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FILED
NOT FOR PUBLICATION JUN 11 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
MANDEEP SINGH, No. 07-74979
Petitioner, Agency No. A073-416-909
v.
MEMORANDUM *
ERIC H. HOLDER, Jr., Attorney General,
Respondent.
On Petition for Review of an Order of the
Board of Immigration Appeals
Submitted May 25, 2010 **
Before: CANBY, THOMAS, and W. FLETCHER, Circuit Judges.
Mandeep Singh, a native and citizen of India, petitions for review of the
Board of Immigration Appeals’ (“BIA”) order denying his motion to reopen. We
have jurisdiction under 8 U.S.C. § 1252. Reviewing for abuse of discretion,
*
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).
Iturribarria v. INS, 321 F.3d 889, 894 (9th Cir. 2003), we deny the petition for
review.
The BIA did not abuse its discretion in denying Singh’s motion to reopen
because it was filed more than two years after the BIA’s December 3, 2004, order
dismissing the underlying appeal, see 8 C.F.R. § 1003.2(c)(2) (motion to reopen
generally must be filed within 90 days of the final administrative order), and Singh
failed to establish grounds for equitable tolling, see Iturribarria, 321 F.3d at 897-
98.
PETITION FOR REVIEW DENIED.
2 07-74979
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628 F.3d 368 (2010)
UNITED STATES of America, Plaintiff-Appellee,
v.
Orlandes NICKSION and Mark Cubie, Defendants-Appellants.
Nos. 09-3732, 09-3755.
United States Court of Appeals, Seventh Circuit.
Argued October 20, 2010.
Decided December 9, 2010.
*372 Michelle L. Jacobs (argued), Office of the United States Attorney, Milwaukee, WI, for Plaintiff-Appellee.
Jeffrey W. Jensen, Sr. (argued), Milwaukee, WI, for Defendant-Appellant in No. 09-3732.
Andrea E. Gambino (argued), Gambino & Associates, Chicago, IL, for Defendant-Appellant in No. 09-3755.
Before FLAUM, RIPPLE, and EVANS, Circuit Judges.
EVANS, Circuit Judge.
Orlandes Nicksion and Mark Cubie, along with several others including Nicksion's cousin, Ronald Terry,[1] were charged with drug trafficking conspiracy and various drug and gun offenses. After withdrawing his guilty plea,[2] Nicksion proceeded to trial. A jury subsequently convicted him of drug trafficking conspiracy, in violation of 21 U.S.C. § 846, aiding the discharge of a firearm during the drug trafficking conspiracy, in violation of 18 U.S.C. § 924(c)(1)(A)(iii), and being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1). He was sentenced to a total term of 480 months' imprisonment. Cubie pled guiltyand did not seek to withdraw his pleato drug trafficking conspiracy, in violation of 21 U.S.C. § 846, and carrying a firearm during a drug trafficking crime, in violation of 18 U.S.C. § 924(c)(1)(A)(i), while preserving pretrial issues for appeal. He was sentenced to a total term of 295 months' imprisonment.
Both men now appeal but challenge different rulings. Nicksion argues that his confrontation clause rights were violated at trial when the district judge admitted out-of-court statements implicating Nicksion in the homicide of Earl Benion, which was used to prove the firearm offense under § 924. Cubie, on the other hand, argues that his pretrial motion to suppress evidence seized from his car during a traffic stop was improperly denied. He also contends that the district judge should have granted his request for a pretrial proffer or hearing regarding the admissibility of co-conspirator statements and that the judge made multiple errors at sentencing. We begin with Nicksion and the facts as established at his trial.
The trial consisted of two main components: the drug trafficking conspiracy and the Benion homicide. Nicksion's arguments on appeal only concern the latter. To briefly summarize the former, the evidence showed that, from 2002 to 2005, Nicksion, Cubie, Terry, and others were involved in procuring large quantities of cocaine, crack, and marijuana from Chicago sources for distribution in Milwaukee, Wisconsin. In general, Nicksion and Cubie would obtain the drugs and provide Terry with a supply to sell. The conspirators used an apartment in a duplex owned by Nicksion's great-uncle, Robert Bridges, and his wife for drug trafficking. At times, Bridges also assisted with drug sales.
*373 The evidence of the homicide showed that, on September 18, 2002, Benion's son, Sirus (age twelve at the time), saw Nicksion and Terry repeatedly drive by his home in a silver Monte Carlo with Illinois plates, while his father was outside. At one point, Nicksion blew Benion a kiss. Terry shot Benion that night, and Benion died the next day.
Immediately after the shooting, Terry, Cubie, Nicksion, Nicksion's father, and Bridges all met in Bridges' apartment. (Nicksion had previously told Bridges, during a meeting with Terry and Cubie, that they intended to hurt Benion if he did not pay a drug debt.) Over Nicksion's hearsay and confrontation objections, Bridges testified that Terry then confessed to shooting Benion because of the debt owed to Cubie, Nicksion, and Terry. Nicksion was quiet during the meeting. But later, when Benion's obituary appeared in the newspaper, Nicksion told Bridges that Benion "should have paid us our money."
Later that month, Terry got rid of the murder weapon by selling it to Frederick Bonds. (Bonds, a drug dealer by trade, had previously seen Terry with the same gun and had learned from Terry that Benion owed money to Nicksion.) Terry told Bonds that he (Terry) needed to get rid of the gun because it was "hot." Over Nicksion's hearsay and confrontation objections, Bonds testified that Terry said that Nicksion and he went looking for Benion, there was an argument over money, and he (Terry) shot Benion. The gun was later recovered from Bonds and traced to the homicide.
Terry also confessed to Darin Palmer, a childhood friend who worked drug houses with Terry. In the fall of 2003, Palmer learned that Terry's drug source was Nicksion. Over Nicksion's hearsay and confrontation objections, Palmer testified that, about a year later, while in a drug house, Terry said that he killed Benion over a drug debt and had been compensated for the shooting.
Milwaukee police detective Chad Wagner investigated the Benion homicide. Wagner eventually contacted Avis Rent-A-Car after learning of a vehicle that he "believe[d]" was linked to the homicide. Over Nicksion's hearsay objection (he later objected to similar testimony on confrontation grounds as well), Wagner testified that an Avis employee told him that, on August 18, 2002, Melissa Zaragoza rented a silver Monte Carlo with Illinois plates. Officers followed up with Zaragoza, who admitted to knowing Nicksion's wife, Nicksion, Benion, and Terry but denied renting the car in question. Eventually, the car was found, but it yielded no evidence regarding the murder or Nicksion.
Prior to his trial, Nicksion was detained for several months with inmate Trenton Gray. Nicksion eventually told Gray that Terry had been involved in the Benion shooting. Nicksion further explained that Terry and he had gone to collect a drug debt from Benion, when Terry shot and killed him.
Nicksion argues that the district judge should not have admitted the testimony of Bonds, Bridges, Palmer, and Wagner. This testimony, Nicksion asserts, was the only evidence linking him to the Benion homicide, which, to repeat, supported his firearm conviction under § 924. In his opening brief, Nicksion only appears to invoke the confrontation clause of the Sixth Amendment, making our review de novo. United States v. Turner, 591 F.3d 928, 932 (7th Cir.2010). In his reply brief, however, Nicksion claims that he also raised a hearsay argument. That issue, if properly preserved, is reviewed for an abuse of discretion. United States v. Harris, 585 F.3d 394, 398 (7th Cir.2009).
*374 Bonds, Bridges, and Palmer all testified that Terry confessed to shooting Benion while Nicksion and Terry were trying to collect on a drug debt. As Nicksion concedes, there is no confrontation clause problem here because Terry's statements were not testimonial. See Davis v. Washington, 547 U.S. 813, 823-24, 126 S.Ct. 2266, 165 L.Ed.2d 224 (2006) (holding that, under Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004), the confrontation clause applies only to testimonial hearsay); see also Melendez-Diaz v. Massachusetts, ___ U.S. ___, 129 S.Ct. 2527, 2536, 174 L.Ed.2d 314 (2009) (explaining that Ohio v. Roberts, 448 U.S. 56, 100 S.Ct. 2531, 65 L.Ed.2d 597 (1980), was overruled by Crawford). The government argues that this resolves the matter because Nicksion did not preserve a hearsay argument in his opening brief. See United States v. Dabney, 498 F.3d 455, 460 (7th Cir.2007) (stating that arguments not raised in the opening brief are waived).
Even giving Nicksion the benefit of the doubt on the preservation issue, Terry's statements were made in furtherance of the conspiracy and therefore admissible under Federal Rule of Evidence 801(d)(2)(E). Terry's statement to Bonds was made in an attempt to get rid of the murder weapon. He made his statement to explain why he needed to sell the gun namely, because it was "hot." Terry's statement to Bridges occurred immediately after the shooting, while he and his co-conspirators, including Nicksion, were discussing how to handle it.[3] The statement to Palmer was more attenuated from the homicide but still furthered the conspiracy. Specifically, Terry confessed at a drug house, while he was working for Nicksion and Cubie, in an effort to explain his relationship with them to a fellow drug dealer.
Detective Wagner's testimony is a little trickier because it implicates the confrontation clause. The government's first argument on this issue is that Nicksion is now challenging testimony to which he did not object at trial. Nicksion's complaint on appeal is with Wagner's statement that he "believe[d]" that an Avis rental car was linked to the homicide. And, in fact, there was no objection to this testimony at trial. Later, when Wagner said that an Avis supervisor told him that, shortly before the murder, Melissa Zaragoza rented a silver Monte Carlo with Illinois plates, Nicksion finally lodged an objection. As that statement was clearly not offered for the truth of the matter assertedthat is, the government was not trying to prove that Zaragoza rented the car in questionit is not surprising that Nicksion has abandoned the argument. We may still review the admission of Wagner's preceding testimony regarding his "belief," but only for plain error. See United States v. Akinrinade, 61 F.3d 1279, 1283 (7th Cir.1995).
Even assuming an "error" that was "plain" (a stretch, considering that Wagner never recounted statements that he solicited to form his "belief" and simply appeared to be explaining the course of his investigation), the testimony clearly did not affect Nicksion's "substantial rights." See United States v. Olano, 507 U.S. 725, 732, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993). First, other evidence supported a connection between the car and the homicide. Zaragoza, in whose name the car was rented, admitted to knowing Nicksion's wife, Nicksion, Benion, and Terry. And Sirus Benion, the 12-year-old boy you'll recall, testified that he saw Nicksion *375 and Terry repeatedly drive by his house in a silver Monte Carlo with Illinois plates on the day of his father's shooting. Second, Terry's confessions to Bonds, Bridges, and Palmer, which we already deemed admissible, were enough to implicate Nicksion.
But the final nail in the coffin is that none of the challenged statements were necessary to prove Nicksion's firearm offense. Nicksion himself admitted (or so the jury under the circumstances could easily conclude) to his involvement in the murder by: (1) telling Bridges, upon seeing Benion's obituary, that Benion "should have paid us our money" and (2) telling Gray that Terry and he had gone to collect a drug debt from Benion, when Terry shot and killed him. And let's not forget that the gun that Terry sold to Bonds was determined to be the murder weapon. Thus, any error in the admission of the statements was clearly harmless. See United States v. Martin, 618 F.3d 705, 730 (7th Cir.2010) (applying harmless error analysis to confrontation clause violation); United States v. Sawyer, 558 F.3d 705, 713-14 (7th Cir.2009) (applying harmless error analysis to hearsay violation). Having rejected Nicksion's arguments, we now turn to Cubie and the facts as established at the evidentiary hearing on his motion to suppress.
On January 28, 2005, a confidential informant made a controlled purchase of a half kilogram of cocaine from Cubie. In the early afternoon on February 2, the informant made a controlled payment of $5,000 to Cubie for the previous half kilogram purchase. After the payment, law enforcement kept Cubie under constant surveillance and observed him making numerous stops and engaging in what appeared to be other drug-related transactions.
That evening, detective Kenneth Smith advised officers Brian Brosseau and Dennis DeValkenaere of the investigation into Cubie's drug trafficking, the controlled drug buy on January 28, and the controlled drug payment earlier that day. Smith also said that other officers had seen Cubie participate in what they believed to be a drug transaction a short time (approximately 20 minutes) previously. Smith requested that Brosseau and DeValkenaere stop Cubie's car.
Brosseau and DeValkenaere both testified that, when they caught up to Cubie's vehicle, he changed lanes quickly without using a turn signal, causing Brosseau to slam on his brakes. There were minor inconsistencies in the officers' testimony for example, Brosseau testified that Cubie veered suddenly to the left, while DeValkenaere said that Cubie veered suddenly to the right. According to Cubie's passenger, Donald Buchanan, however, Cubie never made any abrupt lane changes. Minor inconsistencies aside, Brosseau activated his siren and pulled Cubie's car over.
Brosseau approached Cubie, explained that he had stopped him for a traffic violation, and asked for identification. Cubie calmly reached into the back seat and retrieved his license from a black leather briefcase. He ultimately was issued a traffic ticket. Because of the information he received from Smith regarding Cubie's drug activities, Brosseau asked Cubie to get out of the car and stand near the rear of the vehicle. Buchanan was also taken to the rear of the vehicle.
DeValkenaere then requested permission to search the car. According to the officers, Cubie calmly replied, "Yes. Go ahead." Buchanan, however, testified that he never heard Cubie give consent. (Buchanan also testified that he never saw the officers take Cubie out of the vehicle or search the car.) Brosseau began searching and located a .22-caliber pistol in the car's center console. The officers then *376 placed Cubie and Buchanan in handcuffs. DeValkenaere continued to search the car and found cocaine, marijuana, and money in the black leather briefcase. He also found a white grocery bag containing money under the front driver's seat.
In his recommendation to the district judge, a magistrate judge found that Brosseau and DeValkenaere were credible witnesses and Buchanan was not. The magistrate judge also found that: (1) the stop of Cubie's vehicle was justified based on his traffic violation; (2) the officers had probable cause to stop and arrest Cubie based on the January 28 drug buy and the February 2 drug payment; and (3) the search of the car was justified both under the search-incident-to-arrest exception in New York v. Belton, 453 U.S. 454, 101 S.Ct. 2860, 69 L.Ed.2d 768 (1981), and because Cubie gave voluntary consent. The district judge adopted the magistrate judge's recommendation and denied the motion to suppress. He also hintedbut did not decidethat the stop was also justified based on the collective knowledge of the officers about Cubie's illegal activities earlier that day.
Cubie argues that his motion was improperly denied. When considering a motion to suppress, we review legal questions de novo and findings of fact and credibility determinations for clear error. United States v. Wesela, 223 F.3d 656, 660 (7th Cir.2000). Probable cause determinations are mixed questions of law and fact that we review de novo. United States v. Williams, 627 F.3d 247, 2010 WL 4157339, at *3 (7th Cir. Oct.25, 2010). A finding is clearly erroneous if we are "left with the definite and firm conviction that a mistake has been made." United States v. Gravens, 129 F.3d 974, 978 (7th Cir.1997).
Cubie first claims that the stop of his vehicle was illegal because he did not commit a traffic violation. This argument is easily dismissed because Cubie is basically taking issue with the magistrate judge's credibility determinations. To repeat, the judge found that the officers, who said that Cubie deviated from his lane (they only disagreed on minor details), were credible witnesses, and Buchanan, who said that Cubie did not deviate from his lane (he also said that the officers never removed Cubie or searched the vehicle), was not. There is no evidence of clear error on this point.
Cubie next argues that the officers did not have probable cause to arrest him. Under the "collective knowledge" doctrine, the officers who actually make the arrest need not personally know all the facts that constitute probable cause if they reasonably are acting at the direction of other officers. United States v. Parra, 402 F.3d 752, 764 (7th Cir.2005). In other words, "[t]here is no Fourth Amendment violation if the knowledge of the officer directing the stop, search, or arrestor the collective knowledge of the agency for which he worksis sufficient to constitute probable cause." Williams, 2010 WL 4157339, at *4.
Here, law enforcement collectively knew that: (1) a confidential informant made a controlled drug purchase from Cubie five days earlier; (2) the informant made a controlled drug payment of $5,000 to Cubie on the day of the stop; and (3) Cubie engaged in what appeared to be other drug transactions shortly before the stop. This information, which provided sufficient reason to believe that Cubie had committed a crime, may be imputed to Brosseau and DeValkenaere, who were in communication with Smith. See United States v. Nafzger, 974 F.2d 906, 911 (7th Cir.1992) ("[W]hen officers are in communication with each other while working together at a scene, their knowledge may be *377 mutually imputed even when there is no express testimony that the specific or detailed information creating the justification for a stop was conveyed.").
Cubie's biggest complaint is that the officers were not justified in searching his car, either under the search-incident-to-arrest exception or a theory of voluntary consent. Regarding the former, Cubie relies heavily on Arizona v. Gant, ___ U.S. ___, 129 S.Ct. 1710, 173 L.Ed.2d 485 (2009), which was decided four months after final judgment was entered in his case. As we recently recognized in United States v. Stotler, 591 F.3d 935 (7th Cir.2010):
Gant backed off a bit from Belton and held that "[p]olice may search a vehicle incident to a recent occupant's arrest only if the arrestee is within reaching distance of the passenger compartment at the time of the search or it is reasonable to believe the vehicle contains evidence of the offense of arrest."
Id. at 939 (quoting Gant, 129 S.Ct. at 1723).
But we also noted that Gant explicitly recalled, and did not curtail, the automobile exception to the warrant requirement in United States v. Ross, 456 U.S. 798, 102 S.Ct. 2157, 72 L.Ed.2d 572 (1982). Stotler, 591 F.3d at 940; see also Gant, 129 S.Ct. at 1721. Under that rule, if there is probable cause to believe that a vehicle contains evidence of criminal activity, police may search any area in which the evidence might be found. Gant, 129 S.Ct. at 1721. Thus, unlike the searches described in the final clause of the holding in Gant, "Ross allows searches for evidence relevant to offenses other than the offense of arrest, and the scope of the search authorized is broader." Id.
Here, as we previously discussed, law enforcement had Cubie under constant surveillance on the day of the stop and saw him accept a $5,000 drug payment and engage in other drug transactions. In addition to justifying Cubie's stop and arrest, this information also provided sufficient reason to believe that the vehicle (and any vessels inside the vehicle) contained at least the buy money and probably other evidence of drug trafficking. The fact that Brosseau and DeValkenaere actually may have relied on other justifications for the search, such as the search-incident-to-arrest exception or Cubie's purported consent, is irrelevant. See Williams, 2010 WL 4157339, at *6-7. So the denial of Cubie's motion to suppress stands.
Cubie's remaining arguments merit little discussion. First, he argues that the district judge improperly denied his request for a pretrial proffer or hearing regarding the admissibility of alleged co-conspirator statements. This ruling, Cubie maintains, had a substantial impact on his decision to enter a guilty plea. We review the judge's decision for an abuse of discretion. United States v. Hunt, 272 F.3d 488, 494 (7th Cir.2001).
Under United States v. Santiago, 582 F.2d 1128 (7th Cir.1978), a district judge must make a ruling on the admissibility of co-conspirator statements prior to their formal acceptance as evidence at a trial. We have, however, approved various procedures for fulfilling this requirement, including conditionally admitting the evidence without a proffer or pre-trial hearing subject to eventual supporting evidence at trial (risking, of course, a possible mistrial). United States v. Cox, 923 F.2d 519, 526 (7th Cir.1991). This is exactly what happened here. The district judge ruled that he would conditionally admit the alleged co-conspirator statements, which the government had already disclosed to counsel for all defendants in discovery materials, subject to supporting proof at trial. So there was no abuse of discretion. *378 Moreover, this is a no-harm-no-foul situation because the judge eventually found that the government had provided sufficient supporting proof to admit the evidence at Nicksion's trial. The statements therefore would have been admissible against Cubie had he not pled guilty.
Cubie next challenges the district judge's calculation of drug quantity at sentencing. We review this factual finding for clear error. United States v. Krasinski, 545 F.3d 546, 551 (7th Cir.2008). Cubie says that a "fair estimate" of the drug quantity attributable to him is 49.9 kilograms of powder cocaine, which would put him at a base offense level of 34, instead of 36. To get to that amount, he dismisses as "unreliable" a multitude of evidence of additional drug weight in the pre-sentence report (PSR) simply because it was provided by cooperating defendants. This is an insufficient showing of error. See United States v. Mustread, 42 F.3d 1097, 1102 (7th Cir.1994) ("[A defendant challenging the PSR] must produce some evidence that calls the reliability or correctness of the alleged facts into question.") (citation omitted). But, even ignoring those accounts, Cubie's estimate is still too low because, as the district judge found, Cubie neglected to include the 35 grams of crack seized from him during the February 2, 2005, traffic stop. When that amount is added, Cubie's base offense level is 36.
Cubie also argues that his criminal history category (two) overstated the seriousness of his criminal history. We review a district judge's refusal to apply a lower criminal history category under U.S.S.G. § 4A1.3 for an abuse of discretion. United States v. Turner, 569 F.3d 637, 643 (7th Cir.2009). Cubie's first contentionthat his only prior drug conviction (for PCP distribution) involved a case that had "languished for five years" before being resolvedis frivolous because it is based on a typographical error in the PSR. Moreover, Cubie was on supervision for another drug offense when he was arrested for PCP distribution. Cubie's criminal history, unlike the one described in application note three to § 4A1.3, therefore does not involve merely "minor" offenses. The district judge was well within his discretion to find that Cubie's criminal history category was appropriate.
Cubie next claims that information regarding the Benion homicide should have been excised from the PSR, even though the district judge ruled that he would not consider it at sentencing and took steps to insure that it would not affect Cubie's prison status. But Cubie cites no authority for this assertion and fails to identify any harm or request a remedy. So the argument is waived. See United States v. Wimberly, 60 F.3d 281, 287 (7th Cir.1995).
Cubie's last argumentthat his sentence was unreasonablesuffers from the opposite problem. That is, other than repeating his criminal history, Cubie's analysis is wholly comprised of legal conclusions without any factual support. Failing to identify anything about his background or the offense that would call into doubt the district judge's determination, Cubie cannot possibly overcome the presumption of reasonableness that we apply to his within-guidelines sentence. See United States v. Coopman, 602 F.3d 814, 819 (7th Cir.2010).
For the foregoing reasons, the judgments of the district court are AFFIRMED.
NOTES
[1] Terry pled guilty to drug trafficking conspiracy and was sentenced to a term of 260 months' imprisonment. He appealed an adverse decision on a pretrial matter, and we affirmed. See United States v. Terry, 572 F.3d 430 (7th Cir.2009).
[2] Nicksion sought withdrawal because he did not understand when he pled guilty that the government might argue at sentencing that a 2002 homicide (discussed later in this opinion) was attributable to him.
[3] Because Nicksion heard but did not object to Terry's confession to Bridges, the statement was also admissible under Rule 801(d)(2)(B).
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Case: 18-11191 Document: 00514985012 Page: 1 Date Filed: 06/05/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 18-11191 United States Court of Appeals
Summary Calendar
Fifth Circuit
FILED
June 5, 2019
UNITED STATES OF AMERICA, Lyle W. Cayce
Clerk
Plaintiff-Appellee,
v.
YONI CASTRO-LOPEZ,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 4:18-CR-50-1
Before JONES, HIGGINSON, and OLDHAM, Circuit Judges.
PER CURIAM: *
Yoni Castro-Lopez pleaded guilty to illegal reentry after deportation, in
violation of 8 U.S.C. § 1326(a), (b)(1), and (b)(2), and was sentenced to 22
months of imprisonment and a two-year term of supervised release. Castro-
Lopez raises two arguments on appeal. He correctly concedes that one
argument he raises—that his sentence violated due process because it
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 18-11191 Document: 00514985012 Page: 2 Date Filed: 06/05/2019
No. 18-11191
exceeded the statutory maximum charged in the indictment—is foreclosed
under Almendarez-Torres v. United States, 523 U.S. 224, 226–27 (1998).
His other argument, however, is not foreclosed. Castro-Lopez contends
that the district court plainly erred by stating in the judgment that his
conviction was punishable under § 1326(b)(2), rather than under § 1326(b)(1),
because his prior Texas conviction for burglary of a habitation was not an
aggravated felony for purposes of § 1326(b)(2). He requests modification of the
judgment accordingly. To show plain error, he must show a forfeited error that
is clear or obvious and that affects his substantial rights. Puckett v. United
States, 556 U.S. 129, 135 (2009). If he makes such a showing, we have the
discretion to correct the error “if the error seriously affects the fairness,
integrity or public reputation of judicial proceedings.” Id. (internal quotation
marks and brackets omitted).
In sentencing Castro-Lopez pursuant to § 1326(b)(2), the district court
necessarily relied on the now-unconstitutional definition of “aggravated felony”
found in 18 U.S.C. § 16(b). See United States v. Godoy, 890 F.3d 531, 542 (5th
Cir. 2018); United States v. Herrold, 883 F.3d 517, 536–37 (5th Cir. 2018)
(en banc). Accordingly, the designation in the written judgment indicating
that Castro-Lopez was convicted and sentenced under § 1326(b)(2) was
erroneous and should be reformed as Castro-Lopez requests. See Godoy, 890
F.3d at 542; United States v. Mondragon-Santiago, 564 F.3d 357, 369 (5th Cir.
2009). We therefore MODIFY the district court’s judgment to reflect that
Castro-Lopez was sentenced according to § 1326(b)(1), and we AFFIRM the
judgment AS MODIFIED.
2
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807 A.2d 556 (2002)
Everett Clifton CANNON and Allie Marie Cannon, his wife, Defendants Below, Appellants,
v.
STATE of Delaware, Upon the Relation of the Secretary of the Department of Transportation, Plaintiff Below, Appellee.
No. 418, 2001.
Supreme Court of Delaware.
Submitted: May 21, 2002.
Decided: August 28, 2002.
Rehearing Denied October 11, 2002.
John A. Sergovic, Jr., Esquire, Sergovic, Ellis & Shirey, P.A., Georgetown, Delaware, for Appellants.
Mark F. Dunkle, Esquire, Parkowski & Guerke, P.A., Dover, Delaware, for Appellee.
Before VEASEY, Chief Justice, WALSH, HOLLAND, BERGER, and STEELE, Justices, constituting the Court En Banc.
*557 WALSH, Justice for the Majority.
In this interlocutory appeal from a Superior Court order of possession, we address the scope of the condemnation powers delegated to the Department of Transportation of the State of Delaware ("DelDOT"). The appellants/defendants below are the owners of 6.5 acres of land in Sussex County that DelDOT seeks to condemn in order to create a wetlands *558 mitigation site. The wetlands mitigation is required as a condition of the U.S. Army Corps of Engineers' permit to fill other wetlands in connection with the Route 54 highway reconstruction project in Sussex County. After a contested condemnation hearing, the Superior Court granted DelDOT's request for possession. The property owners have appealed, arguing that DelDOT lacks the authority to condemn land for wetlands mitigation, and, even if it has such authority, it acted unreasonably by failing to explore alternative sites. We agree with the trial court that DelDOT's statutory grant of authority to condemn land extends to wetlands mitigation, and that it acted within that authority in this case.
I.
Appellants Everett and Allie Cannon ("the Cannons") own a coastal farm on the Little Assawoman Bay that is adjacent to the current Route 54 in Sussex County, Delaware. Route 54 serves as an essential hurricane evacuation route for the seashore area but is often rendered inaccessible due to flooding. In recognition of this problem, DelDOT commenced a study in 1992 to determine what improvements should be made to the road. Seven design alternatives for the Route 54 project were considered. The study evaluated each alternative design for its social, economic, and environmental impact on the surrounding area, as required by the National Environmental Policy Act. With the exception of the first alternative, to do nothing, all of the designs, to varying extents, would necessarily interfere with the Cannon's property and require the filling of wetlands. Eventually, after public notice and debate, DelDOT chose a design featuring an elevated viaduct and a six foot elevated fill berm to access it. The viaduct will extend across approximately 2,460 feet of the Cannons' land and cross federally protected wetlands.
The Cannons did not dispute DelDOT's plan to condemn the portion of their land necessary for actual highway improvements. The Cannons did, however, refuse to surrender any of their land to accommodate wetlands mitigation necessitated by the project. The Route 54 project will require the filling of 1.87 acres of wetlands and removal of .955 acres of fill for temporary and shading of wetlands. Acting under the authority delegated to it by the Clean Water Act, the U.S. Army Corps of Engineers ("the Corps") requires a permit to fill wetlands and maintains a "no net loss" policy, which requires wetlands mitigation to accompany any wetland filling operation. 33 U.S.C. § 1344; 33 C.F.R. § 320.4(r). This means, essentially, that DelDOT must create wetlands to replace those lost by the Route 54 improvements. Thus, DelDOT sought condemnation of 6.5 acres of the Cannons' property in order to create the necessary wetlands.
DelDOT cannot build the Route 54 project without a fill permit from the Corps, and the Corps will not issue a permit without acceptable wetlands mitigation. By virtue of a memorandum of understanding between the Corps and the Environmental Protection Agency, the Corps operates under a protocol of sequential review of possible mitigation sites. Under the protocol, the most desirable site is one that is both on-site and in-kind. If the most preferred mitigation site is not practical or feasible, the Corps will consider alternatives in descending order of preference: off-site and in-kind, on-site and out-of-kind, and off-site and out-of-kind. The Cannons' land is both on-site and in-kind, because it is adjacent to the impact area and amenable to the creation of tidal wetlands. In short, the Cannons' wetlands *559 essentially replicate the wetlands to be filled in constructing the road.
DelDOT hired an expert wetlands consultant, Edward Launay, to develop a wetlands mitigation plan that would be acceptable to the Corps. Based on Launay's recommendation, DelDOT offered only one mitigation site to the Corps, the Cannons' property. After the Cannons expressed their opposition to having their land used for wetlands mitigation, DelDOT investigated the feasibility of off-site mitigation sites. Launay reviewed all DelDOT-owned land in Sussex County and concluded that none would be acceptable to the Corps as suitable for the creation of tidal wetlands. The Cannons concede that their land is the best ecological site, but argue that other, less desirable sites could be acceptable to the Corps. Despite the Cannons' opposition, the Corps granted DelDOT's fill permit and DelDOT is prepared to go forward with construction of the Route 54 project. According to the Corps' permit, however, construction cannot begin until DelDOT actually acquires the Cannon property. Although wetlands mitigation is needed before construction can begin, once the highway is built it will play no role in the function of the roadway.
II.
Our standard and scope of review of the Superior Court's interpretation of the condemnation statute is de novo. Public Water Supply Co. v. DiPasquale, 735 A.2d 378, 382-83 (Del.1999).
The Cannons first argue that DelDOT lacks statutory authority to condemn private land for wetlands mitigation purposes. Although 17 Del. C. § 132(c) does not contain language authorizing DelDOT to condemn land specifically for "wetlands mitigation," DelDOT asserts that the grant of condemnation power is broad enough to encompass this purpose. The Superior Court agreed, holding that the taking of the Cannons' land is "necessary for a proper, public purpose," because, as a practical matter, DelDOT cannot make the improvements to Route 54 without providing wetlands mitigation.
We agree with the Superior Court that 17 Del. C. § 132 grants DelDOT the authority to condemn land for wetlands mitigation, if necessary to advance the underlying purpose of construction and maintenance of the State's roadways. It is beyond dispute that as a sovereign governmental entity, the State of Delaware retains the power of eminent domain and that it may delegate that power to agencies charged with furthering some public good. Thomison v. Hillcrest Athletic Ass'n., 5 A.2d 236, 238 (Del.Super.1939). The statute granting DelDOT the power of eminent domain provides that, in furtherance of the construction of a comprehensive and permanent system of state highways, DelDOT may: "[a]cquire by condemnation or otherwise any land, easement, franchise, material or property, which, in the judgment of the Department, shall be necessary therefor...." 17 Del. C. § 132(c)(4). The General Assembly further granted DelDOT the power to do "whatever is incidental and germane to the scope of the duties and powers conferred on it by law." 17 Del. C. § 132(d).
Statutes that vest the power of eminent domain in an agency must be strictly construed, however, because, by their operative nature, they subjugate the rights of private property owners to the greater public need. State ex rel. Sharp v. 0.6878 Acres of Land, 105 A.2d 205, 206 (Del.Super.1954). Despite the strict construction we must accord 17 Del. C. § 132, our overriding goal is to determine the intent of the legislature. In this vein, we *560 note that the Superior Court has construed the statute to allow DelDOT to condemn property for the purpose of building a toll plaza and an administrative building, which the court deemed "necessary for the construction and use" of a state highway. State v. M. Madic, Inc., C.A. Nos. 96C-11-192, 96C-11-193, 96C-11-196, 96C-11-197, slip. op. 17-19, Quillen, J. (Del.Super.Jan. 24, 1997). Ultimately, the court reasoned, the property owners' proffered interpretation of the statute would "hamstring DelDOT's efforts to construct any state roadway, and Title 17 is not so restrictive." Id.
Courts in other states have also concluded that environmental mitigation is a practical necessity for public construction projects and have allowed state agencies to condemn private land for wetlands mitigation. See State v. Trap Rock Industries, Inc., 338 N.J.Super. 92, 768 A.2d 227, 231 (2001) (holding that, "[a]lthough mitigation is strictly environmental in its nature, the highway could not have been constructed without [it] ... [t]herefore, the property at issue was realistically needed for transportation purposes"); Dare County Board of Education v. Sakaria, 118 N.C.App. 609, 456 S.E.2d 842, 845-46 (1995) (holding that county board of education was statutorily authorized to condemn land for use as wetlands mitigation, as necessary to construction of new athletic facilities).
The same rationale is applicable here. Were the Cannons' very narrow construction of the statute to be accepted, DelDOT would be substantially hampered in its efforts to fulfill its statutory mandate to establish a comprehensive system of state highways. 17 Del. C. § 132(a). Whenever a proposed roadway interfered with federally protected wetlands, and the property owner refused to sell, DelDOT would be forced to abandon the project, no matter how "necessary" and compelling would be the public need. We do not believe that the General Assembly, in conferring upon DelDOT a broad grant of condemnation power, intended that such authority be exercised only with the consent of adjacent landowners, where wetlands mitigation is required by federal law.
III.
Having determined that DelDOT has the statutory authority to condemn land for wetlands mitigation, we address the Cannons' claim that, in this instance, DelDOT abused that authority. First, a discussion of the standard of review applicable to the Superior Court's decision, and DelDOT's decision, is necessary. The General Assembly has granted DelDOT the authority to condemn private land for public use, providing that DelDOT may "[a]cquire by condemnation or otherwise any land, easement, franchise, material or property, which, in the judgment of the Department, shall be necessary therefor...." 17 Del. C. § 132(c)(4) (emphasis supplied). There is little question that DelDOT's condemnation of the Cannons' property was for a public use, i.e., to enable the State to improve a hurricane evacuation route. The question raised by the Cannons is, was the taking of their wetlands, in particular, necessary? The statute makes clear that DelDOT is empowered to make that determination in the first instance. Once DelDOT determines a particular property is necessary to the fulfillment of its duty to maintain the State's highways, the courts must accord broad deference to that decision.
When the General Assembly delegates the right of eminent domain to a governmental agency for a public purpose, as it has to DelDOT, it may also delegate to such agency the power of determining what property and how much property is necessary for the purpose. State ex rel. *561 Sharp v. 0.62033 Acres of Land, 110 A.2d 1 (Del.Super.1954), aff'd, 112 A.2d 857 (Del. 1955). The only limit to that power is that it may not be exercised "thoughtlessly or arbitrarily." 0.24148, 0.23831 & 0.12277 Acres of Land v. State ex rel. Smith, 145 A.2d 388 (Del.1958); see also Public Water Supply Co. v. DiPasquale, 735 A.2d 378, 383 n. 9 (Del.1999) (noting that expert agency determinations of fact, applied to settled law, are reviewed for an abuse of discretion). Indeed, the Superior Court Civil Rules recognize that deference is owed to DelDOT's condemnation determinations. Rule 71.1, governing condemnation proceedings, provides that "[i]n all such condemnation proceedings the burden shall be upon the property owner to overcome the presumption of regularity and the prima facie case of necessity for public use presented by the institution of such proceeding." Super. Ct. Civ. R. 71.1 (emphasis supplied).
The power of eminent domain belongs exclusively to the legislative branch. See Joslin Mfg. Co. v. City of Providence, 262 U.S. 668, 678-79, 43 S.Ct. 684, 67 L.Ed. 1167 (1923) (stating "[t]hat the necessity and expediency of taking property for public use is a legislative and not a judicial question is not open to discussion"). The General Assembly's exercise of that power through delegation to an administrative agency may be reviewed by the courts only to ensure that the power is not wielded punitively or arbitrarily. Our standard of review "mirrors that of the Superior Court." Public Water Supply Co. v. DiPasquale, 735 A.2d 378, 380 (Del. 1999). In this case, the Superior Court accorded DelDOT the proper deference when it reviewed its necessity determination for "fraud, bad faith, or gross abuse of discretion." State ex rel. Sharp v. 0.62033 Acres of Land, 110 A.2d 1, 6 (Del.Super.1954), aff'd, 112 A.2d 857 (Del.1955). Accordingly, we review DelDOT's determination that the Cannons' land is necessary for the Route 54 highway project for fraud, bad faith, or abuse of discretion.
While there is no evidence that DelDOT acted fraudulently or in bad faith, the Cannons contend that DelDOT acted unreasonably and abused its discretion in selecting their property as necessary for wetlands mitigation without first exploring if there were any State-owned lands that would suffice. DelDOT maintains that, because the Cannons' land is both on-site and in-kind, the Corps would not have accepted anything less. Indeed, the Corps would not consider an alternative mitigation site unless the Cannons' land was not "practical or feasible." Given our determination that DelDOT has the authority to acquire the Cannons' land, it would be unlikely that the Corps would deem it impractical. Furthermore, DelDOT did investigate alternative mitigation sites, but found that DelDOT did not own any land in the vicinity that would be suitable to wetlands mitigation. We do not believe that DelDOT was obligated to conduct an inventory of all State-owned lands. It is enough that DelDOT hired an expert to determine the best mitigation site available, researched the feasibility of alternative mitigation sites, and attempted to negotiate with the Cannons before resorting to condemnation.
The fact that DelDOT focused on the Cannons' property as the first choice for wetland's mitigation is understandable because it was "on-site/in-kind" and readily acceptable to the Corps. The dissenters complain that the choice was made before exploration of other alternatives. But when DelDOT's taking was challenged in the Superior Court, the agency was able to demonstrate that no other site in its available inventory achieved the same level of acceptability. Importantly, DelDOT was able to justify the necessity of the taking *562 when required to do so in the Superior Court and we agree with the Superior Court's ruling that the process followed by DelDOT was "rational and logical."[1]
DelDOT has been charged by the General Assembly with doing whatever is necessary to ensure that the citizens of this state have suitable highways upon which to travel. There is no question that DelDOT had a "proper public purpose" to pursue the Route 54 project. See Wilmington Parking Authority v. Land with Improvements, Situate in the City of Wilmington, 521 A.2d 227 (Del.1986). A hurricane evacuation route that routinely floods is clearly a matter of public concern and its improvement is in the best interest of the public. Although there may be more that DelDOT could have done to avoid condemning the Cannons' land for wetlands mitigation, we cannot say that it acted unreasonably in choosing the site that gave it the greatest chance of obtaining the permit from the Corps which was required to begin construction of the project.
Accordingly, we affirm.
VEASEY, Chief Justice, concurring.
I join in the opinion of the majority, but I write separately to emphasize that, in my view, the affirmance of the judgment of the trial court is compelled by the narrow scope of the standard of review. The determination of whether the taking of the Cannons' land for wetlands mitigation was necessary is controlled by the standard of review at two levels: (i) that exercised by the Superior Court when DelDOT's decision to condemn a particular wetland was challenged by the Cannons and (ii) when this Court reviews the Superior Court. In each case, the standard is the same.
We all agree that the ultimate issue in this case is the "necessity" determination of DelDOT to take the Cannons' land for wetlands mitigation. The Superior Court heard live testimony on that point and made findings of fact, based on the evidence presented at trial. Based on those findings the trial court concluded that DelDOT had not abused its discretion in making the determination of necessity for taking the Cannon property.
The issue before the Superior Court was not whether the trial judge should substitute his judgment for that of DelDOT, the agency charged by the General Assembly with the statutory responsibility to make that judgment. Rather, the issue before the trial judge was whether the DelDOT determination was based on supportable facts and reason, whether or not the trial judge would have reached the same judgment in the first instance. Stated differently, the issue before the trial judge was whether DelDOT's exercise of its "judgment," as called for in the statute, was the product of fraud, bad faith or abuse of discretion.[2] The trial judge applied that *563 analysis to the facts adduced at trial[3] and concluded that DelDOT's judgment was not an abuse of discretion.
The next and final level of review is that to be applied by this Court. Although our scope of review on statutory construction and constitutionality is de novo, our scope of review is deferential on the trial judge's factual findings on DelDOT's "judgment" of the "necessity" of the taking of the Cannons' property. Specifically, the issue is not whether we would agree in the first instance with DelDOT's determination of necessity or even whether, in the second instance, we would have come to the same conclusion as did the trial judge on this record. Rather, our task is as follows:
In exercising our power of review, we have the duty to review the sufficiency of the evidence and to test the propriety of the findings below. We do not, however, ignore the findings made by the trial judge. If they are sufficiently supported by the record and are the product of an orderly and logical deductive process, in the exercise of judicial restraint we accept them, even though independently we might have reached opposite conclusions. It is only when the findings below are clearly wrong and the doing of justice requires their overturn that we are free to make contradictory findings of fact.[4]
In my view, the findings of the trial court on the exercise of DelDOT's discretion meets this test of our judicial review. The Cannons' land was favorably located as "on-site and in-kind." DelDOT did, ultimately, consider other alternatives, and, upon examining those alternatives, it found that none achieved the same level of acceptability as the Cannon property.
DelDOT's judgment of necessity permits it to consider a rank order of preferences within the universe of acceptable sites. A relevant and permissible factor in that analysis is what DelDOT believes the Corps would likely accept. DelDOT is not relegated to a choice of only minimally acceptable sites in the face of an objection by the landowner of the preferred site. Therefore, whether or not we are comfortable with the result or whether we would have preferred a different outcome, in my view our affirmance of the trial court is compelled by our narrow scope of review.
HOLLAND, Justice, with whom Justice Steele joins, dissenting.
We agree with the holding by the majority that DelDOT has the statutory authority to condemn land for wetlands mitigation if that action is reasonably necessary for *564 the purpose of maintaining State highways. The record reflects that DelDOT's condemnation of the Cannons' additional property for wetlands mitigation was unnecessary and unreasonable. Accordingly, we respectfully dissent.
Eminent Domain
The power of eminent domain is an inherent aspect of sovereign authority. It is the "power to compel a transfer of property from a private owner to the government for a public purpose."[5] The power of eminent domain is the most drastic of all interferences with private property rights. James Madison expected that "[i]ndependent tribunals of justice will consider themselves in a peculiar manner the guardians of those rights."[6]
Our constitutional democracy frequently calls for balancing competing rights of fundamental importance. There is no doubt that the State of Delaware can exercise its sovereign authority to condemn private property for the greater public good. Article I, Section 8 of the Delaware Constitution, however, prohibits the taking of the Cannons' property for public use "without the consent of his or her representatives."
Unbridled Administrative Discretion
The power of eminent domain belongs exclusively to the legislative branch of the government.[7] The General Assembly may delegate the right of eminent domain to an administrative agency for a public purpose. The General Assembly's ability to delegate an exclusively legislative function, however, is carefully circumscribed by the parameters of the non-delegation doctrine.
This Court has recognized that the non-delegation doctrine is based upon a fundamental principle of constitutional democracy: "[a]dministrators should not have unguided and uncontrolled discretionary power to govern as they see fit."[8] Accordingly, reviewing Courts must focus on the "totality of protections against [administrative] arbitrariness," including "both substantive standards and procedural safeguards," i.e., due process or the law of the land, as the latter term appears in the Delaware Constitution.[9] Where it is not feasible for the General Assembly to set precise guidelines, the presence of administrative procedural safeguards may compensate for the lack of precise statutory standards.[10]
In most situations involving action delegated to an administrative agency, an aggrieved party has a right of administrative review that is subject to the right of judicial review.[11] That two-tiered system of review is designed to protect adversely affected parties from arbitrary administrative decisions.[12] In this case, the General Assembly did not provide any statutory standards for DelDOT to use in making its administrative determination of necessity. DelDOT did not apparently adopt any substantive or procedural safeguards for either making a determination of necessity *565 or for providing administrative review of that decision.
Accordingly, judicial review is the only protection the Cannons have against an exercise of unbridled administrative discretion by DelDOT. The applicable statute provides for DelDOT to exercise its judgment in making the determination of necessity for condemning private property. There is no precedent, however, for judicial deference to an administrative agency's determination that it is necessary to condemn private property for a public purpose when that determination is made without any substantive or procedural safeguards.
Statutes that vest the power of eminent domain in an administrative agency must be strictly construed because by their operative nature they subrogate rights of private property owners to the greater public need.[13] The record reflects that the Cannons have demonstrated conclusively that, although DelDOT was required to provide property for wetlands mitigation, it was not necessary to take the Cannons' additional private property to accomplish that purpose. The Cannons' constitutionally protected private property rights cannot be subordinated to an administrative agency's decision to repudiate the pursuit of a myriad of acceptable alternatives for wetlands mitigation, simply as a matter of its own convenience.
Issue Presented
This case relates to two separate takings of the Cannons' private property by DelDOT. The primary taking is of wetlands property owned by the Cannons that the State wants to use for the purpose of improving Route 54. The Cannons acknowledge that the State has the right to exercise its sovereign power of eminent domain to condemn their private wetlands property for the purpose of actually improving Route 54, notwithstanding the Cannons' objections to that taking. Accordingly, the record does not support the majority's assertion that "[w]ere the Cannons' very narrow construction of the statute to be accepted, ... [w]henever a proposed roadway interfered with federally protected wetlands, and the property owner refused to sell, DelDOT would be forced to abandon the project, no matter how `necessary' and compelling would be the public need." The primary taking of the Cannons' private wetlands property for the purpose of actually improving Route 54 is simply not an issue in this case.
The issue in this case is the "additional taking" of the Cannons' private property that the State seeks to condemn for the purpose of mitigating the wetlands that will be lost when Route 54 is improved. The Cannons contend that the additional taking of their private property is not necessary. DelDOT submits that the taking of the Cannons' additional property for wetlands mitigation is necessary to improve Route 54 because the State cannot make improvements to Route 54 without a permit from the Corps and the Corps will not issue a permit to the State unless the State provides additional land for wetlands mitigation.
The logical question is, can DelDOT accommodate the Corps' wetlands mitigation requirement without taking additional private property from the Cannons? The record reflects the answer to that question is an unqualified "yes." The Corps has a hierarchy of preferences for property that will each satisfy its general requirement for wetlands mitigation. The Corps' hierarchy of preferences is a specific recognition that one or more of the Corps' highest *566 preferences of property for wetlands mitigation may not be available.
Why then did DelDOT offer the Cannons' additional private property to the Corps for wetlands mitigation? The answer is because DelDOT knew that the Cannons' additional property comported with the Corps' highest preference for on-site and in-kind wetlands mitigation. DelDOT offered the Cannons' additional private property to guarantee the Corps' permit approval by avoiding negotiations with the Corps about other property that the State either owned or could buy, because any of those other properties would be further down the Corps' hierarchy of preferences for wetlands mitigation. Accordingly, the question presented to this Court is, whether an administrative agency can condemn the Cannons' additional private property simply because it did not want to negotiate with the Corps about providing for wetlands mitigation with other property that the State owned or could buy?
Property and Liberty
The most definitive and authoritative book on property rights and liberty in America was written by Professor James W. Ely, Jr.[14] The title for Professor Ely's work was inspired by Virginian Arthur Lee's declaration that "[t]he right of property is the guardian of every other right, and to deprive a people of this, is in fact to deprive them of their liberty."[15] A brief historical review is helpful to understand why DelDOT had no authority to condemn the Cannons' private property.
The origin of property rights in America can be traced to the Magna Charta in 1215, which protected the rights of property owners against arbitrary action by the sovereign. It provided in chapter 39 that "[n]o freeman shall be taken or imprisoned, or disseised ... unless by the lawful judgment of his peers, or by the law of the land." With this language, the Magna Charta secured the rights of private property owners against deprivations by the sovereign without due process of law.[16] That guarantee remains one of the most fundamental tenets of our American constitutional democracy.
In 1687, when the State of Delaware constituted the three lower counties of Pennsylvania, William Penn ("Penn") arranged for the publication of a commentary on the Magna Charta.[17] Penn implored American colonists "not to give away any thing of Liberty and Property that at present they do ... enjoy."[18] In 1689, John Locke ("Locke") wrote his famous Second Treatise on Government, which asserted that legitimate government was based on a compact between the people and their rulers.[19] "According to Locke, private property existed under natural law before the creation of political authority. Indeed, the principal purpose of government was to protect these natural property rights, which Locke fused with liberty."[20] Undoubtedly influenced by Locke, the rights of property owners were characterized *567 by the most prominent political theorists in the eighteenth century as the "bulwark of freedom from arbitrary government."[21]
In 1721, John Trenchard stated, "All Men are animated by the Passion of acquiring and defending Property, because Property is the best Support of that Independency, so passionately desired by all Men."[22] The Lockean theory of property rights was reflected in the English common law. In his Commentaries on the Laws of England (1765-1769), William Blackstone acknowledged the influence of Locke's formulation on the law's evolution. Blackstone summarized the English common law on property rights in broad terms: "So great moreover is the regard of the law for private property, that it will not authorize the least violation of it."[23] Prior to the American Revolution, property ownership became identified with the preservation of political liberty. Blackstone's Commentaries were studied as a definitive summary of English common law.[24] The Declaration of Independence reflected the inseparability of political liberty and private property described in the compact theory of Locke.[25]
1776 Delaware Constitution
Following the Declaration of Independence from the English monarchy, the historic authority of general sovereignty became vested in each of the former colonial states.[26] As new sovereign entities, each state drafted its own constitution.[27] The first colonial constitutions attempted to set forth in writing universal principles, grounded in reason.[28]
The challenge in writing state constitutions was to reconcile the known conceptions of sovereignty with "notions about the popular foundations of legitimate government."[29] Those efforts were influenced by philosophers, such as Charles Montesquieu, Jean Jacques Rousseau, and Locke, and by English common-law scholars, like Edward Coke, Henry deBracton and William Blackstone.[30] Each state constitution attempted to define sovereignty with precision and to restrain its exercise within marked boundaries.[31]
The first Delaware Constitution and the Declaration of Rights and Fundamental Rules of the Delaware State ("Declaration of Rights") were adopted in September 1776. The primary authorship of the 1776 Delaware Constitution and Declaration of *568 Rights is traditionally ascribed to Thomas McKean, a Delaware lawyer and signatory of the Declaration of Independence.[32] McKean had studied the English common law at the Middle Temple in London, where he was a contemporary of William Blackstone.[33]
The first section of the Declaration of Rights reflected a continued adherence to the philosophy of Locke and provided that "all government of right originates from the people, is founded in compact only, and instituted solely for the good of the whole."[34] The first Delaware Constitution also reflected a continued adherence to the English common law and stated:
The common law of England, as well as so much of the statute law as have been heretofore adopted in practice in this State, shall remain in force, unless they shall be altered by a future law of the Legislature; such parts only excepted as are repugnant to the rights and privileges contained in this constitution....[35]
The 1776 Delaware Constitution was preceded by the Declaration of Rights.[36] The principles from the Magna Charta that protected property rights were included in the 1776 Declaration of Rights. Section 10 provided that "every member of society hath a right to be protected in the enjoyment of life, liberty and property [and] ... no part of a man's property can be justly taken from him or applied to public uses without his own consent or that of his legal Representatives."[37] Section 12 provided that "every freeman for every injury done him in his goods, lands or person, by any other person, ought to have remedy by course of the law of the land."[38]
United States Constitution
Protecting the right to acquire and own private property was also of a paramount importance to the Framers of the United States Constitution. Invoking the philosophy of Locke, John Rutledge of South Carolina told the delegates at the Philadelphia Convention that "[p]roperty was certainly the principal object of Society."[39] Alexander Hamilton stated, "One great objt. of Govt. is personal protection and the security of Property."[40] According to Professor Ely, "many provisions of the Constitution pertain to property interests and were designed to rectify the abuses *569 that characterized the revolutionary era."[41]
In 1790, John Adams stated, "Property must be secured or liberty cannot exist."[42] The Fifth Amendment became effective in 1791 and explicitly incorporated into the United States Constitution Locke's theory that "protection of property is a chief aim of government."[43] The importance of the Fifth Amendment is described by Professor Ely:
As finally adopted, the Fifth Amendment contains two important property guarantees, along with procedural safeguards governing criminal trials. The amendment provides in part that no person shall be "deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation." Madison's decision to place this language next to criminal justice protections, such as the prohibitions against double jeopardy and self-incrimination, underscored the close association of property rights with personal liberty. Individuals needed security against both arbitrary punishment and deprivation of property.[44]
According to Professor Ely, the Due Process Clause in the Fifth Amendment was a direct descendant of the Magna Charta and the initial state constitutions (like Delaware's) and "in time became the most significant constitutional guarantee of property rights."[45]
Present Delaware Constitution
Following the enactment of the United States Constitution and the operative effectiveness of the Bill of Rights in 1791, Delaware adopted its own new constitution in 1792. The President of the 1792 Delaware Constitutional Convention was John Dickinson, who had studied the common law of England at the Middle Temple in London with Thomas McKean and, thus, was also a contemporary of William Blackstone.[46] John Dickinson and the other framers of the 1792 Delaware Constitution clearly intended to preserve and incorporate the well-established common-law principles from the 1776 Delaware Constitution into the protections afforded by the Bill of Rights in the 1792 Delaware Constitution.
Today, the first document that appears in the Delaware Code is the Magna Charta.[47] The entire Delaware Bill of Rights has remained virtually intact since those provisions were adopted in the 1792 Delaware Constitution. Article I, Section 8 of the present Delaware Constitution provides: "nor shall any person's property be taken or applied to public use without the consent of his or her representatives, and without compensation being made."
Although this history demonstrates that property rights are fundamental to liberty, they are not paramount. In 1798, United States Supreme Court Justice James Iredell noted that public projects "are necessarily sometimes built upon the soil owned by individuals."[48] Accordingly, Justice *570 Iredell acknowledged that "private rights must yield to public exigencies."[49]
Necessity Preserves Balance
The members of the General Assembly are the representatives elected to protect the Article I, Section 8 private property rights of Delaware's citizens, such as the Cannons. The General Assembly has properly placed the burden on the State to demonstrate "necessity" as a condition precedent to taking private property for a public purpose.[50] Title 17, section 132(c)(4) of the Delaware Code permits DelDOT to discharge its duties under section 132(b) by enabling DelDOT to "[a]cquire by condemnation or otherwise any land, easement, franchise, material or property, which, in the judgment of the Department shall be necessary."
It is uncontested that DelDOT could not build the Route 54 project without providing a proposal for wetlands mitigation that was approved by the Corps. In order to condemn the Cannons' additional property for compensatory mitigation, however, DelDOT had to establish that specific condemnation of that particular parcel was necessary to commence the Route 54 project. In this case, the record reflects that DelDOT has failed to demonstrate that it was necessary to take the Cannons' additional property for the public purpose of improving Route 54. That purpose could have been accomplished by satisfying the Corps' requirement for wetlands mitigation with other land already owned by the State or other land purchased by the State from a willing seller. The basis for these conclusions is found in the analysis of the law and the facts that follows.
Federal Statutory and Regulatory Scheme
Section 404(a) of the Clean Water Act generally bans the "discharge of dredged or fill material into the navigable waters" of the United States without a prior permit from the United States Army Corps of Engineers (the "Corps").[51] Section 404 vests the Corps with the statutory authority to regulate wetlands development.[52] Section 404(b)(1) provides that the decision to issue a permit for the discharge of fill material into wetlands is made using guidelines developed by the Corps and the Environmental Protection Agency (the "EPA").[53]
Pursuant to section 404(b)(1), the EPA develops section 404(b)(1) Guidelines, in conjunction with the Corps, for use by the Corps as the permitting authority.[54] In evaluating all applications for Department of the Army permits, the Corps will deny a permit involving activities with section 404 discharges into navigable waters unless the discharge complies with the EPA's 404(b)(1) Guidelines.[55] In addition to ensuring compliance with the section 404(b)(1) Guidelines, the Corps considers wetlands mitigation throughout the permit *571 application review process.[56] A general statement of the Corps' wetlands mitigation policy for evaluating permit applications is set forth in 33 C.F.R. § 320.4(r).[57] This general statement is not, however, "a substitute for the mitigation requirements necessary to ensure that a permit action under section 404 of the Clean Water Act complies with the section 404(b)(1) Guidelines."[58]
Provisions addressing compliance with the EPA's 404(b)(1) Guidelines are set forth in 40 C.F.R. pt. 230 at subpart B. In reviewing an application's compliance with the section 404(b)(1) Guidelines and determining whether to grant or deny a permit for the discharge of fill material into wetlands, the Corps must further follow the general policies of 33 C.F.R. pt. 320 and procedures of 33 C.F.R. pt. 325.[59] 33 C.F.R. § 320.4(g) states that "[a]uthorization of work or structures by [the Department of the Army] does not convey a property right, nor authorize any injury to property or invasion of other rights." Under 33 C.F.R. § 320.4(g)(6), an "applicant's signature on an application is an affirmation that the applicant possesses or will possess the requisite property interest to undertake the activity proposed in the application."[60] Similarly, 33 C.F.R. § 325.1(d)(7) states that an applicant's signature will be an affirmation that the applicant will possess the requisite property interest. Accordingly, the federal statutory and regulatory scheme clearly contemplates that an applicant will offer land that it owns for purposes of wetlands mitigation.
In this case, the applicant, DelDOT, did not offer any land owned by the State of Delaware to the Corps for wetlands mitigation. Instead, DelDOT's application to the Corps for a wetlands permit only offered the Cannons' additional land on the assumption that DelDOT had the absolute authority to condemn any property that it wanted to seize for wetlands mitigation. Whether the Cannons' additional property could be condemned for compensatory wetlands mitigation is the crux of this matter.
Memorandum of Agreement
In furtherance of the federal statutory and regulatory guidelines, the EPA and the Department of the Army entered into a Memorandum of Agreement (the "MOA") for determining mitigation under the Clean Water Act section 404(b)(1) Guidelines.[61] This MOA articulates "the policy and procedures to be used in the *572 determination of the type and level of mitigation necessary to demonstrate compliance with the Clean Water Act ... Section 404(b)(1) Guidelines."[62] The MOA "must be adhered to when considering mitigation requirements for standard permit applications."[63]
The MOA is the operative document in this appeal. Pursuant to the MOA, the Corps must subject individual permit applications to "a process known as mitigation sequencing" to determine whether the section 404(b)(1) Guidelines have been met.[64] Under the mitigation sequencing program, the Corps initially assesses an application to determine whether the proposed activity "avoids adverse impacts on wetlands to the maximum extent [practicable]."[65] Next, the Corps considers appropriate and practicable[66] requirements that could be placed on the proposed activity to minimize any remaining unavoidable impacts.[67] Finally, the Corps must lessen the effect of unavoidable impacts by requiring the permit applicant to provide appropriate and practicable compensatory mitigation when minimization is not possible.[68]
"The objective of mitigation for unavoidable impacts is to offset environmental losses."[69] Such mitigation should provide, at a minimum, one for one functional replacement, recognizing that the minimum requirement may not be appropriate and practicable in all cases.[70] The MOA does not itself, however, establish "a no net loss policy for the Nation's wetlands."[71]
Mitigation Sequencing
The MOA mitigation sequencing program was triggered in this case because the Corps determined that the impact to wetlands caused by the DelDOT Route 54 project required compensatory mitigation. The relevant provision of the MOA addressing DelDOT's obligation for compensatory mitigation states:
Appropriate and practicable compensatory mitigation is required for unavoidable adverse impacts which remain after *573 all appropriate and practicable minimization has been required. Compensatory actions (e.g., restoration of existing degraded wetlands or creation of manmade wetlands) should be undertaken, when practicable, in areas adjacent or contiguous to the discharge site (on-site compensatory mitigation). If on-site compensatory mitigation is not practicable, off-site compensatory mitigation should be undertaken in the same geographic area if practicable (i.e., in close physical proximity and, to the extent possible, the same watershed). In determining compensatory mitigation, the functional values lost by the resource to be impacted must be considered. Generally, in-kind compensatory mitigation is preferable to out-of-kind.[72]
Under this provision, a hierarchy of preferences is established regarding the type of compensatory action that should be undertaken. The MOA sets forth a preference for on-site compensatory mitigation over off-site, and in-kind compensatory mitigation over out-of-kind.
The MOA provides, as appears from the testimony, the following hierarchical preferences for compensatory mitigation: on-site, in-kind; on-site, out-of-kind; off-site, in-kind; off-site, out-of-kind. In assessing the type of compensatory actions the permit applicant will be required to undertake, the MOA conditions the compensatory action on whether it is "practicable."[73] The MOA specifically states that in determining "practicable" mitigation "[p]racticable is defined at Section 230.3(q) of the Guidelines."[74] "Section 230.3(q) of the Guidelines reads as follows: `The term practicable means available and capable of being done after taking into consideration cost, existing technology, and logistics in light of overall project purposes.'"[75]
The proper focus on the "practicability" of accommodating the Corps' preference for compensatory action by DelDOT with on-site, in-kind compensatory mitigation must logically begin on land already owned by the State or available from a willing seller. If undertaking on-site compensatory mitigation was not practicable from land owned by the State or that could be voluntarily acquired, the MOA permitted DelDOT to offer off-site compensatory mitigation. Therefore, it was not necessary to condemn the Cannons' additional land to accomplish the improvements to Route 54.
DelDOT's Mitigation Proposal
DelDOT's Route 54 project design, constructing an elevated viaduct and a six foot elevated fill berm to access it, crossed wetlands. The fill for the approaches to the viaduct required DelDOT to obtain permits to fill wetlands from the Corps. DelDOT engaged Edward Launay ("Launay"), a professional wetland scientist, to address the issue of wetlands mitigation.
After conducting an assessment of potential wetlands mitigation sites along the Route 54 corridor, Launay selected only one mitigation site, an additional 6.53 acres of the Cannons' land. Initially, Launay *574 did not conduct a formal off-site search "since the environmental agencies prefer on-site mitigation as a first option and the Cannon property provided an ideal site adjacent to the roadway improvements." After a June 3, 1999 meeting with the Cannons, however, DelDOT agreed to have Launay review other potential off-site areas near the project.
Nevertheless, the record reflects that Launay submitted the Cannons' property to the Corps as the only mitigation site, apparently without reviewing other off-site areas. Consequently, the Cannons requested, pursuant to the Freedom of Information Act, that DelDOT identify and provide all "lands held by the State which are earmarked or could be used for mitigation of filling Federal Title 10 Section 404 wetlands." In response to the Cannons' Freedom of Information Act request, DelDOT sought to obtain answers through internal communications.
Those internal communications reflect that, in response to the Cannons' request, DelDOT Real Estate employee, V. Wayne Rizzo ("Rizzo"), was asked to provide a list of all State owned lands in the Route 54 project vicinity, which would also be passed on to Launay to review for mitigation potential. On June 15, 2000, Rizzo determined that no DelDOT owned lands existed in the Route 54 project vicinity. On June 19, 2000, DelDOT asked for the evaluation of other state owned land in the area.
Thereafter, as a result of these internal communications, in response to the Cannons' Freedom of Information Act request, Launay was asked to review eighteen excess Sussex County properties owned by DelDOT for potential use as wetlands mitigation sites.[76] Launay issued a report evaluating DelDOT's properties on September 28, 2000.[77] Launay stated that he thought he was requested to study other DelDOT properties since DelDOT "wanted to make sure that they didn't, in fact, hold other properties that could be suitable and to prepare a document stating so." Launay determined that the eighteen DelDOT properties were inferior to the Cannons' additional property and unacceptable as mitigation sites.
Cannons Oppose Application
After DelDOT submitted its application for a wetlands fill permit to the Corps, a public notice was issued on December 12, 2000. In response to that notification, the Cannons formally protested the use of their property as a wetlands mitigation site by letter to the Corps dated January 3, 2001. The Cannons also requested that the Corps look to other lands owned by the State of Delaware for mitigation purposes.
DelDOT responded to the Cannons' letter by submitting to the Corps Launay's report, which rejected other DelDOT mitigation sites as inferior to the Cannons' property. Not surprisingly, the Corps disregarded the Cannons' protest. The Corps issued a permit to DelDOT to fill wetlands for the proposed improvements to Route 54 upon the condition that DelDOT secure ownership of the Cannons' additional property prior to commencing work.
*575 DelDOT Creates Necessity
DelDOT argues that condemnation of the Cannons' additional property was necessary since the Corps, under the MOA's sequential review, would require wetlands mitigation for the Route 54 project on-site and in-kind, regardless of whether other State owned off-site locations were available for mitigation purposes. This argument is contrary to the MOA's express language. What DelDOT purports to be the Corps' "requirement" for on-site and in-kind compensatory mitigation is in actuality a non-mandatory preference. Moreover, the Corps preference for on-site and in-kind compensatory action yields in a hierarchical order whenever that preferred action is not practicable. The Corps then allows an applicant to offer compensatory action off-site in the same geographic area, if practicable.
To be "practicable," either on-site or off-site actions should be reasonable in terms of cost, existing technology, and logistics in light of overall project purposes, i.e., from land that the applicant already owns or could acquire from a willing seller. By selecting and submitting only the most preferred, on-site and in-kind solution, DelDOT assumed that compensatory mitigation through a voluntary sale or condemnation of the Cannons' additional property was a practicable alternative. DelDOT knew, however, that the Cannons did not intend to voluntarily transfer their additional property by at least June 3, 1999.
Notwithstanding its knowledge of the Cannons' refusal to sell additional land, DelDOT applied for a permit from the Corps by offering the Cannons' property as the only mitigation site for compensatory mitigation. The Corps approved DelDOT's permit by requiring the acquisition of the Cannons' additional property prior to commencement of the project. Thus, DelDOT argues it became "necessary" for DelDOT to condemn the Cannons' property in order to fulfill Special Condition 28 of the DelDOT permit to fill wetlands to improve Route 54. The federal regulations specifically provide, however, that a permit from the Corps "does not authorize any injury to property or invasion of rights or any infringement of Federal, state or local laws or regulations."[78]
By submitting only the Cannons' additional property for wetlands mitigation, DelDOT guaranteed that the Corps would condition its grant of a permit to fill wetlands on DelDOT's acquisition of the Cannons' property. In this appeal, DelDOT has the temerity to argue that it is now "necessary" to condemn the Cannons' additional land for wetlands mitigation so that Route 54 can be improved. In fact, DelDOT suggests that it had the right to submit any private property anywhere in the State for wetlands mitigation and then to condemn that property if its acquisition was a condition for obtaining a permit for construction from the Corps.
DelDOT operated under the assumption that the State had the absolute right to condemn the Cannons' additional property.[79] Thus, DelDOT did not offer the Corps any other State owned property for *576 wetlands mitigation. If any necessity existed for acquiring the Cannons' additional property for mitigation purposes, DelDOT created that necessity by limiting its review to one potential mitigation site that it did not own and that the Cannons did not want to sell.
Cannons Condemnation Unnecessary
Launay testified that the Cannons' additional property was the only mitigation site submitted to the Corps. Launay testified that in negotiations with the Corps on DelDOT's behalf, he operated under the assumption that "ultimately the State somehow would acquire that piece of property." Launay testified that DelDOT offered the Corps the most preferred mitigation site in order to ease and facilitate the negotiation process for a permit to fill wetlands. Therese Fulmer, DelDOT's Manager of Environmental Studies, Planning, and Project Development, also testified that DelDOT operated under the assumption that they had the power of condemnation and attempted to accommodate the Corps' preference for on-site compensatory mitigation without even considering off-site compensatory mitigation options.
Launay testified that at least 100 acres of State owned land existed that could have been reviewed and offered to the Corps, located in the same watershed, within some level of the Corps' mitigation preferences. The Corps' representative testified that if it was convinced that the Cannons' property was not practicable or feasible the Corps would have considered other mitigation sites.[80] Accordingly, DelDOT's Conscious choice to submit only one mitigation site, which it did not even own, to accommodate a non-mandatory preference by the Corps resulted in the Corps' imposition of a condition that does not constitute the statutory necessity which would enable DelDOT to condemn the Cannons' additional property.
Conclusion
The record reflects that condemnation of the Cannons' additional property for wetlands mitigation was neither necessary nor reasonable. Although it was necessary for DelDOT to provide for wetlands mitigation to receive a permit for construction of the improvements to Route 54 from the Corps, it was not necessary to offer the Cannons' additional property to accomplish that purpose. In the absence of establishing a necessity, DelDOT had no statutory authority to condemn the Cannons' additional land.
DelDOT's actions also violated the private property rights that are guaranteed to the Cannons by Article I, Section 8 of the Delaware Constitution. That provision in the Delaware Constitution protects against a taking of the Cannons' private property for public purposes without the consent of the Cannons' elected representatives. The General Assembly conditioned DelDOT's authority to exercise the inherent sovereign powers of eminent domain upon a demonstration of necessity. Since DelDOT's condemnation of the Cannons' additional land was unnecessary, it was not in accordance with the applicable statute enacted by the Cannons' elected representatives. In the absence of procedural safeguards, DelDOT's action also violated the non-delegation doctrine that is based upon the due process rights of private property owners that are guaranteed *577 by the term "law of the land" in Article I, Section 8.
The Superior Court's decision to affirm DelDOT's finding of necessity is not supported by the record and is not the product of a logical deductive process. DelDOT's condemnation of the Cannon's additional land was both legally erroneous and constituted an abuse of the sovereign power of eminent domain. Therefore, we respectfully dissent.
NOTES
[1] In its bench ruling, the Superior Court noted that "as a practical matter, that if DelDOT had even gone and looked at [the other] properties, they would not have ranked as high as the Cannons' property in terms of being suitable for wetlands mitigation." The court commented that it was satisfied, based on the testimony of DelDOT's environmental consultant, that the agency acted "in a very fair, rational and logical manner, and, second, Mr. Cannon had made it pretty clear that he didn't want any of his lands to be used for wetlands, and based on the testimony that I heard, he never changed his mind, and if he did change his mind, he never communicated that to DelDOT."
[2] State ex rel. Sharp v. 0.62033 Acres of Land, 112 A.2d 857, 859 (Del.1955) ("In the absence of fraud, bad faith or abuse of discretion, the determination of the Legislature or of the state agency to whom the power has been delegated will not be disturbed.").
[3] See, e.g., facts set forth in the Majority Opinion at 12, n. 1.
[4] Levitt v. Bouvier, 287 A.2d 671, 673 (Del. 1972) (emphasis added); cf. Hudak v. Procek, 806 A.2d 140 at 144 (Del.Supr.) (stating that, when this Court's "scope of review is narrow and accords considerable deference to the trial judge's factual findings," those findings will not be disturbed, "whether or not we would independently have reached the same conclusions"); Young v. Frase, 702 A.2d 1234, 1235 (Del.1997) (stating, in the context of a trial court's decision regarding a motion for additur or a new trial, that this Court will "not substitute [its] judgment for that of the trial judge, who presided at trial and heard the evidence," unless her "determination is beyond the range of reasonableness or constitutes an abuse of discretion"). Cf. Paramount Communications, Inc. v. QVC Network, Inc., 637 A.2d 34, 45 (Del.1994) ("If a board selected one of several reasonable alternatives, a court should not second-guess that choice even though it might have decided otherwise or subsequent events may have cast doubt on the board's determination. Thus, courts will not substitute their business judgment for that of the directors, but will determine if the directors' decision was, on balance, within a range of reasonableness.").
[5] James W. Ely, Jr., The Guardian of Every Other Right: A Constitutional History of Property Rights 5 (2d ed.1998).
[6] 12 The Papers of James Madison 204-07 (Charles F. Hobson & Robert A. Rutland eds., 1979).
[7] See Joslin Mfg. Co. v. City of Providence, 262 U.S. 668, 678-79, 43 S.Ct. 684, 67 L.Ed. 1167 (1923).
[8] Atlantis I Condo. Ass'n v. Bryson, 403 A.2d 711, 713 (Del.1979).
[9] Id. at 713, 717.
[10] Id. at 713.
[11] Id. at 717.
[12] Id.
[13] See State ex rel. Sharp v. 0.6878 Acres of Land, 105 A.2d 205, 206 (Del.Super.Ct.1954).
[14] James W. Ely, Jr., The Guardian of Every Other Right: A Constitutional History of Property Rights (2d ed.1998).
[15] See id. at 26 (quoting Arthur Lee, An Appeal to the Justice and Interests of the People of Great Britain, in the Present Dispute with America 14 (New York, 1775)).
[16] Id. at 13.
[17] Id.
[18] William Penn, The Excellent Priviledge of Liberty and Property Being the Birth-Right of the Free-Born Subjects of England (Philadelphia, William Bradford 1687).
[19] Ely, supra, at 17.
[20] Ely, supra, at 17.
[21] Ely, supra, at 17.
[22] John Trenchard, Cato's Letters, no. 68, Mar. 3, 1721, in The English Libertarian Heritage 177-78 (David L. Jacobson, ed.1965).
[23] 1 William Blackstone, Commentaries *135.
[24] Ely, supra, at 17.
[25] Ely, supra, at 29.
[26] See generally Randy J. Holland, State Constitutions: Purpose and Function, 69 Temp. L.Rev. 989, 989-90 (1996).
[27] See Willi P. Adams, The First American Constitutions: Republican Ideology and the Making of the State Constitutions in the Revolutionary Era 4 (1980); Gordon S. Wood, Foreword: State Constitution-Making in the American Revolution, 24 Rutgers L.J. 911, 913-14 (1993); Note, The Theory of State Constitutions, 196 Utah L.Rev. 542 (1966).
[28] Adams, supra, at 4.
[29] Jefferson Powell, Languages of Power, A Source Book of Early American Constitutional History 22 (1991).
[30] Daniel A. Farber & Suzanna Sherry, A History of the American Constitution 6 (1990).
[31] Seminole Tribe v. Florida, 517 U.S. 44, 168, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996) (Souter, J., dissenting) (citing Calder v. Bull, 3 U.S. (3 Dall.) 386, 398-99, 1 L.Ed. 648 (1798) (Iredell, J., dissenting in part)).
[32] Proceedings of the Assembly of the Lower Counties on Delaware 1770-1776, of the Constitutional Convention of 1776, and of the House of Assembly of the Delaware State 1776-1781, at 25 (Claudia L. Bushman et al. eds., 1986).
[33] See Randy J. Holland, Introduction to The Delaware Bar in the Twentieth Century xix, xxv (Helen L. Winslow et al. eds., 1994).
[34] Declaration of Rights and Fundamental Rules of the Delaware State of 1776, § 1.
[35] Del. Const. of 1776, art. XXV; see also Jonathan M. Hoffman, By the Course of the Law: The Origins of the Open Courts Clause of State Constitutions, 74 Or. L.Rev. 1279, 1308 (1995).
[36] The Declaration of Rights was adopted by the convention on September 11, 1776. Shortly thereafter, the first constitution of the State of Delaware was enacted on September 20, 1776. See generally Wood, supra, at 921 (noting that the Delaware Constitution, as with constitutions from four other states, was prefaced with a bill of rights, "combining in a jarring but exciting manner ringing declarations of universal principles with motley collections of common law procedures").
[37] Declaration of Rights and Fundamental Rules of the Delaware State of 1776, § 10.
[38] See id. § 12.
[39] 1 The Records of the Federal Convention of 1787, at 534 (Max Farrand ed., 1937).
[40] Id. at 302.
[41] James W. Ely, Jr., The Guardian of Every Other Right: A Constitutional History of Property Rights 43 (2d ed.1998).
[42] Discourses on Davila, in 6 The Works of John Adams 280 (Charles Francis Adams ed., Boston, Little Brown 1851).
[43] Ely, supra, at 54.
[44] Ely, supra, at 54.
[45] Ely, supra, at 54.
[46] Randy J. Holland, Introduction to The Delaware Bar in the Twentieth Century xix, xxv, xxxiii (Helen L. Winslow et al. eds., 1994).
[47] Del.Code Ann. vol. 1 (1975).
[48] Calder v. Bull, 3 U.S. (3 Dall.) 386, 400 (1798) (Iredell, J., dissenting in part).
[49] Id.
[50] See Del.Code Ann. tit. 17, § 132(c)(4) (1995); see also Wilmington Parking Auth. v. Land with Improvements, 521 A.2d 227, 232-33 (Del.1986).
[51] See 33 U.S.C. § 1344(a) (2001); Randall S. Guttery et al., Federal Wetlands Regulation: Restrictions on the Nationwide Permit Program and the Implications for Residential Property Owners, 37 Am. Bus. L.J. 299, 301-02 (2000).
[52] See 33 U.S.C. § 1344.
[53] See 33 U.S.C. § 1344(b)(1); Guttery et al., supra, at 302.
[54] Guidelines for Specification of Disposal Sites for Dredged or Fill Material, 45 Fed. Reg. 85,336 (Dec. 24, 1980) (codified at 40 C.F.R. pt. 230).
[55] 33 C.F.R. § 320.4(a)(1) (2001).
[56] See id. § 320.4(r)(1).
[57] See id. § 320.4(r) n.1.
[58] See id.
[59] 33 C.F.R. § 323.1 (2001). Adherence to such general policies and procedures is required in addition to those special policies, practices and procedures to be followed by the Corps in connection with permits to authorize section 404 discharges. See id.
[60] Richard Hassel ("Hassel"), Assistant Chief of the Corps' Regulatory Branch, testified that the Corps Regulatory Program does not require land ownership in its permit decision. Hassel stated that if the proposed activity was not contrary to the public interest and complied with the necessary federal regulations, the permit would be issued conditioned upon receiving the necessary legal instruments to perform the work on the property.
[61] Memorandum of Agreement Between the Environmental Protection Agency and the Department of the Army Concerning the Determination of Mitigation Under the Clean Water Act Section 404(b)(1) Guidelines, 55 Fed.Reg. 9,210, at I (Mar. 12, 1990) [hereinafter 1990 Memorandum of Agreement]. The MOA does not change substantive regulatory requirements, maintaining the need for compliance with the EPA's 404(b)(1) Guidelines. 1990 Memorandum of Agreement, at I.
[62] 1990 Memorandum of Agreement, supra, at I.
[63] 1990 Memorandum of Agreement, supra, at I. The MOA focuses on standard permits which are "those individual permits which have been processed through application of the Corps public interest review procedures (33 C.F.R. 325) and EPA's Section 404(b)(1) Guidelines." 1990 Memorandum of Agreement, supra, at I. An individual permit, such as DelDOT's permit, means a "Department of the Army authorization that is issued following a case-by-case evaluation of a specific project involving the proposed discharge(s) in accordance with the procedures of this part and 33 C.F.R. part 325 and a determination that the proposed discharge is in the public interest pursuant to 33 CFR part 320." 33 C.F.R. § 323.2(g) (2001).
[64] Guttery et al., supra, at 314; see also 1990 Memorandum of Agreement, supra, at II.C.; Appellants' App. at 248.
[65] Guttery et al., supra, at 314; 1990 Memorandum of Agreement, supra, at II.C.
[66] The MOA specifically states that "[i]n determining `appropriate and practicable' measures to offset unavoidable impacts, such measures should be appropriate to the scope and degree of those impacts and practicable in terms of cost, existing technology, and logistics in light of overall project purposes." 1990 Memorandum of Agreement, supra, at II.C.
[67] Guttery et al., supra, at 314-15; 1990 Memorandum of Agreement, supra, at II.C.
[68] Guttery et al., supra, at 314-15; 1990 Memorandum of Agreement, supra, at II.C.
[69] 1990 Memorandum of Agreement, supra, at III.B.
[70] 1990 Memorandum of Agreement, supra, at III.B.
[71] 1990 Memorandum of Agreement, supra.
[72] Memorandum of Agreement Between the Environmental Protection Agency and the Department of the Army Concerning the Determination of Mitigation Under the Clean Water Act Section 404(b)(1) Guidelines, 55 Fed.Reg. 9,210, at II.C.3 (Mar. 12, 1990) (emphasis added) [hereinafter 1990 Memorandum of Agreement].
[73] 1990 Memorandum of Agreement, supra, at II.C.3.
[74] 1990 Memorandum of Agreement, supra, at II.B.
[75] 1990 Memorandum of Agreement, supra, at II.B.n.3 (alteration in original) (quoting 40 C.F.R. § 230.3(q)).
[76] Although Rizzo's June 15, 2000 response indicated that DelDOT did not own any lands in the vicinity, Launay's report clearly states that DelDOT provided and requested him to evaluate a list of Sussex County properties owned by DelDOT. No further reference is made within the DelDOT internal communications as to where such a list was generated.
[77] Appellants' App. at 190-217 (Evaluation of Wetland Mitigation Potential for Sussex County Properties Owned by the Delaware Department of Transportation).
[78] 33 C.F.R. § 320.4(g)(6)(2001).
[79] On February 9, 2001, DelDOT stated in a letter to the Corps that for DelDOT "to obtain possession on the property acquisitions that [it] could not negotiate to a settlement, [the Cannons' additional property,] it [would] be necessary for [DelDOT] to demonstrate to the court that [the] project [would] in fact be permitted by the Corps." Accordingly, DelDOT requested the Corps to issue the previously accepted permit, "with appropriate conditions," by mid-March. That date was requested because DelDOT believed "that [it] would allow [DelDOT] sufficient time to complete the property acquisitions."
[80] Hassel testified that if the State could not condemn the Cannons' additional property the Cannons' mitigation site would not be feasible for compensatory mitigation. Hassel stated the Corps would then sequentially review other potential mitigation sites under the MOA's hierarchy to find a practicable and feasible alternative.
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11TH COURT OF APPEALS
EASTLAND, TEXAS
JUDGMENT
Michael Manuel Perez, * From the 104th District
Court of Taylor County,
Trial Court No. 18416B.
Vs. No. 11-13-00024-CR * March 14, 2013
State of Texas, * Per Curiam Memorandum Opinion
(Panel consists of: Wright, C.J.,
McCall, J., and Willson, J.)
This court has inspected the record in this cause and concludes that the appeal should be
dismissed. Therefore, in accordance with this court=s opinion, the appeal is dismissed.
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Order filed July 28, 2016
In The
Eleventh Court of Appeals
___________
No. 11-15-00209-CR
___________
JOE ANGEL HERNANDEZ, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 244th District Court
Ector County, Texas
Trial Court Cause No. B-44,526
ORDER
Joe Angel Hernandez, Appellant, pleaded not guilty to the offense of felony
driving while intoxicated. The jury convicted him of the offense. Appellant pleaded
true to the State’s enhancement allegation, and the trial court assessed punishment
at confinement for fifty years. We abate the appeal.
Appellant’s court-appointed counsel has filed a motion to withdraw. The
motion is supported by a brief in which counsel asserts that he has professionally
and conscientiously examined the record and applicable law and that he has
concluded that the appeal is frivolous. Counsel has provided Appellant with a copy
of the brief, the motion to withdraw, and the appellate record and has advised
Appellant of his right to review the record and file a response to counsel’s brief. It
appears that court-appointed counsel has attempted to comply with the requirements
of Anders v. California, 386 U.S. 738 (1967); In re Schulman, 252 S.W.3d 403 (Tex.
Crim. App. 2008); Stafford v. State, 813 S.W.2d 503 (Tex. Crim. App. 1991); High v.
State, 573 S.W.2d 807 (Tex. Crim. App. [Panel Op.] 1978); Currie v. State, 516
S.W.2d 684 (Tex. Crim. App. 1974); Gainous v. State, 436 S.W.2d 137 (Tex. Crim.
App. 1969); and Eaden v. State, 161 S.W.3d 173 (Tex. App.—Eastland 2005, no
pet.).
Following the procedures outlined in Anders and Schulman, we have
independently reviewed the record, and we disagree with court-appointed counsel’s
conclusion that the appeal is frivolous and without merit. We are of the opinion that
there are arguable grounds for an appeal. In this regard, we note that the offense for
which Appellant was convicted was a third-degree felony. See TEX. PENAL CODE
ANN. § 49.09(b)(2) (West Supp. 2015). Appellant pleaded true to the State’s
enhancement allegation and was punished as a habitual offender. See id. § 12.42(d).
However, neither the State’s enhancement allegation nor the judgments that
correlate to the State’s allegation indicate that “the second previous felony
conviction is for an offense that occurred subsequent to the first previous conviction
having become final” as required by Section 12.42(d). The judgments indicate that
Appellant was convicted in 2000 for a 1999 robbery and that he was convicted in
2003 for a 1998 murder.
Accordingly, we grant counsel’s motion to withdraw, abate this proceeding,
and remand the case to the trial court for the appointment of new appellate counsel.
See Bledsoe v. State, 178 S.W.3d 824, 826–27 (Tex. Crim. App. 2005). We direct
the trial court to appoint new counsel to represent Appellant on appeal. The trial
2
court shall furnish the name, address, telephone number, and state bar number of
new counsel in its order appointing new counsel. The order shall be included in a
supplemental clerk’s record, which shall be filed with the clerk of this court on or
before August 8, 2016. Appellant’s brief is due to be filed in this court thirty days
from the date of the trial court’s appointment of new counsel. All other appellate
deadlines shall be in accordance with the Texas Rules of Appellate Procedure.
The motion to withdraw is granted; the appeal is abated; and the cause is
remanded to the trial court in accordance with this order.
PER CURIAM
July 28, 2016
Do not publish. See TEX. R. APP. P. 47.2(b).
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.
3
| {
"pile_set_name": "FreeLaw"
} |
9 S.W.3d 39 (1999)
STATE of Missouri, Respondent,
v.
Michael G. ALBANESE, Appellant.
No. WD 55524.
Missouri Court of Appeals, Western District.
December 21, 1999.
Rehearing Denied February 1, 2000.
*42 Philip M. Koppe, Asst. Atty. Gen., Kansas City, for respondent.
John P. O'Connor, Kansas City, for appellant.
PER CURIAM.
Michael G. Albanese appeals the judgment of his jury conviction in the Circuit Court of Platte County for felony murder in the second degree, § 565.021.1(2),[1] for which he was sentenced to life imprisonment.
The appellant asserts three points in his appeal. In Point I, he claims that the trial court erred in overruling his motion for a new trial because his constitutional right to due process was violated by the State: (1) intentionally suppressing favorable and material information which he requested pursuant to Rule 25.03(C)[2] and was required to be disclosed under the rule and Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963); and (2) knowingly obtaining a conviction based on perjured testimony. In Point II, the appellant claims that the trial court erred in overruling his motions for a mistrial because the State violated, in three instances, its order in limine. In Point III, the appellant claims the trial court plainly erred in not declaring a mistrial, sua sponte, because the assistant prosecutor made several improper references in her closing argument to her belief in the appellant's guilt.
We affirm.
Factual Background
In 1996, Ferrell Travis Riley (Mr. Riley) was convicted of racketeering; sentenced to nine years incarceration in a federal penitentiary; and ordered to forfeit $28 million in assets he and his girlfriend had fraudulently acquired, including a large amount of personal property acquired through a criminal enterprise, including items such as rugs, sculptures, and statues. Despite the forfeiture order, the federal government was unable to obtain possession of the items. As a result, the Federal Bureau of Investigation (FBI) began
*43 surveillance on Mr. Riley's youngest son, Joseph Riley (Riley), in an attempt to locate the items. The FBI believed that Mr. Riley was continuing his fraudulent activities through his son, who was president of a Kansas City-area company that Mr. Riley had formed.
During the FBI investigation of Riley, agents discovered that Joseph Bartels (Bartels), a paid FBI informant, lived next door to Riley. The FBI asked Bartels to get to know Riley and look for evidence of the missing items. Bartels subsequently befriended Riley, telling him that he worked for a Chicago drug dealer. As a result of his friendship with Riley, Bartels met Nicholas LanFranca (LanFranca). At times, Riley discussed with Bartels "ripping off" and "whacking" drug dealers. Riley also talked about killing drug dealers in the presence of LanFranca.
In January 1997, Riley told Bartels he would be willing to sell him two items that were ordered forfeited by his father, a player piano and an Indian bronze statue. The FBI encouraged Bartels to pursue the purchase of the items. Several days after their conversation about the sale of the piano and statue, Riley called Bartels and asked if he could buy some cocaine through the Chicago drug dealer. Riley said he wanted the cocaine for a friend. After consulting with the FBI, Bartels offered to sell the drugs to Riley. Riley met with the appellant on January 23, 1997, the same day he said he had someone ready to buy the drugs from Bartels.
On January 26, 1997, Bartels confirmed the buy with Riley, who said his friend wanted to buy all the cocaine that was available. Bartels told Riley he was going out of town and would contact Riley when he arrived back in the Kansas City area with the drugs. During the days Bartels was supposed to be in Chicago, the FBI rented two adjoining hotel rooms in a Kansas City Motel 6 next to Interstate 29. FBI agents modified the room where the drug deal was to take place so they could record the transaction. The FBI planned to have agents stationed both inside and outside the motel and, immediately after the exchange, to arrest Riley and whomever accompanied him.
On January 30, 1997, the FBI began surveillance on Riley, at which time Bartels called Riley to tell him the sale would take place that day. Soon thereafter, Riley called the appellant, then drove to the appellant's home and picked him up. Riley and the appellant joined a woman and LanFranca for lunch at Mr. Riley's restaurant, where Riley received a page from Bartels. Riley called Bartels, who told him to come alone to the Motel 6 to complete the drug deal. Shortly thereafter, Riley and the appellant drove around, were paged again, then returned to call Bartels at the restaurant, where a conversation about acquiring a gun took place with LanFranca.
Riley and the appellant left the restaurant and drove north toward the Motel 6. On the way, they stopped at a pay phone to call Bartels. Both Riley and LanFranca listened to the phone conversation. Riley then dropped off the appellant nearby and went to meet Bartels at the Motel 6. At the motel, Bartels showed Riley the drugs, and the two discussed the sale. They quibbled about the price, and Riley told Bartels that he would get back with him soon and left.
After Riley left the Motel 6 and picked up the appellant, the two made several stops and telephone calls. They went to LanFranca's residence, talked there for a while, then Riley, the appellant, and LanFranca left and drove toward the Motel 6. They stopped at another restaurant near the motel, where the appellant received a page, made a call, and told the other two that the person he called was "buggin' him for his money" and that "[t]he deal wasn't even done yet." Shortly thereafter, Riley, the appellant, and LanFranca left the restaurant and traveled to the Motel 6.
After reaching the motel, the appellant handed Riley a gun. Riley got out of the *44 car, and the appellant got behind the wheel while LanFranca moved to the front passenger seat. The appellant drove the car next to the steps that led to Bartels's motel room. Riley entered Bartels's room with the gun concealed and with gloves on his hands. After Bartels closed the door and a few words were spoken, Riley pulled out his gun and began shooting Bartels. Riley's gloves allegedly made firing the revolver difficult, giving FBI agents an opportunity to intervene. An agent came through the door adjoining the two motel rooms and shot Riley. Riley died as a result of the agent's gunshot wounds. FBI agents then ordered law enforcement officers at the scene to arrest the appellant and LanFranca, who were still waiting in the car, with the motor running outside the motel stairs. Law enforcement officers surrounded the car and arrested the two suspects.
Procedural History
The appellant was indicted on February 27, 1997, and later charged by information in the Circuit Court of Platte County, Missouri, with one count of murder in the second degree. He was charged under the felony-murder provision of § 565.021.1 because Riley was alleged to have been killed as a result of the appellant's attempt to possess a controlled substance under § 195.202. LanFranca was not charged.
Subsequent to LanFranca's arrest as a result of events surrounding Riley's death, the federal government sought to revoke LanFranca's federal probation. At his probation revocation hearing held on March 3, 1997, LanFranca testified for several hours about what occurred on the day of Riley's shooting. He denied any wrongdoing, but his probation was nonetheless revoked. With respect to his involvement in the drug deal gone bad, LanFranca entered into an agreement with the federal government that allowed him to plead guilty to conspiracy to possess five kilograms of cocaine for a reduced sentence, in exchange for his testimony against the appellant in this case. At the time of the appellant's trial, LanFranca testified that he did not expect to be charged in state court for the events surrounding Riley's death.
Prior to the appellant's trial, his attorney made a written request for discovery pursuant to Rule 25.03(C). In response to this request, the State made certain disclosures that did not include a transcript of Bartels's testimony at LanFranca's revocation hearing. On December 1, 1997, the appellant filed a motion in limine to prevent the State, inter alia, from mentioning at trial "any statements attributed to Michael Albanese made to Joe Riley (deceased) and reported to the state's witnesses in this case." The trial court sustained the appellant's motion with respect to this issue.
The appellant's jury trial commenced on December 1, 1997. After being instructed and deliberating on a charge of felony murder in the second degree, the jury, on December 4, 1997, found the appellant guilty, as charged. The appellant filed a motion for judgment of acquittal or, in the alternative, for a new trial, which was denied. He was sentenced by the trial court on January 29, 1998, to life imprisonment.
The record reflects that the appellant appealed his conviction to this court on February 9, 1998. On September 16, 1998, the appellant filed a motion in this court to remand the case to the Circuit Court of Platte County for an evidentiary hearing on the State's alleged intentional suppression of material and exculpatory information, specifically, Bartels's testimony given at LanFranca's revocation hearing. The motion was sustained. A hearing was then held in the circuit court on December 9, 1998. On December 23, 1998, the court found that the State did not intentionally suppress any evidence it was required to disclose to the appellant under Rule 25.03(C) and/or Brady v. Maryland.
*45 I.
In Point I, the appellant claims that the trial court erred in overruling his motion for a new trial because his constitutional right to due process was violated by the State: (1) intentionally suppressing favorable and material information which he requested pursuant to Rule 25.03(C) and was required to be disclosed under the rule and Brady v. Maryland; and (2) knowingly obtaining a conviction based on perjured testimony. We disagree.
Standard of Review
Our review of a trial court's denial of a motion for a new trial is for an abuse of discretion. State v. Jackson, 969 S.W.2d 773, 775 (Mo.App.1998). "`Judicial discretion is abused when a trial court's ruling is clearly against the logic of the circumstances then before the court and is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration....'" Id. (quoting King v. Copp Trucking, Inc., 853 S.W.2d 304, 307 (Mo.App.1993) (citing State ex rel. Webster v. Lehndorff Geneva, Inc., 744 S.W.2d 801, 804 (Mo. banc 1988))). "Rulings made within the trial court's discretion are presumed correct and the appellant has the burden of showing that the trial court abused its discretion." Id.
Discussion
A. Brady Violation
In claiming that he is entitled to a new trial based on a discovery violation by the State, the appellant contends that, pursuant to Rule 25.03(C)[3] and Brady, the State was required to furnish to the defense, as part of its pretrial discovery under the rule, a transcript of Bartels's testimony during the federal probation revocation hearing of LanFranca (the revocation hearing). Bartels testified, in pertinent part, at the revocation hearing that Riley, in the presence of LanFranca, had discussed with Bartels "ripping off a drug dealer" and had asked if he "knew of anybody that they could do." LanFranca testified at the appellant's trial that he did not recall being present during any such discussions between Riley and Bartels, but admitted that he had heard Riley make such statements. He also admitted that he knew of Riley's intention to steal from Bartels at the Motel 6 and was involved in the plan. This testimony conflicted with Bartels's testimony at trial that LanFranca was not present during any such discussions. Bartels, when confronted at trial with the FBI report, which stated that LanFranca was present, testified that he had lied to the FBI. The appellant argues that Bartels's testimony at the revocation hearing was favorable and material to his defense on the felony-murder charge against him because it could have been used to: (1) impeach both Bartels and LanFranca, the principal witnesses on which the State relied to convict; and (2) corroborate the defense's theory that LanFranca, not the appellant, was aware of Riley's plan to steal Bartels's drugs and murder him, such that the outcome of his case would have been different. We disagree.
*46 The State contends that there was no discovery violation, as alleged by the appellant, warranting a new trial because it had no duty under the rule or Brady to furnish to the defense the transcript of Bartels's revocation hearing testimony in that: (1) for discovery purposes, it was not in its possession or control, and it was not aware of the transcript until trial; and (2) it was a matter of public record which could have been readily obtained by the defense using due diligence. The State further contends that even assuming, arguendo, that these issues were resolved in the appellant's favor, it still had no duty under Brady to furnish the transcript to the defense because it was not material to his case. For the reasons discussed, infra, we agree with the State's assertion that its failure to disclose to the defense the transcript of Bartels's testimony at the revocation hearing was not material to the appellant's case requiring a new trial.
"The Brady rule is based on the requirement of due process." United States v. Bagley, 473 U.S. 667, 675, 105 S.Ct. 3375, 3379, 87 L.Ed.2d 481, 489 (1985). It "requires disclosure only of evidence that is both favorable to the accused and `material either to guilt or to punishment.' " Id. at 674, 105 S.Ct. 3375 (citations omitted); see also State v. Shafer, 969 S.W.2d 719, 740-41 (Mo.banc), cert. denied, ___ U.S. ___, 119 S.Ct. 419, 142 L.Ed.2d 340 (1998). "Impeachment evidence,... as well as exculpatory evidence, falls within the Brady rule." Bagley, 473 U.S. at 676, 105 S.Ct. 3375. For purposes of the rule, "evidence is material only if there is a reasonable probability that, had the evidence been disclosed to the defense, the result of the proceeding would have been different. A `reasonable probability' is a probability sufficient to undermine confidence in the outcome." Id. at 682, 105 S.Ct. 3375; see also Shafer, 969 S.W.2d at 741; State v. Weaver, 912 S.W.2d 499, 514-15 (Mo. banc 1995). Under the rule, the "suppression of evidence amounts to a constitutional violation only if it deprives the defendant of a fair trial." Bagley, 473 U.S. at 678, 105 S.Ct. 3375 (citing United States v. Agurs, 427 U.S. 97, 112, 96 S.Ct. 2392, 2401, 49 L.Ed.2d 342, 354-55 (1976)). "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 he received a fair trial, understood as a trial resulting in a verdict worthy of confidence." Kyles v. Whitley, 514 U.S. 419, 434, 115 S.Ct. 1555, 1566, 131 L.Ed.2d 490, 506 (1995). Thus, a constitutional error occurs under the Brady rule, requiring reversal of the defendant's conviction and a new trial, "if the evidence is material in the sense that its suppression undermines confidence in the outcome of the trial." Bagley, 473 U.S. at 677-78, 105 S.Ct. 3375.
In the case at bar, the appellant was convicted of second degree felony murder under § 565.021.1(2), based on an information and a verdict-directing instruction patterned after MAI-CR 3d 313.06 [Revised Oct. 1, 1998],[4] which hypothesized that he attempted to commit *47 the felony of possession of a controlled substance, cocaine, under § 195.202, and that Riley was killed as a result of the appellant's attempted perpetration of this felony. Section 565.021.1 provides:
1. A person commits the crime of murder in the second degree if he:
. . .
(2) Commits or attempts to commit any felony, and, in the perpetration or the attempted perpetration of such felony or in the flight from the perpetration or attempted perpetration of such felony, another person is killed as a result of the perpetration or attempted perpetration of such felony or immediate flight from the perpetration of such felony or attempted perpetration of such felony.
Thus, under this statute and the verdict director given, in order to obtain a conviction for second degree felony murder against the appellant, the State was required to show that the victim, Riley, was killed during an attempt by the appellant to possess a controlled substance.
There was no dispute at trial as to whether Riley died during the attempted perpetration of a felony drug deal; the only issue was whether the appellant was acting in concert with Riley in the planned exchange of the drugs. There was substantial evidence to support the jury's finding that the appellant was involved in Riley's plan to acquire illicit drugs. In this respect, the appellant spoke with Riley before Riley confirmed that he wanted to purchase the drugs; he accompanied Riley around town and twice to the Motel 6 on July 30, 1997; he was involved in several communications about the drug deal, including Riley's call to the motel from a pay phone; and he was apparently serving as a lookout outside the motel at the time of the fatal incident. Thus, given the State's burden of proof at trial and the issues in dispute, the relevant inquiry for the jury as to the appellant's guilt or innocence was whether he knew that Riley and Bartels were engaged in a drug deal at the time of Riley's death and he aided or encouraged Riley in the planned exchange of the drugs. It was not required to show that both Bartels and LanFranca had met with Riley to discuss his plans to rip off drug dealers. Consequently, whether LanFranca was present during any discussions between Bartels and Riley concerning such plans was irrelevant to the State's required proof as to the appellant's guilt or innocence of felony second degree murder.
The appellant contends that Bartels's testimony at the revocation hearing was material because it "struck at the heart of [his] defense," in that it was contrary to the State's theory of the case, that the appellant was aware of Riley's intent to kill Bartels and steal the cocaine, but LanFranca was not. Even accepting that this was the State's "theory" of the case, given the proof requirements to convict the appellant as charged, the fact that LanFranca knew of Riley's plans would not constitute any recognized legal defense to the charges against the appellant. Its only bearing on the appellant's guilt or innocence would have been to discredit the trial testimony of Bartels and LanFranca such that the jury would not believe their testimony as to material facts that did bear on the appellant's guilt or innocence. As such, the fact that Bartels testified one way at the revocation hearing and another way at trial as to LanFranca's presence during discussions between Bartels and Riley concerning plans to rip off drug dealers was not directly relevant to a determination of the appellant's guilt or innocence and would have served only to impeach Bartels's and LanFranca's testimony at trial.
As to the necessity of the transcript of Bartels's revocation hearing testimony at trial to allow the appellant to impeach Bartels and LanFranca with respect to their discussions with Riley concerning his plans to rip off drug dealers, the appellant contends that it was essential to the outcome of his case such that its alleged suppression by the State served to deny him his constitutional rights to due *48 process and a fair trial, requiring reversal of his conviction and a new trial. Hence, the question we must answer in determining whether there was a Brady violation entitling the appellant to a new trial, as alleged by him, is whether there was a reasonable probability that the outcome of his case would have been different if the State had not allegedly suppressed the transcript so as to prevent him from using it to impeach Bartels's and LanFranca's trial testimony concerning their discussions with Riley to rip off drug dealers and then kill them. In other words, was the alleged suppression of the transcript by the State material to the appellant's case, in the context of the Brady rule, in that had it been disclosed to the defense by the State, it could have been used by the appellant at trial to impeach Bartels and LanFranca such that there would have been a different outcome in his case? Bagley, 473 U.S. at 677-78, 105 S.Ct. 3375.
The record reflects that both Bartels and LanFranca testified at trial that they were aware of Riley's plans to rip off drug dealers. Hence, the only true controversy as to the impeachment value of the transcript centers on the trial testimony of Bartels and LanFranca as to whether LanFranca ever was present when Bartels and Riley discussed Riley's plans. Although, as noted, supra, impeachment evidence can be material for purposes of the Brady rule, for the reasons discussed, infra, we cannot say, under the totality of the circumstances presented, that it was material here.
As to whether the transcript was material with respect to discrediting Bartels's trial testimony, the record reflects otherwise. Even without the transcript, the record reflects that Bartels's credibility was squarely in issue at trial. In this respect, it was disclosed to the jury that Bartels had several misdemeanor and felony convictions and had agreed to be an informant for the federal government so that other charges against him would not be pursued. In addition, Bartels testified that the FBI had paid him close to $60,000 for his services as an informant. Moreover, it is undisputed that Bartels was, in fact, impeached by the appellant at trial on the issue of whether LanFranca was present during Bartels's discussions with Riley in that, when confronted on cross-examination with the FBI report of its investigation, which indicated that he had told the FBI that LanFranca was present during such discussions, he admitted that he had lied to the FBI, but was telling the truth at trial. At best, for the appellant, impeachment of Bartels with the transcript would have been cumulative on the issue of his credibility and not material on any issue as to guilt or innocence. See State v. Rousan, 961 S.W.2d 831, 844 (Mo.banc), cert. denied, ___ U.S. ___, 118 S.Ct. 2387, 141 L.Ed.2d 753 (1998). In light of the foregoing and the fact that the testimony in question did not directly bear on any issue of the required proof to convict or a recognized defense to the charges against the appellant, we fail to see how the State's failure to provide the transcript to him, so as to impeach Bartels, would undermine confidence in the jury's verdict, violating due process and requiring a new trial. Bagley, 473 U.S. at 677-78, 105 S.Ct. 3375.
With respect to attacking LanFranca's credibility at trial, we also fail to see how the transcript was material to the outcome of the appellant's case. The record reflects that even without the transcript, his credibility was under attack on several fronts. At trial, he testified that he was currently incarcerated as a result of the events of January 30, 1997, and that he had worked out a deal with the federal government in which he would receive a lesser sentence on other pending charges if he testified against the appellant in this case. He also candidly admitted, while testifying, that he had repeatedly lied in various legal proceedings in the past for his own benefit. In this respect, he testified *49 under cross-examination by the defense:
Q. You will lie under oath?
A. I have lied under oath. That's what I'm saying.
Q. And you will lie under oath to benefit yourself?
A. Again, I've lied under oath to benefit myself.
Q. To keep from going to jail?
A. Yes.
Q. You were willing to lie under the oath of God and the oath of a federal court to stay out of trouble, to keep from going to jail?
A. Yes.
Q. Let's see who you lied to. You lied to a Federal District Judge?
A. Yes.
Q. You lied to the FBI?
A. Yes.
Q. You've lied to a federal probation officer?
A. Yes.
Q. You've lied to your own father about what happened?
A. Yes.
Q. You've lied to Mrs. Albanese?
A. Yes.
Q. You've lied to Travis Riley, the victim's dad?
A. Yes.
Q. You've lied to the IRS?
A. Yes.
Q. You've lied to the Oklahoma authorities?
A. Yes.
Q. Did I miss anybody?
A. How far back yeah, I mean.
Q. You've lied to a lot of people. You don't have a problem lying do you?
A. Yeah, I've lied to people, yes.
Defense counsel continued to call into question LanFranca's credibility by reading questions and answers from his deposition and asking him whether the answers given were truthful. He admitted that he had lied in over twenty instances.
Without question, by his own admissions, the jury was made acutely aware of the fact that LanFranca was a liar whose testimony would have to be closely scrutinized. As such, just as in the case of Bartels, impeachment of LanFranca with the transcript would have been, at best, cumulative on the issue of his credibility. Rousan, 961 S.W.2d at 844. In light of this fact, the trial court, in denying the appellant's motion for a new trial, could have reasonably found that the absence at trial of the transcript of Bartels's revocation hearing testimony for use by the appellant to impeach LanFranca on the issue of whether he was present when Bartels and Riley discussed Riley's plans to rip off drug dealers did not undermine confidence in the jury's verdict of guilty, such that a due process violation occurred, requiring a new trial. Id.
B. Conviction Based on Perjured Testimony
The appellant also claims in Point I that he was entitled to a new trial because the State knowingly obtained his conviction using perjured testimony. Specifically, he contends that the undisclosed transcript of Bartels's revocation-hearing testimony demonstrates that the prosecution's case included perjured testimony concerning whether LanFranca was present when Bartels and Riley were discussing ripping off drug dealers. We disagree.
As a general rule "a conviction which results from the deliberate or conscious use by a prosecutor of perjured testimony violates due process and must be vacated." State v. Mims, 674 S.W.2d 536, 538 (Mo. banc 1984) (citing, inter alia, United States v. Agurs, 427 U.S. 97, 103, 96 S.Ct. 2392, 2397, 49 L.Ed.2d 342 (1976)); see also State v. Cummings, 838 S.W.2d 4, 7 (Mo.App.1992); Shavers v. State, 758 S.W.2d 132, 133 (Mo.App.1988); Smith v. *50 State, 714 S.W.2d 778, 781 (Mo.App.1986). In Agurs, the United States Supreme Court recognized that the Brady rule applied to three situations of nondisclosure, including the situation where the prosecution obtains a conviction based on perjured testimony when it knows or should have known of the perjury at the time of trial based on evidence in its possession, which had not been disclosed to the defendant. Agurs, 427 U.S. at 103, 96 S.Ct. 2392. The due process violation is based, inter alia, on the fact that the prosecution, by not disclosing evidence, which is contrary to the evidence relied upon by it for conviction, creates an appearance that it was attempting to "corrupt[ ] the truth-seeking function of the trial process," id. at 104, 96 S.Ct. 2392, which would undermine confidence in the outcome of the trial, rendering the undisclosed evidence material to the outcome of the case. In this respect, the court in Bagley, decided after Agurs, held that the materiality standard of the Brady rule, discussed, supra, applied to the "perjury situation" of nondisclosure discussed in Agurs. Bagley, 473 U.S. at 682, 105 S.Ct. 3375. See State v. Aaron, 985 S.W.2d 434, 436 (Mo.App.1999); State v. Carter, 939 S.W.2d 556, 557 (Mo.App.1997). It is this situation which the appellant contends existed here.
To prevail on his claim that he was denied due process because he was convicted through the use of perjured testimony, the appellant had the burden to prove that: "(1) [Bartels's and LanFranca's] testimony was false; (2) the state knew it was false; and (3)[his] conviction was obtained as a result of the perjured testimony." Cummings, 838 S.W.2d at 7. Under this required proof, the appellant was not only required to demonstrate that Bartels's and LanFranca's trial testimony was false, but that it was perjured. For testimony to be perjured, it must not only be false, but must relate to a "material fact" in the case. § 575.040.1 (emphasis added); State v. Fletcher, 948 S.W.2d 436, 438 (Mo.App.1997). "`A fact is material, regardless of its admissibility [under rules of evidence], if it could substantially affect, or did substantially affect, the course or outcome of the ca[u]se, matter or proceeding.' " Fletcher, 948 S.W.2d at 438 (quoting § 575.040.2); see also State v. Leitner, 945 S.W.2d 565, 574 (Mo.App.1997). To this materiality standard for determining perjured testimony, we are required to overlay the materiality standard of the Brady rule, as enunciated in Bagley and discussed, supra, in determining if a due process violation occurred, as the appellant claims. See Aaron, 985 S.W.2d at 436; Carter, 939 S.W.2d at 557.
As to the first element of proof to establish the appellant's claim, the appellant asserts that the evidence of Bartels's and LanFranca's trial testimony being false was Bartels's inconsistent testimony at the revocation hearing and his inconsistent statement given to the FBI concerning LanFranca's presence at meetings between Bartels and Riley. Inconsistent statements made prior to trial are not alone sufficient to establish that a witness has committed perjury. Shavers, 758 S.W.2d at 133 (citing State v. Lee, 617 S.W.2d 398, 403 (Mo.1981)). Such statements generally go to the witness's credibility and can be used to cross-examine him or her. Id. When confronted at trial with the inconsistency between his trial testimony and his statement in the FBI report, Bartels testified that his trial testimony was the truth and that he had lied in the FBI report. In denying the appellant's motion for new trial, based on the appellant's claim that he was convicted with perjured testimony, the trial court was free to believe Bartels's trial testimony that he had lied previously and that his trial testimony as to the issue in question was truthful. As such, the appellant's claim of being convicted on perjured testimony would fail in that the trial court was free to find, in denying the appellant's motion for new trial, that Bartels's and LanFranca's trial testimony as to LanFranca's *51 presence at discussions between Bartels and him was not false.
Even assuming, arguendo, that the record was such for us to find that the trial court erred in not finding that the testimony in question was false and that the State knew that it was, to succeed on his claim that he was convicted on perjured testimony, he would still have to show that Bartels's and LanFranca's trial testimony was material in that it would have changed the outcome of his case. Carter, 939 S.W.2d at 557; Cummings, 838 S.W.2d at 7. As discussed, supra, in the perjured-testimony situation of nondisclosure, the third element of a due process claim based thereon, that the prosecution obtained a conviction based on known perjured testimony, Cummings, 838 S.W.2d at 7, is required to encompass the materiality standard of the Brady rule, that the alleged perjured testimony undermined the confidence in the jury's verdict of guilty. Given our discussion, supra, concerning the materiality of Bartels's testimony at the revocation hearing and trial and LanFranca's trial testimony, we cannot conclude that the trial court abused its discretion in finding that the appellant was not entitled to a new trial based on the appellant's due process claim that he was convicted by known perjured testimony.
For the reasons discussed, appellant's Point I is denied.
II.
In Point II, the appellant claims that the trial court erred in overruling his motions for a mistrial because the State violated its order in limine in three instances. Specifically, the appellant contends that the trial court erred in admitting testimony concerning statements allegedly made by the appellant to Riley. We disagree.
Standard of Review
The standard of review for a trial court's refusal to grant a mistrial is abuse of discretion. State v. Johnson, 968 S.W.2d 123, 134 (Mo.banc), cert. denied, ___ U.S. ___, 119 S.Ct. 348, 142 L.Ed.2d 287 (1998); State v. Rodriguez, 985 S.W.2d 863, 865 (Mo.App.1998). "The decision whether to declare a mistrial rests largely within the discretion of the trial court because the trial court has observed the incident that precipitated the request for a mistrial and is in a better position than is the appellate court to determine what prejudicial effect, if any, the indicent had on the jury." State v. Webber, 982 S.W.2d 317, 322 (Mo.App.1998) (citing State v. Schneider, 736 S.W.2d 392, 401 (Mo. banc 1987)). "`Judicial discretion is abused when a trial court's ruling is clearly against the logic of the circumstances then before the court and is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration....'" Jackson, 969 S.W.2d at 775 (quoting King, 853 S.W.2d at 307). "`Granting a mistrial is a drastic remedy and should be exercised only in extraordinary circumstances where the prejudice to the defendant cannot be removed any other way.'" State v. Wyman, 945 S.W.2d 74, 77 (Mo.App.1997) (quoting State v. Jones, 921 S.W.2d 28, 31-32 (Mo.App.1996)); see also State v. Barnett, 980 S.W.2d 297, 305 (Mo. banc 1998), cert. denied, ___ U.S. ___, 119 S.Ct. 1074, 143 L.Ed.2d 77 (1999).
Discussion
A trial court's ruling on a motion in limine is interlocutory and subject to change in the course of a trial and preserves nothing for appellate review. State v. Purlee, 839 S.W.2d 584, 592 (Mo.banc 1992); State v. Stephan, 941 S.W.2d 669, 674 (Mo.App.1997); State v. Boulware, 923 S.W.2d 402, 404 (Mo.App.1996). "The trial court's action of sustaining the pretrial motion in limine does not act as an automatic, permanent bar to the evidence sought to be excluded." Stephan, 941 S.W.2d at 674 (citing State v. Evans, 639 S.W.2d 820, 822 (Mo.1982)). As such, a trial court, having initially excluded the evidence pursuant to a pretrial motion in *52 limine, is free to change its ruling at trial and admit it. Id. Hence, in order to afford the trial court with an opportunity to reconsider its previous ruling, the proponent of the excluded evidence may attempt to present the excluded evidence at trial. Id. Of course, such an attempt would be subject to any restrictions imposed by the trial court as to the manner in which this is to be done, for example, requiring counsel to approach the court, outside the hearing of the jury, and advise the court that he or she intends to introduce the excluded evidence and why it is now admissible. Martin v. Durham, 933 S.W.2d 921, 925 n. 3 (Mo.App.1996). This would afford the opponent of the evidence an opportunity to renew his or her objection to the admission of the evidence, and assuming that he or she did, this would allow the trial court to reconsider and rule on its admissibility, outside the hearing of the jury.
The procedure described in offering evidence at trial that had previously been excluded by an order in limine recognizes the dual purpose of a motion in limine. Although one purpose of a pretrial motion in limine is obviously to exclude inadmissible evidence at trial, it also serves the second purpose of prohibiting a party from placing an improper and prejudicial issue before the jury through voir dire, opening statement, or questions during trial, which are not evidence. Id. The rationale for the second purpose is based on the fact that in certain circumstances the mere act of raising the issue, regardless of the fact that no inadmissible evidence is admitted, is so prejudicial that the prejudice cannot be removed by refusing to admit the evidence being offered. Id. Stated another way, once the bell is rung, it cannot be unrung. Hence, if a party seeks to admit evidence at trial which was previously excluded by an order in limine, it runs the risk of a mistrial should the trial or appellate court find that, despite the fact the inadmissible evidence was ultimately excluded at trial, the damage was done in that the manner in which the party sought to introduce the evidence had the same prejudicial effect as if the evidence had, in fact, been admitted.
Here, the appellant filed a pretrial motion in limine requesting, inter alia, that the trial court prohibit the State from mentioning as hearsay "any statements attributed to [the appellant] made to Joe Riley (deceased) and reported to the state's witnesses." With respect to this issue, the appellant's motion was sustained. He contends that the State violated the trial court's ruling in the following three instances during its direct examination of LanFranca:
1. A. I said, "No. What do you need a gun for"?
[Riley] said that he had-had a couple of things goin' on in the near future where he was gonna need one.
He goes, "But today I've got this guy comin' in from Chicago with five kees. Me and [the appellant] are gonna go meet him and [the appellant is] gonna get rid of `em for me."
Q. And whenever he says, "He and [the appellant] and gonna go meet him and [the appellant is] gonna get rid of it"
2. Q. And whenever the [appellant] walks out of the bathroom, what happens, at that point?
A. [Riley] tells [the appellant] that he can't use The Diner. We can't use The Diner, because of my dad.
Q. And what happens then?
A. [Riley] says, "So where we gonna do this deal"?
[The appellant] says, "I don't care where we"
3. Q. And can you tell the jury what this [appellant] was saying, during that trip?
A. Just remove everybody else's conversation and just his input? Is that what you want?
Q. That's what you're gonna have to do.
*53 A. Okay.
In the first two instances, LanFranca was attempting to testify to statements made by the appellant, which were reported by Riley. In the third instance, no actual statements of the appellant were involved, rather he complains simply about the prosecution's admonishment of LanFranca, in the presence of the jury and after repeated objections by the appellant, to restrict his testimony to what the appellant had said with him being present. In the first two instances, the appellant objected to the admission of the excluded evidence and requested a mistrial. Although the trial court sustained the objections and excluded the evidence, it overruled his motions for a mistrial. In the third instance, in which no evidence was being offered, the appellant objected and moved for a mistrial, which objection and motion were overruled, although the trial court instructed the assistant prosecutor to limit her comments. Given these circumstances, it is clear that the appellant is basing his claim of error on the fact the State violated the spirit of the trial court's order in limine by the manner in which it sought to introduce the excluded evidence at trial.
The State contends that the challenged testimony of LanFranca did not violate the trial court's order sustaining the appellant's pretrial motion in limine in that the order only excluded inadmissible "double hearsay" testimony and LanFranca's testimony did not fall in that category because it either was admissible as admissions of the appellant or as statements of a co-conspirator. As to the prosecutor's admonition of LanFranca in the presence of the jury, the State contends that this also did not violate the trial court's order in limine and that it was the product of incorrect evidentiary rulings by the trial court as to the admissibility of the evidence in question, more likely to be interpreted by the jury as an attempt by the State, not the defense as the appellant contends, to limit what the jury could hear.
Even assuming, arguendo, that the trial court's order in limine encompassed all the challenged testimony of LanFranca, which the appellant challenges on appeal, the State was free to attempt to introduce any evidence excluded by the court's order. Stephan, 941 S.W.2d at 674. As such, given the fact the objectionable evidence was excluded at trial, the State's attempt to introduce this testimony would not be violative of the trial court's order in limine, unless it could be reasonably found that the manner in which the State did so violated the spirit of the order in that the prejudice sought to be avoided by the order nonetheless resulted.
After a careful review of the record, we fail to see how the trial court abused its discretion in failing to grant a mistrial on the basis of the three alleged "violations" of its order in limine. As stated, supra, a mistrial is a drastic remedy and is not to be imposed unless no other means is effective in removing the prejudice. Any prejudice resulting from the challenged questioning of LanFranca by the State would have been slight, in light of the fact that the alleged inadmissible evidence was excluded and given the other direct evidence in the record of the appellant's involvement in the drug deal, which formed the basis for his felony murder conviction.
Point denied.
III.
In Point III, the appellant claims the trial court erred in not declaring a mistrial, sua sponte, because the assistant prosecutor made several improper references in her closing argument concerning her personal beliefs as to the appellant's guilt. The claim is without merit.
Standard of Review
A "`trial court has sound discretion in determining whether closing argument has had a prejudicial effect so as to warrant a mistrial, and its judgment will not be disturbed on appeal unless there is a manifest abuse of discretion.'" Bowls v. *54 Scarborough, 950 S.W.2d 691, 699 (Mo.App.1997) (quoting Amador v. Lea's Auto Sales & Leasing, Inc., 916 S.W.2d 845, 851 (Mo.App.1996)). This is so because "[t]rial courts have a superior vantage point from which to assess the pervasive effect of an improper argument." State v. Weaver, 912 S.W.2d 499, 513 (Mo. banc 1995). Therefore, whether any error "can be dissipated by timely and appropriate action short of declaring a mistrial is a matter within the sound discretion of the trial court." Id.
"`[S]tatements made in closing arguments [seldom] affect substantial right[s] or result in manifest injustice or the miscarriage of justice so as to result in plain error requiring reversal of a conviction.' "State v. Cruz, 971 S.W.2d 901, 903 (Mo.App.1998) (quoting State v. Higgins, 619 S.W.2d 94, 95 (Mo.App.1981)). "Furthermore, courts hesitate to find plain error in a failure to sua sponte correct a statement made during closing arguments because `trial strategy looms as an important consideration' in deciding whether to object during closing argument." Id. (quoting State v. Cobb, 875 S.W.2d 533, 537 (Mo. banc 1994)).
During the State's rebuttal portion of its closing argument, the appellant objected to two comments by the assistant prosecutor on the basis of improper personalization. Both objections were sustained and the jury instructed to disregard the offending statements. Apparently satisfied with the court's rulings, the appellant did not request any further relief. As such, he did not preserve his claim of error for appellate review. State v. Kee, 956 S.W.2d 298, 305 (Mo.App.1997); see also State v. Basile, 942 S.W.2d 342, 350-51 (Mo. banc 1997); Wyman, 945 S.W.2d at 77. Given this fact, his claim that the trial court erred in failing to sua sponte grant him a mistrial would only be reviewable for plain error under Rule 30.20.
Rule 30.20 provides, in pertinent part, that "[w]hether briefed or not, plain errors affecting substantial rights may be considered in the discreation of the court when the court finds that manifest injustice or miscarriage of justice has resulted therefrom." "`The plain error rule should be used sparingly and does not justify a review of every [alleged] trial error that has not been properly preserved for appellate review.'" State v. McMillin, 783 S.W.2d 82, 98 (Mo. banc 1990) (quoting State v. Valentine, 646 S.W.2d 729, 731 (Mo.1983)); see also State v. Silvey, 894 S.W.2d 662, 670 (Mo. banc 1995).
Plain error review involves a two-step process. Under the rule, the first step involves an examination to determine whether "plain error" has, in fact, occurred, or in other words, whether the claim for review "facially establishes substantial grounds for believing that `manifest injustice or miscarriage of justice has resulted.'" State v. Brown, 902 S.W.2d 278, 284 (Mo. banc 1995) (quoting Rule 30.20). In the absence of such a determination, a court should "decline to exercise its discretion" to review a claim of error under Rule 30.20. Id. The rule makes it clear that not all prejudicial errors can be deemed plain errors. Plain errors are those which are "evident, obvious and clear." State v. Bailey, 839 S.W.2d 657, 661 (Mo.App.1992). If plain error is found on the face of the claim, then the rule authorizes, as a matter of court discretion, a second step to determine whether the claimed error resulted in manifest injustice or a miscarriage of justice.
The defendant bears the burden of showing that plain error has occurred which resulted in manifest injustice or a miscarriage of justice. State v. Isa, 850 S.W.2d 876, 884 (Mo. banc 1993). "Mere allegations of error and prejudice will not suffice." Id. "The determination [of] whether plain error exists must be based on a consideration of the facts and circumstances of each case." State v. Cline, 808 S.W.2d 822, 824 (Mo. banc 1991) (citing State v. Sanders, 541 S.W.2d 530, 533 (Mo. banc 1976)). When guilt is established by overwhelming evidence, no injustice *55 or miscarriage of justice results requiring relief under the rule. State v. Jordan, 627 S.W.2d 290, 293 (Mo. banc 1982) (citing State v. Bainter, 608 S.W.2d 429, 431 (Mo.App.1980)).
Discussion
The appellant contends that the assistant prosecutor, in closing argument, impermissibly expressed her personal opinion as to his guilt. Specifically, he objects to the following argument of the assistant prosecutor:
And what we're telling you is you don't need Nick.
We didn't have him whenever we charged the [appellant] the day after the crime. He didn't talk about LanFranca, because we don't need him.
The day after the crime you bet we considered filing on Nick LanFranca. Our heart of hearts made us look to file against Nick LanFranca.
What are we firmly convinced of? What were our hearts telling us?
. . .
So what are we to do? We now have Nick LanFranca and we know no one, no Prosecutor wants to put on a snitch, but what do we do? Even though we know the [appellant's] guilty and our proof shows the [appellant] is guilty beyond a reasonable doubt, what do we do as Prosecutors?
As stated, supra, the appellant's objections to these comments were sustained and the jury instructed to disregard. According to the State, these comments referred back to comments made by defense counsel in his closing argument about the State "hiding" from LanFranca in its opening statement by not mentioning him and counsel's assertion that the State should have charged LanFranca with felony murder rather than use him as a witness. As such, the State contends that the comments in question were proper as retaliatory argument to the defense's closing argument, citing State v. Clayton, 995 S.W.2d 468, 479 (Mo. banc 1999); State v. Petty, 967 S.W.2d 127, 136[20] (Mo.App.1998); State v. Jones, 979 S.W.2d 171, 177 (Mo. banc 1998), cert. denied, ___ U.S. ___, 119 S.Ct. 886, 142 L.Ed.2d 785 (1999). Unfortunately, the appellant did not see fit to include his closing argument in the transcript filed on appeal, which we find suspect. Although we would be justified in refusing plain error review of the appellant's claim on this basis alone, State v. Kelly, 823 S.W.2d 95, 98 (Mo.App.1991); State v. Blackburn, 789 S.W.2d 126, 128 (Mo.App.1990); State v. Klaus, 730 S.W.2d 571, 579 (Mo.App.1987), we need not do so.
As an alternative basis for denying plain error review, we find that the appellant's claim does not facially establish substantial grounds that manifest injustice or a miscarriage of justice resulted from the challenged closing argument of the State. This is so in that to reverse a conviction on plain error for improper argument, an appellant must show manifest prejudice affecting substantial rights. Kee, 956 S.W.2d at 303 (citing State v. Clark, 913 S.W.2d 399, 405 (Mo.App.1996)). In other words, the appellant must establish that the assistant prosecutor's comments had a decisive effect on the jury's determination such that the verdict would have been different. Id.; Basile, 942 S.W.2d at 349. Given the nature of the assistant prosecutor's remarks, the trial court's instruction to the jury to disregard them in response to the appellant's objections, and the admissible evidence in the case as to the appellant's guilt, we cannot find fairly that the appellant's claim facially establishes that manifest injustice or a miscarriage of justice resulted from her remarks in that we fail to see how the remarks changed the outcome of the verdict.
As a final reason for denying plain error review, we believe from the record that no error, plain or otherwise, occurred because the remarks in question were proper. Generally, a jury is presumed to follow the trial court's instructions to disregard any improper comments. Wyman, 945 S.W.2d at 78 (citing State v. Bradley, 811 S.W.2d 379, 382 (Mo. banc 1991)). In our case, the appellant's objections were sustained, with the trial court instructing *56 the jury to disregard the assistant prosecutor's comments. As a result, we may presume that no error occurred. Id. However, in this case, we need not rely solely on this presumption in finding no error, plain or otherwise.
As a general proposition, the appellant is correct in his assertion that a prosecutor may not express his or her opinion in closing argument as to the guilt of the defendant in such a way that implies knowledge on the prosecutor's part based on evidence not in the record. State v. Grant, 702 S.W.2d 857, 864 (Mo.App.1985). However, prosecutors and defense attorneys are allowed substantial latitude in closing argument, State v. Womack, 967 S.W.2d 300, 303 (Mo.App.1998), including suggesting reasonable inferences to be drawn from the evidence. Bowls, 950 S.W.2d at 699 (citing Moore v. Missouri Pac. R.R. Co., 825 S.W.2d 839, 844 (Mo. banc 1992)); Weaver, 912 S.W.2d at 512. As such, a prosecutor may express a belief as to the defendant's guilt if that opinion appears to be fairly based on the evidence. Weaver, 912 S.W.2d at 512; State v. Link, 965 S.W.2d 906, 912 (Mo.App.1998); State v. Boyd, 954 S.W.2d 602, 610-11 (Mo.App.1997). In light of these legal principles, it is our view that the remarks of the assistant prosecutor in question were not improper, and that the trial court would have been justified in overruling the appellant's objections thereto but chose not to, which we in no way fault. The fact that the challenged closing argument, in our view, was not objectionable, we obviously would decline plain error review.
Point denied.
Conclusion
The circuit court's judgment of the appellant's jury conviction for murder in the second degree, § 565.021.1(2), is affirmed.
All concur.
NOTES
[1] All statutory references are to RSMo 1994, unless otherwise indicated.
[2] All rule references are to the Missouri Rules of Criminal Procedure (1997), unless otherwise indicated.
[3] Rule 25.03(C) provides:
If the defense in its request designates material or information which would be discoverable under this Rule if in the possession or control of the state, but which is, in fact, in the possession or control of other governmental personnel, the state shall use diligence and make good faith efforts to cause such materials to be made available to the defense counsel, and if the state's efforts are unsuccessful and such material or other governmental personnel are subject to the jurisdiction of the court, the court, upon request, shall issue suitable subpoenas or orders to cause such material or information to be made available to the state for disclosure to the defense.
In his request for discovery, the appellant stated, inter alia: "The defendant requests that the prosecuting attorney make a diligent, good faith effort to obtain any of the above items or information which may be in the possession or control of any other government personnel, under the authority of Rule 25.03(c)."
[4] The "MURDER IN THE SECOND DEGREE: FELONY" instruction provides:
((As to Count ___, if) (If) you do not find the defendant guilty of (murder in the first degree) (murder in the second degree as submitted in Instruction No. ___), you must consider whether he is guilty of murder in the second degree (under this instruction).)
(As to Count ___, if) (If) you find and believe from the evidence beyond a reasonable doubt:
First, that defendant (committed) (attempted to commit) [Insert name of underlying felony, such as "robbery in the second degree."], as submitted in Instruction No. ___, and
Second, that [Describe briefly how victim was killed. See Notes on Use 3 for suggestions.], and
Third, that [name of victim ] was killed as a result of the (perpetration) (or) (attempted perpetration) (or) (immediate flight from the (perpetration) (or) (attempted perpetration)) of that [name of felony,] then you will find the defendant guilty (under Count ___ ) of murder in the second degree.
MAI-CR 3d 313.06.
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151 P.3d 663 (2006)
H. Michael SOPKO, Plaintiff-Appellant,
v.
CLEAR CHANNEL SATELLITE SERVICES, INC., Donald Harms, and Monty Dent, Defendants-Appellees.
No. 05CA1811.
Colorado Court of Appeals, Div. VI.
November 30, 2006.
Mitchem & Flanigan, LLC, James E. Mitchem, Denver, Colorado, for Plaintiff-Appellant.
Brownstein Hyatt & Farber, P.C., David D. Powell, Jr., Richard P. Barkley, Denver, Colorado, for Defendants-Appellees.
*664 Opinion by Judge J. JONES.
Plaintiff, H. Michael Sopko, appeals the district court's order granting the motion filed by defendants, Clear Channel Satellite Services, Inc., Donald Harms, and Monty Dent, to stay additional arbitration proceedings and vacating the arbitrator's interim award in plaintiff's favor. We reverse and remand for additional proceedings.
I. Background
Plaintiff is a former employee of defendant Clear Channel Satellite Services, Inc. Defendants Donald Harms and Monty Dent are management employees of Clear Channel.
In February 2004, plaintiff filed a complaint against defendants in district court, asserting claims for unpaid wages, for nonpayment on a check, and for the value of a computer allegedly taken by defendants. In 2002, plaintiff had executed an "Arbitration Agreement" with Clear Channel, in which they agreed to submit claims between them to arbitration to be conducted under the auspices of, and in accordance with the rules of, the American Arbitration Association (AAA). Accordingly, the parties then filed a joint motion pursuant to former § 13-22-204(1), Colo. Sess. Laws 1975, ch. 154 at 573-74, to stay further proceedings pending arbitration. The district court granted the motion to stay.
Plaintiff's demand for arbitration included additional claims for relief, including federal law claims for age discrimination and religious discrimination. The arbitration occurred over six days. On December 28, 2004, the AAA notified the parties that the arbitration hearing was closed. The arbitrator issued an interim award on January 24, 2005, in which she found in plaintiff's favor on his claim under the Colorado Wage Act and on his age discrimination claim. The arbitrator awarded plaintiff $27,701.47 on his Colorado Wage Act claim, but ordered that an additional hearing be scheduled to hear additional evidence of plaintiff's damages on the age discrimination claim and on his claim for attorney fees. The arbitrator found in defendants' favor on plaintiff's remaining claims.
Defendants filed an objection to further proceedings with the arbitrator, asserting that the arbitrator's jurisdiction expired thirty days after the arbitration was formally closed pursuant to a clause in the Arbitration Agreement. The arbitrator denied the objection and scheduled the hearing on damages and attorney fees. In denying the objection to further arbitration proceedings, the arbitrator found that the parties had agreed to reserve the issue of attorney fees for post-hearing presentation and resolution, thus rendering the thirty-day limit in the Arbitration Agreement inapplicable by its own terms. The arbitrator also found that because she was going to hold a hearing on attorney fees, it seemed appropriate to receive any additional evidence and hear any additional arguments from the parties regarding damages on the discrimination claim at that time. The arbitrator further found that defendants had failed to demonstrate any prejudice caused by any delay in issuing the final award, that there is no "time is of the essence" clause in the Arbitration Agreement, and that the Arbitration Agreement does not state that a "final" arbitration award shall issue no later than thirty days after completion of the hearing, but merely provides that some award by the arbitrator shall issue no later than thirty days from the date the arbitration hearing concludes. Finally, the arbitrator noted that the Arbitration Agreement and the AAA rules allowed her to request post-hearing briefs (which would extend the thirty-day limit in the Arbitration Agreement), which she essentially did by requesting a post-hearing presentation on damages and attorney fees.
Defendants then filed an emergency motion with the district court to stay the arbitration. Defendants argued that the arbitrator lacked jurisdiction to schedule a hearing on damages and attorney fees beyond the thirty-day period allowed by the terms of the Arbitration Agreement.
The district court, relying on the decisions in Cohen v. Quiat, 749 P.2d 453 (Colo.App. 1987), and Ash Apartments v. Martinez, 656 P.2d 708 (Colo.App.1982), concluded that the arbitration award must be made within the thirty-day period agreed to by the parties, *665 and that no final award had been issued within that time. Therefore, the court determined that the arbitrator's interim order was void, and that the arbitrator did not have authority to conduct a further hearing on the issues of damages, attorney fees, and costs. In effect, the district court's order denied plaintiff any recovery on his claims. Plaintiff appeals the district court's order.
II. Discussion
Plaintiff contends that the district court erred in precluding further arbitration proceedings and vacating the interim award because there was no proper basis for disregarding the arbitrator's interpretation and application of the relevant provisions of the Arbitration Agreement. We agree.
The Arbitration Agreement provides:
Unless the parties and arbitrator agree otherwise, the arbitrator's award shall issue no later than thirty (30) days from the date the arbitration hearing concludes or the post-hearing briefs (if requested) are received, whichever is later.
The AAA rules, which were incorporated into the Arbitration Agreement, also provide: "The award shall be made promptly by the arbitrator and, unless otherwise agreed by the parties or specified by law, no later than 30 days from the date of closing of the hearing". . . .
In addition, Colo. Sess. Laws 1975, ch. 154, § 13-22-210(2) at 575, provided that "[a]n award shall be made within the time fixed therefor by the agreement or, if not so fixed, within such time as the court orders on application of a party."
The Arbitration Agreement also provides that the arbitrator is empowered to determine "[a]ny dispute concerning the arbitrability of any [potential] claim" and "[a]ny dispute regarding this Agreement, including but not limited to its enforceability, scope or terms. . . ." Thus, it is clear that the parties' dispute over the interpretation and application of the thirty-day provision is one that the parties contractually agreed to entrust to the arbitrator. We will enforce contractual provisions giving arbitrators such authority. See Galbraith v. Clark, 122 P.3d 1061, 1064 (Colo.App.2005).
Here, the arbitrator interpreted and applied the thirty-day provision of the Arbitration Agreement, determining as a matter of fact that (1) the parties and the arbitrator had agreed to extend the thirty-day period to address the issue of attorney fees; (2) there was no indication in the Arbitration Agreement that "time is of the essence" in rendering the award; (3) defendants had not shown that they would suffer any prejudice if the final award was issued after January 28, 2005; and (4) her request for further presentation of evidence and argument on damages effectively constituted a request for post-hearing briefs, which extended the time for making an award. The arbitrator also determined as a matter of law that (1) the thirty-day provision is directory, rather than mandatory; and (2) defendants were therefore required to show that time was of the essence or that they would be prejudiced by virtue of any delay in issuing a final award.
Defendants do not contest the arbitrator's authority to decide the timeliness issue "in the first instance," but contend that the district court was entitled to substitute its judgment for that of the arbitrator on the timeliness issue, and that, as a matter of law, the arbitrator lost jurisdiction to conduct additional hearings thirty days after the AAA notified the parties that the hearing had been closed. We do not agree with either contention.
In arguing that the court could substitute its judgment for that of the arbitrator, defendants rely on the statute which governed the stay of arbitration proceedings at the time of the arbitration, Colo. Sess. Laws 1975, ch. 154, § 13-22-204(2) at 573-74. That subsection of the statute provided:
On application, the court may stay an arbitration proceeding commenced or threatened on a showing that there is no agreement to arbitrate. Such an issue, when in substantial and bona fide dispute, shall be forthwith and summarily tried and the stay ordered if found for the moving party. If found for the opposing party, the court shall order the parties to proceed to arbitration.
*666 We do not read this provision as a general grant of authority for courts to second-guess arbitrators' decisions. Rather, this provision gives the court authority to stay an arbitration proceeding only where there is no contract between the parties to arbitrate or it is apparent from the language of the contract that the claim sought to be arbitrated is clearly beyond the scope of the arbitration clause. See City & County of Denver v. Dist. Court, 939 P.2d 1353, 1363-64 (Colo.1997); Eagle Ridge Condo. Ass'n v. Metropolitan Builders, Inc., 98 P.3d 915, 917 (Colo.App. 2004); Gergel v. High View Homes, LLC, 996 P.2d 233, 235 (Colo.App.1999); Lawrence Street Partners, Ltd. v. Lawrence Street Venturers, 786 P.2d 508, 510 (Colo.App.1989); Cabs, Inc. v. Delivery Drivers Local Union No. 435, 39 Colo.App. 241, 244, 566 P.2d 1078, 1080 (1977). Where, however, there is an agreement to arbitrate, and a particular claim is not clearly beyond the scope of the arbitration clause that is, where there is a reasonable basis for construing the agreement in support of arbitrability of the claim the scope of the arbitration agreement must be determined by the arbitrator, not by the court. Cabs, Inc., supra, 39 Colo. App. at 244-45, 566 P.2d at 1080-81; see also Youmans v. District Court, 197 Colo. 28, 31, 589 P.2d 487, 489 (1979). Similarly, under these circumstances, questions of contract application and interpretation are for the arbitrator, not the court, to decide. Container Technology Corp. v. J. Gadsden Pty., Ltd., 781 P.2d 119, 121-22 (Colo.App.1989).
In this case, the court's ruling went beyond determining whether a contract to arbitrate existed (a matter which was never disputed) and which claims fell within the scope of the arbitration clause (another matter which was never disputed). Rather, the court effectively disregarded the arbitrator's factual finding that the parties and the arbitrator had agreed to extend the hearing to address attorney fees and costs and the arbitrator's interpretation of the contract that by requesting post-hearing submissions relating to damages she had triggered the clause extending the time for making an award if post-hearing briefs were requested. Such determinations, however, are binding on review. See Container Technology Corp., supra, 781 P.2d at 121. Under the version of the statute in effect during the time period relevant in this case, a court could set aside such decisions only in the very limited circumstances set forth in Colo. Sess. Laws 1975, ch. 154, § 13-22-214 at 576. No such circumstances are alleged here. Therefore, the court erred in disregarding the arbitrator's decisions.
The district court also erred in ruling that the thirty-day limit on issuing an award was jurisdictional, and that any award issued after that time would be void.
The court relied, as defendants do on appeal, on the decision in Ash Apartments, supra. There, the parties agreed to arbitrate any disputes pursuant to the construction industry arbitration rules of the AAA. One of those rules, as here, provided that "unless otherwise agreed by the parties or provided by law, arbitrators have thirty days from the close of the hearing to make an award." Ash Apartments, supra, 656 P.2d at 709. The arbitrators in Ash Apartments, however, entered their award after the thirty-day period had expired. The trial court affirmed the award entered by the arbitrators.
On appeal, a division of this court noted that because the arbitration agreement at issue preceded the enactment of the Uniform Arbitration Act in 1975, the common law governed the interpretation of the agreement. Under the common law, an award not rendered within a party-established time limitation was considered void. However, an exception provided that the failure to object based on lateness prior to the issuance of the award constituted a waiver of any objection. Consequently, because the plaintiffs in Ash Apartments chose to wait until after they had been notified of the award before objecting, the court concluded that they had waived their right to challenge the timeliness of the award.
As noted in Ash Apartments, the General Assembly enacted the Uniform Arbitration Act in 1975. The purpose of the Act was to provide a uniform statutory framework for arbitration and to encourage settlement of disputes through the arbitration process. *667 Lane v. Urgitus, 145 P.3d 672, 678 (Colo. 2006); Farmers Ins. Exch. v. Taylor, 45 P.3d 759, 761 (Colo.App.2001). Because arbitration is a favored means of dispute resolution, any doubts about the scope of an arbitration clause should be resolved in favor of arbitration. Lane, supra, 145 P.3d at 678, 680; Gergel, supra, 996 P.2d at 235. Consequently, a division of this court has stated that "[o]nce a controversy is so submitted, it remains before the arbitrator until an award is rendered unless the parties mutually agree to withdraw it." Cabus v. Dairyland Ins. Co., 656 P.2d 54, 56 (Colo.App.1982) (noting that an issue voluntarily submitted or submitted by an agreement expanding the original scope of the arbitrator's jurisdiction does not alter the fact that, once agreed upon, it becomes part of a binding contract to arbitrate); see also In re Marriage of Gavend, 781 P.2d 161, 162 (Colo.App.1989) (noting that husband's unilateral attempt to terminate arbitrator's services for failure to render a written decision within thirty days was without legal effect).
Other jurisdictions have ruled on whether the arbitrator's failure to issue an award within a prescribed period requires vacating the arbitration award. See Allan E. Korpela, Annotation, Construction and Effect of Contractual or Statutory Provisions Fixing Time Within Which Arbitration Award Must be Made, 56 A.L.R.3d 815 (1974). Many courts construing the Uniform Arbitration Act have held that statutory and contractual time requirements for the issuance of an award are directory, not mandatory and jurisdictional. See, e.g., Allstate Ins. Co. v. Fisher, 212 Ill.App.3d 712, 715-17, 156 Ill.Dec. 812, 571 N.E.2d 792, 794-95 (1991); Roseville Community School Dist. v. Roseville Federation of Teachers, 137 Mich.App. 118, 126, 357 N.W.2d 829, 833 (1984); Martich v. City of Cleveland, 76 Ohio App.3d 802, 804-05, 603 N.E.2d 381, 382-83 (1992). Thus, several courts have required that the parties include a "time is of the essence" clause in the arbitration agreement in order for any award issued after the expiration of the time period to be void. 3 Thomas H. Oehmke, Commercial Arbitration § 118:5 (3d ed.2003).
In addition, consistent with the holding in Ash Apartments, supra, numerous courts have held that the failure to object to the delay prior to the issuance of an award constitutes a waiver of any objection. See Martich, supra, 76 Ohio App.3d at 804-05, 603 N.E.2d at 382-83 (listing cases); Utility Trailer Sales, Inc. v. Fake, 740 P.2d 1327 (Utah 1987); Korpela, supra, 56 A.L.R.3d 815 § 2(a); 3 Oehmke, supra, § 118:7. Nevertheless, several other courts have held that even if a timely objection to the timing of an arbitration award has been made, the award will not be vacated unless the complaining party also establishes prejudice as a result of the delay in issuing the award. See, e.g., Allstate Ins. Co., supra, 212 Ill.App.3d at 715-17, 156 Ill.Dec. 812, 571 N.E.2d at 794-95. See generally 3 Oehmke, supra, § 118:5 (noting that "the emerging federal rule is that, to vacate an untimely award, there must be a seasonable objection before the award is due, often a protest after the due date has passed, and a demonstration by the objecting party of material prejudice due to that delay").
Colorado law favors the resolution of disputes by arbitration. Lane, supra, 145 P.3d at 678, 680. This purpose would be frustrated by a rigid rule that an arbitration award must be vacated if the arbitrator did not issue a final award within the period set forth in the arbitration agreement or the statute. Therefore, we conclude that contractual and statutory time requirements for issuance of an award are directory, not mandatory or jurisdictional. In the absence of language in an arbitration agreement that time is of the essence or that any arbitration award issued after the expiration of the period specified in the agreement is void, the party seeking to preclude an award issued after the time prescribed by the agreement must show both that it made a timely objection to issuing an award after the time limitation in the agreement and that it has been prejudiced by the delay.
In this case, we need not decide whether defendants made a timely objection because it is clear from the record that they did not suffer prejudice.
*668 To establish prejudice, a party must show more than the mere fact that a damages award may be entered against it. As noted in Green v. Ameritech Corp., 12 F.Supp.2d 662, 665 (E.D.Mich.1998), rev'd on other grounds, 200 F.3d 967 (6th Cir.2000), prejudice resulting from "losing the case later, rather than sooner, does not justify the setting aside of an arbitration award."
The arbitrator in this dispute had already found defendants liable on the age discrimination claim and determined that she would benefit from the presentation of additional information on damages. As the arbitrator noted, she would already be holding a hearing to determine the amount of attorney fees and costs to be awarded. On that issue, she had specifically found that both she and the parties had agreed to a post-hearing presentation and resolution. Thus, consideration of additional evidence concerning the issue of damages on the age discrimination claim would not have significantly delayed final resolution of the controversy, which had been ongoing for over sixteen months. Moreover, to the extent defendant Clear Channel claims that it was prejudiced because it was unable to include the amount of damages for the age discrimination claim in a budget request because of the arbitrator's failure to rule in a timely manner (a claim stated in conclusory fashion, without evidentiary support), we note that it could have simply estimated its damages on that claim and included that amount in its budget request. The mere fact that the amount of damages was not precisely known does not establish the type of prejudice that would justify vacating the interim award and precluding an additional hearing on damages. See Green, supra, 12 F.Supp.2d at 665.
Therefore, because defendants have failed to show prejudice or actual harm as a result of the delay in issuing the final award, we conclude that the district court erred in staying the arbitration proceedings. We also conclude that the district court erred in determining that the initial arbitration award was void because a final award resolving all the claims had not been issued within the period prescribed by the Arbitration Agreement. Consequently, we further conclude that the court erred in determining that plaintiff was not entitled to a hearing on the issue of attorney fees and costs on the basis that the award was void.
In light of our resolution of the primary issues raised on appeal, we need not address plaintiff's remaining contentions.
The district court's order is reversed, and the case is remanded to the district court with directions to reinstate the interim award, to vacate the stay of arbitration, and to remand the case to the arbitrator for additional proceedings to determine and award plaintiff damages on his age discrimination claim and to determine and award plaintiff his attorney fees and costs.
Judge WEBB and Judge CARPARELLI concur.
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420 So.2d 354 (1982)
Eddie Lee COLEMAN, Appellant,
v.
STATE of Florida, Appellee.
No. 81-1365.
District Court of Appeal of Florida, Fifth District.
October 6, 1982.
*355 James B. Gibson, Public Defender, and Theresa K. Edwards, Asst. Public Defender, Daytona Beach, for appellant.
Jim Smith, Atty. Gen., Tallahassee, and Sean Daly, Asst. Atty. Gen., Daytona Beach, for appellee.
COBB, Judge.
This appeal concerns the propriety of the trial court's denial of a defense motion for mistrial based upon comments made in closing argument by the prosecution.
The defendant, Eddie Lee Coleman, was charged with robbery with a firearm. The only evidence at trial against the defendant was the testimony of and eyewitness identification by one Patricia Chavis, the victim of the robbery at a convenience store in Eustis. The defendant testified in regard to an alibi defense, but had no corroborating witnesses. In other words, it was a one-on-one factual dispute for jury resolution.
In the prosecutor's comments during closing argument, he stated:
But let's get back to Patricia Chavis' description. Her description was good enough when it was sent over a BOLO for the Belle Glade Police Department to pick him up.
This statement was unsupported by any evidence. Moreover, it was untrue since Coleman had been arrested by a Belle Glade police officer for an unrelated offense. The defendant claims that the comment gave unwarranted support to the reliability of the victim's identification, which was the key issue in the case. The court noted that there was no evidence at all presented as to why the defendant was picked up, and denied *356 the motion, while entering a cautionary instruction stating that if there is a difference between the facts as remembered by the jury and those presented by counsel, the jury was to go by what they personally remembered.
It is the duty of the trial court to check improper remarks of counsel to the jury and by proper instructions remove any prejudicial effects such remarks may have created. Carlile v. State, 129 Fla. 860, 176 So. 862 (Fla. 1937). Improper comments made by trial counsel warranting a mistrial must be so fundamentally tainted that neither an objection nor retraction could entirely destroy their sinister influence. Abbott v. State, 334 So.2d 642 (Fla. 3d DCA 1976), cert. denied, 345 So.2d 420 (Fla. 1977). Here, a cautionary instruction was given, and presumably such a directive by the trial court would be sufficient to vitiate any harm the improper comment would have done. However, whether such improper comments constitute harmful error must be determined by consideration of their effect when viewed in context with other circumstances appearing in the record. McMillian v. State, 409 So.2d 197 (Fla. 3d DCA 1982). In looking at the entire record, even in the presence of a rebuke to the comment, if an improper remark can still be said to be prejudicial to the right of the accused it must be considered as grounds for reversal. Pait v. State, 112 So.2d 380 (Fla. 1959). The key question in determining proper review of an improper argument is whether or not the court can see from the record that the conduct of the prosecuting attorney did not prejudice the accused, and unless this conclusion be reached, the judgment should be reversed. McCall v. State, 120 Fla. 707, 163 So. 38 (Fla. 1935).
Here, the statement that the victim's identification was good enough to allow the police to pick up the suspect cannot be said to be without prejudice to the defendant. Since the testimony of Chavis as to the identification of the robber was the sole evidence presented at trial, any additional credibility given to it is of great importance. When the key issue in the case is one of the victim's ability to identify the defendant, the fact that her identification was sufficient to allow police in another town to pick up the defendant adds to her credibility in that if the description was that sufficient, she must have had a very good recollection of events, thereby bolstering any further identification she made. It cannot be said that the error was harmless in that the improper comment did not in any way contribute to the defendant's conviction. Clearly, there was reasonable doubt presented on the issue of whether this statement contributed to the conviction; therefore, a reversal is required. See McMillian v. State; Glantz v. State, 343 So.2d 88 (Fla. 3d DCA 1977). The judge's instruction telling the jury to disregard the statement of the prosecutor and to rely upon the testimony presented is of little help here, since there was no evidence presented as to why the defendant was arrested. Therefore, the only information presented to the jury on this issue was the improper comment by the prosecution.
REVERSED and REMANDED FOR NEW TRIAL.
ORFINGER, C.J., and DAUKSCH, J., concur.
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410 F.2d 11
Catherine COLANGE, Petitioner,v.RAILROAD RETIREMENT BOARD, Respondent.
No. 23397.
United States Court of Appeals Ninth Circuit.
April 15, 1969.
Louis T. Herzon (argued), Cathedral City, Cal., for petitioner.
Dale G. Zimmerman (argued), Myles F. Gibbons, Gen. Counsel, David B. Schreiber, Associate Gen. Counsel, Louis Turner, RR Retirement Board, Chicago, Ill., for respondent.
Before CARTER and HUFSTEDLER, Circuit Judges, and BYRNE,* District Judge.
PER CURIAM:
1
This is a petition to review the decision of the Railroad Retirement Board, holding that petitioner, on the date of her application for an annuity filed July 23, 1963, was not a "spouse" as that term is defined in Section 2(f) of the Railroad Retirement Act, 45 U.S.C. § 228b(f).
2
This section of the Act specifically provides that the term "spouse" shall mean the wife of an annuitant only if such wife meets at least one of three conditions at the time she files her application for a spouse's annuity. These conditions are: (1) that they were both "members of the same household," or (2) that she was receiving "regular contributions" from him toward her support, or (3) that he had been ordered by a court to contribute to her support.
3
The Railroad Retirement Board found on substantial evidence that petitioner had not satisfied any of the three alternatives set forth above.
4
There is no merit to the petition, and the decision is affirmed.
Notes:
*
Hon. William M. Byrne, Sr., United States District Judge, Central District of California
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OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSXIN
Bournable Walter Cousitm, Jr., Secretary
Taxes Board of PharMay
gll Inxuranoe Building
Dlllas, Texas
Dear 32r2
"There are qbany persona registered under the
lawa’of Neu i.%exlco uhd have applied to Texas for
reaiprocitg, and, sin00 the Meu Mexico lava regulat-
ing the practice of pharmacy do not have the same
Konorable Walter C0~8ln8, Jr., pago 2
prerequisites as the laws of Texas, and sines some
OS the persons lloenaetl In the State of Eew Hex100
studied la *oram sohools or sorved approntloe-
ships under licensed pbarmaolsts and later took
the examination and were admitted as lloensed
pharmacists in the State of New Mexloo; and others
took their pharsaoeutloal ldwatlon by oorrespond-
enoe or exteasion York, ve would like to know if
under Seation 9 of Artiale 4542-a, Revised Civil
Statutes of Texas, this Roar6 hss the right to gra&
reolprooltg, slnoe our law etates:
“‘Provided that the State Board of Pharaaoy
may, in its dlsorrtlon, upon the psymat of Twenty-
five ($25.00) Dollars, grant a lloease to praotloo
phusmcy to persons who furnish prool that t&y
have been registered as suoh In lotse other State
or Territory, en6 that they are of gtmd mqral ohar-
aoter. Prwlded that such other Beard in its
examination requires the sam geaeml degree of
fltuess required by this State and grants the same
reoiprooal privileges to pharmolsts of this State.’
*In term tthe same general degree of fitness’,
set forth above, what is meant by *semi@germral de-
gree of lltness~?
I . . . . (1
SInoe the Legislature in 1943 amended the st8tutes
regulating the praotlce OS pharmsoy in Texas, it 1s msde a-
tiroly olear by Seetlon 9 that every person desiring to prao-
tloe pharmacy in the State of Teus shall be required to pass
the eudaation g%ven by the State Board of Phcmsay. This
SeatIon of the Aot sets forth in speoitle detsll thb aaeoemsarg
qualificationa of a&xapplioant for such eumluatlon. These re-
quirements ares (1) that the l pplloant has obtained the age
of 21 yeara; (2) i5 of good sioral oharacteri (3) 18 a oltl-
aea of the United States; (4) is a graduate OS a first olass
hlgb school or hss a prellrlnary stluaatlaa equlvaleat thereto
that vould pertit matrloulatlon In the University of Texas; and
(5) that he has attended and graduated from a reputable sohool
or college of’ pharmacy which meets vlth the requlremeuts of the
xonoreble Walter Couslas, Jr., pege 3
BMrd. In additionto this, he shell heve he6 one yeer of
practual experlenoe la a retail phermsoy under the direct
supsrvlaion of l registered phemeolst. A reputable or rroog-
nlzed sohool or college of pherasoy is defined es oas uhos4
course of lastruotlon shell be the equivalent of’ not lses than
four terms bf eight maths eaoh, all of which shell be’epproved
by the keld. The statute further outlluss the o~urses of
study which sbll be awered bJ the aemlnatlaa.
Tluwo Is e spsolfla prwlsloa la this Seotioa of t’he
Aot hovevtr glvlag the Board the disoretloa to great a lloease
to praotioe pheraeoy to e person who ?uraIshss pmr uMefeo-
tory to the Board that he has beea reglster~d li~s.PrPe other
state or territory. This dlsarutioa of the Boer&hovever Is
oondltloaed with the raquireaent, first,, thet the 8pplieeat
sbell be of good aorel ohareoter ead; seao+d, tht the Boerd
shell require OS the appllcent the seas gsaeral dogme of rit-
ness that is rsqulrsd of enlpplloent to taks tits we8.lastlon
In this State.
Oae of ths obvious purposes of the emsaded lev ls
to raise the steaderds of the professloa in this Stat.. Ia
carrying out the purposes mid objects or the &v It seem
oleu that it vould be the duty of the Bomd to asesurs the
quellflaatloas or ea eppllseat rogIstorrU ~eaother State by
the seas generel steaderds that ere applied to these deslrlag
to take the sxeaIaetloa Ia this Stek. It is our oplaioa,
therefore, thet the olsuse, "the sama general degree OS flt-
ness" used in the Aot, mans just that. Out-of-8tats lloeasees
la order to qusllfy la Texas must mesure up tq all tha stead-
srds thet ere lsrposed upon all other appliaent~ Sor exeal.ae-
tloa to preotloa pbermeay in Texas. Of oourse, there is the
other requIrerent that the lppliaeat aunt be liaenssd by l
State reolprooetlag vith Tsxes l.a this regerd.
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875 F.2d 873
Packv.Gaither*
NO. 88-8111
United States Court of Appeals,Eleventh Circuit.
APR 27, 1989
1
Appeal From: M.D.Ga.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 11th Cir.R. 23
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Landmark Ventures, Inc. v Birger (2017 NY Slip Op 01153)
Landmark Ventures, Inc. v Birger
2017 NY Slip Op 01153
Decided on February 14, 2017
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 February 14, 2017
Tom, J.P., Sweeny, Renwick, Moskowitz, Kapnick, JJ.
3081 651745/14
[*1]Landmark Ventures, Inc., Plaintiff-Appellant,
vDoron Birger, Defendant-Respondent.
McCabe & Flynn LLP, Rockville Centre (William B. Flynn of counsel), for appellant.
Beys Liston Mobargha & Berland LLP, New York (Nader Mobargha of counsel), for respondent.
Judgment, Supreme Court, New York County (Eileen A. Rakower, J.), entered July 20, 2015, dismissing the amended verified complaint, unanimously affirmed, with costs.
"[A] contractual forum selection clause is documentary evidence that may provide a proper basis for dismissal pursuant to CPLR 3211(a)(1)" (Lischinskaya v Carnival Corp., 56 AD3d 116, 123 [2d Dept 2008] [internal citations omitted], lv denied 12 NY3d 716 [2009]; see also Sydney Attractions Group Pty Ltd. v Schulman, 74 AD3d 476 [1st Dept 2010]).
The forum selection clause in the 2012 supplement to the parties' 2010 agreement states, "Any disputes between the Parties with relation to or arising out of this Supplement or the [2010] Agreement or breach of any part thereto [sic], or to any matter stemming thereof [sic] will be brought to the suitable jurisdiction of Tel Aviv district." The instant dispute has "relation to" and arises out of the Confidentiality and Intellectual Property Agreement (CIPA), which is part of the 2010 Agreement. Thus, at a minimum, the court properly dismissed the first cause of action, which alleges breach of the CIPA.
Plaintiff contends that it should be allowed to litigate its breach of contract claim in New York because the CIPA chooses New York law. However, a choice of law clause is different from a choice of forum clause (see Boss v American Express Fin. Advisors, Inc. (6 NY3d 242 [2006]).
Plaintiff also contends that the supplement's forum selection clause does not apply to its tort claims. This argument is unavailing (see e.g. Couvertier v Concourse Rehabilitation & Nursing, Inc., 117 AD3d 772, 773 [2d Dept 2014]; Erie Ins. Co. of N.Y. v AE Design, Inc., 104 AD3d 1319, 1320 [4th Dept 2013], lv denied 21 NY3d 859 [2013]).
Since dismissal was proper based on the forum selection clause, we need not reach plaintiff's arguments regarding forum non conveniens (see Sydney, 74 AD3d at 477; see also Lischinskaya, 56 AD3d at 123-124).
Defendant's argument that plaintiff should be sanctioned for bringing a frivolous appeal is unavailing. Even though the 2012 supplement to the parties' 2010 agreement chose Israel as the
forum, plaintiff's commencement of this action in New York was not frivolous (see Sydney, 74 AD3d at 476-477).
In light of the foregoing we need not reach the other claims.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: FEBRUARY 14, 2017
CLERK
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194 F.2d 52
DAUKSEWICZv.UNITED STATES.
No. 4602.
United States Court of Appeals First Circuit.
Argued December 4, 1951.
Decided December 19, 1951.
COPYRIGHT MATERIAL OMITTED Henry C. Gill, Brockton, Mass., for appellant.
William A. Moran, Atty., Office of Rent Stabilization, Washington, D. C. (Ed Dupree, Gen. Counsel, Leon J. Libeu, Asst. Gen. Counsel, and Cecil H. Lichliter, Sp. Litigation Atty., Office of Rent Stabilization, Washington, D. C., with him on brief), for appellee.
Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.
MAGRUDER, Chief Judge.
1
In the judgment now under review the district court, pursuant to authority under § 206(b) of the Housing and Rent Act of 1947, as amended, 63 Stat. 27, 50 U.S.C.A. Appendix, § 1896(b), ordered a landlord to make restitution to a tenant in the sum of $344.25, the amount of rental overcharges during the period December 11, 1948, to June 30, 1950, and enjoined further violations of the Act and of the regulations thereunder. The only point on appeal which in our opinion warrants any comment is the claim that the district court erred in rejecting a certain offer of proof made by the defendant.
2
The case was heard by the court, without a jury, on the pleadings, plaintiff's request for admissions under Rule 36, Fed.Rules Civ.Proc. 28 U.S.C.A. and, defendant's responses thereto, defendant's request for admissions and plaintiff's responses thereto, and a stipulation of facts, defendant's offer of proof of further facts having been rejected by the court.
3
It is conceded that the maximum rent for the apartment in question was originally established at $8.50 per week on the freeze date technique pursuant to the regulation of the Price Administrator issued under the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 901 et seq. On October 9, 1946, the area rent director issued an order increasing the maximum rent to $9.25 per week. So far as appears, no attack was made upon the validity of this order, and it is stipulated that the maximum rent of $9.25 so established was carried over automatically and became the starting maximum rent under § 204(b) of the Housing and Rent Act of 1947, 61 Stat. 198, 50 U.S.C.A.Appendix, § 1894(b), when that Act superseded the Emergency Price Control Act of 1942 on June 30, 1947. It is also stipulated that this maximum rent remained unchanged throughout the period now in question, December 11, 1948, to June 30, 1950, and that the landlord during that whole period collected $13.50 per week rent, or a total overcharge of $344.25. Hence, prima facie plaintiff was entitled to an order of restitution. Porter v. Warner Holding Co., 1946, 328 U.S. 395, 66 S.Ct. 1086, 90 L.Ed. 1332; United States v. Moore, 1951, 340 U.S. 616, 71 S.Ct. 524, 95 L.Ed. 582.
4
But defendant in her answer apparently sought to set out an affirmative defense that the established maximum rent of $9.25 per week was invalid. Though the order of October 9, 1946, fixing the rent at $9.25 was made while the Emergency Price Control Act was still in effect, there appears to be no outstanding question as to any alleged overcharges prior to June 30, 1947, when that Act terminated. Therefore, the Emergency Court of Appeals has no exclusive jurisdiction, indeed no jurisdiction at all, to consider the validity of this maximum rent as applied to a period since the enactment of the Housing and Rent Act of 1947. Talbot v. Woods, Em. App.1947, 164 F.2d 493. As pointed out in Henry v. Woods, Em.App.1951, 186 F.2d 312, there is no provision in the Housing and Rent Act of 1947, similar to that contained in § 204(d) of the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 924(d), and § 408(d) of the Defense Production Act of 1950, 64 Stat. 798, 50 U.S. C.A.Appendix, § 2108(d), which would deprive courts, other than the Emergency Court of Appeals, of jurisdiction to consider the validity and to enjoin the enforcement of regulations and orders issued under the said Housing and Rent Act. It follows, then, that in the present enforcement suit the district court had jurisdiction to consider and pass upon a defense of invalidity of the maximum rent in question. How far such a defense would be good is another matter.
5
Section 204(b) of the Housing and Rent Act of 1947, 61 Stat. 198 provided that no person shall demand or receive any rent for any controlled housing accommodations greater than the maximum rent established under authority of the Emergency Price Control Act of 1942 and in effect on June 30, 1947, provided, however, "That the Housing Expediter shall, by regulation or order, make such adjustments in such maximum rents as may be necessary to correct inequities or further to carry out the purposes and provisions of this title". The criteria for such further regulations or orders were elaborated somewhat by amendment of § 204(b) in 1949, 63 Stat. 21.
6
The Controlled Housing Rent Regulation, 12 F.R. 4331, was issued by the Housing Expediter under authority of the Housing and Rent Act. Following the prescription of § 204(b) of the Act, the Housing Expediter provided in § 4 of the regulation that the maximum rent of controlled housing accommodations shall be the maximum rent which was in effect on June 30, 1947, as established under the Emergency Price Control Act and regulations thereunder, and that such maximum rent shall continue unless and until changed by the Expediter as provided in § 5 of the regulation. Section 5 contains detailed provisions under which a landlord may apply for and obtain an order increasing the maximum rent, for instance, where he has made major capital improvements or made a substantial increase in the services or equipment, or where the landlord was suffering substantial hardship because of increase in property taxes or operating costs. See also the similar provisions in the Controlled Housing Rent Regulation as republished with the inclusion of all amendments up to August 8, 1949, 14 F.R. 5711. The procedural regulations of the Housing Expediter provide that if a landlord is aggrieved by a decision of the area rent director fixing a maximum rent, he may obtain review by the regional rent administrator and, if necessary, appeal ultimately to the Housing Expediter himself. 12 F.R. 5916, 13 F.R. 2369, 14 F.R. 1784.
7
In other words, a landlord who may think that facts exist or that circumstances have arisen which would entitle him to an increase of his maximum rent under the statutory or regulatory standards cannot take upon himself to increase the rent to a figure he thinks proper, and then, in defense to a suit for restitution of overcharges, offer to prove in the enforcement court the existence of a set of facts under which he would have been entitled to an increase had he applied for it under the applicable administrative procedures. If the regulation encouraged or permitted this sort of thing, the inflationary tendencies would obviously be magnified. Also, it would have the undesirable effect of imposing upon the courts the initial burden of determining what is a proper maximum rent under the statutory and regulatory criteria without the benefit of a prior consideration of the matter by the expert administrative agency. The rent regulation does provide that, upon the filing of a petition by a landlord for a maximum rent adjustment, the Expediter may enter an interim order increasing the maximum rent, subject to refund by the landlord to the tenant of any amount received in excess of the maximum rent established by final order in such proceeding, 12 F.R. 4307, 14 F.R. 5718. Thus some administrative control is retained in the matter; and if the rent director receives a landlord's petition of prima facie merit he has discretion, through the device of an interim order, to avoid possible hardship to the landlord which might result from a delay in the administrative proceeding.
8
These provisions of the regulation which forbid a landlord, however strong may be the equities of his case, to exact a rent in excess of the established maximum without applying for an administrative adjustment, are no doubt reasonable and valid. Such regulatory requirement is not, it is true, an instance of the discretionary rule in courts of equity that a petitioner will be denied equitable relief when he has failed to pursue an available administrative remedy by which he might obtain the same relief. For the landlord in the present case is not a petitioner seeking equitable relief, but rather is a defendant in an enforcement suit. The point is, however, that once a maximum rent has been established which was initially valid, the rent regulation provides, and lawfully provides, that the landlord may not charge more than that maximum rent without having applied for an upward adjustment and presented to the Housing Expediter the special facts of his case upon which he bases his claim to a higher maximum. If he does make such an overcharge without petitioning for an adjustment he violates the regulation, and so the Act, and becomes irretrievably liable to make restitution, though the facts would have entitled him to a higher maximum rent had he applied for it.
9
To make out a defense to the enforcement suit, therefore, the landlord must not only prove the existence of facts under which he would have been entitled to an increase of maximum rent pursuant to the criteria laid down in the Act and regulation, but also that he had applied for the increase through the applicable administrative procedures, and that such relief had wrongfully been denied or withheld. United States v. Sharp, 9 Cir., 1951, 188 F.2d 311. Tested by this requirement, defendant's offer of proof in the case at bar was insufficient to make out a defense. The offer does not contain any allegation that the landlord made administrative application for an increase of the $9.25 maximum at any time before or during the period here involved, December 11, 1948, to June 30, 1950, and that such application had been denied. So far as the record discloses, the only application for administrative relief which appellant filed with respect to the apartment in question since the passage of the Housing and Rent Act of 1947 was a petition which resulted in an order of the area rent director issued September 8, 1950, increasing the maximum rent to $11.50 per week effective as of August 4, 1950, which presumably was the date on which the petition was filed. See the Controlled Housing Rent Regulation, as amended, § 825.5 (5), 14 F.R. 5715. This of course was subsequent to the period during which the overcharges in question were made.
10
The judgment of the District Court is affirmed.
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529 F.Supp. 1382 (1982)
C. R. BARD, INC., Plaintiff,
v.
MEDICAL ELECTRONICS CORPORATION, Defendant.
Civ. A. No. 81-1332-G.
United States District Court, D. Massachusetts.
January 21, 1982.
*1383 *1384 *1385 Stephen D. Anderson, Palmer & Dodge, Boston, Mass., for plaintiff.
David Roseman, Terrance J. Hamilton, Chaplin, Casner & Edwards, Boston, Mass., for defendant.
MEMORANDUM AND ORDERS ON MOTIONS FOR SUMMARY JUDGMENT AND DISMISSAL
GARRITY, District Judge.
This case arises out of the termination of a distributorship agreement between William Harvey, a division of manufacturer C. R. Bard, Inc., the plaintiff, and distributor Medical Electronics Corp. (MEC), the defendant. Bard seeks to recover damages of $137,525.14 for goods sold and delivered to, but not paid for by, defendant, plus interest and reasonable attorneys' fees. MEC, the buyer, counterclaims on five grounds relating to the alleged breach of the distribution agreement.
Without reciting all the facts of this case, we sketch relevant background. Plaintiff Bard, a leading manufacturer of medical equipment, through its William Harvey division, entered into a Manufacturer-Distributor Agreement on May 1, 1980. Under the agreement, which ran for 10 pages absent exhibits, Harvey agreed to sell its products to defendant MEC at net prices as set by Harvey. Harvey retained the right to sell its products directly to other distributors and users or engage other distributors without regard to geographic location. MEC agreed to purchase an annual minimum, and agreed to various clauses relating to inventory maintenance, promotion, and provision of credit information. The agreement was for a 6-month term and was renewed automatically unless a party gave written notice of termination 15 days in advance of the expiration date. Harvey was also authorized to terminate in various other circumstances, including default of MEC in payment according to terms. Between January 19, 1981 and March 19, 1981 Harvey delivered and sold MEC goods valued at $153,852.75. With freight charges included, and certain adjustments, the bill came to $155,906.29. After MEC returned some inventory to Harvey the bill was reduced to its present amount $137,525.14. On March 9, 1981, Harvey notified MEC in writing of its decision to terminate the distribution agreement. By letter 11 days later, MEC notified Harvey of its intention, pursuant to U.C.C. § 2-717, "to withhold and offset all sums due Harvey under the Agreement." MEC alleged that Harvey had breached the implied covenant of good faith and fair dealing by enticing MEC's regional salesman, Ron Whitfield, to work directly for Harvey, and by falsely advising MEC earlier in 1981 that the agreement would be renewed. Bard and Harvey denied these allegations.
Bard filed suit on May 7, 1981 in Suffolk Superior Court. MEC removed the action to federal district court and filed its counterclaim. The action is within the diversity jurisdiction of the court and the amount in controversy exceeds $10,000.
Plaintiff moved a) for summary judgment and entry of final judgment on its contract claim, and b) for dismissal of Counts IV and V of defendant's counterclaim. The court heard oral argument on December 21, 1981 on those motions which we discuss and decide in turn.
Plaintiff's Motion for Summary Judgment and Entry of Final Judgment
Summary judgment is proper when 1) "specified filings reveal no genuine issue as to any material fact" and 2) "the moving party is entitled to a judgment as a matter of law." Federal Rule of Civil Procedure 56(c). MEC's admissions establish that it purchased goods from Harvey valued at $137,525.14 for which it has not paid. These admissions would entitle Bard to summary judgment absent a valid defense supported by a statement of "specific facts showing that there is a genuine issue for *1386 trial." Fed.Rule Civ.Pro. 56(e). Defendant MEC raises eight affirmative defenses: failure to state a claim, violation of the Massachusetts antitrust statute G.L. c. 93, violation of the Massachusetts statute proscribing unfair practices, G.L. c. 93A, § 2, estoppel, justification, impossibility, violation of the duty of good faith imposed by the Uniform Commercial Code, and willful violation of the distribution agreement by plaintiff.[1] In light of defendant's admissions, the defense of failure to state a claim is clearly frivolous. The "antitrust defense" is generally unsuccessful when raised by a purchaser in a suit against him for the agreed price of goods sold. Kelly v. Kosuga, 1959, 358 U.S. 516, 518, 79 S.Ct. 429, 430, 3 L.Ed.2d 475, Gutor International AG v. Raymond Packer Co., Inc., 1 Cir. 1974, 493 F.2d 938, 946-47, and has been limited to circumstances where the violation of the antitrust act inheres in the sale, Dickstein v. du Pont, 1 Cir. 1971, 443 F.2d 783, 786-87, a situation clearly absent here. MEC relies on the Massachusetts Antitrust Act, rather than the Sherman Act, for its antitrust defense. Since the Massachusetts statute provides that it shall be construed in harmony with the Sherman Act, the federal cases cited represent principles applicable to the state act as well.
MEC's "principle defense" is that Bard breached the agreement by failing to act in good faith and to deal fairly as required by §§ 1-203 and 2-717 of the Uniform Commercial Code and by Fortune v. National Cash Register, 1977, 373 Mass. 96, 364 N.E.2d 1251.[2] Specifically, MEC alleges that 1) a Bard sales manager failed to support MEC, 2) Bard tried to lure away MEC's key sales manager, and 3) Bard, shortly before terminating the distributorship agreement, assured MEC that the relationship would continue as long as sales goals were met. These allegations, even if true, are insufficient to establish a defense to plaintiff's contract claim.
The U.C.C. § 1-203, as adopted by Massachusetts, G.L. c. 106, § 1-203, provides:
Obligation of Good Faith. Every contract or duty within this chapter imposes an obligation of good faith in its performance or enforcement.
Although the precise contours of "good faith" as used in the U.C.C. are unclear, see Gillette, "Limitations on the Obligation of Good Faith," Duke Law Journal (1981) 619-665, defendant assigns the concept too broad a reach. The U.C.C. defines "good faith" as "honesty in fact in the conduct or transaction concerned." G.L. c. 106, § 1-201(19). Here the "transaction concerned" in Bard's complaint is the sale of the goods for which MEC has not paid and Bard quite clearly had the good faith duty the U.C.C. imposes regarding that sale.
But MEC here alleges, as its defense to Bard's action for the price of the goods sold and delivered, not that Bard failed to act in good faith regarding the sale of those goods but rather that Bard failed to act in good faith regarding the larger distributorship agreement. The theory underlying that defense is too broad. Absent some bad faith by Bard in the sale of the goods itself, MEC lacks a good faith defense under the U.C.C. to Bard's claim for the price.
The cases which defendant cites in its brief, Fortune v. National Cash Register, supra, and at oral argument, Gram v. Liberty Mutual Insurance Co., ___ Mass. ___, *1387 1981 Mass.Adv.Sh. 2287, 429 N.E.2d 21 (1981), do not help MEC's defense against Bard's claim. To begin with, those cases did not construe the U.C.C. but rather involved common contract law in the employment context. Moreover, those cases are clearly distinguishable.
Fortune held that a contract for employment at will was breached, under the facts of that case, when an employer terminated a salesman who was compensated on a commission basis in order to avoid paying the salesman future commissions due for contracts the employee had recently arranged. Moreover, Fortune held that the salesman could sue the employer to recover damages for an employer's breach of that good faith covenant. Fortune explicitly did not reach the question whether every contract contains an implied covenant of good faith and fair dealing. Fortune v. National Cash Register, supra 373 Mass. at 104, 364 N.E.2d 1251, Gram v. Liberty Mutual Ins. Co., supra ___ Mass. at ___-___ 1981 Mass. Adv.Sh. at 2294-2295, 429 N.E.2d 21. In Gram, the S.J.C. declined "to adopt a general rule that the discharge of an at-will employee without cause is alone a violation of an employer's obligation of good faith and fair dealing", but held that "the obligation of good faith and fair dealing imposed on an employer requires that the employer be liable for the loss of compensation that is so clearly related to an employee's past service, when the employee is discharged without good cause." Ibid. at ___-___, 2299-2300, 429 N.E.2d 21. Fortune and Gram may be relevant, and helpful, to defendant's counterclaim for violation of the distributorship agreement. But, since neither held that an employer's breach of contract afforded the employee a defense to obligations unrelated to that breach, they are not helpful as defenses to Bard's contract action.
MEC's remaining defenses estoppel, justification, excuse, plaintiff's alleged unfair practices, and its alleged willful violation of the contract rely on the same facts as the good faith defense. Even if MEC properly stated facts sufficient to set out each element of those defenses, it still would lack a defense to Bard's claim since those theories, like the good faith defense, address the termination of the distributorship agreement rather than the actual sale of the goods.
MEC also claims that the U.C.C. § 2-717, as incorporated in Massachusetts law, G.L. c. 106, § 2-717, authorizes it to withhold payment for the goods received. That statute provides:
Deduction of Damages from Price. The buyer on notifying the seller of his intention so to do may deduct all or any part of the damages resulting from any breach of the contract from any part of the price still due under the same contract.
Defendant, as § 2-717 requires, notified Bard of its intention to deduct from the price. We conclude, however, that MEC has construed this provision too broadly. To be sure, the drafters intended § 2-717 to broaden the buyer's right to deduct and did not limit that remedy to cases involving breach of warranty. Comment 1 to U.C.C. § 2-717. But as Judge Duncan has pointed out, § 2-717 "is not a general set-off provision permitting a buyer of goods to adjust its continuing contract obligations according to the equities perceived by the buyer." Columbia Gas Transmission Corp. v. Larry H. Wright, Inc., S.D.Ohio, 1977, 443 F.Supp. 14, 20. Damages are deductible only against the price still due under the same contract. Moreover, we believe that in order for a buyer to invoke § 2-717, the asserted breach must go to the essence of the transaction under which the seller seeks to recover his price. Here the breaches asserted by the buyer largely relate to the termination of the distributorship agreement; there is no hint that seller acted improperly in any way regarding the actual sale or delivery of the goods. A buyer should not be able, by asserting a remote breach of contract, to delay payment for goods accepted. The recent expansion of the "good faith" concept, uniquely susceptible as it is to frivolous, as well as authentic, assertions, makes necessary some confinement *1388 of the scope of § 2-717. The high contemporary level of interest rates provides further reason for a more narrow construction of that provision.
Contrary to defendant's argument, the First Circuit did not, in Gutor International AG v. Raymond Packer Co., Inc., 1 Cir. 1974, 493 F.2d 938, recognize the right of a buyer to offset damages stemming from termination of a distributorship. Rather, the First Circuit explicitly acknowledged that defendant Packer never gave plaintiff Gutor notice of its intent to invoke § 2-717 and thus forfeited "whatever right, or claim of right, it might have had" to act under that provision. Ibid. at 943. Thus, it never reached the question here at issue.
In view of MEC's admissions of the receipt and nonpayment of goods from Harvey, coupled with MEC's lack of a defense to Board's claim, we conclude that no genuine issue of material fact exists to be tried regarding Bard's claim for recovery of the price of those goods and that Bard should prevail on its claim as a matter of law. Accordingly, we grant Bard summary judgment on its complaint.
Bard also seeks entry of final judgment on its complaint under Rule 54(b), Fed.R.Civ.P. That rule provides, in pertinent part:
(b) Judgment Upon Multiple Claims or Involving Multiple Parties. When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment.
The decision whether to certify as a final judgment rests largely in the discretion of the trial court, Sears, Roebuck & Co. v. Mackey, 1956, 351 U.S. 427, 437, 76 S.Ct. 895, 900, 100 L.Ed. 1297, but the Supreme Court has suggested some appropriate inquiries. See Curtiss-Wright Corp. v. General Electric Co., 1980, 446 U.S. 1, 100 S.Ct. 1460, 64 L.Ed.2d 1. Relevant factors may include, but are not limited to, the equities between the parties, Ibid. at 8, 10, 11-12, 100 S.Ct. at 1465, 1466, 1466-67, including the difference between the statutory and market rates of interest, Ibid. at 11, 100 S.Ct. at 1466, and judicial administrative interests. Ibid. at 8, 100 S.Ct. at 1465. Upon consideration of those factors, we conclude that "there is no just reason for delay." Fed.Rule Civ.Pro. 54(b). Plaintiff's claim, as discussed above, is for recovery of an ascertainable sum for goods sold and delivered. That amount is considerable. In such a situation, we see no reason why plaintiff should be denied the use of those funds while awaiting disposition of MEC's counterclaims. The amount Bard would ultimately recover as interest calculated at the statutory rate is surely significantly less than the market would yield, especially to a sophisticated investor. Bard is clearly solvent and good for any judgment to which MEC might ultimately be entitled on its counterclaims. Nor is MEC's survival jeopardized by entry of final judgment for Bard; an affidavit by MEC's president, filed on August 17, 1981 reveals that it possesses considerable assets. Finally, the issues Bard's complaint raises are independent of those in MEC's counterclaim so that entry of final judgment does not present a danger that the court of appeals will be called upon twice to review the same issues. See Curtiss-Wright Corp. v. General Electric Co., supra. MEC's reliance on Gutor International AG v. Raymond Packer Co., Inc., supra at 944 n. 9 and 948, is misplaced. There the district court had initially granted plaintiff summary judgment on its claim and on defendant's counterclaim. In affirming summary judgment for plaintiff on its claim but reversing on defendant's counterclaim, the First Circuit granted leave to the district court to stay enforcement of the judgment on plaintiff's claim. Since the appellate court, in reversing that part of the lower court's decision denying defendant's counterclaim, had returned some issues to the trial court for further consideration, it was, in effect, suggesting *1389 that the trial court consider the equities of enforcing plaintiff's judgment before disposition of defendant's counterclaim. That issue had, of course, not arisen before, since the district court initially decided all claims. The First Circuit explicitly left that determination to "the discretion of the district court", Ibid. at 944 n. 9, and elsewhere in the opinion acknowledged the utility of Rule 54(b). Ibid. at 947.
Accordingly, the court plans to enter final judgment on Bard's complaint. Bard has not, however, submitted a motion and affidavit detailing its reasonable attorneys' fees; and MEC has not addressed Bard's claim for interest as stated in "Plaintiff's Amended Motion for Summary Judgment Under Rule 56 and for Entry of Final Judgment Under Rule 54(b)" or Bard's claims for reasonable attorneys' fees. We defer entry of final judgment until receipt of submissions addressing these issues, as ordered below.[3]
Motion to Dismiss
Bard also has moved to dismiss Counts IV and V of MEC's counterclaim for failure to state a claim under the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2 and under the parallel Massachusetts Antitrust Act, G.L. c. 93, §§ 4, 5. Essentially, MEC alleges that the requisite contract, combination or conspiracy existed between Bard, Whitfield and indirectly MEC's customers[4] and that this agreement restrained trade in violation of 15 U.S.C. § 1 and G.L. c. 93, § 4. Moreover, MEC alleges that Bard was attempting to monopolize distribution in the medical equipment market in violation of 15 U.S.C. § 2 and G.L. c. 93, § 5.
Although "summary procedures should be used sparingly in complex antitrust litigation," Poller v. Columbia Broadcasting System, Inc., 1962, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458, "sparingly" is not synonymous with "not at all," and the party claiming an antitrust violation must still allege, to survive a motion to dismiss, sufficient facts to state each element of an antitrust offense. See Gilbuilt Homes, Inc. v. Continental Homes of New England, 1 Cir. 1981, 667 F.2d 209; Americana Industries Inc. v. Wometco de Puerto Rico, 1 Cir. 1977, 556 F.2d 625, 627-28.
MEC has not done so. The Sherman Act addresses and proscribes unreasonable anticompetitive behavior. It does not prevent a private manufacturer who lacks market power from deciding independently with whom it will deal. United States v. Colgate & Co., 1919, 250 U.S. 300, 307, 39 S.Ct. 465, 468, 63 L.Ed. 992; Gilbuilt Homes, Inc. v. Continental Homes of New England, supra, at 210. Vertical integration, the situation where a manufacturer decides to distribute its own products rather than rely on independent distributors, does not threaten competition where substantial market power is absent at either the product or distribution level. Auburn News Company, Inc. v. Providence Journal Company, 1 Cir. 1981, 659 F.2d 273, 278.
MEC fails to state a claim in two respects. Its complaint, even when read with the gloss added by MEC's brief, fails to allege a contract, combination or conspiracy. We do not believe that the conclusory allegations and the contract to employ Whitfield can constitute an agreement in restraint of trade forbidden by the Sherman Act. In Gilbuilt Homes, Inc. v. Continental Homes of New England, supra, the court dismissed for failure to state a claim under 15 U.S.C. § 1, a complaint regarding termination of a vertical business relationship. The First Circuit concluded that the complaint contained only "conclusory allegations of an `internal conspiracy'" and failed *1390 to suggest that "the decision to terminate [the] dealer was other than an intracorporate one." Ibid. at 210-211. Significantly, the complaint in that case contained an allegation that the manufacturer "did entice and hire away from the [builder/dealer] some of its sales personnel." Ibid. at 211.[5] Following Gilbuilt we hold that conclusory allegations and a reference to hiring away a key employee cannot, under these facts, constitute a contract, conspiracy or combination.
MEC's complaint also does not state a claim for relief under 15 U.S.C. § 1 since it fails to allege an unreasonable restraint of trade. "[V]ertical integration, as such without more, cannot be held violative of the Sherman Act." United States v. Columbia Steel Co., 1948, 334 U.S. 495, 525-26, 68 S.Ct. 1107, 1123, 92 L.Ed. 1533; Auburn News Company, Inc. v. Providence Journal Company, supra at 278. Here MEC alleges nothing more. MEC does not allege that Bard has market power. See Ibid. The mere cancellation of a distributorship is not an unreasonable restraint of trade that the Sherman Act proscribes, Bushie v. Stenocord Corp., 9 Cir. 1972, 460 F.2d 116, nor is the deprivation of a key employee. Stifel Nicolaus & Co., Inc. v. Dain, Kalman & Quail, Inc., 8 Cir. 1978, 578 F.2d 1256, 1261.
MEC relies upon Industrial Bldg. Materials, Inc. v. Interchemical Corp., 9 Cir. 1970, 437 F.2d 1336, in which the Ninth Circuit held that the district court should not have granted summary judgment to the defendant in an anti-trust claim alleging that the defendant-manufacturer, who had vertically integrated, had conspired with others to force the plaintiff distributor out of business in restraint of trade. That case is distinguishable. First, the distributor there alleged that the manufacturer "sought to drive it out of business by unlawful means," Ibid. at 1341, an allegation absent here. Second, the distributor there alleged that the manufacturer had monopoly power, or at least a dominant position, in its market "so that any action tending to strengthen that position would be an unreasonable restraint of trade." Ibid. at 1343. Here, however, MEC has not alleged that Bard has such power, an omission that assumes importance since the Ninth Circuit in Industrial Bldg. Materials, Inc., at 1343, explicitly did "not decide what result [it] would reach if the same actions were taken by a less powerful member of the industry." Finally, there the alleged conspiracy involved the officers of two corporations as well as the distributor's salesman and customers. Accordingly we hold that MEC fails to state a claim under 15 U.S.C. § 1 since it alleges no unreasonable restraint on trade.
MEC also fails to state a claim for relief under 15 U.S.C. § 2 for attempt to monopolize. A claim of attempt to monopolize "must establish both an intent to monopolize and a dangerous probability of successful monopolization." George R. Whitten, Jr., Inc. v. Paddock Pool Builders, Inc., 1 Cir. 1974, 508 F.2d 547, 550. Hence, an attempt to monopolize case must include a market definition. Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 1965, 382 U.S. 172, 177, 86 S.Ct. 347, 350, 15 L.Ed.2d 247; Gilbuilt Homes, Inc. v. Continental Homes of New England, supra, at 211; George R. Whitten, Jr., Inc. v. Paddock Pool Builders, Inc., supra at 550. The party pressing a claim based on attempt to monopolize must plead facts sketching "relevant details of a § 2 claim" including "facts defining the market." Gilbuilt Homes, Inc. v. Continental Homes of New England, supra, at 211. MEC alleges only that Bard and Harvey, in hiring MEC's salesman Whitfield to work for Harvey, engaged in "an attempt to monopolize ... trade in the medical equipment and product market." MEC fails to specify an adequate product or geographic market and fails "to allege facts and circumstances tending to show that [Bard] has substantial market power." Americana Industries *1391 v. Wometco de Puerto Rico, supra at 628.
Therefore, we dismiss Count V of MEC's counterclaim alleging violations of Sherman Act §§ 1 and 2. The Massachusetts Antitrust Act, G.L. c. 93, § 1 provides that it "shall be construed in harmony with judicial interpretations of comparable federal antitrust statutes insofar as practicable." Sections 4 and 5 of the Massachusetts Act are directly comparable to sections 1 and 2 respectively of the Sherman Act. Accordingly, we also dismiss Count IV of MEC's counterclaim.
ORDERS
The court grants plaintiff Bard summary judgment on its complaint in the amount of $137,525.14 plus interest, perhaps supplemented by attorneys' fees, and dismisses Counts IV and V of defendant MEC's counterclaim. The court defers entry of final judgment until after determination of plaintiff's claims for attorneys' fees and for interest. It is ordered that the parties endeavor to stipulate resolution of these issues. Failing agreement, 1) plaintiff shall file by January 29, 1982 a motion for recovery of attorneys' fees accompanied by a memorandum of law and supporting affidavit(s) computing a claimed lodestar, see Furtado v. Bishop, 1 Cir. 1980, 635 F.2d 915, and adjustments based upon the 12 factors identified in King v. Greenblatt, 1 Cir. 1977, 560 F.2d 1024; 2) defendant shall file by January 29, 1982 a response to plaintiff's claim for interest, with particular attention to the claims and calculations on pages 2-3 of "Plaintiff's Amended Motion for Summary Judgment Under Rule 56 and for Entry of Final Judgment Under Rule 54(b)", which was filed on November 23, 1981; 3) defendant shall file by February 11, 1982 a memorandum responsive to plaintiff's claim for attorneys' fees.
NOTES
[1] MEC also defends by alleging in its Answer violations of various unspecified statutes. The court obviously cannot consider the merits of such "defenses." Since MEC has not specified these defenses in its briefs or by amendments to its Answer, we conclude that it has waived these other "defenses" and we limit our consideration to those stated in its Answer.
[2] Although the Manufacturer-Distributor Agreement provides that it shall be interpreted according to California law, the parties cited no California cases in their briefs, relying instead on Massachusetts case law. The court interprets this reliance, and defense counsel's statement at the hearing, when the court raised the point, that he assumed that the law in California was the same as in Massachusetts, as signifying their agreement that Massachusetts decisions are applicable precedent. The court notes that California and Massachusetts have both adopted the U.C.C. provisions relevant to this case.
[3] Counsel are directed to confer at their earliest convenience in an effort to stipulate resolution of either or both of these issues.
[4] MEC claims in its brief that the purported contract, combination or conspiracy involved Bard, Whitfield and MEC's customers. MEC's counterclaim did not make this clear, indeed left it so obscure that Bard quite reasonably assumed MEC was alleging a conspiracy between Bard and Harvey. For purposes of this motion we accept MEC's clarification in its brief as its statement of the contract, combination or conspiracy.
[5] To be sure, the complaint in Gilbuilt Homes apparently was more deficient than the one here and the reference to efforts to "entice" sales personnel apparently came in the portion of the complaint alleging a violation of 15 U.S.C. § 2, not 15 U.S.C. § 1. We believe that these differences do not remove this case from the holding of Gilbuilt.
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181 F.Supp. 729 (1960)
Archie Q. ADAMS, doing business as Cal-Ore Asbestos Company, Plaintiff,
v.
RALPH L. SMITH LUMBER COMPANY, a Missouri Corporation, Defendant.
Civ. No. 7957.
United States District Court N. D. California, N. D.
March 18, 1960.
*730 Mark M. Brawman, Yreka, Cal., and Alf M. Jacobsen, Cathlamet, Wash., for plaintiff.
Webster V. Clark, Lawrence W. Jordan, Jr., Bernard P. McCullough, and Rogers & Clark, San Francisco, Cal., for defendant.
HALBERT, District Judge.
This is an action arising out of controversies over a leasing agreement. The action was originally instituted in the Superior Court of the State of California, in and for the County of Siskiyou. Defendant filed a petition to have the case removed to this Court on the ground of diversity of citizenship with the requisite jurisdictional amount involved (Title 28 U.S.C. § 1332 and § 1441). Plaintiff is a citizen of California. The petition for removal states that defendant was incorporated and operates under the laws of Missouri, and is a citizen of that State. Neither the petition for removal, nor any other document in the file at the time said petition was filed, contains any statement as to the location of defendant's principal place of business.
After some proceedings in this Court, including the filing of an amended complaint, and an answer thereto, plaintiff moved this Court to remand the case to the State Court on the ground that defendant has its principal place of business in Anderson, California, and is, therefore, a citizen of California, so far as this litigation is concerned.
By way of response to plaintiff's contention, defendant now asserts that its principal place of business is in Missouri, and that plaintiff has, in fact, waived his right to have the case remanded.
The threshold question in every case in the Federal Courts is jurisdiction. The Courts will raise the issue of jurisdiction on their own motion, and this they must do even though it is not raised by the parties (Warner v. Territory of Hawaii, 9 Cir., 206 F.2d 851). Jurisdiction is conferred on this Court solely by statute. There is no presumption of jurisdiction in the Federal Courts (Lehigh Mining & Manufacturing Co. v. Kelly, 160 U.S. 327, 16 S.Ct. 307, 40 L.Ed. 444 and United States v. Green, 9 Cir., 107 F.2d 19), and it may not be conferred by consent or waiver of the parties. There can be no waiver of the right to move to remand, but, to the contrary, the Court must of its own motion remand any case which it discovers to have been removed without jurisdiction (Roseberry v. Fredell, D.C., 174 F.Supp. 937).
As the record, at the time of the petition for removal, did not state the location of defendant's principal place of business, there was no short and plain statement of the facts entitling defendant to removal. The record was therefore inadequate to invoke the jurisdiction of this Court (Title 28 U.S.C. § 1332(c) and § 1446(a); Roseberry v. Fredell, supra; Washington-East Washington Joint Authority v. Roberts & Schaefer Co., D.C., 180 F.Supp. 15; and Browne v. Hartford Fire Ins. Co., D.C., 168 F. *731 Supp. 796). The motion to remand must therefore be granted.[1]
Under the circumstances which exist, it is unnecessary for this Court to decide the question of where defendant's principal place of business is in fact located.
It Is, Therefore, Ordered that this case be, and it is, hereby remanded to the Superior Court of the State of California, in and for the County of Siskiyou, for all further proceedings. The Clerk is directed to take any and all steps, and perform any and all acts, necessary to complete the transfer of this case in accordance with this order.
NOTES
[1] Defendant contends that plaintiff has himself invoked the jurisdiction of this Court by his amended complaint. The complaint does not contain any statement as to the principal place of business of defendant, or the citizenship of defendant. It is therefore inadequate to invoke the jurisdiction of this Court. If the complaint as amended had been originally filed in this Court, it would have been the duty of the Court to dismiss it, on the Court's own initiative, when it discovered the lack of jurisdictional allegations (See: Warner v. Territory of Hawaii, supra).
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498 S.E.2d 924 (1998)
Sherri Ann POLSTON, s/k/a Sherri Anne Polston
v.
COMMONWEALTH of Virginia.
Record No. 971536.
Supreme Court of Virginia.
April 17, 1998.
Ned M. Mikula, Chesterfield, for appellant.
Marla Graff Decker, Assistant Attorney General (Mark L. Earley, Attorney General, on brief), for appellee.
Present: All the Justices.
HASSELL, Justice.
Sherri Ann Polston entered a conditional plea of guilty to the crime of possession of marijuana with intent to distribute in violation of Code § 18.2-248. Pursuant to Code § 19.2-254, she reserved her right to appeal that portion of the Chesterfield Circuit Court's judgment denying her motion to suppress the marijuana which she claims was the fruit of an unlawful search. The trial court accepted her guilty plea and fixed her *925 punishment at 10 years' imprisonment, which was suspended subject to certain conditions. The Court of Appeals affirmed the judgment of the circuit court, Polston v. Commonwealth, 24 Va.App. 738, 485 S.E.2d 632 (1997), and we awarded the defendant an appeal.
The following facts are relevant to our disposition of this appeal. Stuart G. Powell, a Chesterfield County detective, along with an unidentified informant, appeared before a magistrate on January 6, 1995. Detective Powell submitted an affidavit to the magistrate which stated in relevant part:
"On this date 1-6-95, a citizen appeared before the magistrate of the Twelth [sic] Judicial District Court and stated the following facts under oath and the penalty of purgery [sic]. This citizen stated that within the past 72 hours he/she observed a quantity of marijuana being stored and being offered for sale at the apartment mentioned in section two of this document.
* * *
"I was advised of the facts set forth in this affidavit, in whole or in part, by an informer. This informer's credibility or the reliability of the information may be determined from the following facts:
"The citizen mention[ed] in section 4 of this document made these statements while under oath and after being advised of the penalty of purgery [sic] by your affiant. Your affiant has been a police officer for over six years and is currently employed in the Vice and Narcotics Unit of the Chesterfield County Police Department. Your affiant has made several drug arrests and is familiar with the drug culture in and around Chesterfield County. The citizen has decided to remain anonymous for fear of retaliation."
The magistrate questioned the informant under oath, and the informant stated that he was familiar with the local drug culture and that he had used marijuana at least once per week for a number of years. The magistrate or Detective Powell added the following sentence to the affidavit: "This citizen is a self-admitted drug user and is familiar with the drug culture in and around Chestserfield [sic] County."
The magistrate issued a warrant authorizing a search of the defendant's apartment. When Detective Powell, along with Chesterfield County police officers, conducted the search, the defendant directed them to a dresser in her bedroom which contained approximately one pound of marijuana. The officers also found a "bong" in the defendant's apartment, and the defendant told the officers that she sold marijuana.
The defendant argues that the magistrate did not have a substantial basis to find probable cause necessary for the issuance of the search warrant. The defendant observes that the "citizen" referred to in the affidavit was actually an individual who had been arrested by police officers earlier on the day that the search warrant was issued. Continuing, the defendant says that Detective Powell "conceded that he had made no effort of any kind to investigate or verify either the informant's credibility or the reliability of the information" contained in the affidavit. Responding, the Commonwealth asserts that the magistrate did have a substantial basis for finding that probable cause existed for the issuance of the warrant and that the evidence seized pursuant to the warrant was also admissible on another basis, the good faith exception to the warrant requirement established in United States v. Leon, 468 U.S. 897, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984).
In Leon, the United States Supreme Court held that "suppression of evidence obtained pursuant to a warrant should be ordered only on a case-by-case basis and only in those unusual cases in which exclusion will further the purposes of the exclusionary rule." 468 U.S. at 918, 104 S.Ct. at 3418; see also Massachusetts v. Sheppard, 468 U.S. 981, 987-88, 104 S.Ct. 3424, 3427-28, 82 L.Ed.2d 737 (1984). The Supreme Court also stated that "the exclusionary rule is designed to deter police misconduct...." Leon, 468 U.S. at 916, 104 S.Ct. at 3417. This deterrent is not present when a police officer, acting in objective good faith, obtains a search warrant from a magistrate and conducts a search within the scope of the warrant. Derr v. *926 Commonwealth, 242 Va. 413, 422, 410 S.E.2d 662, 667 (1991). We have embraced and applied the good faith exception to the exclusionary rule. Id. at 422-23, 410 S.E.2d at 667; McCary v. Commonwealth, 228 Va. 219, 232, 321 S.E.2d 637, 644 (1984).
The Supreme Court stated the following test which we must apply to determine whether suppression of evidence is an appropriate remedy:
"Suppression therefore remains an appropriate remedy if the magistrate or judge in issuing a warrant was misled by information in an affidavit that the affiant knew was false or would have known was false except for his reckless disregard of the truth.... The exception we recognize today will also not apply in cases where the issuing magistrate wholly abandoned his judicial role.... [I]n such circumstances, no reasonably well trained officer should rely on the warrant. Nor would an officer manifest objective good faith in relying on a warrant based on an affidavit `so lacking in indicia of probable cause as to render official belief in its existence entirely unreasonable'.... Finally, depending on the circumstances of the particular case, a warrant may be so facially deficient i.e., in failing to particularize the place to be searched or the things to be seized that the executing officers cannot reasonably presume it to be valid." Leon, 468 U.S. at 923, 104 S.Ct. at 3421 (citations omitted).
We hold that, regardless of the actual validity of the search warrant, the evidence seized during the search of the defendant's apartment is admissible because of the good faith exception to the exclusionary rule. The evils identified in the Leon test are simply not present here. When the police officers conducted the search of the defendant's apartment, they acted in good faith, reasonably, and under the authority of an apparently valid search warrant. The magistrate was not misled by any information in the affidavit, and he did not abandon his judicial role. Rather, acting in his judicial role, the magistrate questioned the informant about the informant's knowledge of drug activity in Chesterfield County. Additionally, the warrant is not so lacking in indicia of probable cause as to render official belief in its existence entirely unreasonable, and the warrant is not facially deficient.
Accordingly, we will affirm the judgment of the Court of Appeals.
Affirmed.
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469 So.2d 720 (1985)
Cosby Linward HURST
v.
STATE.
7 Div. 274.
Court of Criminal Appeals of Alabama.
April 9, 1985.
*721 Loma B. Beaty, Fort Payne and Terry T. Bush, Rainsville, for appellant.
Charles A. Graddick, Atty. Gen., and P. David Bjurberg, Asst. Atty. Gen., for appellee.
BOWEN, Presiding Judge.
Cosby Linward Hurst was indicted for the murder of Michael Fox. A jury convicted him of manslaughter. Sentence was ten years' imprisonment. Nine issues are presented on appeal.
I
The defendant argues that the trial judge erred in refusing to instruct the jury on the crimes of criminally negligent homicide, assault, and reckless endangerment as lesser included offenses of the crime charged in the indictment.
The State's evidence was that, shortly after midnight on July 2, 1982, Michael Fox shoved the defendant after the defendant hit his wife, Jody Hurst, who had discovered the defendant sitting with another woman. The defendant and Fox "tangled" and the defendant was seen with a knife. Although there were several people in the apartment at the time, no one saw the defendant actually cut Fox. During this struggle, Mrs. Hurst and the other woman were also engaged in a physical altercation. The defendant's confrontation with Fox was brief. Before the defendant could walk out of the apartment, Fox fell to the floor. He had been stabbed in the heart and cut across the face.
In a statement to the police, the defendant denied having or seeing any knife, but did not deny that he might have cut Fox: "I ain't saying I didn't cut him, because I was agrabbing anything I could." The defendant stated, "[I]f he was cut in the heart, it wasn't cut with a knifeWhatever he had in his hand, because me and him was wrestling and if he had've got cut, he would have got cut in his belly, `cause we had the knife wrestling downor whatever it wasdown in his belly." * * * "I don't see how in the world he could have been cut up here, unless he fell in the floor and cut hisself on it and fell, because me and him was ascuffling."
In his defense, the defendant attempted to establish that, after he walked away from Fox, Fox and Jeff Lowe began fighting and that it must have been Lowe who stabbed Fox.
The requested charge on criminally negligent homicide was properly refused because there was no evidence that the defendant was acting "negligently" as that term is defined in Alabama's Criminal Code. Alabama Code 1975, §§ 13A-2-2(4).
It was undisputed that Fox struck the first blow. The State's evidence supports the conclusion that the defendant pursued Fox, who was unarmed, and cut and stabbed him with a knife. The defense tended to show that the unarmed defendant acted only in self-defense and did not even know that Fox had been cut when he left the apartment. "The submission to the jury of manslaughter as a lesser included offense of murder does not necessarily entitle a defendant to a jury charge on criminally negligent homicide as a lesser included offense." Phelps v. State, 435 So.2d *722 158, 166 (Ala.Cr.App.1983). If the defendant apprehended danger to himself, he had the right to take the knife away from Fox. Wakefield v. State, 447 So.2d 1325, 1326 (Ala.Cr.App.1983), affirmed, Smith v. State, 447 So.2d 1334 (Ala.1984). If, while the defendant was trying to defend himself and take the knife away from Fox, Fox was accidentally injured, it would simply be an accident. If the defendant intentionally caused the injury, it would be self-defense, Wakefield, supra, but not criminal negligence.
For these same reasons, the requested charges on assault and reckless endangerment were properly refused. Under the State's evidence, the defendant intentionally caused the death of Fox. Under the evidence presented by the defense, the defendant, while acting in self-defense, may have accidentally injured Fox.
"The accused is entitled to have the trial court charge on lesser included offenses where there is a reasonable theory from the evidence supporting defendant's position, regardless of whether the State or defendant offers the evidence." Ex parte Pruitt, 457 So.2d 456, 457 (Ala.1984). However, "[t]he court shall not charge the jury with respect to an included offense unless there is a rational basis for a verdict convicting the defendant of the included offense." Alabama Code 1975, § 13A-1-9.
II
The trial court properly refused to charge on insanity. "Intoxication in itself does not constitute mental disease or defect within the meaning of section 13A-3-1." Alabama Code 1975, § 13A-3-2(d). Although there was some testimony that the defendant was highly intoxicated, there was no indication that the defendant lacked either the "capacity to appreciate the criminality of his conduct or to conform his conduct to the requirements of law." Alabama Code 1975, § 13A-3-1. "Requested charges submitting the defense of insanity to the jury are properly refused where there is no evidence tending to show that the accused was insane." Young v. State, 428 So.2d 155, 160 (Ala.Cr.App.1982). We note that the trial court did instruct the jury on intoxication. Although intoxication may be so extreme as to render one insane, Maddox v. State, 31 Ala.App. 332, 334, 17 So.2d 283 (1944), there was no evidence that the defendant was that intoxicated in this case.
III
It is alleged that the trial court erred in giving a confusing and erroneous oral instruction on the burden of proof.
In instructing the jury, the trial judge did state that "[y]ou cannot convict if there is a probability that the defendant is innocent." This was proper. Fleming v. State, 150 Ala. 19, 43 So. 219, 221 (1907). "As we understand it, the better rule expressed and obtaining is that the jury should acquit if there is from the evidence a probability of innocence, and such charge is generally held proper." Wilson v. State, 243 Ala. 1, 21, 8 So.2d 422 (1942); Blalock v. State, 369 So.2d 35, 37 (Ala.Cr.App.), cert. denied, Ex parte Blalock, 369 So.2d 38 (Ala.1979).
We have reviewed the entire oral charge of the trial judge on this issue and find no error. Even "where a portion of the oral charge is erroneous, the whole charge may be looked to and the entire charge must be construed together to see if there be reversible error." Gosa v. State, 273 Ala. 346, 350, 139 So.2d 321 (1961).
IV
Again, construing the court's charge in its entirety, we find that the trial court did not misstate the defendant's burden to prove self-defense. The court accurately stated that "[t]he State has the burden of convincing you beyond a reasonable doubt and to a moral certainty that the defendant was not acting in self-defense."
V
The defendant complains of the trial court's failure to provide the defense access *723 to State-prepared statements or tape recordings of Judy Castillo. We find no error.
The defendant's reliance on Jencks v. United States, 353 U.S. 657, 77 S.Ct. 1007, 1 L.Ed.2d 1103 (1957), is misplaced as that case applies only to federal prosecutions. Sanders v. State, 278 Ala. 453, 457, 179 So.2d 35 (1965).
The record shows that the State produced for the defendant the only tape recording of the interviews it had with Ms. Castillo, who was called as a witness by the defense. The defendant had actual knowledge of Ms. Castillo's favorable testimony for the defense and called her as a witness at trial. Under these circumstances, we fail to see how any alleged nondisclosure harmed the defendant. Prosecutors have no duty under Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), to disclose evidence available to the defense from another source. Fulford v. Maggio, 692 F.2d 354, 357 (5th Cir.1982), reversed on other grounds, 462 U.S. 111, 103 S.Ct. 2261, 76 L.Ed.2d 794 (1983); United States v. Bruner, 657 F.2d 1278, 1288 (D.C.Cir.1981); United States v. Iverson, 648 F.2d 737, 739 (D.C.Cir.1981); United States v. Steffen, 641 F.2d 591, 594-95 (8th Cir.), cert. denied, 452 U.S. 943, 101 S.Ct. 3091, 69 L.Ed.2d 959 (1981).
Even if the State did fail to produce the requested Brady information, a reversal is not required because the nondisclosure would not have affected the outcome of the trial. United States v. Agurs, 427 U.S. 97, 104, 96 S.Ct. 2392, 2397, 49 L.Ed.2d 342 (1976); United States v. Shields, 675 F.2d 1152, 1159-60 (11th Cir.), cert. denied, 459 U.S. 858, 103 S.Ct. 130, 74 L.Ed.2d 112 (1982).
VI
The defendant predicates error on the trial judge's failure to admit into evidence a knife marked Defense Exhibit 8. At trial, the defense attempted to show that Jeff Lowe purchased a knife from Jeff Dukes on the afternoon of the day before the homicide occurred.
Although defense witness Richard Stephenson testified that he saw a knife in Lowe's hand when Lowe and Fox were fighting, that particular knife was never described or identified. The defense was unable to establish either that Dukes had sold the knife or that Lowe had obtained it. Defense counsel argued that the knife was admissible because it had been "placed in the position to be controlled by those people on that very day."
The trial judge initially admitted the knife but, after the State's immediate objection, excluded it when the defense failed to connect it to the homicide. This exclusion was proper.
Only conjecture and speculation support any inference that the knife with which Lowe allegedly stabbed Fox was the same knife he allegedly purchased from Dukes earlier in the evening. Dukes never testified and Lowe was not questioned about that knife.
"Weapons or other instruments of crime which are so connected with the crime charged as to throw light thereon, or as to which it is reasonable to infer that they were used in committing it, are admissible, provided they are in substantially the same condition as at the time of the offense." 22A C.J.S. Criminal Law § 712(a) (1961).
There was no testimony that Defense Exhibit 8 was similar to any knife seen at or near the scene of the crime. It was properly excluded. Kerr v. State, 31 Ala.App. 203, 205, 14 So.2d 256 (1943). See also Anderson v. State, 362 So.2d 1296, 1302 (Ala.Cr.App.1978).
VII
A related issue concerns the prosecutor's comment on the knife during his closing argument. After the prosecutor had finished his closing argument and the jury had been recessed, defense counsel moved for a mistrial "based on the District Attorney in his argument to the jury waving *724 before the jury and referring to a knife marked Defendant's Exhibit 8."
The record does not reflect exactly what the prosecutor said. The trial judge stated, "My recollection is that you did pick the knife up and exhibit it to the jury and state that this was not evidence in the case; the Court did not allow it to be admitted." The prosecutor argued that his comment was merely a response to argument by defense counsel. From the record, this Court cannot determine "`with reasonable certainty what was said in the court below.'" Jones v. State, 460 So.2d 1382, 1383 (Ala.1984). Without that basis, we have no ground for error.
A mistrial is a drastic and extreme measure which should be granted only when the prejudicial qualities of the comment cannot be eradicated by instruction or other action by the trial court. Nix v. State, 370 So.2d 1115, 1117 (Ala.Cr. App.), cert. denied, Ex parte Nix, 370 So.2d 1119 (Ala.1979). From the record, it does not appear that the trial judge abused his discretion in denying the request for a mistrial.
VIII
In his motion for new trial, the defendant alleged that juror Carlton Marks failed to reveal on voir dire that he knew State's witness Sandra Fox, the wife of the deceased.
The voir dire of the venire is not contained in the record. Mrs. Fox was not in the courtroom during the voir dire.
At the hearing on the motion for new trial, juror Marks testified that during the trial he recognized Mrs. Fox as "a person that I had seen at school." When he was a senior in high school, Mrs. Fox was in the eighth grade. He testified that they were not personal friends, and that he based his verdict "strictly on the evidence presented."
Mrs. Fox testified that she went to school with Mr. Marks but "didn't know him."
"[T]he proper inquiry for the trial court on motion for new trial, grounded on allegedly improper responses or lack of responses by prospective jurors on voir dire, is whether this has resulted in probable prejudice to the movant." Freeman v. Hall, 286 Ala. 161, 166, 238 So.2d 330 (1970), quoted in Ex parte O'Leary, 438 So.2d 1372, 1375 (Ala.1983). The record shows no probable or possible prejudice to the defendant. The motion for new trial was properly denied.
IX
The defendant argues that the trial judge's demeanor and actions denied him a fair trial, specifically the judge's action in conducting a pretrial hearing in his absence and in requiring the defense to begin the presentation of the case at 8:30 in the morning instead of the usual 9:00.
For some reason, defense counsel did not learn or was not informed that his motion to produce had been scheduled for a hearing. When counsel failed to appear, the trial judge asked the District Attorney if he had any objection to the motion but did not do anything "conclusive" and did not enter an order "one way or another." At a later date and before trial, a hearing was held on the discovery motion.
With regard to the starting time, after hearing the argument of defense counsel, the judge withdrew his prior order and permitted court to begin at the usual time.
While the record does disclose some misunderstanding between defense counsel, the trial judge, and even the prosecutor, it appears, from the record, to be no more than that not uncommonly encountered by vigorous advocates in the course of a hotly contested murder trial. We were not present and are bound by the record. In this regard, we must be guided by the judgment of the trial judge.
The judgment of the circuit court is affirmed.
AFFIRMED.
All Judges concur.
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93 Ill. App.3d 575 (1981)
417 N.E.2d 722
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellant,
v.
ROBERT BOCHNIAK, Defendant-Appellee.
No. 80-574.
Illinois Appellate Court First District (1st Division).
Opinion filed February 17, 1981.
Bernard Carey, State's Attorney, of Chicago (Marcia B. Orr and Kathleen Warnick, Assistant State's Attorneys, of counsel), for the People.
Victor F. Ciardelli, Ltd., of Chicago, for appellee.
Order affirmed.
Mr. JUSTICE McGLOON delivered the opinion of the court:
This is an appeal by the State, pursuant to Supreme Court Rule 604(a)(1), from an order by the trial court sustaining defendant's motion to suppress.
After he received a tip-off that defendant Robert Bochniak and his brother had stolen materials from defendant's place of employment, Officer Stasinopoulos went to 2554 West Augusta in Chicago, believing that to be defendant's home address. Defendant actually resided at 2550 West Augusta. When the officer knocked on the door at 2554 West Augusta, defendant's mother, Mrs. Catherine Olijnek answered.
When the officer informed Mrs. Olijnek that there were stolen goods in the garage, she claimed that it was untrue but invited him to inspect. The officer testified that Mrs. Olijnek and defendant's brother Michael *576 entered the garage and that he followed. Mrs. Olijnek testified that she did not accompany the officer to the garage. It is undisputed, however, that the door was opened with her key. Inside the garage, the officer found electrical supplies.
Defendant arrived at his mother's home and asked the police what they were doing in the garage. The officer informed him that he was looking for stolen electrical supplies and that he did not need a search warrant because the landlord had granted him entry.
Mrs. Olijnek was the owner of the garage, but had been renting it out to her two sons for $20 per month for approximately 6 years. She testified that she never used the garage.
The trial court sustained defendant's motion to suppress the evidence. The State appeals from that order.
We affirm.
On appeal, the State argues that the trial court erred in sustaining defendant's motion to suppress because (1) defendant's mother had the actual authority to consent to a search of the garage, or (2) defendant's mother had the apparent authority to consent to a search of the garage.
1 We must first determine whether defendant's mother had the actual authority to consent to the search of the garage. The consent of one who possesses common authority over the premises or effects is valid as against the absent nonconsenting person with whom that authority is shared. (United States v. Matlock (1974), 415 U.S. 164, 170, 39 L.Ed.2d 242, 94 S.Ct. 988; People v. Stacey (1974), 58 Ill.2d 83, 87, 317 N.E.2d 24.) Whether one possesses such authority depends on the particular facts and circumstances of each case.
The State argues that since defendant's mother owned the premises on which the garage was located, retained a key to the garage and had never explicitly been ordered to stay out of the garage, she had the actual authority to consent to the search. Defendant, on the other hand, maintains that since he and his brother rented the garage from their mother for $20 per month and since his mother never used the garage because she had no reason to do so, she did not have any authority to consent to the search.
The fact that defendant's mother owned the garage does not mean that she had the actual authority to consent to a search of the garage. In United States v. Matlock, Justice White of the United States Supreme Court stated that "[c]ommon authority is * * * not to be implied from the mere property interest a third party has in the property." (415 U.S. 164, 171 n. 7, 39 L.Ed.2d 242, 250 n. 7, 94 S.Ct. 988, 993 n. 7; People v. Ford (1980), 83 Ill. App.3d 57, 62-63, 403 N.E.2d 512; People v. Schlemm (1980), 82 Ill. App.3d 639, 644, 402 N.E.2d 810.) Nor does the fact that defendant's mother was in possession of a key to the garage necessarily *577 vest her with such authority. See People v. Weinstein (1968), 105 Ill. App.2d 1, 245 N.E.2d 788.
2 Rather, the authority which justifies third-party consent rests on the mutual use of the property by persons generally having joint access or control for most purposes. (United States v. Matlock (1974), 415 U.S. 164, 171 n. 7, 39 L.Ed.2d 242, 250 n. 7, 94 S.Ct. 988, 993 n. 7; People v. Stacey (1974), 58 Ill.2d 83, 317 N.E.2d 24.) Mrs. Olijnek testified that she never went inside the garage and that she had no reason to do so. Thus, the garage was used exclusively by defendant and his brother Michael. We conclude that although defendant's mother owned and retained a key to the garage, she did not have common authority over the premises. Her consent to the search of the garage was therefore invalid.
The State alternatively argues that the search of the garage was valid because defendant's mother had the apparent authority to consent to the search. In support of this argument, the State points to several facts in the record, namely: that defendant's mother answered the door at the address where the police thought defendant resided; that she identified herself as defendant's mother; that she said she owned the premises; that she invited the police to search; that she opened the garage with a key; and that she failed to tell the police that defendant rented the garage from her.
3 In 1964 in Stoner v. California (1964), 376 U.S. 483, 11 L.Ed.2d 856, 84 S.Ct. 889, the United States Supreme Court considered an argument similar to the one at hand, and held that "[o]ur decisions make clear that the rights protected by the Fourth Amendment are not to be eroded by strained applications of the law of agency or by unrealistic doctrines of `apparent authority.'" (376 U.S. 483, 488, 11 L.Ed.2d 856, 860, 84 S.Ct. 889, 892.) Four years later, in People v. Miller (1968), 40 Ill.2d 154, 238 N.E.2d 407, the Illinois Supreme Court was presented with a factual situation under which it easily could have upheld a search conducted pursuant to the consent of one who had apparent authority over the subject property. The supreme court, however, relying on Stoner rejected the prosecution's apparent authority argument. Subsequent Illinois cases also have refused to apply the apparent authority doctrine in consent search cases. (See People v. Schlemm (1980), 82 Ill. App.3d 639, 402 N.E.2d 810; People v. Johnson (1975), 28 Ill. App.3d 799, 329 N.E.2d 464.) In accordance with the strong Illinois trend, we reject the State's apparent-authority argument.
For the foregoing reasons, we affirm the order of the circuit court of Cook County.
Order affirmed.
GOLDBERG, P.J., and O'CONNOR, J., concur.
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40 F.3d 1238
Hackensack Carsv.Lifestyle Limousine
NO. 94-7242
United States Court of Appeals,Second Circuit.
Oct 27, 1994
Appeal From: S.D.N.Y. 87-cv-2764
1
AFFIRMED.
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415 So.2d 612 (1982)
STATE of Louisiana, Through the DIVISION OF ADMINISTRATION, Plaintiff-Appellant,
v.
ALGERNON BLAIR, INC., et al., Defendant-Appellee.
No. 8819.
Court of Appeal of Louisiana, Third Circuit.
May 26, 1982.
*613 Hawley & Schexnayder, Ltd., W. Paul Hawley, II, Lafayette, Thomas McFerrin and John R. Sheppard, Baton Rouge, for plaintiff-appellant.
Breazeale, Sachse & Wilson, Frank P. Simoneaux, Baton Rouge, for defendant-appellee.
Before DOMENGEAUX, CUTRER and SWIFT, JJ.
SWIFT, Judge.
The State of Louisiana, through the Division of Administration, (State) filed suit against Algernon Blair, Inc., (Blair) and its surety for damages resulting from alleged breaches of contract for the construction of the University Medical Center in Lafayette. Blair timely removed the suit to federal court and filed there in its answer a motion to dismiss for failure to arbitrate and also a motion to stay the proceedings and compel arbitration. Subsequently, the case was remanded to the state court because of the federal court's lack of jurisdiction. The plaintiff then filed a motion to terminate arbitration proceedings previously initiated by the defendant, which involved various claims of the defendant and its subcontractors against the state, and to consolidate those claims in the present proceeding. The defendant filed a rule to show cause why this suit should not be stayed pending arbitration. The district court ordered the proceeding stayed and the State has appealed. We affirm.
The only issue presented by this appeal is whether the trial court erred in staying the proceedings pending arbitration.
The contract with which we are concerned, dated July 7, 1977, contains the following provision:
"7.10 ARBITRATION
"7.10.1 All claims, disputes and other matters in question arising out of, or relating to, this Contract or the breach thereof, except as set forth in Subparagraph 2.2.9 with respect to the Architect's decisions on matters relating to artistic effect, and except for claims which have been waived by the making or acceptance of final payment as provided by Subparagraphs 9.7.5 and 9.7.6, shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise. This agreement to arbitrate shall be specifically enforceable under the prevailing arbitration law. The award rendered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof."
The Louisiana Arbitration Law, LSA-R.S. 9:4201 et seq., "reflects a legislative policy favoring arbitration as a tool for speedy resolution of contract disputes" and states that provisions for arbitration "in valid contracts shall be irrevocable." Willis-Knighton Med. Ctr. v. So. Builders, Inc., 392 So.2d 505 (La.App. 2 Cir. 1980).
Section 4201 of Title 9 provides:
"A provision in any written contract to settle by arbitration a controversy thereafter arising out of the contract, or out of the refusal to perform the whole or any part thereof, or an agreement in writing between two or more persons to submit to arbitration any controversy existing between them at the time of the agreement to submit, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." [Emphasis added.]
Section 4202 mandates the trial court to grant a stay in any proceeding brought in violation of an arbitration agreement. It says:
"If any suit or proceedings be brought upon any issue referable to arbitration under an agreement in writing for arbitration, the court in which suit is pending, upon being satisfied that the issue involved in the suit or proceedings is referable *614 to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until an arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with the arbitration."
Relying upon the exception contained in Section 4201, that an arbitration provision is not valid and enforceable if a ground exists for the revocation of the contract, plaintiff argues that since Blair failed to comply with its contractual obligations due to poor workmanship, time overruns and its subsequent abandonment of the project, the State has the right to dissolve the entire contract, including the arbitration provision therein. We disagree.
In Bodman, Murrell & Webb v. Acacia Found. of L. S. U., 246 So.2d 323 (La.App. 1 Cir. 1971), writ denied 258 La. 766, 247 So.2d 864 (1971), the court was confronted with a somewhat similar situation and contention. An architect sought arbitration under the arbitration provisions of the contract to resolve a dispute over the owner's right to terminate his contract because of the alleged failure of the architect to meet his time schedule and budget limitations. The contract provided that "all questions in dispute under this agreement shall be submitted to arbitration..." The owner argued that if the contract containing the arbitration provision is breached in its entirety, then the arbitration provision falls with the remainder of the contract and cannot be enforced by the offending party. In rejecting this contention the court reasoned:
"We are also of the opinion that the question of a total breach of the contract is arbitrable under both the act and the specific arbitration provision in this case. It cannot be argued that language such as `All questions in dispute under this agreement' or `a controversy thereafter arising out of the contract' does not include a failure to perform thereunder."
In George Engine Co., Inc., v. Southern Shipbuilding Corp., 350 So.2d 881 (La.1977), our supreme court distinguished Bodman, saying, "the Bodman case involved a factual issue of contract performance, whereas the case at bar involves the legal issue of the validity in its inception of the contract itself, based on the alleged lack of valid consent." Thus, the exception in Section 4201 emphasized above is confined to grounds involving consent that would vitiate the contract ab initio.
No such contention is made in this case. The state does not question the validity of the agreement at its inception. It is simply claiming damages for Blair's alleged failure to perform according to its provisions. As the supreme court said in Stone v. Stone, 292 So.2d 686, 692 (La.1974):
"A party cannot evade his agreement to arbitrate performance under the contract by instead filing a suit to annul the contract itself based on this factual issue of nontimely performance, a factual issue of contract performance within the intended scope of the arbitration clause. See Domke on Commercial Arbitration, Section 9.04 (1968)."
Section 4201, of course, expressly states that a controversy arising from "the refusal to perform the whole or any part" of the contract is an issue that may be included in the irrevocable arbitration clause.
We also cannot agree with the plaintiff's position that LSA-C.C. Art. 2765 is applicable in this situation. The state has never attempted to cancel the contract. The petition simply alleges breaches and abandonment thereof by Blair for which damages should be awarded.
Nor do we find any merit in the plaintiff's contention that Blair waived its right to arbitration by the failure to raise the issue through a dilatory exception filed prior to answer.
The failure of a party to arbitrate in accordance with the terms of an agreement may be raised either through a dilatory exception of prematurity demanding dismissal of the suit or by a motion to stay the proceedings pending arbitration. LSA-R.S. 9:4202; and LSA-C.C.P. Art. 926.
*615 As previously mentioned, in the federal court the defendant filed a pleading requesting dismissal of the suit for failure to arbitrate and, reserving its rights in that regard, answered the allegations of the petition. Simultaneously, it also filed in that court a separate motion to stay the proceedings pending arbitration. After the case was remanded Blair filed in the district court a rule to show cause why the suit should not be stayed pending arbitration. Under these circumstances the defendant did not waive its right to have the proceedings stayed pursuant to La.R.S. 9:4202.
Finally, since there exists a valid arbitration agreement with respect to the controversies involved in the case, the parties must proceed with arbitration in accordance with their agreement. Bartley, Inc. v. Jefferson Parish School Board, 302 So.2d 280 (La.1974).
For the reasons assigned, the judgment of the district court is affirmed at appellant's costs which are fixed at $626.57.
AFFIRMED.
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FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
January 24, 2008
TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court
GENE AUTREY BURRIS, SR.,
individually and as a business, d/b/a
Customer Development Service, No. 07-6181
Plaintiff - Appellant,
v. W.D. Okla.
UNITED STATES DEPARTMENT (D.C. No. 07-CV-50-HE)
OF JUSTICE, FBI Oklahoma City
Division; SAMUEL J. MACALUSO,
Officer (ASAC); SALVADOR
HERNANDEZ, Officer (SAC); JOHN
P. MABRY, Officer (CDC);
RICHARD C. A. SMITH, Officer
(SA); WILLIAM W. WEAVER,
Officer (SA); WILLIAM A. LARSH,
Officer (SSA),
Defendants - Appellees.
ORDER AND JUDGMENT *
Before KELLY, MURPHY, and O’BRIEN, Circuit Judges.
After examining the briefs and appellate record, this panel has determined
*
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.
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.
Gene Autrey Burris, Sr., appearing pro se, 1 appeals from the dismissal of
his claims against the Federal Bureau of Investigation (FBI) and six of its
employees. We affirm.
I. BACKGROUND
The record reveals multiple attempts by Burris to have the FBI and
Department of Justice investigate and criminally prosecute the entities he named
as defendants in a state court personal injury case. 2 After reviewing his materials,
the FBI informed Burris it does not investigate civil matters and an Assistant
United States Attorney for the Western District of Oklahoma informed him his
allegations did not give rise to a violation of federal criminal law. The
Department of Justice informed Burris his allegations did not involve a federal
civil rights law it was authorized to enforce and therefore it would take no further
action. The FBI, Assistant United States Attorney and Department of Justice
separately advised Burris he should seek the advise of a private attorney because
1
We liberally construe pro se pleadings. Ledbetter v. City of Topeka, Kan.,
318 F.3d 1183, 1187 (10th Cir. 2003).
2
In addition to requesting criminal prosecution, Burris’ letters to officials
at the Department of Justice and FBI included several pages of quotations from
The Bible and the movie The Hurricane.
-2-
he risked being barred by the statute of limitations on any potential civil claims.
The Department of Justice went so far as to provide the addresses and phone
numbers of the Oklahoma Bar Association and a legal aid service in Burris’ area.
Because the agencies did not act according to his wishes, Burris brought
suit against the FBI and six current or former employees in the agency’s
Oklahoma City office. In his initial complaint, Burris cited to a newspaper article
from The Daily Oklahoman which featured a story about a civil rights case. 3
Based on the newspaper article, Burris alleged the defendants violated his civil
rights and unlawfully discriminated against him by failing to comply with its
official policies and customs. He claimed the Department of Justice and FBI
violated his civil rights through inaction. Burris did not, however, identify which
of his federal civil rights were allegedly violated.
On April 9, 2007, the defendants filed a motion to dismiss the complaint.
The district court, pursuant to the local rules, gave Burris eighteen days (until
April 27, 2007) to oppose the motion or have it be deemed confessed. See W.D.
Okla. LCvR 7.1(g) (motion practice). Even though Burris failed to timely
respond, the district court considered the merits of the defendants’ motion. It
3
The newspaper article appears to refer to this Court’s decision in
Crownover v. City of Lindsay, Okla., 229 F.3d 1162 (10th Cir. 2000) (unpublished
table decision) (“To establish municipal liability, a plaintiff must show ‘that the
unconstitutional actions of an employee were representative of an official policy
or custom of the municipal institution or were carried out by an official with final
policy making authority with respect to the challenged action.’” (quoting Seamons
v. Snow, 206 F.3d 1021, 1029 (10th Cir. 2000)).
-3-
liberally construed Burris’ complaint, but dismissed it by order dated May 24,
2007, because he failed to identify an alleged constitutional violation or plead
facts supporting an identifiable claim. See Fed. R. Civ. P. 12(b)(6). The court
explained that although Burris was not required to plead specific legal theories,
he was required to provide the defendants with notice of the basis of his claims
and had failed to do so. It did not address the other grounds for dismissal urged
by the defendants.
On June 12, 2007, Burris filed a motion to extend the time to file a
response to the defendants’ motion to dismiss claiming he never received a copy
of it. The district court denied Burris’ motion, but granted him leave to amend
his complaint. Burris filed an amended complaint but again did not identify a
constitutional claim or plead facts to support one. After liberally construing
Burris’ amended complaint, the court sua sponte dismissed it.
Burris then filed a motion requesting a three-judge panel pursuant to 28
U.S.C. § 2284 4 and Rule 9.1 of the Local Civil Rules. In a separate filing, Burris
asserted a three-judge panel was necessary because the defendants failed to follow
various local civil rules and the district court conspired with the defendants to
violate his right to a fair trial. The district court denied the motion because the
4
Section 2284 calls for a district court of three judges when “required by
Act of Congress, or when an action is filed challenging the constitutionality of the
apportionment of congressional districts or the apportionment of any statewide
legislative body.”
-4-
statute did not authorize a three-judge panel for the claims asserted by Burris.
Subsequently, Burris filed a second complaint and notice requesting a
three-judge panel, and a response to the district court’s order dismissing his
amended complaint. The court made a docket entry on July 24, 2007, indicating
the action had been dismissed and nothing further should be filed except for
pleadings associated with an appeal. Burris filed a notice of appeal on August 1,
2007.
II. DISCUSSION
A. Motion to Dismiss
We construe Burris’ request that “this Honorable Court would restore and
reopen [his] closed case in its entirety” to be an appeal from the district court’s
dismissal of his complaint. Our review of a district court’s dismissal for failure
to state a claim is de novo. Macarthur v. San Juan County, 497 F.3d 1057, 1064
(10th Cir. 2007). “We may uphold the grant of a motion to dismiss if, viewing
the well-pleaded factual allegations in the complaint as true and in the light most
favorable to the non-moving party, the complaint does not contain ‘enough facts
to state a claim to relief that is plausible on its face.’” Id. (quoting Bell Atlantic
Corp. v. Twombly, -- U.S. --, 127 S.Ct. 1955, 168-69, 1974 (2007)). “While a
complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed
factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and conclusions, and a
-5-
formulaic recitation of the elements of a cause of action will not do.” Bell
Atlantic Corp., 127 S.Ct. at 1964-65 (citations omitted). “Factual allegations
must be enough to raise a right to relief above the speculative level . . . on the
assumption that all the allegations in the complaint are true (even if doubtful in
fact).” Id. at 1965 (citation omitted). Burris’ complaint and amended complaint
failed to meet these basic requirements. Neither filing identifies which of his
civil rights were allegedly violated or an evidentiary basis for the alleged
violations.
B. Motion for a Three-Judge Panel
We also construe the scattered allegations in Burris’ appellate brief
concerning the denial of his motion for a three-judge panel to be an appeal from
that decision. “We review a district court’s interpretation of federal statutes and
regulations de novo.” United States v Davis, 339 F.3d 1223, 1226 (10th Cir.
2003) (quotation omitted). Burris has “neither challenged the apportionment of
any congressional districts or statewide legislative bodies nor alleged any facts
for which an applicable congressional act would require the convening of a three-
judge district court.” Tillett v. Lujan, 931 F.2d 636, 642 (10th Cir. 1991). The
-6-
district court did not err in failing to grant Burris’ motion to convene a three-
judge district court.
AFFIRMED.
ENTERED FOR THE COURT
Terrence L. O’Brien
Circuit Judge
-7-
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485 F.3d 666
UNITED STATES of America, Appellee,v.Humphrey STEWART, Defendant-Appellant.
Docket No. 05-1989-cr.
United States Court of Appeals, Second Circuit.
Argued: January 26, 2007.
Decided: May 8, 2007.
Jeffrey Goldberg, Assistant United States Attorney, Brooklyn, New York (Roslynn R. Mauskopf, United States Attorney for the Eastern District of New York, Peter A. Norling, Alyssa A. Qualls, Assistant United States Attorneys, Brooklyn, New York, on the brief), for Appellee.
Edward D. Wilford, New York, New York (Anthony L. Ricco, Steven Z. Legon, New York, New York, on the brief), for Defendant-Appellant.
Before: KEARSE and SOTOMAYOR, Circuit Judges, and KOELTL, District Judge*.
KEARSE, Circuit Judge:
1
Defendant Humphrey Stewart appeals from a judgment entered in the United States District Court for the Eastern District of New York on April 22, 2005, following a jury trial before Raymond J. Dearie, Judge (now Chief Judge), convicting Stewart of racketeering and racketeering conspiracy, in violation of 18 U.S.C. §§ 1962(c) and (d); conspiracy to distribute and possess with intent to distribute five or more kilograms of cocaine, in violation of 21 U.S.C. § 846; distribution and possession of five or more kilograms of cocaine, in violation of 21 U.S.C. § 841(a)(1); attempted murder and conspiracy to commit murder in aid of racketeering activity, in violation of 18 U.S.C. § 1959(a)(5); possession, as a convicted felon, of a firearm in violation of 18 U.S.C. § 922(g)(1); and discharge of a firearm during a violent crime, in violation of 18 U.S.C. § 924(c)(1)(A)(iii). Stewart was sentenced principally to life imprisonment on each of the racketeering and narcotics counts and 10 years each on the attempted murder, conspiracy to murder, and § 922(g) firearm counts, with all of those prison terms to be served concurrently, and to a five-year term of imprisonment on the § 924(c) firearm count to be served consecutively to the other prison terms. All of these prison terms were to run consecutively to a state-court sentence Stewart was then serving. On appeal, Stewart contends, inter alia, that the district court violated his rights under the Confrontation Clause of the Sixth Amendment when it allowed certain trial witnesses to describe statements that had been made by a declarant whose murder the court found Stewart had procured. Finding no merit in this or any of Stewart's other contentions, we affirm the judgment.
I. BACKGROUND
2
The present prosecution arose out of investigations into the narcotics trafficking activities in Brooklyn, New York, and elsewhere in the United States, of a group of men known as the "Patio Crew." The evidence at Stewart's 2004 trial included testimony from law enforcement officers, cooperating members of the Patio Crew (or "Crew"), and others.
3
Briefly summarized in the light most favorable to the government, the trial evidence included the following. Stewart and Emile Dixon were members of the Patio Crew, a gang that had controlled narcotics trafficking in the Flatbush section of Brooklyn for more than a decade. The Crew distributed powder cocaine and crack cocaine and was vigilant in protecting its Flatbush territory through the use of threats, assaults, robberies, and murder. Stewart and Dixon were regarded by other Crew members as particularly inclined towards violence. The Crew had a code of vengeance against anyone who cooperated with law enforcement authorities; in the vernacular of the Crew members, who were Jamaican nationals, the "rule" was "informer for dead," meaning that if an informer "cooperated with the police," the "[i]nformer must die." (Trial Transcript ("Tr.") at 110; see also id. at 312 ("[i]nformers must dead"); Stewart brief on appeal at 4 ("[T]he credo of the streets" included the rule "keep your mouth shut! Never become an informant! Never snitch! There was even a popular saying on the street, `snitches for dead', which was a warning that meant death to informants.").)
4
In the summer of 1999, Stewart became aware that marijuana was being sold at one of the Crew's locations by Robert Thompson (a/k/a "Ragga"), who was not a member of the Crew. On July 29, 1999, complaining of Ragga's competition in front of Stewart's building (see Tr. 137), Stewart approached other Patio Crew members and asked if anyone had a "fire stick," meaning a gun (Tr. 136, 341). Later that day, Ragga was shot several times. He was seriously injured, but recovered.
5
Ragga at first refused to reveal the identity of his assailant to the police (see, e.g., Tr. 727-28); he would say only that he had been in his jeep stopped at a red light when a man ran up, opened the door, and started firing a gun at him (see id. at 739-40). Eventually, however, Ragga informed the police that the shooter had been Stewart; Ragga so testified before a grand jury in March 2000. In the meantime, Ragga had told several others, including his girlfriend, his brother Steven, and the mother of two of his children, that he had been shot by Stewart.
6
Immediately after the shooting of Ragga, Stewart had fled Brooklyn for Buffalo, New York, where he continued to participate in the Crew's narcotics distributions. In January 2000, Stewart was arrested in Buffalo on New York State drug charges; he was eventually returned to Brooklyn to face outstanding charges with respect to an unrelated 1995 shooting in Brooklyn. As discussed in greater detail in Part II.A. below, Stewart, while being detained first in Buffalo and then in Brooklyn, sent several messages to Ragga urging him not to identify Stewart in a lineup and not to testify against him with respect to the 1999 shooting of Ragga. Ragga was undeterred, and in late March 2000 he informed a police detective that Stewart was the person who had shot him. Thereafter, Stewart had several telephone conversations with Dixon, who urged Ragga not to testify against Stewart. Ragga refused to agree not to testify. On July 26, 2000, in a drive-by shooting, Ragga was killed by Dixon.
7
Dixon and Stewart were eventually indicted on federal charges, including several relating to the murder of Ragga. Stewart was charged with conspiring between July 1999 and July 2000 to murder Ragga and with attempting to murder Ragga on July 29, 1999, for the purpose of maintaining and increasing his position in the Patio Crew, a racketeering enterprise, in violation of 18 U.S.C. § 1959(a)(5). Because the government sought the death penalty against Dixon for the actual murder, the two defendants were tried separately. At Stewart's trial, the government was allowed to introduce evidence from a police detective and several other witnesses that Ragga had told them that the man who shot him on July 29, 1999, was Stewart. (See, e.g., Tr. 739-40, 991, 1098, 1309.) Stewart was convicted on the § 1959 counts, as well as the other counts described above.
II. DISCUSSION
8
On appeal, Stewart contends, inter alia, that the admission of testimony that Ragga had identified him as the July 29, 1999 shooter violated his rights under the Confrontation Clause. His other contentions include a challenge to the sufficiency of the evidence to support his conviction on one count and a contention that the district court failed to consider the appropriate factors in imposing sentence. Finding no merit in his contentions, we affirm the judgment.
9
A. The Confrontation Clause: Forfeiture of the Right
10
The Confrontation Clause of the Sixth Amendment provides that "[i]n all criminal prosecutions, the accused shall enjoy the right . . . to be confronted with the witnesses against him." U.S. Const. amend. VI. Nonetheless, "`the law [will not] allow a person to take advantage of his own wrong,'" United States v. Mastrangelo, 693 F.2d 269, 272 (2d Cir.1982) ("Mastrangelo") (quoting Diaz v. United States, 223 U.S. 442, 458, 32 S.Ct. 250, 56 L.Ed. 500 (1912) (other internal quotation marks omitted)) (brackets ours), and it is thus well established, as a matter of "[s]imple equity" and "common sense," that the right to confrontation is forfeited if the defendant has "wrongfully procured the witnesses' silence through threats, actual violence or murder," United States v. Dhinsa, 243 F.3d 635, 651 (2d Cir.) ("Dhinsa") (internal quotation marks omitted), cert. denied, 534 U.S. 897, 122 S.Ct. 219, 151 L.Ed.2d 156 (2001). See, e.g., id. at 652 ("`It is hard to imagine a form of misconduct more extreme than the murder of a potential witness.... We have no hesitation in finding, in league with all circuits to have considered the matter, that a defendant who wrongfully procures the absence of a witness or potential witness may not assert confrontation rights as to that witness.'" (quoting United States v. White, 116 F.3d 903, 911 (D.C.Cir.), cert. denied, 522 U.S. 960, 118 S.Ct. 390, 139 L.Ed.2d 305 (1997))); United States v. Miller, 116 F.3d 641, 667-68 (2d Cir.1997), cert. denied, 524 U.S. 905, 118 S.Ct. 2063, 141 L.Ed.2d 140 (1998); United States v. Thai, 29 F.3d 785, 814 (2d Cir.), cert. denied, 513 U.S. 977, 115 S.Ct. 456, 130 L.Ed.2d 364 (1994); United States v. Aguiar, 975 F.2d 45, 47 (2d Cir.1992); Mastrangelo, 693 F.2d at 272-73; United States v. Cherry, 217 F.3d 811, 814-15 (10th Cir.2000); Steele v. Taylor, 684 F.2d 1193, 1201-02 (6th Cir.1982), cert. denied, 460 U.S. 1053, 103 S.Ct. 1501, 75 L.Ed.2d 932 (1983); United States v. Carlson, 547 F.2d 1346, 1358-60 (8th Cir.1976), cert. denied, 431 U.S. 914, 97 S.Ct. 2174, 53 L.Ed.2d 224 (1977). See also Crawford v. Washington, 541 U.S. 36, 62, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004) ("the rule of forfeiture by wrongdoing (which we accept) extinguishes confrontation claims on essentially equitable grounds").
11
In 1997, the Federal Rules of Evidence were amended to "recognize[] the need for a prophylactic rule to deal with [this type of] abhorrent behavior `which strikes at the heart of the system of justice itself.'" Fed.R.Evid. 804 Advisory Committee Note (1997) (quoting Mastrangelo, 693 F.2d at 273). Under the heading "Forfeiture by wrongdoing," Rule 804(b)(6) provides that the hearsay rule does not require the exclusion of "[a] statement offered against a party that has engaged or acquiesced in wrongdoing that was intended to, and did, procure the unavailability of the declarant as a witness." Fed.R.Evid. 804(b)(6) (emphasis added). Accordingly, the district court may admit hearsay evidence as to statements by an unavailable declarant if it finds by a preponderance of the evidence, see Fed.R.Evid. 804 Advisory Committee Note (1997); Fed.R.Evid. 104(a), that (a) the "party against whom the out-of-court statement is offered[] was involved in, or responsible for, procuring the unavailability of the declarant through knowledge, complicity, planning or in any other way," and (b) that party "acted with the intent of procuring the declarant's unavailability as an actual or potential witness," Dhinsa, 243 F.3d at 653-54 (internal quotation marks omitted).
12
In the present case, the district court found that the government had shown "by a preponderance of the evidence that Mr. Stewart acted through Mr. Dixon to secure the absence of the witness, Robert Thompson, and that [he did] so with intent to do just that." (Tr. 738.) Stewart challenges these findings. He points out that he "was in custody at the time the murder was committed," arguing that there was no "direct evidence that [he] commanded or directed that Mr. Dixon shoot the witness." (Stewart brief on appeal at 16.) And he argues that there was "no competent evidence, either direct or circumstantial, that [he] acted with the intent required under the second prong of Dhinsa." (Id.) Stewart's challenge is both legally flawed and contradicted by the record.
13
First, the government was not required to show Stewart's involvement in Dixon's murder of Ragga by "direct evidence." Both the existence of a conspiracy and a given defendant's participation in it with the requisite knowledge and criminal intent may be established through circumstantial evidence. See, e.g., United States v. Villegas, 899 F.2d 1324, 1338-39 (2d Cir.), cert. denied, 498 U.S. 991, 111 S.Ct. 535, 112 L.Ed.2d 545 (1990); United States v. Tutino, 883 F.2d 1125, 1129 (2d Cir.1989), cert. denied, 493 U.S. 1081, 110 S.Ct. 1139, 107 L.Ed.2d 1044 (1990); United States v. Young, 745 F.2d 733, 762 (2d Cir.1984), cert. denied, 470 U.S. 1084, 105 S.Ct. 1842, 85 L.Ed.2d 142 (1985). Here the record contains ample circumstantial evidence of Stewart's involvement in Ragga's murder, principally in the form of telephone records and testimony from Stewart confidantes.
14
For example, Stewart's cousin Devon Tate testified that after Stewart was arrested in Buffalo, Stewart made a number of telephone calls to Tate from jail. Tate testified, "[Stewart] asked me to get in touch with Ragga's mother ... to tell her to have [Ragga] not go to the identification line-up ...." (Tr. 433.) Tate passed that message to Ragga's brother Delroy and received a return call from Ragga's mother (id. at 433-34), who advised Tate not to be involved and said that Ragga would "go forward" (id. at 435). Tate testified that he relayed that response to Stewart; Stewart subsequently "told [Tate] that [Stewart] was ID-d by Ragga and he's an informer and informer must die." (Id.)
15
Susan Sanchez, a girlfriend of Stewart's, testified that while Stewart was in custody, first in Buffalo and then in Brooklyn, she frequently, at Stewart's behest, arranged untraceable three-way calls between Stewart and others. (See Tr. 921-23.) She arranged such calls between Stewart and Dixon two or three times a week. (See Tr. 923.)
16
Patio Crew member Horace Burrell, one of the witnesses who described the Crew's rule that "[i]nformers must dead" (Tr. 312), testified that he witnessed a conversation between Dixon and Ragga's brother Delroy about Ragga after Stewart was arrested. In that conversation, Dixon said that Stewart had called him and instructed him to tell Delroy to tell Ragga that "he not supposed to go testify against him." (Tr. 342.) Burrell testified that when Delroy did not agree to relay that message to Ragga, "[Dixon] was upset and he was walking away and said tell your brother that if you don't listen to what we say shot will fire." (Tr. 343.)
17
The government also introduced Dixon's cellular telephone records and Stewart's prison telephone records. They showed telephone contacts between Dixon and Stewart in the weeks leading up to the murder and on the day of the murder itself.
18
Thus, before any witnesses were allowed to testify that Ragga told them he had been shot by Stewart, the court heard evidence that Stewart had instructed Dixon and others to try to persuade Ragga not to testify that Stewart was the person who shot him in July 1999, that the Patio Crew's code was that "[i]nformer must dead," and that both Stewart and Dixon had sent the message that if Ragga insisted on testifying against Stewart, Ragga would be shot. Accordingly, the district court's ruling that the government had established by a preponderance of the evidence that Stewart acted through Dixon to murder Ragga, and did so with the intent to prevent Ragga from testifying against Stewart, was amply supported by the record.
19
Finally, we note that the forfeiture-by-wrongdoing principle made the testimony as to Ragga's statements admissible at Stewart's trial on the present federal charges even though Stewart's efforts had been focused on preventing Ragga from testifying at a different trial, to wit, Stewart's state trial for assault, rather than the trial in the present federal case (which had not yet been initiated). "The text of Rule 804(b)(6) requires only that the defendant intend to render the declarant unavailable `as a witness.' The text does not require that the declarant would otherwise be a witness at any particular trial.... A defendant who wrongfully and intentionally renders a declarant unavailable as a witness in any proceeding forfeits the right to exclude, on hearsay grounds, the declarant's statements at that proceeding and any subsequent proceeding." United States v. Gray, 405 F.3d 227, 241, 242 (4th Cir.) (emphasis in original), cert. denied, ___ U.S. ___, 126 S.Ct. 275, 163 L.Ed.2d 245 (2005). Indeed, the forfeiture principle applies even to
20
situations where "there was [no] ongoing proceeding in which the declarant was scheduled to testify." Miller, 116 F.3d at 668; see also [United States v.] Houlihan, 92 F.3d [1271, 1279-80 (1st Cir. 1996) ]. The application of Mastrangelo under these circumstances is both logical and fair since a contrary rule "would serve as a prod to the unscrupulous to accelerate the timetable and murder suspected snitches sooner rather than later." Houlihan, 92 F.3d at 1280.
21
Dhinsa, 243 F.3d at 652. A defendant will not be allowed to profit from such wrongdoing.
22
In sum, Stewart, by his involvement in the murder of Ragga, forfeited any right to exclude evidence of out-of-court statements by Ragga that he had previously been shot by Stewart.
B. Other Contentions
23
Stewart also contends that the evidence was insufficient to support his conviction for racketeering conspiracy, that the government failed to disclose exculpatory material, that the district court erred in failing to suppress evidence seized from his automobile, and that the court failed to consider the proper factors in imposing sentence. These contentions lack merit and do not warrant extended discussion.
24
Stewart contends that his conviction on the racketeering conspiracy count should be vacated on the ground that the evidence at trial was insufficient to establish that the Patio Crew was a racketeering enterprise, rather than simply a neighborhood social group. This contention is meritless. The evidence showed, inter alia, that members of the Patio Crew distributed narcotics and shared drug distribution opportunities; that the Crew maintained the same core membership for some 12 years; that it regulated drug dealing within the territory it controlled; and that the members adhered to rules of conduct. This was ample to permit a rational juror to infer that the Patio Crew constituted a racketeering enterprise within the meaning of 18 U.S.C. § 1962. See, e.g., United States v. Dixon, 167 Fed.Appx. 841, 843-44 (2d Cir.2006) (holding that the similar evidence introduced at Dixon's trial was sufficient to show that the Patio Crew was a racketeering enterprise).
25
Stewart also contends that the government violated its duty under Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), and Kyles v. Whitley, 514 U.S. 419, 115 S.Ct. 1555, 131 L.Ed.2d 490 (1995), to turn over evidence that could have been used to impeach the credibility of one of its witnesses, Jimael Allen. Stewart claims that Allen testified that Dixon killed Allen's associate Omar Sutherland, and that the government knew and failed to disclose that someone else had been convicted of that murder. Even assuming that such a conviction could have been considered material evidence with respect to the charges against Stewart, Stewart's factual premises are unsubstantiated. First, Stewart has pointed to no evidence as to another person's conviction for the murder of Sutherland. Second, Stewart has provided no record citation to support his assertion that Allen testified that Sutherland was murdered by Dixon. We have found no such accusation by Allen, who testified as follows:
26
Q. Did there come a time when Omar was killed?
27
A. Yes.
28
Q. Did you witness the murder?
29
A. No, I didn't. I wasn't there that night.
30
(Tr. 1143.)
31
Stewart's contention that the district court erred in failing to suppress $20,000 in cash that had been found, following his arrest after a routine traffic stop in 1996, in a car Stewart was driving, borders on the frivolous. Stewart waived this argument when he conceded before the district court that the evidence was admissible under the inevitable discovery doctrine (see Tr. 1209). In any event, one of the arresting officers testified, without contradiction, that he and other police officers regularly performed inventory searches of such a vehicle at the scene of a driver's arrest to determine whether the vehicle could safely be left on the street. (See Tr. 1030.) Thus, even without Stewart's concession, the evidence would have been admissible as the fruit of a valid inventory search. See, e.g., United States v. Thompson, 29 F.3d 62, 65 (2d Cir.1994) (postarrest inventory search conducted pursuant to routine standardized practice does not violate Fourth Amendment).
32
Finally, we reject Stewart's claim that the district court, in imposing his sentence, erred by failing to consider the sentencing factors enumerated at 18 U.S.C. § 3553(a). "[W]e presume, in the absence of record evidence suggesting otherwise, that a sentencing judge has faithfully discharged her duty to consider the statutory factors." United States v. Fernandez, 443 F.3d 19, 30 (2d Cir.), cert. denied, ___ U.S. ___, 127 S.Ct. 192, 166 L.Ed.2d 143 (2006). We see nothing in the record to suggest that the district court here failed to discharge this duty. Rather, the district court carefully considered whether the Guidelines sentence it imposed would be appropriate, and we see no basis for finding the sentence unreasonable, see United States v. Booker, 543 U.S. 220, 260-61, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005).
CONCLUSION
33
We have considered all of Stewart's arguments on this appeal and have found them to be without merit. The judgment of the district court is affirmed.
Notes:
*
Honorable John G. Koeltl, of the United States District Court for the Southern District of New York, sitting by designation
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 11-3288
___________
UNITED STATES OF AMERICA
v.
MARK ZABIELSKI,
Appellant
__________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 10-cr-00044-001)
District Judge: Honorable Nora B. Fischer
___________
Argued October 24, 2012
Before: HARDIMAN, GREENAWAY, JR.
and VANASKIE, Circuit Judges.
(Filed: April 3, 2013)
Laura S. Irwin [Argued]
Rebecca R. Haywood
Barbara K. Swartz
Office of United States Attorney
700 Grant Street
Suite 4000
Pittsburgh, PA 15219
Attorneys for Appellee
Renee Pietropaolo [Argued]
Linda E. J. Cohn
1001 Liberty Avenue
1500 Liberty Center
Pittsburgh, PA 15222
Attorneys for Appellant
____________
OPINION OF THE COURT
____________
HARDIMAN, Circuit Judge.
In United States v. Booker, 543 U.S. 220 (2005), the
Supreme Court held that the United States Sentencing
Guidelines could not constitutionally be applied as diktats.
Rather than scrap the Guidelines entirely, the Court left them
intact as advisory and trial judges may vary from them, within
reason, after applying the relevant provisions of 18 U.S.C. §
3553(a). Before doing so, it is important that trial judges
accurately calculate the Guidelines range and correctly rule
on departure motions. Failure to accomplish either of these
tasks typically will cause us to vacate and remand for
2
resentencing. In some cases, however, the procedural error
committed by the sentencing court is so insignificant or
immaterial that prudence dictates that we hold such error
harmless. Because we view this appeal as one of those cases,
we will affirm Appellant Mark Zabielski‘s judgment of
sentence.
I
On December 9, 2009, Zabielski robbed his hometown
PNC Bank in West Newton, Pennsylvania. In an effort to
disguise his appearance, he wore clothes that belonged to his
stepfather and altered his visage. Footage from PNC‘s
security tapes demonstrates that Zabielski entered the bank
calmly and did ―not appear to be confused, disoriented, or
otherwise mentally adrift.‖ App. 140–41.
Zabielski approached the teller and handed her a note
that read: ―$10,000.‖ The teller, confused by the note, asked
Zabielski if he wanted to withdraw the funds from his
checking or savings account. He replied: ―You don‘t
understand. I need the money now. You have two minutes.‖
PSR ¶ 4; App. 142.
Looking down, the teller noticed a bulge in Zabielski‘s
jacket pocket, which gave her the impression that Zabielski
might have been carrying a gun or a knife. The teller took
$4,767 in cash from her drawer, along with some bait money,
but she decided not to give the bait money to Zabielski for
fear of what he might do if he discovered it.
Zabielski later told several people about the robbery,
including his mother, who convinced him to return the
money. He mailed $3,790 to the bank from a separate town,
3
in a package addressed both to and from the bank he robbed,
after first cleaning the money with alcohol.
Images from the bank security cameras were provided
to the local media, and Zabielski was quickly identified as the
culprit. When authorities interviewed Zabielski on December
11, 2009, he denied having committed the robbery and lied
about where he had been at the time of the crime. A grand
jury in the Western District of Pennsylvania indicted
Zabielski on one count of bank robbery in violation of 18
U.S.C. § 2113(a) on March 16, 2010, and he pleaded guilty a
year later.
The Presentence Investigation Report (PSR) prepared
by the United States Probation Office assigned Zabielski a
total offense level of 21, which included a two-level
enhancement for making a threat of death during the
commission of the robbery pursuant to § 2B3.1(b)(2)(F) of
the Guidelines. With an offense level of 21 and a criminal
history category of I, Zabielski‘s advisory Guidelines range
was 37 to 46 months‘ imprisonment. Zabielski objected to
the two-level enhancement, arguing that he had not made a
threat of death. According to Zabielski, his correct offense
level was 19, which would have yielded an advisory
Guidelines range of 30 to 37 months‘ imprisonment. The
District Court determined that the threat of death
enhancement was appropriate in the circumstances of the
case.
Zabielski also requested a downward variance. He
argued that he suffered from bipolar disorder and had
resumed treatment since the robbery, but claimed he would
4
not receive effective treatment in prison.1 During the
sentencing hearing, Zabielski provided the District Court with
a psychological evaluation and letters from friends and family
describing his mental illness, his behavior when he was not
taking medication, and the improvement in his behavior when
he was managing his illness correctly. Zabielski also
introduced a statement regarding bipolar disorder from the
National Institute of Mental Health and testimony suggesting
that, based on the many individuals with mental illness at
Federal Bureau of Prisons (BOP) facilities and the BOP‘s
limited mental health resources, he might not receive the
treatment he needed in prison.
The Government argued that Zabielski should receive
a within-Guidelines sentence of 37 to 46 months‘
imprisonment. It disputed Zabielski‘s claim that he would
not be able to receive proper treatment in prison. It also
presented evidence demonstrating that Zabielski had
previously engaged in criminal conduct. FBI Agent Michael
Nealon testified that he interviewed one of Zabielski‘s ex-
girlfriends during the investigation, and that she claimed
Zabielski had tried to kick her down the stairs. Another ex-
girlfriend also had filed assault charges against Zabielski, but
those charges were nol prossed upon Zabielski‘s completion
of a domestic abuse counseling program. Agent Nealon
learned from a third ex-girlfriend that Zabielski had likely
broken into a house and stolen items, a claim that was
supported by pawn shop tickets for the stolen items bearing
1
Zabielski moved for downward departures based on
similar grounds. He does not challenge on appeal the District
Court‘s denial of those motions, except to request
reconsideration in the event of remand.
5
Zabielski‘s name and driver‘s license number. One of
Zabielski‘s ex-girlfriends also told Agent Nealon that
Zabielski had pawned his stepfather‘s firearms. Pawn shop
tickets supported this claim, as well.
After hearing arguments from both sides, the District
Court conducted a thorough examination of the 18 U.S.C.
§ 3553(a) factors. It considered Zabielski‘s prior criminal
conduct, his lack of respect for his community, the serious
nature of his crime, the need to deter Zabielski and others
from future criminal conduct, and the need to protect the
public from further crimes that he might commit. The
District Court acknowledged that Zabielski had a history of
mental illness, but found that it did not justify a downward
variance. The sentencing judge also expressed concern that
Zabielski was unable to ―keep [himself] sober and on [his]
medications.‖ App. 306. She remarked: ―You say that you
quit drugs, and I applaud you for that, but I think that the
drugs in the past may have had some impact on your current
diagnosis.‖ App. 309–10.
The District Court also explained that, contrary to
Zabielski‘s suggestion, he would receive adequate treatment
in a BOP facility:
[T]he BOP, in my estimation, can treat your
bipolar disorder. They can treat your diabetes.
They do have the medications available to
you. . . . You have a history of depression,
anxiety, and panic disorders as well. I think
those can be addressed at the BOP. And in my
estimation, the BOP generally goes beyond
community standards for mental health. So, I
think whatever you‘re going to get in a facility
6
is better than you could get in West Newton,
especially if you‘re not working full-time, and if
you don‘t have [an insurance] card, and you
don‘t have the money, because you‘re not
working to pay for the medications.
App. 309–10.
Consistent with its review of the § 3553(a) factors, the
District Court denied Zabielski‘s request for a downward
variance. After hearing Zabielski‘s allocution, however, the
District Court changed course. Finding that Zabielski was
sincerely remorseful, the District Court sentenced him to 24
months‘ incarceration, a downward variance of thirteen
months below the bottom of his Guidelines range and six
months below the bottom of the range he requested. In spite
of this lenient sentence, Zabielski appealed.
II2
Although Zabielski raises a congeries of arguments,
the crux of his appeal is that the District Court committed
procedural error when it applied a two-level threat of death
enhancement. Because we hold that any error by the District
Court was harmless, we will affirm Zabielski‘s judgment of
sentence.
2
The District Court exercised jurisdiction under 18
U.S.C. § 3231. Because Zabielski appeals a final judgment of
conviction and sentence, we have jurisdiction pursuant to 28
U.S.C. § 1291 and 18 U.S.C. § 3742(a).
7
A
In reviewing the District Court‘s sentence, we first
consider whether the Court committed a significant
procedural error, such as improperly calculating the
Guidelines range. United States v. Tomko, 562 F.3d 558, 567
(3d Cir. 2009) (en banc). We exercise plenary review over
the District Court‘s interpretation and application of the
Guidelines, United States v. Figueroa, 105 F.3d 874, 875–76
(3d Cir. 1997), we review determinations of fact for clear
error, United States v. Thomas, 327 F.3d 253, 255 (3d Cir.
2003), and we ―give due deference to the district court‘s
application of the guidelines to the facts,‖ id. (quoting 18
U.S.C. § 3742(e)). Even if we determine that the District
Court committed procedural error, however, we may still
uphold its sentence if the error was harmless. See United
States v. Flores, 454 F.3d 149, 162 (3d Cir. 2006); see also
Puckett v. United States, 556 U.S. 129, 141 (2009) (noting
that procedural errors at sentencing are ―routinely subject to
harmlessness review‖).
Although all bank robberies involve some threat of
harm, see Thomas, 327 F.3d at 257, § 2B3.1(b)(2)(F) of the
Guidelines requires a two-level increase in offense level when
the defendant‘s conduct and statements were so threatening
that they amounted to a threat of death. This enhancement
applies when the defendant has ―engaged in conduct that
would instill in a reasonable person, who is a victim of the
offense, a fear of death.‖ Thomas, 327 F.3d at 255 (quoting
USSG § 2B3.1 app. n.6).
Before the Supreme Court decided Booker, we had
occasion to review district court applications of the ―threat of
death‖ enhancement. See, e.g., Thomas, 327 F.3d at 254;
8
United States v. Day, 272 F.3d 216, 217 (3d Cir. 2001);
Figueroa, 105 F.3d at 875. Each time we affirmed the district
court‘s decision to impose the enhancement. In most of the
cases, the defendant had explicitly threatened death or clearly
stated that he possessed a weapon, see, e.g., Day, 272 F.3d at
217; Figueroa, 105 F.3d at 876–77, 880, but we also deferred
to the district court‘s determination in more ambiguous
circumstances. For example, in Thomas, the defendant
handed the teller a note stating: ―Do exactly what this says,
fill the bag with $100s, $50s and $20s, a dye pack will bring
me back for your ass, do it quick now.‖ 327 F.3d at 254. We
noted that whether the defendant‘s conduct actually amounted
to a threat of death was ―not free from doubt,‖ but determined
that the district court‘s application of the threat of death
enhancement was not clear error. Id. at 257.
Zabielski‘s conduct less clearly amounts to a threat of
death than any of the conduct we have previously
considered—even in Thomas, where we expressed some
uncertainty as to whether the enhancement was appropriate.
Zabielski neither stated that he had a weapon nor explicitly
threatened death; indeed, he did not explicitly threaten
anything at all. He made a statement to the teller that could
be taken as an implicit threat—―you have two minutes‖—and
he had a bulge in his pocket.
Now that the Guidelines are advisory, however, the
District Court‘s imposition of the threat of death enhancement
does not carry nearly the same significance it did before the
Supreme Court decided Booker. In this appeal, Zabielski
concedes that his initial Guidelines range was accurately
calculated, and there is no real suggestion that the District
Court misapprehended any of the relevant facts surrounding
the threat. Zabielski challenges only the two-level increase,
9
which was dependent upon the District Court‘s understanding
of, and appreciation for, the manner in which the bank
robbery was committed. We must decide whether the two-
level increase influenced the sentence imposed.
―[A] non-constitutional error is harmless when ‗it is
highly probable that the error did not prejudice‘ the
defendant.‖ United States v. Langford, 516 F.3d 205, 215 (3d
Cir. 2008) (quoting Gov’t of Virgin Islands v. Toto, 529 F.2d
278, 284 (3d Cir. 1976)). In the context of a Guidelines
calculation error, this means that the record must demonstrate
that there is a high probability ―that the sentencing judge
would have imposed the same sentence under a correct
Guidelines range, that is, that the sentencing Guidelines range
did not affect the sentence actually imposed.‖ Id. at 216.
Because ―district courts must begin their analysis with the
Guidelines and remain cognizant of them throughout the
sentencing process,‖ Gall v. United States, 552 U.S. 38, 50
n.6 (2007), it usually will be difficult for an appellate court to
conclude with sufficient confidence that the same sentence
would have been imposed absent a clear statement to that
effect by the sentencing judge. See Langford, 516 F.3d at
212. An assumption that a district court would have imposed
the same sentence regardless of the error would normally
―place[] us in the zone of speculation and conjecture.‖ Id. at
218 (quoting United States v. Conlan, 500 F.3d 1167, 1170
(10th Cir. 2007)).
In the typical case, an erroneous calculation of the
defendant‘s base offense level or criminal history will not be
harmless, particularly when the sentence imposed suggests
that the district court chose to adhere to the advisory
Guidelines range. In United States v. Langford, for example,
the district court mistakenly assigned the defendant a criminal
10
history category of IV instead of III. Id. at 211. The district
court sentenced Langford to 46 months‘ imprisonment, a
sentence that fell within both the erroneously calculated
Guidelines range (46 to 57 months) and the correct
Guidelines range (37 to 46 months). Id. at 208, 210–11, 216–
19. In holding that the error was not harmless, we noted that
―where a court miscalculates a defendant‘s criminal history,
its attempts to avoid disparity between defendants pursuant to
§ 3553(a)(6) will be misguided as it ineluctably will compare
the defendant to others who have committed the same offense
but are in a different criminal history category.‖ Id. at 212–
13. Furthermore, because the district court imposed a
bottom-of-the-Guidelines sentence, it was reasonable to
assume that, absent the error, the sentencing judge might have
imposed a bottom-of-the-Guidelines sentence pursuant to the
lower, correct range. See id. at 216 & n.3, 219. Thus,
whether the erroneous Guidelines range affected Langford‘s
sentence was unclear, and the court made no explicit
clarifying statements. See id. at 218; see also United States v.
Smalley, 517 F.3d 208, 211, 215–16 (3d Cir. 2008). As a
result, we were unable to conclude that there was a high
probability that the district court would have imposed the
same sentence under both the erroneous and the applicable
Guidelines ranges.
At the same time, we recognized that, ―[i]n the rare
case,‖ it may be possible to discern from the record that the
sentencing Guidelines range did not affect the actual
sentence. See Langford, 516 F.3d at 218 (citing Flores, 454
F.3d at 162). The erroneous application of an enhancement—
when it is clear from the record that the district court correctly
apprehended both the facts underlying that enhancement and
the significance of those facts—is more likely to be harmless
11
than the erroneous calculation of a defendant‘s initial
Guidelines range. This is because the purpose of an
enhancement is to train the district court‘s attention on the
details of the crime. The threat of death enhancement at issue
in this appeal, for example, required the court to consider the
myriad types of threats that may occur in a robbery, and
determine the appropriate level of punishment given the
severity of the threat used by the defendant. Since Booker,
what is most important is that the sentencing judge
understands the facts of the case, grasps their significance,
and incorporates them into a just sentence. To put it more
colloquially, the mechanical application of ―plus two points‖
or ―minus two points‖ is far less significant now that the
Guidelines are advisory.
In addition, an error is more likely to be harmless
when it is clear from the record that the district court decided
to vary from the advisory Guidelines range. For example, in
United States v. Flores, the district court calculated an
advisory Guidelines range of 70 to 87 months‘ imprisonment,
but sentenced the defendant to 32 months‘ imprisonment
based on the § 3553(a) factors—―a term 38 months (and more
than 50 percent) below the bottom of the Court‘s calculated
advisory Guidelines range.‖ 454 F.3d at 162. On appeal,
Flores argued that the court had made three errors in
calculating his Guidelines range, including erroneously
applying a two-level enhancement. Id. If the district court
had made any one of the errors claimed by Flores, the
sentence imposed still would have been below the applicable
Guidelines range. If the district court had made all three
errors, the sentence would have been within the applicable
advisory Guidelines range of 27 to 33 months‘ imprisonment.
Id. Given the district court‘s reliance on the § 3553(a) factors
12
and the substantial discrepancy between the sentence imposed
and the calculated Guidelines range, we determined that there
was a high probability that the district court would have
imposed the same sentence regardless of the applicable
advisory Guidelines range, and found that any error made in
calculating the Guidelines range was harmless.3 Id.
Here, the District Court‘s detailed findings of fact and
explanation convince us there is a high probability that it
would have imposed the same sentence irrespective of the
threat of death enhancement. The District Court
3
Other courts of appeals have determined that a
Guidelines error can be harmless even when the district court
did not explicitly state that it would have imposed the same
sentence under either Guidelines range. See, e.g., United
States v. Savillon-Matute, 636 F.3d 119, 121–22, 124 (4th
Cir. 2011) (finding that any error in application of an
enhancement would have been harmless when defendant
received a sentence slightly below the calculated Guidelines
range but above the purportedly applicable Guidelines range
because it was clear from the record as a whole that the court
focused on the § 3553(a) factors); United States v. Batista,
684 F.3d 333, 339, 346–47 (2d Cir. 2012) (imposition of a
four-level enhancement would have been harmless when
court imposed a sentence that was significantly lower than the
Guidelines range because of a downward departure for
cooperation); see also United States v. Coppola, 671 F.3d
220, 251 n.28 (2d Cir. 2012) (―[J]ust as a single unambiguous
statement can permit us to identify a Guidelines error as
harmless in some circumstances, we can draw the same
conclusion from a careful review of the totality of a
sentencing record.‖ (internal citation omitted)).
13
demonstrated its awareness of the details of the crime,
including Zabielski‘s demeanor, his statements, and his
physical appearance. Although the District Court found the
threat of death enhancement applicable, it fully appreciated
the context surrounding Zabielski‘s conduct. The Court then
conducted a thorough analysis of the § 3553(a) factors. After
hearing and considering Zabielski‘s allocution, the District
Court exercised its discretion to give Zabielski a substantial
break, sentencing him to 24 months‘ incarceration, which was
13 months below the calculated Guidelines range of 37 to 46
months. Even more poignant than Flores, here the sentence
imposed also fell below the range that would have been
applicable without the enhancement (30 to 37 months). The
record does not suggest in any way that the 24-month
sentence was influenced by either the Guidelines range
established by the District Court or the range Zabielski
requested; instead, the District Court chose ―to disregard the
Guidelines as too severe in such a way that we can be certain
that the miscalculation had no effect on the sentence
imposed.‖ Langford, 516 F.3d at 218. Because the Court
―clearly considered all the factors in 18 U.S.C. § 3553(a) in
reaching its sentence and used its discretion in light of these
factors, rather than in the application of a specific downward
departure, to go below his advisory Guidelines range to
identify the appropriate sentence,‖ Flores, 454 F.3d at 162,
any error regarding the threat of death enhancement was
harmless.4
4
Contrary to Zabielski‘s contention in his Rule 28(j)
letter, our recent decision in United States v. Castro, 704 F.3d
125 (3d Cir. 2013), does not affect this analysis. In Castro,
the defendant was convicted by a jury on one count of making
14
For the benefit of future cases, we emphasize that
where, as here, the district court does not explicitly state that
the enhancement had no effect on the sentence imposed, it
usually will be difficult to ascertain that the error was
harmless. An explicit statement that the district court would
have imposed the same sentence under two different ranges
can help to improve the clarity of the record, promote
efficient sentencing, and obviate questionable appeals such as
this one. As the Court of Appeals for the Eleventh Circuit has
noted:
[P]ointless reversals and unnecessary do-overs
of sentence proceedings can be avoided if
district courts faced with disputed guidelines
issues state that the guidelines advice that
results from decision of those issues does not
matter to the sentence imposed after the
§ 3553(a) factors are considered. Likewise, if
resolution of the guidelines issue does matter to
the judge‘s ultimate sentencing decision, noting
that it does will help focus our attention on the
issues that matter.
a material false statement to federal agents and pleaded guilty
to conspiracy. Id. at 129. On appeal, we vacated his
conviction for making a false statement. Because this
conviction had been used to increase the defendant‘s sentence
for the conspiracy charge, we remanded the case so that the
district court could reconsider the sentence. Id. at 142–44.
Remand was necessary because the original sentence was
based, in part, on a crime of conviction that was later deemed
invalid. No such error occurred in Zabielski‘s case.
15
United States v. Keene, 470 F.3d 1347, 1349 (11th Cir. 2006)
(quoting United States v. Williams, 431 F.3d 767, 773 (11th
Cir. 2005) (Carnes, J., concurring)) (internal quotation marks
and citations omitted). Though probative of harmless error,
these statements will not always suffice to show that an error
in calculating the Guidelines range is harmless; indeed, a
district court still must explain its reasons for imposing the
sentence under either Guidelines range. See Smalley, 517
F.3d at 214 (noting that if a departure or variance would be
necessary to reach the actual sentence absent the Guidelines
calculation error, the reasons for that departure or variance
must be explained); United States v. Wright, 642 F.3d 148,
154 n.6 (3d Cir. 2011) (same). But if the applicability of an
enhancement is uncertain, and the enhancement has no
bearing on the sentence imposed by the district court, a
thorough explanation of the district court‘s reasoning can help
us identify when an erroneous Guidelines calculation had no
effect on the final sentencing determination so we can avoid
―setting aside a perfectly reasonable sentence and sending the
case back for more proceedings which probably will result in
the same sentence being imposed again.‖ Williams, 431 F.3d
at 774 (Carnes, J., concurring).
III
In addition to his challenge to the application of the
threat of death enhancement, Zabielski challenges the
substantive reasonableness of his sentence. Because none of
his arguments comes close to satisfying our very deferential
standard of review, see Tomko, 562 F.3d at 568, we discuss
them only briefly.
As we noted already, the District Court thoroughly
considered the relevant § 3553(a) factors, and provided
16
numerous reasons for sentencing Zabielski to 24 months in
prison. It considered, among other things, Zabielski‘s
background and past criminal activity, the seriousness of his
crime, and the fact that he was ―bold enough to commit this
crime in his own backyard,‖ which demonstrated a lack of
respect for his community. App. 298–99. The District Court
also considered the need to deter Zabielski and others from
future criminal conduct and the need to protect the public
from further crimes that Zabielski might commit. It then
weighed those factors against the remorse Zabielski showed
at the sentencing hearing, and determined that 24 months‘
imprisonment was appropriate.
Despite the Court‘s detailed discussion of the
§ 3553(a) factors, Zabielski argues that his sentence is too
harsh because the District Court: (1) relied on unsubstantiated
assumptions about bipolar disorder; (2) relied on
unsubstantiated assumptions about his criminal background;
and (3) sentenced him to imprisonment or increased the
length of his sentence to facilitate rehabilitation. Zabielski
has not shown that the District Court‘s speculation about the
effects his substance abuse had on his bipolar disorder
affected his sentence. And Zabielski‘s other two claims—that
the District Court erred in relying on his bare arrest record
and that it erred in sentencing him for a longer period to
provide treatment or rehabilitation—lack any support in the
record.
1
Zabielski argues that the District Court sentenced him
based, in part, on unsupported assumptions about bipolar
disorder, rendering his sentence unreasonable. He suggests
17
that his sentence would have been lower had the District
Court not relied on the unsupported belief that his substance
abuse and his unemployment were volitional, and that he was,
to some degree, responsible for his own mental condition.
To the extent that the District Court considered
Zabielski‘s history of substance abuse and unemployment in
determining his sentence, it relied on assumptions supported
by the record. Zabielski does not dispute that he used illicit
drugs and, at the time of sentencing, he continued to drink
alcohol and was unemployed.
The District Court did speculate that Zabielski may
have exacerbated his mental illness by abusing drugs and
alcohol. Zabielski claims that this speculation had no basis in
any of the evidence presented, and argues that appellate
courts have reversed judgments of sentence when they are
based on unsupported assumptions about social science. See
United States v. Olhovsky, 562 F.3d 530, 553 (3d Cir. 2009);
United States v. Dorvee, 616 F.3d 174, 188 (2d Cir. 2010);
United States v. Miller, 601 F.3d 734, 740 (7th Cir. 2010);
United States v. Bradley, 628 F.3d 394, 401 (7th Cir. 2010).
The cases upon which Zabielski relies are inapposite.
In each of those cases, the unsupported assumptions played a
significant role in the sentencing determination. Moreover,
those cases involved child pornography and sexual conduct
with minors, and the sentencing judges‘ beliefs about
recidivism, though not supported by evidence in the record,
were central to the judges‘ reasoning. See Olhovsky, 562 F.3d
at 547–50; Dorvee, 616 F.3d at 177–78; Miller, 601 F.3d at
739–40; Bradley, 628 F.3d at 399–401. Even then, the
assumptions about recidivism did not, by themselves, render
the defendants‘ sentences unreasonable. Instead, the courts
18
considered broadly whether the sentence imposed was
reasonable, and the unsupported assumption played one part
in that larger inquiry. See, e.g., Dorvee, 616 F.3d at 184–86.
Here, by contrast, the District Court made several stray
comments in the course of a detailed sentencing hearing, and
Zabielski now attempts to imbue those statements with more
significance than is warranted. Viewing the sentencing
hearing as a whole and the resulting sentence, the District
Court‘s comments about the causes of Zabielski‘s mental
disorder do not render the sentence substantively
unreasonable.
2
Zabielski also argues that the District Court improperly
relied on his arrest record in determining his sentence. He
correctly notes that ―a bare arrest record—without more—
does not justify an assumption that a defendant has committed
other crimes.‖ United States v. Berry, 553 F.3d 273, 284 (3d
Cir. 2009). Nevertheless, a sentencing court may consider
―[p]rior similar adult criminal conduct not resulting in a
criminal conviction,‖ USSG § 4A1.3(a)(2)(E), as long as that
conduct has been proven by a preponderance of the evidence.
See Berry, 553 F.3d at 281. Here, the District Court relied on
more than Zabielski‘s ―bare arrest record‖ in assessing his
background—it relied on testimony from an investigating
officer who described Zabielski‘s past criminal conduct. The
District Court was entitled to consider that information at
sentencing, even though the conduct did not result in a
conviction.
3
Finally, Zabielski argues that the District Court might
have imposed a longer term of incarceration to ensure that he
19
received the treatment he needed for his bipolar disorder.
Under the Sentencing Reform Act, courts cannot impose or
lengthen a prison term merely to promote an offender‘s
rehabilitation. Tapia v. United States, 131 S. Ct. 2382, 2391
(2011); United States v. Manzella, 475 F.3d 152, 161 (3d Cir.
2007). This assuredly does not mean, however, that judges
are prohibited from mentioning rehabilitation during the
sentencing hearing. Courts may still, for example, ―discuss[]
the opportunities for rehabilitation within prison or the
benefits of specific treatment or training programs.‖ Tapia,
131 S. Ct. at 2392.
The few statements of which Zabielski complains are
taken out of context. During the sentencing hearing, the
District Court noted:
I‘ve looked at the fact that you have an
extensive mental health history. And one
reason why I think that incarceration at this
point in time is necessary is the fact that you
don‘t seem to be able to live up to the
conditions that you need to maintain in order to
keep yourself sober and on your medications.
App. 306. This statement does not indicate that the District
Court sentenced Zabielski to ensure that he received
treatment. Zabielski argued throughout his sentencing
hearing that his mental illness justified a lower sentence or
probation. He claimed that he had begun to manage his
illness better since the robbery and was less likely to commit
additional crimes. The District Court, after considering
Zabielski‘s past conduct, did not believe he was effectively
managing his illness. This statement reflects an exchange
between the defendant and the sentencing judge; it does not
20
show that the District Court imposed a longer sentence to
ensure that Zabielski received the treatment that he needed.
Cf. Tapia, 131 S. Ct. at 2385, 2393 (remand was appropriate
when the district court explained that ―one of the factors that
affects [the length of the sentence] is the need to provide
treatment. In other words, so she is in long enough to get the
500 Hour Drug Program, number one‖); Manzella, 475 F.3d
at 155, 162 (remand was appropriate when the district court
listed, among other reasons for the sentence, the need to
―provide the Defendant with needed and effective educational
or vocational training, medical care, or other corrective
treatment‖).
The District Court also stated:
[T]he BOP, in my estimation, can treat your
bipolar disorder. They can treat your diabetes.
They do have the medications available to
you. . . . You have a history of depression,
anxiety, and panic disorders as well. I think
those can be addressed at the BOP. And in my
estimation, the BOP generally goes beyond
community standards for mental health. So, I
think whatever you‘re going to get in a facility
is better than you could get in West Newton,
especially if you‘re not working full time, and if
you don‘t have [an insurance] card, and you
don‘t have the money, because you‘re not
working to pay for the medications.
App. 309–10. This statement is a response to the arguments
raised by Zabielski in the course of his sentencing hearing.
Zabielski argued that because of limited BOP resources, he
may not be able to receive the treatment that he needs in
21
prison. The District Court disagreed, finding that BOP
facilities were capable of accommodating his needs. This
type of reference to rehabilitation is, under Tapia, both
permitted and encouraged. See 131 S. Ct. at 2392.
IV
For the reasons stated, we hold that the application of
the threat of death enhancement was harmless error, and
Zabielski‘s sentence was not substantively unreasonable.
Accordingly, we will affirm the District Court‘s judgment of
sentence.
22
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Case: 12-7170 Document: 17 Page: 1 Filed: 02/11/2013
United States Court of Appeals
for the Federal Circuit
______________________
FRANK MORENO, JR.,
Claimant-Appellant,
v.
ERIC K. SHINSEKI, SECRETARY OF VETERANS
AFFAIRS,
Respondent-Appellee.
______________________
2012-7170
______________________
Appeal from the United States Court of Appeals for
Veterans Claims in case no. 10-1314, Judge Ronald M.
Holdaway.
ORDER
The United States Court of Appeals for Veterans
Claims (“Veterans Court”) received Frank Moreno, Jr.’s
notice of appeal on August 6, 2012. Judgment was en-
tered by the Veterans Court on April 24, 2012. As such, a
total of 104 days had elapsed between judgment and
receipt of the appeal.
Section 7292(a), Title 38, United States Code requires
that a notice of appeal of the decision of the Veterans
Court be filed within 60 days after that court’s entry of
judgment or order. Thus, it appears that this appeal is
untimely and must be dismissed.
Case: 12-7170 Document: 17 Page: 2 Filed: 02/11/2013
2 FRANK MORENO, JR. v. SHINSEKI
IT IS ORDERED THAT:
(1) Mr. Moreno is directed to show cause, within 30
days of the date of filing of this order, as to why his ap-
peal should not be dismissed as untimely. The Secretary
may also respond by that date.
(2) The briefing schedule is stayed.
FOR THE COURT
/s/ Jan Horbaly
Jan Horbaly
Clerk
s25
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623 F.3d 1331 (2010)
Gregory Alan KOKAL, Petitioner-Appellant,
v.
SECRETARY, DEPARTMENT OF CORRECTIONS, Florida Attorney General, Respondents-Appellees.
No. 08-11722.
United States Court of Appeals, Eleventh Circuit.
October 18, 2010.
*1332 Linda McDermott (Court-Appointed), McClain & McDermott, P.A., Wilton Manors, FL, for Petitioner-Appellant.
Stephen Richard White, Tallahassee, FL, for Respondents-Appellees.
Before TJOFLAT, BLACK and MARCUS, Circuit Judges.
MARCUS, Circuit Judge:
In this capital case, Gregory Alan Kokal claims that he was denied the effective assistance of counsel in violation of the Sixth Amendment. Kokal was sentenced to die by a Florida state court for the first degree murder of Jeffrey Russell, a sailor in the United States Navy. During post-conviction proceedings, the Florida Supreme Court concluded that Kokal's trial counsel was not constitutionally ineffective in preparing for the sentencing phase of his trial. Kokal again raised a Strickland claim in this federal habeas corpus petition alleging that his trial counsel failed to investigate mitigating mental health evidence. The federal district court likewise denied this § 2254 petition in full. Kokal now appeals that judgment in our Court. After thorough review, we too conclude that the state court's determination was neither contrary to nor an unreasonable application of clearly established federal law. Accordingly, we affirm the district court's decision and deny the petition.
I. Facts and Procedural History
A. The Guilt Phase of the Trial
The awful facts of the murder, as elicited at trial, are these. At 7:15 a.m. on the morning of September 30, 1983, navy diver Robert Garon was jogging at the Hanna Park Recreational Facility near Jacksonville, Florida, when he discovered a body lying on the beach. There was a pool of blood under the victim's head, and a broken cue stick lay near the body. After police were called to the scene, they discovered, on the park exit road, a wallet and a Naval Identification Card, identifying the victim as Jeffrey Russell, a sailor stationed at Mayport, a Naval base outside of Jacksonville.
The police initially believed that Russell had been beaten to death. An autopsy later revealed, however, that a gunshot was the cause of death, but this information was intentionally restricted to the doctor performing the autopsy and to investigating personnel. The autopsy further revealed that Russell had suffered multiple blunt impacts to the head. The victim also suffered multiple welt marks on the back of his forearm, multiple abrasions and contusions on his knuckles, a dislocated right ring finger, and multiple abrasions on his back. The medical examiner testified that based on these wounds, Russell was alive and tried to defend himself at the time they were inflicted.
As fate would have it, on the morning Russell's body was discovered, Jacksonville police officer David Mahn stopped a 1975 Ford pickup truck with Arizona tags because the driver had driven away from a gas station without paying for the gas. Petitioner Kokal was the only occupant of the truck. When asked for identification, Kokal produced his own Florida driver's license, a Colorado driver's license belonging to William O'Kelly, and a New York driver's license belonging to the victim, *1333 Jeffrey Russell. Inside the truck the officer found a Reuger .357 revolver, which was later determined to have Kokal's fingerprints on it and identified as the weapon used to murder Russell. At the time of Kokal's traffic stop, however, Officer Mahn did not make any connection between Kokal and Jeffrey Russell's murder. As a result, after Officer Mahn arrested Kokal for petit theft of the gasoline, Kokal was released on his own recognizance.
That evening, Kokal was visited by a friend, Eugene Mosley, while Kokal was packing his truck to leave town. Kokal told Mosley that he and his companion, William O'Kelly, were going to Canada because Kokal had killed a man. Kokal explained that he and O'Kelly had beaten Russell with a pool cue, and both had beaten and kicked Russell after he was lying on the beach, but that Kokal had actually shot Russell in the head. In describing the murder to Mosley, Kokal said that the "guy wouldn't . . . hardly go down," and at one point, the victim was on his knees and pleaded for his life, saying "please don't kill me, don't kill me." Nevertheless, they "just kept beating him" and "finally got him on the ground and they continued to kick him and beat on him." Then Kokal "just . . . took a gun and held it to [the victim's] head and shot him."
Kokal told Mosley that "he wasn't worried about [fingerprints being found on the pool cue] because there was enough sand there and that sand will keep them from getting any fingerprints on any object." Kokal further surmised that "he was so close [when he shot Russell] and the bullet would have gone straight through his head and into the sand." According to Mosley, Kokal "didn't seem like it really bothered him that he did it." Indeed, when Mosley asked Kokal why he had shot the victim, Kokal offered this explanation: "dead men can't tell lies." Kokal admitted that the purpose of the attack had been to rob the victim, and that he had "wasted a guy . . . over a dollar." Kokal also told Mosley that "he was going to go get another Sailor before he left town so that they would have money to leave town on."
On October 5, 1983, Eugene Mosley called the police to report that he had information about someone having been shot in the head at the beach. The police determined that they needed to talk to Mosley since "nobody" would have known that Russell was shot in the head "but the person who did it." After speaking to Mosley, the police obtained an arrest warrant for Kokal and arrested him.
On October 20, 1983, Kokal was indicted and charged with the first degree murder of Jeffrey Russell. Kokal's testimony at trial was largely consistent with the facts of the murder detailed by Mosleythat Kokal and O'Kelly had picked up a hitchhiker, Russell, who was struck with a pistol and Kokal's pool cue, robbed, marched down a beach where he was again beaten with the pool cue, and then killed with a single shot from a .357 revolver. However, Kokal testified that it was his companion, O'Kelly, who actually beat, robbed, and shot the victim. Kokal admitted to being present during the murder, but denied any involvement in the homicide.
O'Kelly, on behalf of the government, also testified.[1] O'Kelly said that he had been with Kokal on the night of the murder, and that after they picked up Russell, *1334 the three of them had stopped to smoke marijuana, and then drove into Hanna Park. Once they were at the park, O'Kelly left to use the restroom, and upon his return, he saw Kokal hit Russell over the head with a pistol, and heard Kokal instruct Russell to hand over his wallet. O'Kelly then told Russell to give Kokal the wallet, so that "he would be on his way and we would be on our way." Instead, O'Kelly watched as Kokal made Russell walk down the beach, and a few minutes later, as Kokal beat Russell over the head with a cue stick. O'Kelly told Kokal that "there ain't no need for that" and that he was leaving. After he started to walk away, O'Kelly heard a gunshot, turned around, and saw that Kokal had a pistol in his hand. Next, O'Kelly and Kokal ran to the truck and left. O'Kelly further testified that Kokal had brought up the subject of robbery three or four times before the night of the murder.[2] On October 4, 1984, the jury found petitioner Kokal guilty of first degree murder.
B. The Penalty Phase and Direct Appeal
On October 12, 1984, the penalty phase began. The state presented the testimony of the medical examiner, who gave further detail regarding the wounds inflicted on the victim, including the defensive wounds on the victim's forearm and hand. The pathologist emphasized the seriousness of the beating that fractured the victim's skull, which included "two impacts to the back of the head, one with lacerations or tearing of the skull, the other one with an abrasion and bruise." He also described the very close range from which the victim was shot in the head, and noted that the beating "happened prior to the shooting" because "there was bleeding and reddening of the area suggesting that the man was alive when those injuries were inflicted."
Defense counsel in turn presented the testimony of Kokal's mother, Deanne Kokal. Mrs. Kokal testified that Kokal's father had physically abused Kokal as a child. She described an instance when the father had struck Kokal with a tennis racket, causing "severe gashes in his head." She also said that, when Kokal was around age eight, nine, or ten, on one occasion, his father chained him to the foot of his bed, "locked [him] in his room for one week without having anything to eat except sweet potatoes," and did not allow him to "use the bathroom."
Mrs. Kokal explained that petitioner's father would severely punish Kokal "every time he would do something"; these instances were frequent and included beatings. As the beatings increased in their severity and frequency, Kokal "kept getting into more and more trouble." She sought counseling for her son. The physical abuse of Kokal ended in 1977. Mrs. Kokal also recounted that her husband physically abused her as well, and this included striking her with his fist, although not as frequently as he abused Kokal. She added that a divorce ensued when Kokal was thirteen or fourteen years old.
Mrs. Kokal pleaded with the jury that Kokal had "love, compassion and . . . a lot to offer," including "his loyalty to me." She added that the murder was wholly *1335 inconsistent with "the man that [she had]. . . raised and known for all his life." She recognized that when Kokal returned from Arizona in July 1983 with O'Kelly, his lifestyle had become one of daily alcohol abuse. "[H]e mostly would do what he wanted to." But she said she had not given up on her son, and begged the jury to let him live. She explained that Kokal loved the outdoors, and that a life sentence would be a "tremendous penalty" for him.
Following the testimony and arguments, the judge instructed the jury on the potential aggravating and mitigating circumstances. The aggravating circumstances included whether: (1) the capital felony was committed while the defendant was engaged in the commission of a robbery, Fla. Stat. § 921.141(5)(d); (2) the capital felony was committed for the purpose of avoiding or preventing a lawful arrest, Fla. Stat. § 921.141(5)(e); (3) the capital felony was especially heinous, atrocious or cruel, Fla. Stat. § 921.141(5)(h); and (4) the capital felony was committed in a cold, calculated and premeditated manner without any pretense of moral or legal justification. Fla. Stat. § 921.141(5)(i). The mitigators in turn included these considerations: (1) Kokal's capacity to appreciate the criminality of his conduct or to conform his conduct to the requirements of law, Fla. Stat. § 921.141(6)(f); (2) Kokal's age at the time of the murder, Fla. Stat. § 921.141(6)(g); and (3) his character. Fla. Stat. § 921.141(6)(h).
After deliberating, the jury unanimously recommended death. It also found that "the defendant, Gregory Kokal did actually kill Jeffrey Russell."
On November 14, 1984, the state trial court conducted a motion and sentencing hearing of its own, pursuant to Fla. Stat. § 921.141(3), which requires trial judges to independently review the evidence and make detailed written findings regarding aggravating and mitigating circumstances before imposing the death penalty. In this hearing, the trial court weighed the fact that the jury had found Kokal actually killed the victim, and reviewed all of the potential statutory and non-statutory mitigating circumstances. Finding no mitigators and all four aggravating circumstances, the trial court sentenced Kokal to death.
The trial court also issued a written judgment and sentence, explaining its decision at some length. The court began by outlining the essential facts of the murder, including how Kokal "savagely" beat the victim, shot Russell in the head after the victim "begged his life be spared," and bragged to his friend that he "wasted a sailor for a dollar."
The order further provided that the trial court had "closely examined, weighed and considered" the aggravating and mitigating circumstances. In so doing, the trial court expressly addressed the aggravating circumstances argued by the state, as well as all of the potential mitigating circumstances available in the statute. The trial court then reached the following pertinent conclusions:
In rejecting the "extreme mental and emotional disturbance" mitigating circumstance, Fla. Stat. § 921.141(6)(b), the judge found that "the defendant was at all material times in complete control of his mental and emotional faculties acting deliberately and with pre-meditation."
In rejecting the "substantially impaired" capacity mitigating circumstance, Fla. Stat. § 921.141(6)(f), the judge recognized that the defendant had "testified that during the evening prior to the death of Russell . . . he had consumed a large quantity of alcohol[,]. . . smoked a number of marijuana cigarettes[, and] . . . was highly *1336 intoxicated." The judge also found, however, that "[t]he defendant's statement to his friend, [Mosley], contained no evidence of intoxication [and] . . . was in great detail including his thought process at the time of the killing of Russell"; "[t]he testimony of the co-participant, [O'Kelly], does not support intoxication of the defendant by either alcohol or drugs [and showed] . . . deliberate, calculated acts and conduct by the defendant during the course of the robbery and murder of Russell"; and "the defendant proved to this Court, by his statements and his acts, as well as his demeanor on the witness stand, that he is an individual of above average intelligence, knowledge, and well oriented as to time, space and relationships and well able but unwilling to conform his conduct to the requirements of law and with an ability to appreciate the criminality of his conduct."
In finding the "capital felony [during]. . . the commission of . . . a robbery" aggravating circumstance, Fla. Stat. § 921.141(5)(d), the judge found that the evidence "proves beyond a reasonable doubt that the death of Jeffrey Russell took place during the commission of the robbery of" Russell; and that Kokal knowingly participated in the robbery and "actually committed the murder."
In finding the "capital felony [to] avoid[] . . . arrest" aggravating circumstance, Fla. Stat. § 921.141(5)(e), the judge found that Russell "was beaten severely about the head and shoulders during the robbery" and "[a]t the time of the murder, . . . lay prone upon the ground and was begging for his life"; "Russell's shooting was not necessary for escape from the scene of the robbery, and . . . eliminated the victim's identification and testimony at trial"; and Kokal told Mosley "that he had shot Russell because, `dead men tell no lies.'"
In finding the "heinous, atrocious, and cruel" aggravating circumstance, Fla. Stat. § 921.141(5)(h), the judge found that "the victim was severely beaten about the head and neck[,] . . . suffered great pain from the blows[,]. . . was forced to change his location before he was finally struck down and murdered"; "[t]he march was a `death march' filling Russell's mind with fear and anguish"; and "[a]t the end of the `death march,' Russell was beaten again and as he begged for his life, the murder took place."
And in finding the "cold, calculated, and premeditated" aggravating circumstance, Fla. Stat. § 921.141(5)(i), the judge found that "Russell was assaulted and battered after he alighted from the truck upon arrival from the beach[,] . . . was forced by the defendant to move farther down the beach away from the truck[,] . . . was completely subdued and presented no threat to the defendant[,] . . . was struck repeatedly by the defendant until he fell to the ground[,] . . . [and] offered no threat to the defendant and, to the contrary, begged for his own life"; and "[t]he murder of Russell was in the nature of an assassination. He was forced into the `death march' and, at its conclusion, was assassinated as he begged for his life. He constituted no threat to the defendant nor bar to his escape. At no time, did Russell ever present legal or moral cause to the defendant or his companion, O'Kelly, to justify Russell's death."
Having explained that the state had proven the four aggravating circumstances *1337 beyond a reasonable doubt, and that the defendant had not proven any statutory or non-statutory mitigating circumstances, the order concluded that Kokal should be sentenced to die. On July 17, 1986, the Florida Supreme Court affirmed the petitioner's conviction and death sentence. Kokal v. State, 492 So.2d 1317 (Fla.1986).
In its affirmance, the Florida Supreme Court expressly rejected Kokal's attempts to rebut three of the aggravating circumstances:
The victim was beaten unconscious and posed no threat to Kokal's escape, but he did pose a threat to later identification of the robber(s). Kokal's own statement to his friend to the effect that dead men can't talk confirms that the murder was committed to avoid or prevent arrest. We have found this aggravating circumstance present in similar cases. Appellant's argument that the murder was not especially heinous, atrocious or cruel because death was instantaneous overlooks the events preceding death. The murder was preceded by a violent robbery, a march at gunpoint to the murder site, and a vicious and painful beating during which the victim, in anticipation of his fate, unsuccessfully pleaded for his life. The facts surrounding the murder also show beyond a reasonable doubt the heightened premeditation necessary for a finding of cold, calculated and premeditated. The high level of visceral viciousness with which the murder was carried out is not inconsistent with the coldly calculated decision to eliminate the witness by beating him into unconsciousness prior to the execution-type killing.
Id. at 1319 (internal citations omitted).
The Florida Supreme Court also upheld the state trial court's rejection of mitigating circumstances in these terms:
Appellant also argues that the trial court erred in not finding certain mitigating factors: his capacity to appreciate the criminality of his conduct or to conform his conduct to the requirements of law was impaired and his age of twenty years. The trial court heard testimony from appellant and his mother that he abused alcohol and drugs up to and during the night of the murder. The specificity with which Kokal recounted the details of the robbery and murder to his friend contradicts the notion that he did not know what he was doing, as does the testimony of his companion. There was no abuse of discretion in not giving significant weight to this evidence in mitigation. . . . For the same reason we see no merit in the claim that the trial court erred in not finding as mitigation that appellant was only twenty years of age and immature.
Id. (internal citations omitted).
The Florida Supreme Court denied rehearing in Kokal's direct appeal on September 17, 1986. See Ex. 14.[3]
C. Kokal's Ineffective Assistance Claim In the State Post-Conviction Courts
Following the resolution of Kokal's direct appeal, Kokal filed a post-conviction motion in state court raising, among other things, the claim that his counsel was ineffective at the penalty phase of his trial because counsel failed to investigate and present mitigating evidence concerning Kokal's mental health at the time of the crime. In February 1997, an evidentiary hearing was held on Kokal's post-conviction claims ("the Rule 3.850 hearing").
Dr. Barry Crown, a neuropsychologist, testified as a witness for Kokal. In *1338 Crown's opinion, Kokal had sustained organic brain damage, primarily of a frontal lobe bilateral variety, prior to the crime. Crown noted that Kokal had been in a car accident in 1983, which had resulted in concussions, and had an earlier near-drowning experience, which had deprived his brain of oxygen.[4] According to Dr. Crown, the brain damage Kokal suffered rose to a level that would have affected Kokal's cognitive abilities, and affected Kokal's concentration, attention, reasoning, judgment, auditory selective attention,[5] and basic verbal and nonverbal memory process. Crown further offered that alcohol and drugs "have a greater effect on an individual who has recently sustained a head injury than they would have on the normal individual. A smaller amount of substance creates a greater effect." Dr. Crown thus opined that Kokal's consumption of a large quantity of alcohol on the evening of the murder, in combination with his brain damage, would have greatly affected his cognitive abilities.
In short, in Dr. Crown's opinion, Kokal was suffering from two statutory mitigating factors at the time of the crime: Kokal was under the influence of an extreme mental and emotional disturbance, Fla. Stat. § 921.141(6)(b), and Kokal's capacity was diminished to appreciate the criminality of his conduct or to conform his conduct to the requirements of the law, Fla. Stat. § 921.141(6)(f). Crown admitted on cross-examination, however, that Kokal's brain damage was not severe enough standing alone to have impaired him at the time of the crime. He further conceded that Kokal was not insane at the time of the offense.
Dr. Joseph Virzi, a psychiatrist who had examined Kokal pre-trial in 1984, also testified on behalf of Kokal at the Rule 3.850 hearing. Virzi had been retained before trial by Kokal's counsel, Dale Westling, to evaluate whether Kokal was insane at the time of the crime, but Virzi was not called to testify at the penalty phase. Following the pre-trial examination, Dr. Virzi had given Kokal's counsel a report saying the following about Kokal's "mental status":
This twenty-one year old white male was oriented to time, person, and place. Intelligence was not impaired. Recent and remote memory were clear. The patient had a clear idea of what had happened prior to the above incident and during the above incident. He understands the consequences of his behavior. He knows the difference between right and wrong. The patient has no delusions, no homicidal ideas. His [blank] is clear.
The report opined that Kokal suffered from "[a]cute situational adult/adolescent problems [and c]hronic alcoholism and drug abuse."[6]
*1339 At the Rule 3.850 hearing, Virzi testified that his pre-trial examination of Kokal had lasted about forty-five minutes, and that he had not received any background information on Kokal prior to the examination. Since that time, and prior to the Rule 3.850 hearing, Dr. Virzi had received Kokal's records, and was made aware of Kokal's near-drowning and severe automobile accident. Virzi added that, based on the records supplied to him in post-conviction, he found the presence of at least one statutory mental health mitigator at the time of the crime, Fla. Stat. § 921.141(6)(b).
Specifically, when Virzi was asked whether he had an opinion based upon a reasonable degree of medical probability as to whether Kokal suffered from a diminished capacity at the time of the crime, he answered that the information on Kokal's accidents "would raise my level of awareness that he may have diminished capacity, cognitively, at the time of the crime." And when asked if he had an opinion, within a reasonable degree of medical probability, as to whether the substance and alcohol abuse diminished Kokal's capacity or disturbed him emotionally at the time of the crime, Dr. Virzi's opinion was that "the alcoholism, drug abuse disturbed him emotionally at the time of the crime."
Dr. Virzi acknowledged on cross-examination that he had examined Kokal in 1984 at counsel Westling's request for possible mitigation as well as for sanity. In fact, his written report provided the following details about Kokal's substance abuse:
The patient [Kokal] states that the relationship [with his father] is not the greatest. He stated that the relationship deteriorated with the patient's drinking. He stated that he greatly disappointed his father, but his father did not give him much support during his turbulent adolescent development. . . . The patient said his alcohol history started in junior high school around the eighth grade. He stated he originally drank not to stay drunk, but it gradually moved into that area, with difficulty controlling his drinking and resulting belligerent fighting behavior. He stated he drinks mostly beer, approximately a sixpack a day, but denies any blackouts or D.T.'s, but he does admit to one DWI. . . . He said he had no formal treatment for psychiatric or drug and alcohol problems. . . . He . . . continues to take drugs and pot irregularly.
Virzi thought he had "implied" in his report that Kokal was incapacitated from drugs and alcohol at the time of the crime.
In addition, Virzi still agreed with what he found in his reportthat Kokal suffered from chronic alcoholism and drug abuseand there was no change in his original diagnosis. Dr. Virzi further conceded that when he examined Kokal in 1984 he found no evidence of organic brain disorder. However, when Dr. Virzi was asked whether he continued to believe Kokal had a clear and precise memory of what happened, he said that based on what Kokal's post-conviction lawyers had told him, he now "question[ed] whether that was correct memory or not."
Kokal also called his trial counsel, Dale Westling, to testify at the Rule 3.850 hearing. Westling testified that during his many discussions with Kokal, the petitioner had given him a detailed account of how *1340 he had beaten the victim with a pool cue and then shot him in the head. When asked why he did it, Kokal told Westling, "Dead men tell no lies. That's why I did it," and then added, "and you know what, the mother fucker only had a dollar." Westling said that the account was "chilling," since "there was no emotion whatsoever, no remorse."
As for Kokal's alleged alcohol and drug impairments at the time of the crime, Westling believed that Kokal "knew every step that occurred that evening with great specificity." Westling explained that, during all of his interactions with Kokal, "[t]here was never the slightest indication that [Kokal] was in any way impaired." "He knew exactly what had happened and he did it to steal money."
Westling had asked Kokal at the outset if he had any physical or mental disabilities or handicaps and Kokal had told him no. Westling "spent a lot of time with Mrs. Kokal." He added that the father was not helpful. Neither Kokal, his mother, nor his father told Westling about the near-drowning in 1977 nor the car accident in 1983. Westling said he never had "the slightest indication" that Kokal was incompetent or suffering from some mental incapacity.
Nonetheless, Westling had requested that the court appoint an expert to perform a psychiatric examination of Kokal because it was "common sense . . . to every defense attorney that defends a murder at least to have [the client] examined by a psychiatrist." According to Westling, after receiving Dr. Virzi's report, Westling phoned Virzi to ask if he had anything at all that could help in the defense and Virzi "got a little snotty" and said no.[7]
Westling opined that if called, Dr. Virzi "would have been a devastating witness" against the defense, since Virzi's report would have been discoverable and would have provided grounds for "three or four aggravating circumstances in and of itself." He continued: "I didn't want [the jury] to know that Dr. Virzi thought [Kokal] had a clear idea of what had happened prior to the [murder] and during the [murder]."
Westling also considered the child abuse Kokal had suffered at the hands of his father as one possible non-statutory mitigating circumstance, and looked for others. Westling and Kokal decided "to present [Kokal's] mother with the evidence that we had about the abuse, his age and try to present to the jury some reason . . . not to give him the death penalty." Westling explained: "All we wanted to do was talk about [Kokal]'s past, and what it comes down to is to evoke sympathy." But Westling and Kokal did not want to open the door to Kokal's criminal history or misbehavior as a child through his mother's testimony. Westling also expressed concern about "the inconsistencies [they] might create by arguing [Kokal] did it but there are excuses for it." He said: "You can't take the position at trial I didn't do it and then in mitigation try to explain why you did it."
Westling described Kokal as "very astute throughout the whole case[,] wanting copies of everything and question[ing] me about the practices and policies we were going to follow," and "incredibly bright, responsive, always appropriate in his remarks and responsive in responses, interested in the case." However, by "21 Greg was an accomplished criminal."
*1341 Finally, Kokal's mother, Deanne Kokal, testified at the Rule 3.850 hearing, recalling that she had told trial counsel about Kokal's alcohol and drug abuse problems. She remembered Kokal's near-drowning incident in 1977, but did not know whether she told Westling about it. She also recalled the 1983 car accident, but again did not think she had discussed it with Westling because "I guess I didn't realize that it actuallyyou know, he could have been damaged." Mrs. Kokal said it was a miracle that her son lived because it was very severe.
Following this testimony, the state trial court issued a written decision rejecting all of Kokal's post-conviction claims. Ex. 20. Addressing what it considered to be Kokal's "most serious" claimwhether counsel's penalty-phase investigation into Kokal's mental health was deficient under Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984)the trial court observed that Kokal "failed to demonstrate how his trial counsel could have hoped to have developed mitigating evidence associated with actual brain damage," and "failed to establish with regard to trial counsel's use of the psychiatrist `that the approach taken by defense counsel would not have been used by professionally competent counsel.'" Ex. 20 at 9, 11 (quotations omitted). Nonetheless, the trial court found that "the defense lawyer's over-all preparation for the penalty phase of the trial may have fallen below that expected of reasonably competent counsel [since t]he lawyer did little more than simply think about the penalty phase until after the guilt phase was completed." Ex. 20 at 9. The trial court continued: "Questions regarding any deficiency in Mr. Westling's preparation are irrelevant, though, if the Defendant cannot prove the existence of the second prong of the Strickland v. Washington test for ineffectiveness of counsel." Id.
Turning to Strickland's prejudice prongrequiring Kokal to "show that [he] was prejudiced by any failure to prepare"the trial court found the following: (1) Dr. Virzi's opinionthat, based on his history of alcohol and drug abuse, Kokal had some generally diminished mental capacityhad not changed, despite what Dr. Virzi had recently learned about Kokal's brain damage; (2) Kokal's apparent ability to vividly recall the events of the murder, combined with his ability to function in terms of walking, talking, and driving a car, militated against any concept of specific diminished mental capacity with regard to his crime; (3) Kokal's history of alcohol and drug abuse was presented during the penalty phase of the trial, although not through the psychiatrist; and (4) Dr. Virzi was not called to testify at trial for strategic reasons, since had he testified, he could have been effectively cross-examined, and his report indicated his belief that Kokal understood the consequences of his actions. Ex. 20 at 9-10. The trial court concluded that Kokal
failed to show how he was prejudiced by any alleged failure of trial counsel to have made better use of his psychiatrist. As the Supreme Court noted in affirming this conviction on direct appeal, the Defendant's detailed memory about the crime "contradicts the notion that he did not know what he was doing."
Likewise, the Defendant has failed to adduce any other evidence as to how he may have been prejudiced by any supposed deficiency in preparation for the penalty phase.
Ex. 20 at 11 (citations omitted).
In short, there is no square finding from the trial court about whether counsel satisfied Strickland performance. The most we can say is that it raised the question, but then disposed of Kokal's claim by finding *1342 that he failed to establish Strickland prejudice.
Kokal appealed to the Florida Supreme Court, which after making a detailed and independent examination of the record, affirmed the trial court's decision. See Kokal v. Dugger, 718 So.2d 138, 139 (Fla.1998). The Florida Supreme Court recited the evidence it considered relevant to Kokal's ineffective assistance claim. It began by laying out the facts of the murder, including that Kokal and O'Kelly had picked up, and then beaten, shot, and robbed a hitchhiker, who Kokal had deliberately shot in the head because "dead men can't tell lies." Id. The Florida Supreme Court observed that the trial court had found no mitigating circumstances, but had found four statutory aggravators: (1) the murder was committed during the course of a robbery; (2) the murder was committed to avoid arrest; (3) the murder was especially heinous, atrocious, or cruel; and (4) the murder was committed in a cold, calculated, and premeditated manner. Id. at 139 & n. 1. It also recognized that Kokal's mother had testified during the penalty phase that his father had badly mistreated and abused him as a child. Id. at 139.
The Florida Supreme Court then summarized the testimony from Kokal's postconviction hearing of Crown and Virzi this way:
Kokal called as a witness Dr. Crown, a neuropsychologist who examined him in prison in 1996, and who testified that in his opinion Kokal sustained brain damage in a 1983 car wreck, and that on the night of the killing the combination of brain damage and alcohol consumption rendered him extremely disturbed and also impaired his capacity to appreciate the criminality of his conduct. This testimony was controverted by the State on cross-examination.FN2 Kokal also called Dr. Virzi, a psychiatrist, who testified that he had examined Kokal pre-trial in 1984 to evaluate his sanity and competence. Dr. Virzi now believes that Kokal's drug and alcohol abuse caused him to be emotionally disturbed and to have diminished capacity at the time of the crime. This testimony also was controverted by the State.FN3
FN2. Dr. Crown admitted on cross-examination that he did not prepare a written report on Kokalthat CCR did not ask him toand thus no report was given to the State prior to the evidentiary hearing. He testified that Kokal's brain damage is not severe enough standing alone to have impaired him at the time of the crime and that the only evidence of alcohol consumption came from Kokal himself. Dr. Crown acknowledged that Kokal had successfully completed both his G.E.D. and a number of college courses. Dr. Crown did not know that Kokal had in fact feigned illness in order to obtain favored treatment in jail. Dr. Crown attributed no significance to the fact that hospital records following the 1983 auto accident: ruled out significant head injury, indicated that Kokal's condition was due to alcohol consumption, not head injury, and reported that Kokal was doing well when discharged. Nor did Dr. Crown attach significance to the fact that prison evaluations showed that Kokal was not suffering from any mental disorders and did not need counseling.
FN3. Dr. Virzi acknowledged on cross-examination that he had examined Kokal in 1984 at the request of Dale Westling, defense counsel, and that he had evaluated Kokal for possible mitigation as well as for sanity and competence. Dr. Virzi knew of Kokal's history of drug and alcohol abuse at the time. He still agrees with everything he found in his original report and he concedes that when he examined Kokal in 1984 he found no evidence of organic brain disorderthat Kokal was functioning normally.
Id. The state high court also detailed the testimony of counsel Westling concerning his own prior experience in trying criminal cases, Kokal's admission of the crime to him, Westling's preparation of the case and his trial strategy, and Kokal's demeanor as a defendant. Id. at 139-40.
In affirming the denial of Kokal's post-conviction motion, the Florida Supreme *1343 Court said: "Our review of the record shows that the trial court did not err in denying Kokal's claim of ineffectiveness in the guilt phase or in the penalty phase. The record contains extensive evidence to support its ruling and we find no legal error." Id. at 140-42 (footnotes omitted). In the accompanying footnotes, the Florida Supreme Court quoted at length from Strickland v. Washington, which established the Supreme Court's ineffective assistance standard,[8] as well as from the lower court's findings on Kokal's ineffective assistance claim. Id. at 140-41 nn. 11 & 13.
D. District Court Post-Conviction Proceedings
On February 22, 2005, Kokal filed the instant petition for writ of habeas corpus under 28 U.S.C. § 2254 in the United States District Court for the Middle District of Florida. He filed an amended petition on March 10, 2005, raising nine issues.[9] On February 11, 2008, the district court denied relief on all nine.
As for Kokal's claim that he received ineffective assistance of counsel at the penalty phase of his trial, the district court determined that the state courts' findings were neither contrary to nor an unreasonable application of clearly established federal law. It first determined that Westling had "reasonably decided not to further pursue any mental health matters." Doc. 18 at 31. The court further held that Kokal "was not prejudiced by counsel's alleged errors," explaining that:
Even if the mental health evidence had been presented, there is no reasonable probability that it would have established sufficient mitigating factors to outweigh the four statutory aggravating factors. There is simply no reasonable probability that the result of the penalty proceeding would have been different if counsel had presented such evidence.
Doc. 18 at 31.
The district court issued a certificate of appealability on one issue: "(1) did the *1344 state courts' adjudications of Petitioner's ineffective assistance of counsel claim in ground one (that Petitioner was denied the effective assistance of counsel at the penalty phase of his capital trial) result in decisions that were contrary to clearly established federal law, involved an unreasonable application of clearly established federal law, and/or were based on an unreasonable determination of the facts in light of the evidence presented in the state court proceedings; and, if so, (2) did this Court err in finding Petitioner's ineffective assistance of counsel claim in ground one to be without merit?" Doc. 27. This appeal followed.
II. Standard of Review
Because Kokal filed his federal habeas petition after April 24, 1996, Section 2254(d) governs this proceeding. Wilcox v. Fla. Dep't of Corr., 158 F.3d 1209, 1210 (11th Cir.1998). Accordingly, a court may grant habeas relief only where the state court decision was (1) "contrary to, or involved an unreasonable application of, clearly established Federal law, as determined by the Supreme Court of the United States"; or (2) "based on an unreasonable determination of the facts in light of the evidence presented in the State court proceeding." 28 U.S.C. § 2254(d). A state court decision is "contrary to" clearly established law if the court arrived at a conclusion opposite to that reached by the Supreme Court on a question of law, or the state court confronted facts that are "materially indistinguishable from a relevant Supreme Court precedent" but arrived at a different result. Williams v. Taylor, 529 U.S. 362, 405, 120 S.Ct. 1495, 146 L.Ed.2d 389 (2000). A state court decision is an "unreasonable application" of clearly established law if the state court unreasonably extends or fails to extend a clearly established legal principle to a new context. Id. at 407, 120 S.Ct. 1495.
A state court's factual findings are presumed correct unless rebutted by the petitioner with clear and convincing evidence. 28 U.S.C. § 2254(e)(1). "This presumption of correctness applies equally to factual determinations made by state trial and appellate courts." Bui v. Haley, 321 F.3d 1304, 1312 (11th Cir.2003) (citing Sumner v. Mata, 449 U.S. 539, 547, 101 S.Ct. 764, 66 L.Ed.2d 722 (1981)).
III. Analysis
Kokal's claim boils down to this: his trial attorney was constitutionally ineffective during the penalty phase because counsel failed to conduct a reasonable investigation that would have revealed organic brain damage. To establish ineffective assistance, a petitioner must show both incompetence and prejudice: (1) he must show that "counsel's representation fell below an objective standard of reasonableness," and (2) he must show that "there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different." Strickland, 466 U.S. at 687-88, 694, 104 S.Ct. 2052; accord Wiggins v. Smith, 539 U.S. 510, 521-22, 123 S.Ct. 2527, 156 L.Ed.2d 471 (2003); Williams, 529 U.S. at 390-91, 120 S.Ct. 1495; Darden v. Wainwright, 477 U.S. 168, 185-87, 106 S.Ct. 2464, 91 L.Ed.2d 144 (1986).
Because a petitioner's failure to show either deficient performance or prejudice is fatal to a Strickland claim, a court need not address both Strickland prongs if the petitioner fails to satisfy either of them. See Windom v. Sec'y, Dep't of Corr., 578 F.3d 1227, 1248 (11th Cir.2009) (quoting Strickland, 466 U.S. at 697, 104 S.Ct. 2052). As a result, a court may resolve whether the petitioner established prejudice as a result of counsel's errors without first considering the adequacy of his counsel's *1345 performance. Id.; see also McClain v. Hall, 552 F.3d 1245, 1251 (11th Cir.2008) ("We may decline to decide whether the performance of counsel was deficient if we are convinced that [the petitioner] was not prejudiced"). Since the Florida Supreme Court's determination that Kokal failed to establish Strickland prejudice was not contrary to nor an unreasonable application of clearly established law, we only address prejudice.
To establish prejudice, Kokal must show
that, but for counsel's unprofessional performance, there is a reasonable probability the result of the proceeding would have been different. See Strickland, 466 U.S. at 694, 104 S.Ct. 2052. . . . "It is not enough for the [petitioner] to show the errors had some conceivable effect on the outcome of the proceeding. . .," because "[v]irtually every act or omission of counsel would meet that test." Id. at 693, 104 S.Ct. 2052. . . . Nevertheless, a petitioner "need not show that counsel's deficient conduct more likely than not altered the outcome in the case." Id. at 693, 104 S.Ct. 2052. . . . Rather, where, as here, a petitioner challenges a death sentence, "the question is whether there is a reasonable probability that, absent the errors, the sentencer . . . would have concluded that the balance of aggravating and mitigating circumstances did not warrant death." Id. at 695, 104 S.Ct. 2052. . . .
Putman v. Head, 268 F.3d 1223, 1248 (11th Cir.2001). Thus, "[i]n assessing prejudice, we reweigh the evidence in aggravation against the totality of available mitigating evidence." Wiggins, 539 U.S. at 534, 123 S.Ct. 2527. "In that process, what matters is not merely the number of aggravating or mitigating factors, but their weight." Reed v. Sec'y, Fla. Dep't of Corr., 593 F.3d 1217, 1240-41 (11th Cir. 2010). In addition, we presume "a reasonable sentencer." See Williams v. Allen, 542 F.3d 1326, 1342 (11th Cir.2008) (citing Strickland, 466 U.S. at 695, 104 S.Ct. 2052 ("[T]he idiosyncrasies of the particular decisionmaker, such as unusual propensities toward harshness or leniency[,] . . . are irrelevant to the prejudice inquiry.")).
We review the highest state court decision reaching the merits of the petitioner's claim. See Shere v. Sec'y, Fla. Dep't of Corrs., 537 F.3d 1304, 1310 (11th Cir.2008) ("[O]ur review is limited to examining whether the highest state court's resolution of a petitioner's claim is contrary to, or an unreasonable application of, clearly established law, as set forth by the United States Supreme Court."); see also Newland v. Hall, 527 F.3d 1162, 1199 (11th Cir.2008) ("[T]he highest state court decision reaching the merits of a habeas petitioner's claim is the relevant state court decision.").
Here, the Florida Supreme Court's ruling on Kokal's Rule 3.850 motion is the highest state court decision reaching the merits of Kokal's ineffective assistance of counsel claim. The Florida Supreme Court opinion independently reviewed and recited the facts surrounding Kokal's ineffectiveness claim at length. In so doing, the Florida Supreme Court actually appears to have disagreed with the trial court about whether the psychiatrist had changed his mind since 1984. The trial court suggested that Dr. Virzi continued to reach the same conclusions, see Ex. 20 at 10, while the Florida Supreme Court found that Dr. Virzi "now believes that Kokal's drug and alcohol abuse caused him to be emotionally disturbed and to have diminished capacity at the time of the crime," Kokal, 718 So.2d at 139 (emphasis added). Moreover, the Florida Supreme Court discussed in detail the evidence that undermined *1346 the "new" mitigating evidence provided by Drs. Crown and Virzi, including the testimony of Kokal's counselnone of which had been detailed by the lower court. Compare id. at 139-40 nn. 2, 3, 6, 8, with Ex. 20 at 7-11. After explicating the facts, the Florida Supreme Court quoted at length from Strickland, observed that the record "contain[ed] extensive evidence" to support the trial court's decision denying Kokal relief, id. at 141-42, and concluded that Kokal had failed to establish a Strickland violation.
We are also obliged to afford AEDPA deference to the Florida Supreme Court's decision. Although the petitioner has argued loosely that the state courts failed to weigh the aggravators and mitigators as required by clearly established law, we remain unpersuaded.
We cannot say that the Florida Supreme Court failed to weigh the available mitigating and aggravating circumstances simply because it did not expressly say that it had. A review of its thorough opinion reveals quite the contrary. To begin with, the Florida Supreme Court properly quoted from the Strickland prejudice standard. See Kokal, 718 So.2d at 140 n. 11 (quoting Strickland, 466 U.S. at 694, 104 S.Ct. 2052). In applying Strickland, the Florida Supreme Court then summarized the "new" mitigating evidence that Kokal had introduced at his Rule 3.850 hearing, and pointed out how the state had undermined the evidence proffered by Drs. Crown and Virzi. It also reviewed Westling's testimony, which added the opinion that Virzi would have been a devastating witness against Kokal, and that Kokal had always appeared to be astute and bright. Id. at 140 nn. 6, 8.
The Florida Supreme Court further considered the mitigating evidence that had been presented at the original sentencing phasethat Kokal had been physically abused as a child. Id. at 139 ("During the penalty phase, his mother testified that he had been mistreated as a child."). It then recounted the egregious circumstances surrounding the murder, and discussed the statutory aggravators found by the trial court. Id. at 139 & n. 1.
There is no way to read the Florida Supreme Court's detailed opinion without fairly concluding that it had "reweigh[ed] the evidence in aggravation against the totality of available mitigating evidence." Wiggins, 539 U.S. at 534, 123 S.Ct. 2527. Indeed, "[w]e will not presume that a state court misapplied federal law, and absent indication to the contrary will assume that state courts do understand clearly established Federal law . . . as determined by the Supreme Court of the United States." Wright v. Sec'y for Dep't of Corr., 278 F.3d 1245, 1256 n. 3 (11th Cir.2002) (quotation marks and citation omitted). Accordingly, we afford it AEDPA deference. See Panetti v. Quarterman, 551 U.S. 930, 953, 127 S.Ct. 2842, 168 L.Ed.2d 662 (2007); see also Suggs v. McNeil, 609 F.3d 1218, 1228 (11th Cir. 2010) (affording deference to state court decision that said it had "evaluated the penalty phase of Suggs' trial as a whole," despite petitioner's claim that the court had "compartmentalize[d] the specific components and address[ed] the prejudice from counsel's deficiencies separately") (emphasis and quotation marks omitted).[10]
*1347 Our task, then, is to ask whether the Florida Supreme Court unreasonably weighed the aggravating evidence against the totality of evidence in mitigation. On the record before us, we hold that it did not.
To begin with, and as the state courts have repeatedly recognized, the aggravating circumstances in the murder of Jeffrey Russell are especially powerful. "[T]his is not a case where the weight of the aggravating circumstances or the evidence supporting them was weak." Suggs, 609 F.3d at 1232 (quotation marks omitted). To the contrary, the trial court found four aggravating circumstances that (1) the capital felony was committed while the defendant was engaged in the commission of a robbery; (2) the capital felony was committed for the purpose of avoiding or preventing a lawful arrest; (3) the capital felony was especially heinous, atrocious or cruel; and (4) the capital felony was committed in a cold, calculated and premeditated manner without any pretense of moral or legal justification.
In justifying these findings, the trial court recounted that the victim was "severely beaten" in the neck and head, "suffered great pain from the blows," endured a "`death march' filling Russell's mind with fear and anguish," pleaded to live while lying prone on the ground, and in the end was murdered even though he presented no physical threat to the defendant; that Kokal had bragged to his friend that he had shot Russell to eliminate a witness since "dead men tell no lies," had "wasted a sailor for a dollar," and had decided to go "get another sailor"; and that the jury had found "that the defendant had actually committed the murder." On direct appeal (and again referenced in its post-conviction decision), the Florida Supreme Court reiterated the terrible circumstances of this "execution-type killing," which "was preceded by a violent robbery, a march at gunpoint to the murder site, and a vicious and painful beating during which the victim, in anticipation of his fate, unsuccessfully pleaded for his life." Kokal, 492 So.2d at 1319. In short, the trial testimony detailed a calculated, heartless, and gruesome murder that involved robbery, torture, and, finally, a painful and senseless assassination.[11]
Furthermore, the mitigating evidence regarding Kokal's mental health was not compelling. Dr. Crown admitted on cross-examination that Kokal's brain damage was not severe enough standing alone to *1348 have impaired him at the time of the crime; rather, his mental capacity was impaired only when his brain damage was combined with his drug and alcohol use. Likewise, Dr. Virzi admitted on cross-examination that he still agreed with what he found in his original reportthat Kokal suffers from chronic alcoholism and drug abuseand there was no change in his original diagnosis. The experts also confirmed that Kokal was not insane at the time of the murder, and was not completely out of control.[12]
What's more, other parts of the record undermined the conclusion that Kokal had brain damage in 1984. Thus, for example, Dr. Virziwho knew about Kokal's substance abuse problemsconcluded in his 1984 report that Kokal was "oriented to time, person, and place"; his "[i]ntelligence was not impaired"; his "[r]ecent and remote memory were clear"; he "had a clear idea of what had happened prior to the above incident and during the above incident"; he "underst[oo]d[] the consequences of his behavior"; he knew "the difference between right and wrong"; and he had "no delusions, no homicidal ideas." Virzi even conceded at the post-conviction hearing that when he examined Kokal in 1984after the 1977 near-drowning and 1983 car accidenthe found no evidence of organic brain disorder, and Kokal was functioning normally in terms of his ability to interact and understand.
Nor did any of Kokal's pre-1984 medical records suggest any brain damage. Following the 1977 swimming pool accident, Kokal underwent a physical examination and x-rays, but nothing unusuallike aspiration pneumonitis, acidosis, or a skull fracturewas found. Similarly, hospital records following the 1983 car accident ruled out a significant head injury, indicated that Kokal's condition was due to alcohol consumption, not head injury, and reported that Kokal was doing well when discharged. See Kokal, 718 So.2d at 139 n. 2.
The findings of fact made by the state courts are also inconsistent with the theory that Kokal suffered from substantial mental deficiencies. Notably, Kokal's original trial judge found that "the defendant was at all material times in complete control of his mental and emotional faculties acting deliberately and with pre-meditation," and even though Kokal had testified that "during the evening prior to the death of Russell. . . he had consumed a large quantity of alcohol [,] . . . smoked a number of marijuana cigarettes[, and] . . . was highly intoxicated," "the defendant's statement to his friend, [Mosley], contained no evidence of intoxication [and] . . . was in great detail including his thought process at the time of the killing of Russell." The judge additionally found that the "testimony of the co-participant, [O'Kelly], does not support intoxication of the defendant by either alcohol or drugs [and showed] deliberate, calculated acts and conduct by the defendant during the course of the robbery and murder of Russell." The trial court concluded that "the defendant proved to this Court, by his statements and his acts, as well as his demeanor on the witness stand, that he is an individual of above average intelligence, knowledge, and well oriented as to time, space and relationships and well able but unwilling to conform his conduct to the requirements of law and with an ability to appreciate the criminality of his conduct."
*1349 Similarly, the Florida Supreme Court observed on direct appeal that Kokal's detailed memory about the crime "contradicts the notion that he did not know what he was doing." Kokal, 492 So.2d at 1319. Thus, as we have said before, "[a] psychological defense strategy at sentencing is unlikely to succeed where it is inconsistent with the defendant's own behavior and conduct." Tompkins v. Moore, 193 F.3d 1327, 1338 (11th Cir.1999) (citing Weeks v. Jones, 26 F.3d 1030, 1042 (11th Cir.1994); Bush v. Singletary, 988 F.2d 1082, 1093 (11th Cir. 1993)).
Moreover, the psychological examination conducted just weeks after Kokal's sentencing by the prison psychologist, Dr. Elaine Pittman, found no evidence of mental illness or mental disorder. As the Florida Supreme Court aptly noted, "prison evaluations [completed soon after Kokal's sentencing] showed that Kokal was not suffering from any mental disorders and did not need counseling." Kokal, 718 So.2d at 139 n. 2. In particular, the report provided that objective testing performed on Kokal had revealed an absence of any neurotic or psychotic symptomalogy, and that Kokal was "characteristically antisocial." We cannot ignore that this evidence would have undermined the new expert testimony. What's more, it may have been "potentially aggravating," because it suggests that Kokal has antisocial personality disorder, "which is a trait most jurors tend to look disfavorably upon" and "is not mitigating but damaging." Suggs, 609 F.3d at 1231 (quotation marks omitted); accord Reed, 593 F.3d at 1248; Cummings v. Sec'y for Dep't of Corr., 588 F.3d 1331, 1368 (11th Cir.2009); Parker v. Sec'y for Dep't of Corrs., 331 F.3d 764, 788 (11th Cir.2003); Weeks v. Jones, 26 F.3d 1030, 1035 n. 4 (11th Cir.1994).
But even if Kokal had been able to establish that he suffered from brain damage, he would have had to further impress on the jury his substance abuse on the night of the murder. We have repeatedly observed, however, that evidence of drug and alcohol abuse is a two-edged sword:
The opinion of a medical expert that a defendant was intoxicated with alcohol or drugs at the time of the capital offense is unreliable and of little use as mitigating circumstances evidence when it is predicated solely upon the defendant's own self-serving statements, especially when other evidence is inconsistent with those statements. See Duren v. Hopper, 161 F.3d 655, 662 (11th Cir. 1998). . . . Moreover, even when there is a factual basis for it, a showing of alcohol and drug abuse is a two-edged sword which can harm a capital defendant as easily as it can help him at sentencing. See Waldrop v. Jones, 77 F.3d 1308, 1313 (11th Cir.1996).
Tompkins, 193 F.3d at 1337-38 (footnote omitted). See also Waldrop, 77 F.3d at 1313 (evidence concerning Waldrop's history of excessive alcohol and drug use would not constitute evidence in mitigation of the death penalty, since "admission of some of this evidence might have been harmful to Waldrop's case").
And not only would Kokal have had to stress his substance abuse on the night of the murder, but it also may have been revealed that in the 1983 car accident that allegedly led to his brain damage Kokal had been driving under the influence of alcohol. It is likewise possible that Kokal's school records, juvenile records, and criminal records may have been introduced in order to demonstrate his behavior before the 1983 car accident. These records would establish, among other things, that "even at 21 Greg was an accomplished criminal." Thus, "some of the additional mitigating evidence may have been harmful and tipped the scales still further in *1350 favor of the death penalty." Boyd v. Allen, 592 F.3d 1274, 1301 (11th Cir.2010); accord Marquard v. Sec'y for Dep't of Corr., 429 F.3d 1278, 1309 (11th Cir.2005); see also Robinson v. Moore, 300 F.3d 1320, 1350 (11th Cir.2002) (noting that additional mitigating evidence would have allowed evidence of another crime to be admitted).
Finally, it is worth observing that the jury unanimously recommended the death penalty in this case, and, only after hearing the extensive testimony of each of them, it expressly found that Kokal, and not O'Kelly, was the triggerman. Cf. Harich v. Wainwright, 813 F.2d 1082, 1093 n. 8 (11th Cir.1987) ("Prejudice is more easily shown in jury override cases because of the deference shown to the jury recommendation."), adopted by en banc court, 844 F.2d 1464, 1468-69 (11th Cir.1988) (en banc), overruling on other grounds recognized in Davis v. Singletary, 119 F.3d 1471, 1482 (11th Cir.1997).
In short, in the face of a unanimous death-penalty recommendation from the jury, the finding of four statutory aggravators (including that the murder was especially heinous, atrocious and cruel), the finding that Kokal was the triggerman, Kokal's boasting and detailed statement to Mosley, the weaknesses highlighted in Kokal's "new" mitigating evidence, especially in light of Kokal's mental abilities on the night of the murder, and further aggravating evidence that Kokal's "new" mitigating evidence may have revealed, we cannot say that the Florida Supreme Court unreasonably rejected Kokal's claim that his counsel was constitutionally ineffective. Accordingly, we affirm.
AFFIRMED.
NOTES
[1] About six months before Kokal's trial, O'Kelly pleaded to the lesser included offense of Second Degree Murder with the understanding that prosecutors would recommend a sentence "in accordance with the [Florida] sentencing guidelines" range of 12 to 17 years. In exchange for the plea, the State of Florida required that O'Kelly "testify truthfully" against Kokal.
[2] O'Kelly was cross-examined at considerable length about a letter he had written to Kokal in November 1983, in which he wrote that it was he, O'Kelly, who had fired the weapon that night and had accidentally shot the victim in the head. O'Kelly testified that at the time he wrote the letter, he was attempting to establish an explanation that would exonerate both him and Kokal of the crime. He explained that he wanted to help Kokal, who was his friend. O'Kelly also noted that on the night of his arrest, which was shortly after the murder, he told the police that Kokal had shot Russell, despite what he wrote in the letter.
[3] We refer to the Respondent's exhibits in the district court record as "Ex. __," and we refer to the docket entries in the district court as "Doc. __."
[4] Crown conceded, however, that Kokal underwent a physical examination and x-rays after the near-drowning experience, but nothing unusuallike aspiration pneumonitis, acidosis, or a skull fracturewas found. He further acknowledged that hospital records following the car accident ruled out a significant head injury, indicated that Kokal's condition was due to alcohol consumption, not head injury, and reported that Kokal was doing well when discharged. Indeed, it is undisputed that in the car accident, Kokal had been driving under the influence of alcohol.
[5] This signifies that Kokal may be attentive to some details and inattentive to others, particularly when there are distractions.
[6] The report also said:
The patient does not meet the criteria for McNaughton Rule of insanity. The patient appeared cooperative, and it appeared that the above history is valid. I have no suspicion that the patient is lying. However, I would like to corroborate my history with the Minnesota Multi-Phase Personality Inventory [("MMPI")] test, which could pick up malingering and lying.
On cross-examination, Dr. Virzi admitted that he vaguely recalled trying to give the MMPI test to Kokal in the waiting room the day he met with him, but did not believe that Kokal ended up taking the test. Notably, this statement conflicted with Dr. Virzi's earlier deposition where he said that he believed he had given Kokal the MMPI test in the waiting room.
[7] According to counsel, Westling "knew [Kokal] was lying to [Dr. Virzi]," because Kokal had told Dr. Virzi that he had not killed Russell. As a result, Westling "wasn't overly impressed with the need to do [the MMPI test]," but regardless, Westling "think[s] he may have done it."
[8] The Florida Supreme Court said the following:
The United States Supreme Court in Strickland set forth the following standard for ineffectiveness:
A convicted defendant's claim that counsel's assistance was so defective as to require reversal of a conviction or death sentence has two components. First, the defendant must show that counsel's performance was deficient. This requires showing that counsel made errors so serious that counsel was not functioning as the "counsel" guaranteed the defendant by the Sixth Amendment. Second, the defendant must show that the deficient performance prejudiced the defense. This requires showing that counsel's errors were so serious as to deprive the defendant of a fair trial, a trial whose result is reliable.
[Strickland,] 466 U.S. at 687, 104 S.Ct. 2052. . . . The federal Court further expounded on the second prong, i.e., the prejudice prong, of this standard:
The defendant must show that there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different. A reasonable probability is a probability sufficient to undermine confidence in the outcome.
Id. 466 U.S. at 694, 104 S.Ct. 2052. . . .
Kokal, 718 So.2d at 140 n. 11.
[9] Kokal raised the following claims in his federal petition: (1) ineffective assistance of counsel at the penalty phase; (2) ineffective assistance of counsel at the guilt phase; (3) the trial court's failure to excuse certain jurors for cause; (4) the trial court's exclusion of certain jurors for cause; (5) the trial court's refusal to excuse, and exclusion of, certain jurors based on race; (6) prosecutorial misconduct; (7) the denial of his right to a full and fair post-conviction process; (8) the denial of his newly discovered evidence claim in violation of the Eighth Amendment; and (9) the unconstitutionality of Florida's capital sentencing statute.
[10] Kokal's claim that the Florida trial court's prejudice determination failed to weigh the totality of mitigating evidence against the aggravating evidence (in violation of Strickland)and instead focused on whether Kokal changed the opinion of his competency/sanity expertis not relevant, since the Florida Supreme Court's decision is controlling, even if the lower state court decision had been incorrect. Agan v. Vaughn, 119 F.3d 1538, 1549 (11th Cir. 1997) ("Of course, the latest holding of a state supreme court trumps any prior contrary holdings of lower state courts.") (citing Blue Cross and Blue Shield v. Nielsen, 116 F.3d 1406 (11th Cir.1997) ("The final arbiter of state law is the state supreme court. . . .")).
[11] We note in passing that with crimes like this one, that are "carefully planned, or accompanied by torture, rape or kidnapping," we have often observed "that the aggravating circumstances of the crime outweigh any prejudice caused when a lawyer fails to present mitigating evidence." Dobbs v. Turpin, 142 F.3d 1383, 1390 (11th Cir. 1998) (citations and quotation marks omitted); see also Hall v. Head, 310 F.3d 683, 704-05 (11th Cir.2002) (finding no prejudice where the psychologists' testimony regarding defendant's behavior was speculative and the evidence in aggravation was strong); Thompson v. Wainwright, 787 F.2d 1447, 1453 (11th Cir.1986) (finding no prejudice where evidence of defendant's "troubled" childhood and "mild[]" retardation had not been introduced at sentencing, since the sentence "was strongly supported by the aggravating circumstances introduced in the record"); Francis v. Dugger, 908 F.2d 696, 702-04 (11th Cir.1990) (finding that failure to present additional mitigating evidence of an "impoverished, abused, and socio-economically limited childhood, and . . . of his brain dysfunction, diagnosed by his expert as fetal alcohol syndrome," did not prejudice defendant convicted of torture-murder of government informant).
[12] Dr. Crown did not prepare a written report on Kokal, apparently because post-conviction counsel had not asked him for one.
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NOT RECOMMENDED FOR PUBLICATION
File Name: 05a0945n.06
Filed: December 1, 2005
No. 04-4183
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellant.
v. ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR THE
JEFFREY E. MILLER, NORTHERN DISTRICT OF OHIO
Defendant-Appellee.
/
BEFORE: KEITH, SUHRHEINRICH, and CLAY, Circuit Judges.
CLAY, Circuit Judge. The Government appeals the September 8, 2004 order from the
United States District Court for the Northern District of Ohio, the Honorable David A. Katz,
presiding, sentencing Defendant, Jeffrey E. Miller, to two years probation for Defendant’s violation
of 18 U.S.C. § 922(g). The Government argues that the district court’s downward departure from
the recommended sentencing range under the United States Sentencing Guidelines is unreasonable.
For the reasons set forth below, this Court VACATES the sentence and REMANDS for
resentencing.
No. 04-4183
DISCUSSION
I. Procedural History
Defendant pled guilty to one count of unlawfully possessing a firearm as a felon, in violation
of 18 U.S.C. § 922(g). The district court sentenced Defendant to two years of probation on August
30, 2004. The order of judgment for the sentence was entered on September 8, 2004. The
Government filed a timely notice of appeal on September 25, 2004.
II. Substantive Facts
In July 2003, Defendant reported a burglary of his home to local authorities, indicating that
among the stolen items was a .45 caliber semi-automatic handgun that he kept in his bedroom.
Defendant showed the responding officers two other guns in his residence, including a Remington
Model 700 rifle. Three weeks later, Defendant’s brother, who resided with Defendant, reported
another break-in, indicating that two shotguns, one rifle, and ammunition had been stolen. Upon
responding to the call, officers confiscated the Remington Model 700, which had not been stolen,
after learning that Defendant had prior felony convictions and had not received permission to
possess firearms. The Remington rifle served as the basis for the § 922(g) prosecution. Defendant
alleges, and the Government does not contest, that the rifle belonged to Defendant’s brother.
Defendant does not contest, however, that his constructive possession of the weapon in his home
is a violation of 18 U.S.C. § 922(g).
Defendant has two prior felony convictions and a charge for driving under the influence. In
1988, Defendant was arrested for and subsequently convicted of dealing in cocaine. In 1992,
Defendant was arrested for and subsequently convicted of possession of counterfeit money. In 2001,
2
No. 04-4183
Defendant was charged with driving while under the influence; the charge was reduced and
Defendant paid a fine and attended an intervention program.
The presentence report calculated Defendant’s base offense level at 20 under the United
States Sentencing Guidelines. The report recommended a downward departure of two levels for
acceptance of responsibility pursuant to § 3E1.1(a) of the Guidelines and a discretionary downward
departure of one level pursuant to § 3E1.1(b). The Government agreed at the sentencing hearing to
the total calculated offense level of 17.
Defendant’s criminal history placed him as a category IV offender. The parties agreed that
an offender with a criminal history of category IV with an offense level of 17 resulted in a
recommended sentence of 37 to 46 months incarceration.
Defendant filed a motion for downward departure, citing the following reasons:
1. Defendant’s criminal history category significantly overrepresented the likelihood
that Defendant will commit another offense, given Defendant’s current position in
the community and the significant time passed since his last offense,
2. Defendant’s conduct did not threaten the harm sought to be prevented by § 922(g),
3. Defendant has rehabilitated himself from his past offenses, and
4. Defendant’s incarceration would result in the loss of jobs for at least eight employees
of Defendant’s home construction business.
At the sentencing hearing, the district court referenced Defendant’s past violations as “old,” and
stated that absent the Guidelines, the court would find Defendant’s criminal history category “at
most” a category III, and that the court would depart downward from that determination. (J.A. at
13.) The court went on to note:
3
No. 04-4183
The kind of crime that we have here from what I have read in everything that is
before me is an unplanned possession of a hunting rifle or a hunting instrument, and
to send this gentleman away for 37 months is a miscarriage of justice as I view
justice. Therefore I will not do that . . . . Pursuant to the Sentencing Reform Act of
1984, it is the judgment of this court that the defendant . . . is hereby placed on
probation for a period of two years.
(J.A. at 13.) In the judgment of sentence, the district court listed its reasons for the downward
departure:
the defendant’s conduct did not threaten the harm sought to be prevented by the law
proscribing the offense; 2) the defendant has been substantially & extraordinarily
rehabilitated subsequent to his prior offenses; and 3) the incarceration of the
defendant would result in loss of his job and business for suppliers and contractors
and would be a miscarriage of justice.
(J.A. at 23.)
DISCUSSION
Standard of Review
This Court reviews a district court’s downward departure from the recommended guidelines
sentencing range for reasonableness. See United States v. Jackson, 408 F.3d 301, 304 (6th Cir.
2005); see also United States v. Booker, 125 S. Ct. 738, 765 (2005).
Analysis
This Court concludes that the district court’s sentence is not supported by adequate analysis
to enable meaningful appellate review.
A. The District Court Must Consider the Statutory Factors and Articulate Its Rationale
for Departure
While the sentencing guidelines are advisory in nature, this Court requires lower courts, at
a minimum, to consider the factors set forth in 18 U.S.C. § 3553(a) when imposing sentence. See
4
No. 04-4183
United States v. Webb, 403 F.3d 373, 383 (6th Cir. 2005) (“[R]eview for reasonableness is not
limited to consideration of the length of the sentence . . . . [W]e may conclude that a sentence is
unreasonable when the district judge fails to ‘consider’ the applicable Guidelines range or neglects
to ‘consider’ the other factors listed in 18 U.S.C. § 3553(a), and instead simply selects what the
judge deems an appropriate sentence without such required consideration.”) (internal quotations,
citation, and footnote omitted). “Thus, under this [post-Booker] sentencing scheme, district courts
are required to consider the applicable Guidelines sentencing range when arriving at a defendant’s
sentence, 18 U.S.C. § 3553(a)(4), but only as one factor of several laid out in § 3553(a).” Jackson,
408 F.3d at 304(internal citation omitted); see Booker, 125 S. Ct. at 764 (“Without the ‘mandatory’
provision, the Act nonetheless requires judges to take account of the Guidelines together with other
sentencing goals.”).
This Court has further held that while district courts enjoy greater discretion in sentencing
than in the pre-Booker environment, the courts must still articulate the reasons underlying the
sentence ultimately imposed, as required by 18 U.S.C. § 3553(c). See Jackson, 408 F.3d at 305.
Booker requires the district court to both acknowledge a defendant’s applicable Guidelines range
and discuss the reasonableness of a variation from that range. Id. Without any discussion of its
rationale, this Court’s meaningful review of the sentence’s reasonableness is impossible. Id. A list
of reasons is insufficient to justify a significant downward departure without any accompanying
discussion. Id. at 304-05 (holding court’s list of seven reasons for 8-level downward departure
insufficient to withstand reasonableness review).
B. The District Court’s Unsupported Sentence is Unreasonable
5
No. 04-4183
The district court did not support its downward departure with any significant discussion.
The lower court merely noted that imposition of the guideline range would be a “miscarriage of
justice” in its view. (J.A. at 13.) While the judgment of sentence lists three reasons for the
downward departure, the Court has held that mere lists are inadequate justification for significant
departures. Jackson, 408 F.3d at 305. Without any meaningful analysis underlying the district
court’s 14-level downward departure, this Court cannot fulfill its obligation to evaluate the sentence
for reasonableness. We therefore remand for resentencing.
CONCLUSION
For the reasons set forth above, this Court VACATES the sentence and REMANDS for
resentencing consistent with this opinion.
6
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422 F.Supp. 1187 (1975)
NEUWIRTH INVESTMENT FUND, LTD., and Neuwirth International Fund, N. V., Plaintiffs,
v.
Norman F. SWANTON, as Liquidator for Dempsey-Tegeler & Co., Inc., et al., Defendants.
No. 72 Civ. 268.
United States District Court, S. D. New York.
November 17, 1975.
*1188 Lipper, Lowey & Dannenberg by Stephen Lowey, Richard B. Dannenberg, New York City, for plaintiffs.
Weil, Gotshal & Manges by Michael D. Hess, Dennis J. Block, Neal Schwarzfeld, New York City, for defendants Swanton and Dempsey-Tegeler.
Milbank, Tweed, Hadley & McCloy by Russell E. Brooks, Martha G. Bannerman, New York City, for defendant New York Stock Exchange, Inc.
MOTLEY, District Judge.
OPINION ON MOTION FOR SUMMARY JUDGMENT
Plaintiffs, two foreign investment companies, commenced this action on January 20, 1972, seeking rescission relief under Section 12(1) of the Securities Act of 1933 (15 U.S.C. § 77l(1)) ("Securities Act"). Their claim is that stock sold to them by defendants was not registered pursuant to Section 5 of the Securities Act (15 U.S.C. § 77e), and that, accordingly, they are entitled to redeliver the stock to defendants and have their money returned. On December 2, 1972, this court granted leave to plaintiffs to serve and file an amended complaint which added two additional counts based on theories of misrepresentation, alleging violations of Section 12(2) of the Securities Act (15 U.S.C. § 77l(2)) and Section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 78j(b)) together with SEC Rule 10b-5.
Plaintiffs have now moved pursuant to Rule 56 of the Federal Rules of Civil Procedure for partial summary judgment limited to count I of the Amended Complaint, seeking rescission relief under Section 12(1) of the Securities Act. Defendants in turn have cross-moved for summary judgment on this same count. Both sides maintain that there exists no genuine issue as to any material fact with regards to count I and that the question is ripe for summary judgment. This court concurs, and accordingly denies plaintiffs' motion for partial summary judgment as to the same count. While the material facts set out below are undisputed, the court has resolved any ambiguities *1189 and has drawn all reasonable inferences in favor of the plaintiffs, against whom summary judgment is granted. See Heyman v. Commerce and Industry Insurance Company, 524 F.2d 1317 (2d Cir. 1975).
Thus, the following material facts, described in greater detail below, are found to be undisputed: 1) Defendant Dempsey-Tegeler ("Dempsey") acquired the involved shares, which were not registered for resale and which included a restrictive clause, as underwriting compensation and with the right to require registration of such shares by the issuer on demand. 2) The issuer of such shares never registered these shares, though asked to do so, and Dempsey continued to hold such shares in its investment account. 3) Dempsey eventually went into liquidation and a liquidator appointed by the New York Stock Exchange ("NYSE") took control of its assets. 4) Said liquidator attempted to have the shares registered or alternatively to have a no-action letter issued by the Securities and Exchange Commission ("SEC") regarding them, but failed on both counts. 5) Finally, the liquidator agreed to sell the restricted unregistered shares to plaintiffs with the understanding that defendants would exert their best efforts on the issuer to get the shares registered, and that plaintiffs did not intend to sell the shares until such registration. 6) Such registration never took place and plaintiffs continue to hold such shares. For purposes of this motion, this court also draws the inference that both defendants and plaintiffs sought registration of the involved shares with the intent of making a public offering of such shares after such registration. This is in accord with plaintiffs' contentions. This court also accepts for purposes of this motion plaintiffs' contention that the sale to plaintiffs involved two offerees rather than one.
Statement of Facts
The transaction which plaintiffs seek to have rescinded involved the sale to plaintiffs in January 1971 of an aggregate of 18,000 shares of the capital stock of a New York corporation known as American Bioculture, Inc. ("ABI"). Plaintiffs paid a total of $252,000 for the stock. At the time of sale, these shares were restricted unregistered shares from the investment account of the defendant Dempsey. They were not freely marketable, and the certificates for said shares bore the following legend:
"The shares represented by this certificate have been registered under the Securities Act of 1933 solely for sale to the holder of a Common Stock Purchase Warrant who may be deemed to be an underwriter of such shares within the provisions and for purposes only of the Securities Act of 1933. Unless the issuer of these shares agrees to a transfer of these shares, or any part thereof, any such transfer is null and void. The issuer will agree to such a transfer only if 1) a revised prospectus setting forth the terms of the offer has been filed as part of a post-effective amendment to the Registration Statement under which these shares are registered or as part of another Registration Statement and such posteffective amendment or other Registration Statement has become effective, or 2) it is reasonably satisfied that no such post-effective amendment or other registration is required."
Dempsey had been the holder of the Common Stock Purchase Warrant mentioned in this legend. It had been sold to Dempsey by ABI at the bargain price of $600 as additional underwriting compensation in connection with Dempsey's having acted as the principal and managing underwriter of a public offering of 140,600 shares of the capital stock of ABI under a Registration Statement filed with the SEC on September 17, 1968 and effective September 19, 1968.[1]
The warrant provided that the stock certificates issued to Dempsey upon exercise of *1190 the warrant would bear the restrictive legend quoted above,[2] and, in addition, provided in Section 7:
"The Company agrees that it shall be reasonably satisfied that no post-effective amendment or other registration is required for the public sale of shares to be issued pursuant to the exercise of the Warrant, if it shall be presented with a letter from the staff of the Securities and Exchange Commission (the "Commission") stating in effect that the staff will not recommend any action to the Commission if such shares are offered and sold without delivery of a prospectus, and that, therefore, no post-effective amendment to the Registration Statement under which such shares are registered or other registration statement is required by said staff to be filed.
"Upon written request of Dempsey-Tegeler & Co., Inc., the Company shall prepare and file with the Commission (as a post-effective amendment or amendments to the Registration Statement) such amended or supplemented prospectus or other documents, as may be necessary in the opinion of counsel for the Company and counsel for Dempsey-Tegeler & Co., Inc. in order to comply with the provisions of the Securities Act of 1933 so as to permit the public offering and sale of the shares acquired by exercise of the Warrant, in whole or in part."
Dempsey chose to exercise its Warrant on September 26, 1969, and received 18,000 shares of the capital stock of ABI at a total cost of $64,800. In December 1969, Dempsey requested ABI to file a Post-Effective Amendment to the Registration Statement effective September 19, 1968 for purposes of registering these 18,000 shares. The stock was then selling at approximately $36-$38 per share. In April 1970, a printer's proof of a proposed Post-Effective Amendment was prepared on behalf of ABI by its counsel, the New York law firm of Skadden, Arps, Slate, Meagher & Flom. However, this Amendment was never finalized or filed, and never became effective.
The 18,000 shares were still unregistered in August 1970, when, as a result of a period of severe financial difficulties, Dempsey was forced to cease business. Dempsey, for several years prior to this time, had been a member of the National Association of Securities Dealers and a member firm of the defendant New York Stock Exchange, Inc. ("NYSE"). Accordingly, on August 7, 1970, following Dempsey's cessation of business, the directors of Dempsey and the NYSE entered into an agreement whereby the NYSE, pursuant to Article XIX of its Constitution, agreed to make substantial payments from its "Special Trust Fund"[3] for the benefit of Dempsey and its customers, and wherein the directors of Dempsey authorized the NYSE to appoint a Liquidator for Dempsey to "take *1191 control of the business and property of Dempsey" and to exercise all powers of the corporation in liquidating its affairs.
On August 10, 1970, the NYSE appointed defendant Norman Swanton as Liquidator of Dempsey.[4] Swanton's duties were set forth in a letter dated August 24, 1970 from Robert M. Bishop, Vice President of the NYSE:
"This is to clarify your assignment as Liquidator of Dempsey-Tegeler & Co., Inc. Your duties and powers are spelled out in the Liquidation Agreement executed by the Directors of the corporation. The Exchange expects you to fulfill these responsibilities with efficiency and dispatch. In simple terms, you are the representative of the Special Trust Fund charged with the overall liquidation responsibilities. The firm personnel are all answerable to you, and your instructions to them are to be totally complied with. More specifically, your duties fall into the following four categories:
(1) to direct and supervise all expeditious steps to deliver out the remainder of the customer accounts,
(2) to husband the assets of the firm and of the Special Trust Fund,
(3) to pursue all feasible avenues to realize or recover receivables and possible claims of the corporation in order to increase its ability to meet its obligations to creditors. This includes possible claims against the Dempsey-Tegeler partnership and present and former directors of the corporation,
(4) to maintain records to demonstrate your accountability and that of the Exchange in respect to this liquidation.
"In addition, you will need to make daily reports to the Exchange initially, which later may be changed to weekly, on the progress of the liquidation.
"You will report to Ray Lockhart, Chief Liquidator. During the immediate future, it may also be necessary for you to keep Mr. Arning informed by telephone of significant developments as they occur.
"As you know, the services of legal counsel to the Chief Liquidator have already been made available to you, and we are in the process of obtaining Los Angeles legal counsel to you. We will expect you to follow the advise of legal counsel on matters within their competence. We will also expect you to seek the advice and counsel of the officers of the Exchange on major decisions and policy matters, whether legal or not. . . ."
Among the duties of Swanton as Liquidator was to dispose of the restricted securities included in Dempsey's assets and to realize for them as much cash as possible.[5] Accordingly, on September 18, 1970, Swanton through counsel wrote to Robert E. Hopp, the president of ABI, advising that Swanton as Liquidator for Dempsey wished to sell the ABI shares and requested that a *1192 post-effective amendment be filed. A response to this request was made by counsel for ABI, indicating that ABI would be favorably disposed to the sale of Dempsey's ABI shares without registration statement if counsel for Swanton would render an opinion "that no registration statement would be required in view of Dempsey's `change of circumstance.'" The record does not indicate a response to this proposition, but on October 7, 1970 Swanton wrote to the SEC requesting a "no action" letter with respect to the 18,000 ABI shares "[i]n light of the radical change which has occurred."
On November 30, 1970, counsel to Swanton again wrote to Mr. Hopp on behalf of Swanton to request that a post-effective amendment to its registration statement be prepared by ABI and filed with the SEC as soon as possible "in order to permit the sale of such shares by the liquidator." Counsel commented upon the request for a no-action letter as follows:
"To date we have not received a favorable reply to our `no action' letter request and are not optimistic about receiving such a reply. Accordingly, we have no alternative but to request the prompt preparation and filing of a post-effective amendment to the subject registration statement."
Counsel correctly anticipated the SEC's response. On December 7, 1970, the chief counsel of the SEC's Division of Corporate Finance wrote to Swanton to inform him that the "... Division is unable to conclude that you would not be deemed to be an underwriter within the meaning of Section 2(11) of the [Securities] Act were you to publicly sell the shares at this time." Pursuant to this letter, counsel for Swanton wrote ABI's counsel on December 14, 1970, reiterating the request for the preparation and filing of a post-effective amendment to the relevant ABI registration statement.
This was the state of affairs as of January 1971 when the transaction at issue in the present action was consummated. At the time of the sale of the 18,000 shares to plaintiffs, the shares remained unregistered and plaintiffs represented to Swanton that they would not sell such shares without an effective registration under the Securities Act. Swanton in turn promised to use his "best efforts" to see that the shares were registered by June 30, 1971. To that end, he obtained from ABI an agreement to transfer to plaintiffs Dempsey's right to demand a post-effective amendment or new registration regarding the shares. By letter of January 26, 1971, counsel for ABI advised plaintiffs that ABI would use "its best efforts to cause such registration statement to become effective during the month of May, 1971." No such registration statement was ever filed and at the present time plaintiffs continue to hold the 18,000 shares.[6]
Issues of Law
While the fact pattern attendant to the instant motion and cross motion for summary judgment is fairly complex, both sides agree that the dispositive legal issue involved is a narrowly focused one. Section 12(1) of the Securities Act under which plaintiffs seek rescission provides that:
"Any person who
(1) offers or sells a security in violation of section 5,
* * * * * *
shall be liable to the person purchasing such security from him, who may sue either at law or in equity in any court of competent jurisdiction, to recover the consideration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if he no longer owns the security." [15 U.S.C. § 77l(1)]
*1193 It is plaintiffs' contention that the sale by Swanton to plaintiffs of 18,000 shares of unregistered ABI stock, by use of the mails and telephone, violated Section 5 of the Securities Act.[7] Defendants concede that the 18,000 ABI shares issued to Dempsey upon the exercise of its warrant had been registered solely for sale by ABI to Dempsey, and were, by their terms, not registered for sale to anyone else. Thus, the undisputed facts in this case do constitute a prima facie case for a Section 5 violation and Section 12(1) remedy. Hill York Corp. v. American International Franchises, Inc., 448 F.2d 680 (5th Cir. 1971);[8] III Loss, Securities Regulation 1693 (2d ed. 1961).
Nor can defendants claim that plaintiffs' mere prior knowledge of the unregistered status of the purchased shares placed plaintiffs in pari delicto so as to render them incapable of pursuing a Section 12(1) remedy. The purpose of that section has generally been construed to be the discouragement of the sale of unregistered securities rather than a personal remedy requiring that the remedy-seeker be completely guiltless. See American Bank & Trust Co. v. Barad Shaff Securities Corp., 335 F.Supp. 1276, 1280 (S.D.N.Y.1972); Rosenberg v. Hano, 121 F.2d 818, 822 (3d Cir. 1941); Henderson v. Hayden Stone, Inc., 461 F.2d 1069, 1072 (5th Cir. 1972); VI Loss, Securities Regulation 3828 (Supp. to 2d ed., 1969).
However, in countering the prima facie case made out against them, defendants invoke Section 4 of the Securities Act, which "carefully exempts from [the Securities Act's] application certain types of ... securities transactions where there is no practical need for its application or where the public benefits are too remote." H.R.Rep.No. 85, 73rd Cong., 2d Sess. 5 (1933). More specifically, defendants maintain that the sale of 18,000 shares of ABI common stock to plaintiffs was exempt under Section 4(1), which exempts "transactions by any person other than an issuer, underwriter, or dealer." (15 U.S.C. § 77d(1)). Both sides agree that the disposition of the motion and counter-motion presently before the court depends solely upon a decision as to the applicability or non-applicability of the 4(1) exemption in the instant case. Nor is there any dispute as to the proposition that the burden of proving that the securities are exempt from registration is upon defendants. S. E. C. v. Ralston Purina Co., 346 U.S. 119, 73 S.Ct. 981, 97 L.Ed. 1494 (1953); Gilligan, Will & Co. v. S. E. C., 267 F.2d 461 (2d Cir. 1959), cert. den., 361 U.S. 896, 80 S.Ct. 200, 4 L.Ed.2d 152 (1960); S.E.C. Securities Act Release No. 4552, Nov. 6, 1962, 27 F.R. 11316, 17 CFR 231.4552, 1 CCH Fed.Sec.L. Rep. ¶ 2783.
The relevant issue of law may be narrowed even further at the outset. Plaintiffs concede that defendants were not "dealers," as defined under the Securities Act, so this element of the 4(1) exemption need not be considered by the court. As regards the status of defendants as "issuers," the situation is slightly more ambiguous. Initially, in their Memorandum of Law in Support of Motion for Summary Judgment on Count I, plaintiffs contended that it was "beyond dispute that ABI was the issuer of the securities involved in this *1194 case. ..."[9] However, in their Reply Memorandum, plaintiffs change their position and make a perfunctory argument that Dempsey was an "issuer" as to the "integrated offering" of the various restricted securities contained in Dempsey's investment account which Swanton attempted to sell.[10] The court finds such an argument to be meretricious, and rejects it. The only authority cited by plaintiffs for this novel theory is United States v. Rachal, CCH Fed.Sec.L.Rep. ¶ 93,757 (5th Cir. 1973). It is difficult to perceive how that decision can be seen as in any way supportive of plaintiffs' theory, since it merely holds that officers and other controlling persons of an issuer may also be deemed to be an issuer for Section 4(1) purposes.
The term "issuer" is defined in Section 2(4) of the Securities Act as "every person who issues or proposes to issue any security." (15 U.S.C. § 77b(4)). Section 2(1) provides a number of definitions of the term "security." (15 U.S.C. § 77b(1)). Manifestly, none of these can be stretched to encompass Dempsey-Tegeler's investment portfolio, which consisted of a number of different securities. The case law under this section has consistently held that the term "security" means an investment in a common enterprise in which the investors are purchasing an interest and where the growth of that investment is to result from the efforts of the promoter. See, e. g., Tcherepnin v. Knight. 389 U.S. 332, 88 S.Ct. 548, 19 L.Ed.2d 564 (1967); SEC v. W. J. Howey Co., 328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946); SEC v. C. M. Joiner Leasing Corp., 320 U.S. 344, 64 S.Ct. 120, 88 L.Ed. 88 (1943).
Here, on the other hand, Dempsey's portfolio of diverse securities had none of the attributes of a "security." The purchasers were not acquiring an interest in Dempsey and their investment was in no way dependent upon the actions of Dempsey for its success. Indeed, there is no common enterprise involved here at all. Dempsey's investment portfolio consisted of various securities of diverse issuers. Purchasers of these securities had no further relationship with Dempsey after their purchase; they looked to the issuer of the specific security for the growth of their investment. Hence, plaintiffs' argument calling Dempsey's portfolio a "security" which Dempsey "issued" is specious.
This limits the relevant legal issue in the instant motions to a single consideration namely, do any or all of the defendants come within the Security Act's definition of "underwriter" for purposes of denying them the Section 4(1) exemption from the registration requirements of Section 5? The term "underwriter" as used in the Securities Act is defined in Section 2(11) as follows:
"(11) The term `underwriter' means any person who has purchased from an issuer with a view to, or offers or sells for an issuer in connection with, the distribution of any security, or participates or has a direct or indirect participation in any such undertaking, or participates or has a participation in the direct or indirect underwriting of any such undertaking; but such term shall not include a person whose interest is limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. As used in this paragraph the term `issuer' shall include, in addition to an issuer, any person directly or indirectly controlling or controlled by the issuer, or any person under direct or indirect common control with the issuer." (15 U.S.C. § 77b (11)) (Emphasis added.)
For all defendants to prevail, therefore, each must show that it did not participate in the "purchase" of the 18,000 shares of ABI stock "with a view to ... the distribution" of them and that the sale to plaintiffs was not "in connection with the distribution" of ABI stock. The word "distribution," as used in Section 2(11) has been *1195 held to mean the equivalent of a "public offering," and therefore the determination whether one is an "underwriter" under Section 2(11) requires an analysis of the same considerations relevant to the determination of whether a transaction involves a "public offering" within the meaning of Section 4(2). Gilligan, Will & Co. v. S.E.C., supra; The Value Line Fund, Inc. v. Marcus, CCH Fed.Sec.L.Rep. ¶ 91,523 (S.D.N.Y. 1965).
In attempting to bring defendants within the definition of "underwriter," plaintiffs make the preliminary contention that Swanton himself may be deemed to have "purchased" the 18,000 ABI shares from Dempsey. To support this position, plaintiffs cite the Second Circuit's decision in SEC v. Guild Films Co., Inc., 279 F.2d 485 (2d Cir. 1960), cert. denied sub nom. Santa Monica Bank v. SEC, 364 U.S. 819, 81 S.Ct. 52, 5 L.Ed.2d 49 (1960). In that case, the Santa Monica Bank held 50,000 shares of unregistered Guild Films stock as collateral for a loan. After the loan went into default, the bank foreclosed on the collateral and began a public sale of the shares notwithstanding their unregistered status. The court held that the bank was an "underwriter" in that case and had "purchased" the shares within the meaning of Section 2(11). That holding cannot be extended to the instant case. In Guild Films, the alleged purchaser was a lender and pledgee who foreclosed on the security collateralizing the loan, thereby acquiring an interest in the security. In the instant case, Swanton acquired nothing from ABI or from Dempsey; rather, he was merely the "liquidating agent." Blair & Co., Inc. v. Foley, 471 F.2d 178 (2d Cir. 1972) remanded on other grounds, 414 U.S. 212, 94 S.Ct. 405, 38 L.Ed.2d 422 (1973). Similarly, in Guild Films, unlike the instant case, the proceeds of the sale would have inured to the direct benefit of the lender, whereas the proceeds of the sale of the ABI shares were received by Dempsey and its customers and not by Swanton. Plaintiffs make much of the fact that as a result of the sale the NYSE Special Trust Fund would ultimately suffer less exposure to financial loss and that Swanton might receive a bonus for limiting such exposure. Such benefits, however, remain too remote to cause the assumption of control by Swanton to be styled a "purchase" of the ABI shares, and this court refuses to so extend Guild Films. In addition, even if Swanton were deemed a purchaser, he would not come within the other elements of the Section 2(11) definition of "underwriter," as interpreted below by this court.
Hence, any exposure of Swanton to Section 12(1) liability rests upon his position as "liquidating agent" to Dempsey.[11] Therefore, the crucial issue which remains to be decided is whether Dempsey may be deemed to be an "underwriter" for purposes of determining the applicability of the Section 4(1) exemption.
The mere fact that Dempsey had previously underwritten an ABI public offering and that the shares at issue in this litigation were received as compensation for such underwriting is in no way dispositive of the issue. Congress made this clear in enacting the Securities Act:
"[T]here is a point of time when a person who has become an underwriter ceases to exercise any underwriting function and, therefore, ceases to be an underwriter. When that point is reached, such a person would be subject only to whatever [other] restrictions would be imposed upon him. ..." H.R.Rep. No. 85, 73rd Cong., 2d Sess. 16 (1933). *1196 This principle has been applied to cases identical in nature to the instant matter. Thus, the SEC has seen fit to issue a "no action" letter for the sale by a former underwriter of 13,390 shares of the underwritten company which were originally acquired as underwriting compensation. See "Brennard-Paige Letter" of May 4, 1973, Exhibit J to Block Affidavit. See also Culpepper's Plantation Enterprises, Inc., CCH Fed.Sec. L.Rep. ¶ 78,112 (April 7, 1971). Similarly, the mere fact that the involved stock certificate itself bore the legend that the holder "may be deemed to be an underwriter of such shares within the provisions and for purposes only of the Securities Act of 1933" should not be dispositive. The regulative scheme of the Securities Act would fall into disarray if parties to transactions could themselves specify how or when the Act was to be applied.
Thus, two fundamental queries remain to be answered in order to determine whether or not Dempsey could be considered an underwriter in the transaction herein considered: 1) Did Dempsey purchase the ABI shares with "a view to" their "distribution"? and 2) Did the sale of these shares to plaintiffs itself constitute a "distribution"?
As noted earlier, the term "distribution" in this context has been construed to be the equivalent of "public offering."[12] However, this definition may be somewhat misleading, since the term "public offering," as used in the present context, does not encompass a registered public offering within its scope. The Second Circuit, for example, has defined the standard to be applied in judging whether an offering is "public" for Section 4(1) purposes in this manner:
"[T]he governing fact is whether the persons to whom the offering is made are in such a position with respect to the issuer that they either actually have such information as a registration would have disclosed, or have access to such information." Gilligan, Will & Co., supra, at 466, citing SEC v. Ralston Purina Co., 346 U.S. 119, 125-27, 73 S.Ct. 981, 97 L.Ed. 1494 (1953).
In other words, a registered public offering would not be a "public offering" under these criteria, since, a priori, offerees and purchasers in a registered public offering have available to them "such information as a registration would have disclosed." Consistent with this view is SEC Rule 152, 17 C.F.R. § 231.152, interpreting Section 4(2) of the Securities Act, and providing that a later registration or registered public offering does not affect the non-public nature of the original sale.
Such a definition of "public offering," while on its face unconventional, is entirely consistent with the scheme of the Securities Act, which was promulgated to encourage the disclosure of relevant information concerning a stock issue by the registration procedure. It would indeed be anomalous, given this emphasis on registration and disclosure, if the Act afforded the Section 4(1) exemption to a party who purchased stock with no intention of making a registered sale, while denying such exemption to a party who had the best intentions of carrying out such a registered sale, though prevented from doing so by circumstances beyond his control.
This gloss on the term "distribution" is important for present purposes in two respects. First, it is relevant to determining whether Dempsey purchased the ABI shares with a view to distribution. Secondly, it must be applied in determining whether the sale by Dempsey to plaintiffs in its own right constituted a distribution in that plaintiffs themselves purchased with a view to distribution rather than investment. If either a view to distribution or an actual distribution can be shown, Dempsey must be considered an underwriter incapable of invoking the Section 4(1) exemption.
As regards the first consideration, this court holds that Dempsey did not purchase the ABI shares with a view to distribution. Dempsey may be considered to have purchased the shares at the time when *1197 it exercised its option on them in September 1969. See I Loss, supra, at 553. Plaintiffs' contention is that Dempsey's view to distribution is evident from the fact that Dempsey sought to have the shares registered for sale soon thereafter, in accordance with ABI's promises to register the stock upon demand. However, as noted above, the intent to register the shares or to sell them after registration is not sufficient to deprive defendants of the Section 4(1) exemption. Indeed, the fact that Dempsey acquired these shares with a legend restricting their transfer and held the right to require registration would seem to show that Dempsey had no intent to make an unregistered distribution.
Dempsey acquired the ABI stock on September 26, 1969, after the exercise of a warrant to purchase common stock which had been issued to it on September 6, 1968. These shares were held by Dempsey in its investment account and were recorded on its books as being restricted. No attempts were made to sell these shares until late 1970, when Dempsey went into liquidation. The sale to plaintiffs did not occur until January 1971. Thus, Dempsey held the stock until forced to dispose of it by a drastic change in its financial position. Dempsey's investment intent is clearly indicated by its continued holding of the stock over a period of time until it was forced by its liquidation to raise cash to pay its public customers and creditors and by the fact, as will be shown below, that it never made a distribution or public offering of the shares. These facts negate any inference that Dempsey's original acquisition of the ABI stock was made with a view to an unregistered distribution. In an analogous case, the SEC recognized that a sale of unregistered securities made for the purpose of avoiding personal bankruptcy was not inconsistent with the requisite investment intent as of the time when the stock was purchased. American All-Servus Corporation, CCH Fed.Sec.L.Rep. ¶ 78,086 (March 4, 1971).
The final determination to be made by this court in deciding the applicability of the Section 4(1) exemption concerns the question of whether or not Dempsey's sale of the ABI shares to plaintiffs constituted a distribution in its own right. As noted earlier, in determining whether a sale of securities was part of a distribution rendering the seller an underwriter, the courts have consistently applied the criteria and standards that have evolved under Section 4(2), the "private placement" exemption. See, e. g., The Value Line Fund, Inc. v. Marcus, supra; Fuller v. Dilbert, 244 F.Supp. 196 (S.D.N.Y.1965), aff'd 358 F.2d 305 (2d Cir. 1966). In SEC v. Ralston Purina Co., supra, the leading case on the meaning of a "public offering," the Supreme Court looked to the purpose of the Securities Act, which it declared was "to protect investors by promoting full disclosure of information thought necessary to informed investment decisions." 346 U.S. at 124, 73 S.Ct. at 984. Interpreting the "private offering" exemption in light of this statutory purpose, the Court expressed the view that a transaction is exempt when the particular class of offerees had "access to the same kind of information that the Act would make available in the form of a registration statement." 346 U.S. at 125-26, 73 S.Ct. at 985. The courts, in attempting to construe this concept, have described many factors as relevant to a determination of whether or not a particular transaction is a public offering. Several such factors, which will be considered seriatim in regards to the instant transaction are: the number of offerees, the offerees' access to relevant information and the purchaser's intent at the time of purchase.
In the instant case, there were at most two offerees. All negotiations for the transaction were handled by Henry Neuwirth, a director and advisor of both plaintiffs, and the terms of sale arranged were identical as to all shares, though they were billed to two entities, the Neuwirth Investment Fund and the Neuwirth International Fund. It is not even clear that Swanton knew that he was dealing with two entities, though for purposes of this motion we accept plaintiffs' contention that he was. *1198 Only two other persons Glenn Mayer and John Hecht were even contacted regarding the fact that Dempsey's ABI holdings might be available for sale, and those approaches had none of the earmarks of an offer. Hecht was asked for advice on how to arrange a private sale and Mayer was asked for advice on how to locate a potential buyer; neither was approached as a potential purchaser or authorized to offer the stock to anyone else. Indeed, according to the deposition of Henry Neuwirth, even he did not learn of the existence of the 18,000 unregistered shares from Dempsey, but from the president of ABI. In the view taken by the Supreme Court in Ralston Purina, the number of offerees is not a dispositive factor in establishing a public offering. 346 U.S. at 125, 73 S.Ct. 981. But the holding in that case was only that a large number of offerees was not conclusive proof that there was a public offering. The Court was not faced with the question and did not decide if a small enough number of offerees might conclusively determine that a transaction was private. See I Loss, supra, at 661. Indeed, the Court quoted approvingly an English case stating that one offeree would not constitute "the public" unless "he is intended to be the first of a series of subscribers, but makes further proceedings needless by himself subscribing the whole." 346 U.S. at 125, 73 S.Ct. at 985 (n.11), quoting Nash v. Lynde, [1929] A.C. 158, 169. Such was not the case here; there is no showing that a series of transactions was contemplated or attempted. Besides, Ralston Purina notwithstanding, the courts have continued to refer to the number of offerees as a relevant factor in defining a public offering. See, e. g., The Value Line Fund, Inc. v. Marcus, supra, at p. 94,970; I Loss, supra, at 661-65.
As regards the plaintiffs' access to relevant information, here, as in the Value Line case,
"the offerees possessed enough sophistication to demand, and enough leverage at the bargaining table to receive, all information relevant to make a fully informed decision on whether or not to buy." CCH Fed.Sec.L.Rep. ¶ 91,523 at p. 94,970.
Plaintiffs were able to obtain all the information they desired directly from ABI, and were satisfied that they had obtained sufficient information before negotiating the purchase. Indeed, they had more information regarding ABI than did defendants. Swanton, unlike plaintiffs, never contacted the president of ABI to discuss financial matters, nor did he even correspond with ABI. Furthermore, plaintiffs were sophisticated and experienced investors with the expertise and financial acumen necessary for making investment analyses and decisions. In their own selling literature, plaintiffs assert that "Henry Neuwirth's success is based on thorough study of marketing and sales policy of the companies whose shares he intends to acquire for the portfolio. By investing in shares of [plaintiffs] ... you have the opportunity to benefit from the success of professional and sophisticated management."[13]
Plaintiffs assert additionally that the information to which they had access was not accurate and complete. Even assuming such to be the case, a Section 12(1) action against the present defendants would not be the proper remedy for plaintiffs to seek; these defendants, who in no way are even claimed to have participated in such alleged deception, cannot be held liable. The test for a private offering is access to the type of information which would be available in a registration statement. As the Court in Value Line noted in rejecting a theory similar to that asserted by plaintiffs here:
"The fact that [the equivalents of Neuwirth and his agents] failed in [their] plain duty to fend for the plaintiffs and make the thorough investigation [they] pretended to make, cannot be twisted into any valid claim that plaintiffs did not have access to information and were not in a position to fend for themselves." CCH Fed.Sec.L.Rep. ¶ 91,523 at p. 94,970.
*1199 A final consideration is whether the sale to plaintiffs must be considered a distribution because plaintiffs themselves intended to distribute the shares, making the sale to them part of a larger scheme of distribution. The evidence clearly shows an intention by plaintiffs to have the shares registered by June 30, 1971, and indeed defendants promised their "best efforts" to attain that end. Yet, as has been shown, the fact that plaintiffs desired immediate registration and perhaps a registered sale thereafter does not mean that sale to them can be considered part of a distribution for purposes of the Section 4(1) exemption.[14] Rather, only an intent on their part to make an unregistered public offering would suffice. Here, plaintiffs concede that they agreed not to sell the ABI shares to the public without an effective registration, and they have not done so until this time.
Given these facts, the sale of ABI shares by Dempsey to plaintiffs cannot itself be considered a distribution for purposes of terming Dempsey an "underwriter" and depriving defendants of the Section 4(1) exemption.
Accordingly, this court grants defendants' motion for partial summary judgment on Count One of the complaint, holding that application of the Section 4(1) exemption saves defendants from Section 12(1) liability for failing to comply with the registration requirements of Section 5 of the Securities Act. Plaintiffs' motion for partial summary judgment on the same Count is denied.
NOTES
[1] The arrangement was described on the cover page of the Prospectus filed as part of the Registration Statement:
"The Company has agreed to sell to Dempsey-Tegeler & Co., Inc. for 10¢ per share, non-transferable warrants, which expire five years from the date of issue, to purchase 6,000 shares of Capital Stock of the Company. These warrants first become exercisable at an initial price of $10 per share twelve months after the date of their issue. Any profit realized by Dempsey-Tegeler & Co., Inc. upon the sale of the Capital Stock received as a result of the exercise of the warrants may be deemed to be, for purposes of the Securities Act of 1933, additional underwriting compensation."
It should be noted that while the warrant provided for the purchase of 6,000 shares, prior to its exercise ABI split its stock 3 for 1, with the result that 18,000 shares were delivered to Dempsey upon exercise of the warrant.
[2] See p. 1189, supra.
[3] The "Special Trust Fund" was created by the NYSE in 1964 to avoid brokerage firm bankruptcies. The Trustees of the fund are the Governors of the NYSE. The principal of the trust consists of contributions made to it by the NYSE. Section 8 of Article X of the Constitution of the NYSE empowers the Governors of the NYSE to assess its members to reimburse the NYSE for payments made to the Trust Fund.
Section 1 of Article XIX provides that the funds from the trust are to:
"be used solely for the purpose of providing direct or indirect assistance to customers of a member, member firm or member corporation threatened with loss of their money or securities because such member, member firm or member corporation, in the opinion of the Trustees ... is insolvent or in such financial condition that he or it may be unable without assistance to meet his or its obligation to such customers ...."
[4] Since, as will be seen, plaintiffs contend that the form of Dempsey's compensation is relevant to his possible classification as an "underwriter," it deserves description in detail.
Compensation for Swanton was fixed at the rate of $45,000 per annum, plus reimbursement for personal expenses up to a maximum of $750 per month, plus rental for a second household, the cost of transportation for himself between New York and Los Angeles, and the cost of similar transportation for his wife at the beginning and at the termination of his assignment as Liquidator for Dempsey. In addition to the foregoing compensation, the NYSE and Swanton agreed to a bonus system encouraging Swanton "to minimize expenditures by the Special Trust Fund." Since as of August 7, 1970, the NYSE contemplated that the Dempsey liquidation presented the Special Trust Fund with a possible exposure of $29,000,000, the NYSE agreed to pay Swanton a bonus aggregating $40,000 if the cost of the Dempsey liquidation to the Special Trust Fund was less than $20,000,000.
[5] Among these, in addition to the 18,000 unregistered shares of capital stock of ABI, were 556,800 "control" shares of common stock of King Resources Company; 2,640,000 unregistered shares of the common stock of Siboney Corp.; 102,246 unregistered shares of common stock of Data Mate Computer Systems, Inc.; 22,500 unregistered shares of Information Displays; unregistered warrants to purchase 25,000 shares of Golden West Mobile Homes; 125,000 unregistered warrants to purchase shares of Serendipity, Inc.; and 17,500 unregistered warrants to purchase shares of Image Systems, Inc.
[6] Plaintiffs originally paid $14 a share for the ABI stock in January 1971, when the market price of the stock was slightly over $20. When this action was commenced on January 20, 1972, ABI common stock was trading in the over-the-counter market in the $5 to $6 range. As of January 16, 1974, when the motion under consideration was filed, the bid price for ABI common stock was under 50¢ per share.
[7] Section 5 of the Securities Act provides in pertinent part:
"(a) Unless a registration statement is in effect as to a security, it shall be unlawful for any person, directly or indirectly
(1) to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to sell such security through the use or medium of any prospectus or otherwise; or
(2) to carry or cause to be carried through the mails or in interstate commerce, by any means or instruments of transportation, any such security for the purpose of sale or for delivery after sale." [15 U.S.C. § 77e]
[8] "In order to establish a prima facie case for a Section 5 violation, a plaintiff must prove three elements. First, it must be shown that no registration statement was in effect as to the securities. Second, it must be established that the defendant sold or offered to sell these securities, and finally, the use of interstate transportation or communication or of the mails in connection with the sale or offer of sale must be proved." 448 F.2d at 686.
[9] Plaintiffs' Memorandum of Law in Support of Motion for Summary Judgment on Count I, at 36.
[10] Plaintiffs' Reply Memorandum, at 23.
[11] Similarly, any liability under Section 12(1) on the part of the NYSE would also be derivative. Plaintiffs argue that the NYSE should be held liable as an underwriter in the event that either Dempsey or Swanton is found to be an underwriter. Two theories are advanced: 1) the NYSE's "participation" in any underwriting attributed to Swanton or Dempsey in this transaction; or 2) the fact that the NYSE here is a "controlling person" of Dempsey and Swanton. Without reaching the merits of either of these theories, the court notes that since neither Dempsey nor Swanton is found to be an "underwriter" in the instant case, no liability attaches to the NYSE.
[12] See p. 1194, supra.
[13] Prospectus of Neuwirth Investment Fund, Ltd., pp. 1-2.
[14] See pp. 1195-1196, supra.
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300 N.W.2d 865 (1980)
Beverly J. JOHNSON, Plaintiff and Appellee,
v.
Raymond D. JOHNSON, Defendant and Appellant.
No. 13034.
Supreme Court of South Dakota.
Considered on Briefs October 23, 1980.
Decided December 23, 1980.
Mark E. Swanson, Sioux Falls, for plaintiff and appellee.
*866 Charles L. Dorothy, Dorothy, Craig, Palmer & Harris, Sioux Falls, for defendant and appellant.
HENDERSON, Justice.
ACTION
This is an appeal by Raymond D. Johnson (appellant) from a property division in a judgment of divorce entered on behalf of his ex-wife, Beverly J. Johnson (appellee). Appellant contends on appeal that the trial court erroneously determined that he should receive only $3,000 equity in the parties' marital home, and that the trial court erred in allowing appellee unilateral access to the savings account (containing approximately $35,000) set up by the parties as an informal trust for their children. The balance of the property award is not in dispute. Appellee filed a motion with this Court for appellate attorney fees. We reverse and remand.
FACTS
Appellant and appellee were married May 4, 1956. Three children were born of this marriage, their ages at the time of this appeal being 23, 21, and 17 years old. The parties were divorced on January 4, 1980. The parties' youngest child has been residing with appellee at the marital home since the divorce. The parties' other two children do not live at home.
The parties purchased a home from appellee's parents in 1959 on a contract for deed for the sum of $13,000. Interest on this contract was 4% per annum with payments of $60 per month for a period in excess of 36 years. There was conflicting testimony at trial as to whether any down payment was made upon the home, although the contract itself indicates that a down payment of $587 was made. Appellee's parents originally purchased the home for immediate resale to the parties, who at that time were unable to obtain mortgage financing. The parties paid approximately $6,000 on the principal of this contract for deed by the time divorce proceedings were instituted. Appraisals disclosed that the value of the home was between $41,900 and $48,000 at the time of trial.
During the parties' marriage, appellant worked as a milkman for a local dairy. He also worked a second job at a service station from 1971-1973. In 1974, appellant's employer went out of business and appellant was forced to operate as an independent milkman because he was unable to find other suitable employment due to injuries received in three separate motor vehicle accidents during the 1960s. These injuries resulted in appellant suffering chronic neck and back problems, including curvature of the spine. Also, appellant underwent surgery in 1970 for an ulcer. In 1974, appellee started working as an interior decorator for Sears and began to earn more money than appellant. Appellee earned approximately 65% of the family's income subsequent to 1975. At this time, appellee began paying the insurance premiums and taxes on the home. Appellant, however, continued to pay the monthly installments on the home itself. During the course of the marriage, appellant and appellee's father built a garage and finished off the basement of the home.
Appellee's mother died in 1978. As a consequence, appellee inherited what remained to be paid on the contract for deed, which was approximately $7,000. Appellant testified at trial that he thought the home was deeded to himself and appellee. Appellee testified, however, that such a deed was never given. Appellee testified that she and appellant were only able to purchase the home because of the generous terms afforded them by her parents. Appellee also inherited a savings account from her mother containing approximately $6,000. She testified that this money was used for funeral expenses and home remodeling.
Prior to her death in 1978, appellee's mother had made a cash gift of approximately $35,000 intended for the parties' three children. The money was placed in a joint savings account under the names of the litigants. It was apparently agreed between the litigants that this account was *867 set up as an informal trust for their children. In 1978, the interest from this account was reported as income on the parties' joint income tax return. Appellee apparently handled all the business matters for the family. After the divorce proceedings were instituted, this money was unilaterally transferred by appellee to an account solely under her name, without appellant's knowledge or consent. Appellee contends that she did this because she was afraid appellant might withdraw and spend all the money if he had access to it. In 1979, appellee withdrew approximately $3,500 from this account in order to make a down payment on an automobile purchased in her name. According to appellee, this money was borrowed after obtaining permission from the parties' oldest child. Appellee testified at trial that she does not wish to allow the parties' children absolute and inalienable access to the account due to their economic immaturity. In making its division of property, the trial court awarded appellant $3,000 equity in the parties' marital home. Appellee was awarded the marital home itself.
The trial court ruled that each party is required to pay their own costs and attorney fees and that neither party is entitled to alimony. Appellant was ordered to pay $25 per week for child support for the parties' youngest child until the child graduated from high school or became otherwise emancipated.
In conjunction with the division of the marital home, the trial court entered as findings of fact that: (1) the marital home was in the nature of a gift from appellee's parents; (2) since 1959 the parties have paid approximately $6,000 principal on the contract for deed of which appellant is entitled to one-half ($3,000); and (3) appellee is entitled to the home. The trial court further found that the cash gift from appellee's mother to the parties' children was not properly subject to the jurisdiction of the trial court. Hence, the account containing this money remained under appellee's name only.
Appellee, who is 47 years old at the time of this appeal, currently works full-time for Sears earning approximately $12,000 per year. Appellant, who is 51 years old, now resides at his sister's home and pays $60 rent per month. From 1975-1978, appellant averaged approximately $6,400 in yearly income. He testified at trial that he has been advised by his physician that he should not be working due to his physical condition. Appellant continues to work as a part-time independent milkman.
ISSUES
I.
Did the trial court abuse its discretion in awarding appellant $3,000 equity in the martial home? We hold that it did.
II.
Did the trial court err in holding that it did not have jurisdiction to rule upon the disposition of the joint savings account containing the money given to the parties' children by their maternal grandmother? We hold that it did.
III.
Under the circumstances of this case, is appellee entitled to an award of appellate attorney fees? We hold that she is not.
DECISION
I.
Appellant argues that the marital home should be sold and the resulting equity be divided equally among the parties. Here, the trial court determined that $6,000 had been paid on the principal of the contract for deed and, consequently, awarded appellant one-half of that amount. The trial court further determined that the remaining amount owed on the home (approximately $7,000) was inherited by appellee from her mother. The trial court concluded that appellant was not to participate in this inheritance.
Precedent governing this Court's review of a trial court's division of property in a divorce case is as follows:
*868 [W]e start with the general proposition that under SDCL 25-4-44 the trial court has broad discretion in making a division of marital property. This court will not set aside or modify a trial court's decision in this regard unless it clearly appears that the trial court abused its discretion in entering its judgment. Price v. Price, 278 N.W.2d 455 (S.D.1979); Lien v. Lien, 278 N.W.2d 436 (S.D.1979); Hansen v. Hansen, 273 N.W.2d 749 (S.D.1979); Kittelson v. Kittelson, 272 N.W.2d 86 (S.D. 1978). In making an equitable division of property, a trial court is not bound by any mathematical formula but is to make the award on the basis of the material factors in the case, having due regard for equity and the circumstances of the parties. These factors include the duration of the marriage, the value of the property of each of the parties, the ages of the parties, their health and competency to earn, and the contributions of each of the parties to the accumulation of the marital property. Kressly v. Kressly, 77 S.D. 143, 87 N.W.2d 601 (1958). See also Hansen v. Hansen, supra; Lien v. Lien, supra; Vaughn v. Vaughn, 252 N.W.2d 910 (S.D. 1977); Hanson v. Hanson, 252 N.W.2d 907 (S.D.1977).
Michael v. Michael, 287 N.W.2d 98, 99-100 (S.D.1980) (footnote omitted).
In Andera v. Andera, 277 N.W.2d 725 (S.D.1979), we affirmed the trial court's decision not to include 640 acres of realty previously owned by the divorced parties in making a division of property. The 640 acres were purchased by the parties on a contract for deed from appellee's mother. The purchase occurred approximately six months prior to the commencement of the divorce proceedings and was at 25% below the current market value. The couple was engaged in farming. We stated that the transfer of the 640 acres was in the nature of a gift and that "there was no contribution of any significance by appellant in acquiring the land." Id. at 728.
We held in Busch v. Busch, 298 N.W.2d 95 (S.D.1980), that the trial court erred in awarding one of the divorced parties full ownership of the marital home. Both parties had worked throughout their eleven-year marriage and had contributed equally to the purchase of the home, which had nearly doubled in value since its purchase.
Andera, supra, is distinguishable. Appellant in this case has faithfully made monthly payments on the purchase price of the home for approximately twenty years. For a majority of those years, he also paid the insurance and taxes on the home. Further, he substantially contributed to making major improvements on the home. We cannot agree with the trial court that the marital home was in the nature of a gift from appellee's parents. Payments of $60 per month for nearly two decades cannot be considered an insignificant contribution by appellant. Payments of such a long duration are an investment; in awarding only $3,000 to appellant for his contribution to the home, the trial court effectively negated all inflationary equity appellant had realized in the home during the marriage. We hold that the trial court abused its discretion in its award of $3,000 to appellant and remand this matter for the purpose of selling the marital home and making an equitable distribution of the resulting equity between the parties. There need be no further facts developed by testimony as to the value of the home as those facts were fully developed at trial. However, inasmuch as the trial court did not establish the home's value, this must be done by the testimony at trial in arriving at an equitable division. Failure to place a value upon the property of the parties for purposes of equitable distribution is reversible error. Guindon v. Guindon, 256 N.W.2d 894 (S.D. 1977).
II.
Appellant secondly contends that the trial court erred in allowing appellee unilateral access to the savings account containing the $35,000 given by appellee's mother to the parties for the intended benefit of their children. Appellant is concerned that appellee will eventually deplete the funds of this account for her own purposes.
*869 Our legislature enacted the South Dakota Uniform Gifts to Minors Act by Chapter 208 of the South Dakota Session Laws of 1957, which is now SDCL ch. 55-10. Certain requirements in law were established to include those set forth in SDCL 55-10-5, which provides as follows:
An adult person may, during his lifetime, or by will or trust, make a gift of money to a person a who is a minor on the date of the gift, by paying or delivering it to a broker or a domestic financial institution for credit to an account in the name of the donor, another adult or a trust company, followed, in substance, by the words: "as custodian for (name of minor) under the South Dakota Uniform Gifts to Minors Act."
The failure to formally designate a custodian does not affect the consummation of the gift. Here, the money given by the maternal grandmother for the benefit of the children was not accompanied by any formal words of custodial supervision. It was assumed by all of the parties, however, that the money would be kept by appellant and appellee for the children's future benefit. The money was placed in a joint account in appellee's and appellant's names. After the commencement of the divorce proceedings against appellant, appellee unilaterally withdrew all the money from the account (as is permitted under SDCL 51-22-5) and opened another separate account giving herself sole access to the funds. None of the money in question has been distributed to any of the children, although appellee testified that she would not object to placing the money in a formal trust for the children's benefit.
SDCL 25-4-44 states:
Where a divorce is granted for an offense of either husband or wife, the courts shall in such action have full power to make an equitable division of the property belonging to either or both, whether the title to such property is in the name of the husband or the wife. In making such division of the property the court shall have regard for equity and the circumstances of the parties.
SDCL 25-4-45 states:
In an action for divorce the court may, before or after judgment, give such direction for the custody, care, and education of the children of the marriage as may seem necessary or proper, and may at any time vacate or modify the same.
Both parties in this case testified that the $35,000 in question was to be used for the benefit of their three children. The trial court stated in its findings of fact that the $35,000 was a gift to the children from their maternal grandmother. Appellant and appellee appear to have treated the $35,000 as their own as evidenced by the 1978 joint tax return wherein they declared the interest on the money as income. They intended to distribute the money to the children as they later deemed to be appropriate. We conclude that under the aforementioned statutes, the trial court had the power and duty to protect the interests of these children.
SDCL 55-1-6 states:
An implied trust is one which is created by operation of law. An implied trust arises in the cases described in §§ 55-1-7 and 55-1-10, inclusive.
SDCL 55-1-11 states:
The enumeration in §§ 55-1-7 to 55-1-10, inclusive, of cases wherein an implied trust arises does not exclude or prevent the arising of an implied trust in other cases nor prevent a court of equity from establishing and declaring an implied, resulting, or constructive trust in other cases and instances pursuant to the custom and practice of such courts.
"An implied trust arises from the facts and circumstances of a transaction ...." Knock v. Knock, 80 S.D. 159, 166, 120 N.W.2d 572, 576 (1963). A trust by operation of law must be established by clear, satisfactory, and convincing evidence. Krager v. Waage, 76 S.D. 395, 79 N.W.2d 286 (1957); Scott v. Liechti, 70 S.D. 89, 15 N.W.2d 1 (1944).
We believe that the facts and circumstances of this case, combined with the intent of the parties involved, warrant a creation of a trust with regard to the $35,000. *870 We hold that the trial court erred in not assuming jurisdiction of this money under SDCL 25-4-44 and SDCL 25-4-45 in its determination of the parties' divorce property settlement, and we remand the case to the trial court for the purpose of creating a formal trust and designating a proper trust officer with the parties' children as sole beneficiaries, each to receive an equal share of the trust's res upon reaching the age of majority, absent a showing of incompetence. Our ruling will require the immediate payment thereunder of one-third of the trust's res to each of the parties' two oldest children, who have already reached the age of majority. Appellee is required to forthwith return to this trust the $3,500 she withdrew for her personal benefit.
III.
Subsequent to appellant filing his notice of appeal, appellee moved for an award of attorney fees on appeal in the amount of $3,000. Appellee contends that she cannot afford attorney fees and that appellant is appealing for purposes of harassment. Appellee and two acquaintances of the parties have filed affidavits stating that they have heard appellant express that he is appealing simply to harass appellee. Appellant subsequently filed an affidavit denying all of appellee's allegations and likewise urges that he is economically unable to defray attorney fees.
SDCL 15-17-7 gives this Court the power to order payment of attorney fees in a divorce case, both before and after judgment, provided, however, that such an award is "warranted and necessary." We have addressed this issue in three recent cases: Johnson v. Johnson, 291 N.W.2d 776 (S.D.1980); Lien v. Lien, 278 N.W.2d 436 (S.D.1979); and Holforty v. Holforty, 272 N.W.2d 810 (S.D.1978). In determining whether one party should be required to pay another party's attorney fees, this Court considers the property owned by each party; their relative incomes; whether the moving party's property is in fixed or liquid assets; and whether either party unreasonably increased the time spent on the case. Lien, supra.
We have reviewed the circumstances of both parties with these considerations in mind, and determine that appellant is not required to pay appellee's attorney fees on this appeal.
Reversed and remanded.
DUNN and MORGAN, JJ., concur.
WOLLMAN, C. J., and FOSHEIM, J., concur specially.
FOSHEIM, Justice (concurring specially).
I agree with the majority opinion in all respects except as to the conclusion that the marital home should be sold so that an equitable distribution can be made between the parties. In my opinion, this overreaches the requirements on appeal and invades the province of the trial court. The circuit court may very well conclude that until the youngest child reaches maturity or is otherwise emancipated, the marital home should remain in the possession of appellee, who has custody of the minor. See Bruggeman v. Bruggeman, 292 N.W.2d 111 (S.D.1980).
I am hereby authorized to state that WOLLMAN, C. J., joins in this special concurrence.
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485 F.2d 110
73-2 USTC P 9678
MIDLAND-ROSS CORPORATION, TRANSFEREE OF SURFACE COMBUSTIONCORPORATION, Plaintiff-Appellant,v.UNITED STATES of America, Defendant-Appellee.
No. 73-1100.
United States Court of Appeals,Sixth Circuit.
Argued June 7, 1973.Decided Sept. 27, 1973.
Henry C. Harvey, Cleveland, Ohio, for plaintiff-appellant; Bruce J. Havig-hurst, Jones, Day, Cockley & Reavis, Cleveland, Ohio, on brief.
Ernest J. Brown, Dept. of Justice, Washington, D.C., for defendant-appellee; Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Attys., Tax Div. Dept., of Justice, Washington, D.C., on brief.
Before CELEBREZZE and McCREE, Circuit Judges, and MOYNAHAN,* District Judge.
CELEBREZZE, Circuit Judge.
1
This is an appeal from the District Court's final judgment for the Government in a suit under 28 U.S.C. Sec. 1346(a) (1) by Midland-Ross Corporation (Midland) seeking a refund of income taxes paid by Midland as transferee of Surface Combustion Corporation (including the latter's tax liabilities) for Surface's fiscal year ended March 31, 1960.
2
In its complaint Midland sought a refund of $113,029 plus interest paid by Midland after the Commissioner disallowed certain depreciation deductions claimed by Surface for the above tax year. The Government's answer asserted, inter alia, an affirmative defense of set off in the form of a tax liability on Surface's gross profits for work in process of $1,344,191, for which profits Midland claimed nonrecognition under 26 U.S.C. Sec. 337.1 Prior to trial, the Government conceded that the disallowance of depreciation was erroneous. Because the tax liability asserted in the Government's affirmative defense would be greater than the refund to which Midland was otherwise entitled, the sole issue before the District Court was whether the above profits fell within the nonrecognition provisions of 26 U.S.C. Sec. 337.
3
For several years preceding the tax year in question, Surface's principal business was the design, manufacture, and installation of heat treat equipment under contracts with various customers in the metal and glass industries. Full performance of each contract frequently required a period in excess of one year, and the contracts usually called for progress payments as Surface's work proceeded. Under the completed-contract method of accounting, 26 C.F.R. Sec. 1.451-3(b) (2), Surface consistently reported gross income from each of these contracts only in the year in which the contract was completed and accepted and similarly deducted costs and expenses allocable to each contract in said year of completion.
4
Having adopted a plan of complete liquidation, Surface sold substantially all of its properties and assets to Midland on November 9, 1959, with Midland assuming all the debts and liabilities of Surface, including liabilities for federal income taxes. Within 12 months after adoption of its plan of liquidation, Surface distributed the proceeds of this sale to its shareholders in cancellation and redemption of its stock.
5
Among the assets sold to Midland were certain uncompleted, but partially performed, long-term contracts between Surface and its customers for the design, manufacture, and installation of heat treat equipment, as described above. Prior to the date of sale, Surface had incurred accumulated costs and expenses totalling $5,357,010 in partially performing these contracts. Based on Surface's past business experiences under such contracts, it was estimated that $1,344,191 represented the portion of the total expected profits which Surface had earned through its partial performance. By adding these two amounts (costs and expenses plus estimated partial profits), the parties arrived at a fair market value of $6,701,200 for the uncompleted, long-term contracts. This fair market value-less the amount of progress payments received by Surface prior to the sale-was recorded by Midland as a portion of the total purchase price allocable to the uncompleted, long term contracts.2
6
Pursuant to its completed-contract method of accounting, Surface had neither taken income tax deductions for the accumulated costs and expenses incurred prior to the sale of the uncompleted, long-term contracts, nor had it reported any gross income from those contracts. Moreover, in its income tax return for its fiscal year ended March 31, 1960, which covered the November 9, 1959, sale to Midland, Surface reported no gross income from the sale of these contracts to Midland.
7
In its affirmative defense of set off against Midland's suit for refund, the Government asserted that Surface erroneously failed to report as ordinary income the above-described $1,344,191 in profits arising from its sale of the uncompleted, long-term contracts to Midland. Midland, on the other hand, contends that these profits were entitled to nonrecognition as gain from the sale of property in complete liquidation under 26 U.S.C. Sec. 337, the pertinent provisions of which are set forth in the margin.3
* * *
In its Memorandum, reported at 352 F.Supp. 1287, the District Court noted the similarity in the definition of "property" in Section 337 and the definition of capital assets in 26 U.S.C. Sec. 1221, and reasoned that, with the exception of the property described in subsection 337(b) (2), Section 337 was not intended to apply to property the sale of which yields ordinary income to the corporation. After determining that the uncompleted, long-term contracts at issue were neither inventory nor property held by the corporation primarily for sale to customers in the ordinary course of its trade or business so as to qualify for the bulk sale provisions of subsection 337(b) (2), the District Court concluded that Surface was required to recognize the profits from the sale of these contracts to Midland. The Court therefore sustained the Government's affirmative defense of set off against Midland. We affirm, albeit for somewhat different reasons.
Initially, we note the Government's argument before us that this case presents a parallel to this Court's decision in Buckeye Union Casualty Co. v. Commissioner, 448 F.2d 228 (6th Cir. 1971), wherein the release of certain unearned premiums through a reinsurance agreement was held to have not constituted gain from the sale or exchange of property under Section 337.4 We believe that the gain at issue here, in the form of estimated profits deemed to have been earned by Surface through its partial performance of the contracts, can safely be said to have arisen from the sale of those contracts.5
We also note our agreement with the District Court's conclusion that the uncompleted, long-term contracts sold by Surface were neither inventory nor property held primarily for sale to customers, as described in subsection 337(b) (1) (A) and referred to in subsection (b) (2). See, 352 F.Supp. at 1291-1294. To this we merely add that these contracts were not "installment obligations" under subsection 337(b) (1) (B) or (C) (even under the broadest inter-pretations of that term; see note 6 infra), and they thus do not fall within any of the express exclusions from the term "property" under Section 337. We therefore focus upon the District Court's rationale that, beyond the express exclusions, no ordinary-income-producing items are to be included within the term "property" under Section 337, with the exception of those specified in subsection (b) (2).
The scope to be afforded to the nonrecognition provisions of Section 337, or more accurately, the means of determining that scope, has been a subject of considerable uncertainty. In its definition of "property", subsection 337(b) appears to specifically set forth the only types of gain which Congress intended to exclude from nonrecognition under the statute. Indeed, the Regulations support this view, stating that "[w]ith the exceptions listed in [subsection (b)] the term 'property' includes all assets owned by a corporation." Treas. Reg. Sec. 1.337-3(a) (1955).
Reference to the legislative history of Section 337, however, suggests that its seemingly clear language does not fully comport with its purpose. Section 337 was enacted to eliminate the formalism created by the holdings in Commissioner v. Court Holding Co., 324 U.S. 331, 65 S. Ct. 707, 89 L.Ed. 981 (1945), and United States v. Cumberland Public Service Co., 338 U.S. 451, 70 S.Ct. 280, 94 L.Ed. 251 (1950), by establishing a parity of tax treatment at the corporate level whether a liquidating corporation sells its assets and thereafter distributes the proceeds to its shareholders in complete liquidation or, conversely, distributes its assets in kind to its shareholders in complete liquidation for sale by them. See S.Rep.No.1622, 83d Cong.2d Sess., at 258; [1954] 3 U.S.Code Cong. & Adm. News at 4896. See also Buckeye Union Casualty Co. v. Commissioner, 448 F.2d 228, 230 (6th Cir. 1971); Commissioner v. Kuckenberg, 309 F.2d 202, 205-206 (9th Cir. 1962), cert. denied, 373 U.S. 909, 83 S.Ct. 1296, 10 L.Ed.2d 411 (1963); Frank W. Verito, 43 T.C. 429, 438-40 (1965); B. Bittker & J. Eustice, Federal Income Taxation of Corporations and Shareholders, para. 11.64 at 11-58 (3d ed.1971).
Standing alone, the language of the statute does not appear to fully serve this purpose. Obvious problems arise in the context of a liquidating corporation's sale of receivables and other rights to income already earned, but not yet received, which are not expressly excluded from Section 337's nonrecognition provisions except to the extent of the installment obligation exclusion appearing in subsections (b) (1) (B) and (C). If such receivables and other rights to income were distributed in kind to a liquidating corporation's shareholders and thereafter sold by them so as to satisfy the Cumberland Public Service Co. holding, any gain from the sale would most certainly be attributed to the corporation under the assignment of income doctrine, notwithstanding the nonrecognition provisions of 26 U.S.C., Sec. 336 for such distributions of assets in kind. See, e. g., Wood Harmon Corp. v. United States, 311 F.2d 918, 921-926 (2d Cir. 1963); Williamson v. United States, 292 F.2d 524, 528-530, 155 Ct.Cl. 279 (1961). Yet, if the application of Section 337 were restricted only to the extent of its express exclusions, gain from the corporation's sale of these same assets within the statutory period would escape recognition by the corporation. Indeed, if carried to its extreme, this approach would afford Section 337's nonrecognition to gain from a corporation's sale of receivables arising from the prior sale of even those assets which are expressly excluded from the statute, such as inventory items, thus permitting a corporation to bring all gain within the nonrecognition provisions of the statute. See Note, Tax-Free Sales in Liquidation Under Section 337, 76 Harv.L.Rev. 780, 790-91 (1963).
In an effort to avoid these results under Section 337, the Courts have adopted several approaches which restrict the statute's scope more narrowly than do its express exclusions.6 Accordingly, the District Court ruled that "the 'property' whose gain shall be subject to non-recognition does not include ordinary income [property] unless it falls within Section 337(b) (2)." 352 F.Supp. at 1294. Thus, with the exception of bulk sales specified in subsection (b) (2), the District Court would presumably exclude from Section 337 any property which would yield ordinary income, rather than capital gains, if sold outside of Section 337. Without attempting to fully explore the operation and effects of such a rule under the statutes governing capital gains and losses, 26 U.S.C. Sec. 1201 et seq., we simply observe that this approach would deny Section 337's nonrecognition to property used in the trade of business, as described in Section 1221(2), but held 6 months or less, and to copyrights, literary compositions, etc., as described in Section 1221(3)7 whereas these same assets would in most cases escape recognition if distributed in kind under Section 336. See B. Bittker & J. Eustice, supra, para. 11.65, at 11-71. This rule also fails to suggest any plausible explanation for the fact that in subsection 337(b) (2) Congress chose to afford nonrecognition to bulk sales of inventory and property held primarily for sale to customers, notwithstanding the fact that these bulk sales would yield ordinary income if sold outside Section 337. Moreover, the District Court's rule appears to infer its inverse, i. e., that any property which would yield capital gains if sold outside Section 337 is to be afforded the statute's nonrecognition; however, under appropriate circumstances, capital gains can be attributed to a corporation distributing its assets in kind under Section 336. See Wood Harmon Corp. v. United States, 311 F.2d 918, 921-926 (2d Cir. 1963).
These problems will attend any rule which attempts to prescribe the scope of Section 337 through reference to capital assets, as defined in Section 1221, to property afforded capital asset treatment under Sections 1221 and 1231, or to capital gains resulting from such treatment.8 These approaches have their basis in the fact that the types of property expressly excluded from Section 337 in subsection (b) (1) (A), i. e., inventory and property held primarily for sale to customers, are identical to the types of property expressly excluded from the definition of capital assets in Section 1221(1). Thus, so the argument goes, since Congress borrowed a portion of the definition of capital assets in Section 1221 as the "heart of the definition of 'property"' under Section 337, it must have intended that only capital assets would be encompassed in the latter term.9 Pridemark, Inc. v. Commissioner, 345 F.2d 35, 45 (4th Cir. 1965). See also Messer v. Commissioner, 438 F.2d 774, 780 (3d Cir. 1971); Coast Coil Co., 50 T.C. 528, 535 (1968) (alternate holding), aff'd, 422 F.2d 402 (9th Cir. 1970). Cf. Hollywood Baseball Ass'n v. Commissioner, 423 F.2d 494, 499-500 (9th Cir.), cert. denied, 400 U.S. 848, 91 S.Ct. 35, 27 L.Ed.2d 85 (1970) (excluding Corn Products-type assets).
We believe that these approaches to Section 337 are based on the erroneous notion that, by adopting the language found in subsection (b) (1) (A), Congress intended to supply mere examples of a broad class of property (i. e., noncapital or noninvestment) which, for some unstated reason, would be excluded from the statute's nonrecognition provisions-notwithstanding the fact that the nonrecognition afforded to distributions in kind under Section 336 is governed by no comparable restrictions.10
A reasonable reading of the statute in light of its limited legislative history suggests that in adopting the language of subsection 337(b) (1) (A), Congress intended nothing more than to exclude from the statute's nonrecognition provisions gain or loss from a corporation's sales in the ordinary course of its business during the 12-month period. After setting forth the primary purpose to be served by Section 337 (i. e., elimination of the Court Holding Co.-Cumberland Public Service Co., formalism) and in explanation of the nonrecognition afforded to bulk sales of inventory and property held primarily for sale to customers under subsection (b) (2), the Senate Report reads as follows:
"It is intended that, during the 12-month period, sales in the ordinary course of business shall result in ordinary gain to the corporation as if the corporation were not in the process of liquidating." S.Rep.No.1622, 83d Cong., 2d Sess.; [1954] 3 U.S.Code Cong. & Adm.News at 4897.
It appears that this intent of Congress led to its adoption of the language appearing in subsection 337(b) (1) (A), drawn from subsection 1221(1), with the latter subsection's similar, albeit broader, purpose of isolating one type of "profits and losses arising from the everyday operations of a business".11 Corn Products Co. v. Commissioner, 350 U.S. 46, 52, 76 S.Ct. 20, 24, 100 L.Ed. 29 (1955). See Malat v. Riddell, 383 U.S. 569, 572, 86 S.Ct. 1030, 16 L.Ed.2d 102 (1966). This approach appears to explain Congress's failure to further include in subsection (b) (1) (A) the types of property described in subsections 1221(2) through (5), such as property used in the trade or business and accounts receivable, which are not normally sold in the ordinary course of a corporation's business. It further appears to explain Congress's decision to afford nonrecognition to bulk sales of inventory and property held primarily for sale to customers under subsection 337(b) (2), in that such property is not normally sold in bulk to a single purchaser in the ordinary course of a corporation's business.
Congress's intent to avert the nonrecognition of gain or loss from sales in the ordinary course of the business during the 12-month period is, of course, unique to Section 337 and alien to the statute's broader purpose of establishing a parity between Sections 336 and 337. By denying nonrecognition to sales of inventory and property held primarily for sale to customers, but then affording nonrecognition to bulk sales of those same assets, subsection 337(b) leads to some disparity of tax consequences under Sections 336 and 337.12 This disparity, however, is minimized if, under the above reasoning, the term "property" in Section 337 is restricted only to the extent of the express exclusions set forth in subsection (b).
In accordance with the Regulations (Treas.Reg. 1.337-3(a)) discussed above and the language of the statute itself, we conclude that the term property should be read to include all assets owned by the corporation except those expressly excluded under subsection (b). While recognizing that no hard and fast rule is likely to fit every case arising under Section 337, we further conclude that a corporation's recognition or nonrecognition of gain or loss13 arising from the sale of property not expressly excluded under subsection 337(b), should generally be governed by the established doctrines of tax law applicable to distributions in kind under Section 336-specifically, for purposes of the present case, the assignment of income doctrine. See Williamson v. United States, 292 F.2d 524, 527-530, 155 Ct.Cl. 279 (1961) (invoking the assignment of income doctrine to require a cash-basis corporation to recognize gain on the distribution of accounts receivable under Section 336); Wood Harmon Corp. v. United States, 311 F.2d 918, 921-923 (2d Cir. 1963) (invoking the assignment of income doctrine to require a corporation to recognize capital gains on the distribution under Section 336 of the right to receive condemnation proceeds). See also Commissioner v. Kuckenberg, 309 F.2d 202, 204-206 (9th Cir. 1962), cert. denied, 373 U.S. 909, 83 S.Ct. 1296, 10 L.Ed.2d 411 (1963) (invoking the assignment of income doctrine to require a cash-basis corporation to recognize gain from a Section 337 sale of completed contracts); Family Record Plan, Inc. v. Commissioner, 309 F.2d 208 (9th Cir. 1962), cert. denied, 373 U.S. 910, 83 S. Ct. 1297, 10 L.Ed.2d 411 (1963) (same result where completed customer contracts, or accounts receivable, were sold by a cash-basis corporation under Section 337).14
Under the assignment of income doctrine, as discussed and applied in Commissioner v. Kuckenberg, supra, we conclude that the $1,344,191, realized by Surface upon the sale of its uncompleted, long-term contracts and representing the portion of the total estimated profits deemed to have been earned through its partial performance of those contracts, must be recognized to Surface, just as it would have been had the contracts been distributed in kind under Section 336 and thereafter sold by Surface's shareholders. While Kuckenberg dealt with completed, rather than uncompleted, contracts under Section 337,15 this factor does not detract from the principle recited in Kuckenberg, 309 F. 2d at 205:
"'[T]he corporation has performed the services which create the right to the income which brings into play the basic rule that income shall be taxed to him who earns it. Helvering v. Eubank, 1940, 311 U.S. 122, 61 S.Ct. 149, 85 L.Ed. 81."'
We hold that Surface's uncompleted, long-term contracts, not falling within any of the express exclusions of subsection (b) (1), were "property" under Section 337. Under the assignment of income doctrine, however, we further hold that the $1,344,191 in profits realized on that sale must be recognized to Surface, notwithstanding the nonrecognition provisions of Section 337.
For the reasons stated above, a judgment will be entered affirming the judgment of the District Court, with costs awarded against Appellant pursuant to 28 U.S.C. Sec. 2412 (1966).
*
The Honorable Bernard T. Moynahan, Jr., Chief Judge, United States District Court for the Eastern District of Kentucky, sitting by designation
1
This tax liability was asserted solely by means of the Government's affirmative defense of set off in the present suit, rather than by direct assessment, in that the statute of limitations, 26 U.S.C. Sec. 6501, for further assessments had run when the complaint was filed. See generally Lewis v. Reynolds, 284 U.S. 281, 52 S.Ct. 145, 76 L. Ed. 293 (1932); Springfield Street Ry. Co. v. United States, 312 F.2d 754, 758, 160 Ct. Cl. 111 (1963)
2
The fair market value of the uncompleted, long-term contracts was actually added to what was apparently deemed the fair market value of certain uncompleted, short-term contracts (the gain from which has not been raised as an issue in this case), and the sum of these values was then reduced by the total amount of progress payments received by Surface on both types of uncompleted contracts prior to the sale, yielding an actual cash payment by Midland of $122,939.34 for both the long-term and the short-term uncompleted contracts, as follows:
Assets Allocated Amount
---------------------------------------------- ----------------
-------------------------------------------------------------------------------
Contracts in Process
Long Term $6,701,201.00
Short Term 816,875.00
-------------
$7,518,076.00
Less: Progress billings on contracts in 7,395,136.66 $122,939.34
process
-------------------------------------------------------------------------------
3
Sec. 337. Gain or loss on sales or exchanges in connection with certain liquidations
(a) General rule.-If-
(1) a corporation adopts a plan of complete liquidation on or after June 22, 1954, and
(2) within the 12-month period beginning on the date of the adoption of such plan, all of the assets of the corporation are distributed in complete liquidation, less assets retained to meet claims,
then no gain or loss shall be recognized to such corporation from the sale or exchange by it of property within such 12-month period.
(b) Property defined.-
(1) In general.-For purposes of subsection (a), the term "property" does not include-
(A) stock in trade of the corporation, or other property of a kind which would properly be included in the inventory of the corporation if on hand at the close of the taxable year, and property held by the corporation primarily for sale to customers in the ordinary course of its trade or business,
(B) installment obligations acquired in respect of the sale or exchange (without regard to whether such sale or exchange occurred before, on, or after the date of the adoption of the plan referred to in subsection (a)) of stock in trade or other property described in subparagraph (A) of this paragraph, and
(C) installment obligations acquired in respect of property (other than property described in subparagraph (A)) sold or exchanged before the date of the adoption of such plan of liquidation.
(2) Nonrecognition with respect to inventory in certain cases.-Notwithstanding paragraph (1) of this subsection, if substantially all of the property described in subparagraph (A) of such paragraph (1) which is attributable to a trade or business of the corporation is, in accordance with this section, sold or exchanged to one person in one transaction, then for purposes of subsection (a) the term "property" includes-
(A) such property so sold or exchanged, and
(B) installment obligations acquired in respect of such sale or exchange.
4
In this argument, which was not presented to the District Court, the Government analogizes the progress payments received and retained by Surface under the uncompleted contracts (see note 2, supra.) with the unearned premiums released to the Old Buckeye Companies as a result of the reinsurance agreement. As should be evident from subsequent portions of this opinion, the fact that Surface received substantial progress payments under the contracts at issue is irrelevant in our considerations under Section 337
5
But see Anders v. United States, 462 F.2d 1147, 1149 (Ct.Cl.), cert. denied, 409 U.S. 1064, 93 S.Ct. 557, 34 L.Ed.2d 517 (1972) (gain on the sale of previously expensed rental items "was not realized from the 'sale,' but rather from reconverting the previously expensed items into 'property"'); Central Building & Loan Ass'n, 34 T.C. 447, 451 (1960) (accrued interest realized on the sale of note obligations did not arise from the sale, but rather constituted "receipt and collection" of the interest; see note 6, infra)
6
Attempting to adhere to the express exclusions found in Section 337(b) and the Regulations thereunder [Treas.Reg. Sec. 1.337-3(a) (1955) (discussed above)], the Tax Court has averted the above results by holding that accounts receivable constitute "installment obligations" under subsection 337(b) (1), Family Record Plan, Inc., 36 T. C. 305 (1961), aff'd on other grounds, 309 F.2d 208 (9th Cir. 1962), cert. denied, 373 U.S. 910, 83 S.Ct. 1297, 10 L.Ed.2d 411 (1963); Sarah G. Wimp, 20 CCH Tax Ct. Mem., Dec. 25,187(M) (1961), and that the realization of accrued interest upon note obligations which were sold by a corporation pursuant to Section 337 are outside the nonrecognition provisions of the statute because the gain arose not from the sale or exchange of the notes, but rather from what the Tax Court termed the "receipt and collection of interest" from the purchaser. Central Building & Loan Association, 34 T. C. 447, 451 (1960). See also Coast Coil Co., 50 T.C. 528 (1968), aff'd, 422 F.2d 402 (9th Cir. 1970) (holding that the liquidating corporation could recognize a loss incurred in the sale of accounts receivable, which were deemed to be "installment obligations" as in Family Record Plan, Inc., supra)
7
Both types of property described in the text are excluded from the definition of a capital asset under Section 1221, and neither is afforded capital asset treatment under Section 1231
8
While the District Court's rule expands the scope of Section 337 beyond the strict Section 337-1221 analogy and thereby would result in a greater parity between Sections 336 and 337, we believe that the analogy itself, in which the rule has its basis, is erroneous
9
Presumably, had it so chosen, Congress could have incorporated under Section 337(b) (1) the full definition of a capital asset appearing in Section 1221, so as to expressly exclude from the former depreciable and real property used in the trade or business, copyrights, etc., accounts and notes receivable, and discounted government obligations, as described in subsections (2) through (5) of the latter. The rationale cited in the text, however, would suggest that Congress left this simple task of transcription to the Courts
10
Section 336 simply provides as follows:
"Except as provided in section 453(d) (relating to disposition of installment obligations), no gain or loss shall be recognized to a corporation on the distribution of property in partial or complete liquidation."
As noted throughout this opinion, a corporation may be required to recognize gain on the distribution of assets in kind, notwithstanding the above provision. Such recognition, however, is generally governed by the overriding assignment of income doctrine rather than by the capital or noncapital nature of the property distributed. While that doctrine is most frequently applied where ordinary-income-producing assets are distributed, it is not so restricted. See Wood Harmon Corp. v. United States, 311 F.2d 918, 921-926 (2d Cir. 1963).
11
Rather than borrowing the language of subsection 1221(1), the unsuccessful House version of what later became Section 337 expressly provided that its nonrecognition provisions did not apply to "a sale in the ordinary course of business". H.Rep.No.1337, 83d Cong., 2d Sess.; [1954] 3 U.S.Code Cong. & Adm.News at 4244. See also Frank W. Verito, 43 T.C. 429, 438 (1965). The Senate Report on the present version of Section 337 simply notes the following with respect to the unsuccessful House version:
"While the purpose intended to be served by section 337 is similar to that provided in section 333 of the House bill, the language and approach of section 337 differs from that of section 333." S.Rep.No.1622, 83d Cong., 2d Sess.; [1954] 3 U.S.Code Cong. & Adm.News at 4896.
See also Hollywood Baseball Ass'n v. Commissioner, 423 F.2d 494, 500 (9th Cir.), cert. denied, 400 U.S. 848, 91 S.Ct. 35, 27 L.Ed.2d 85 (1970).
12
It seems open to question whether the assignment of income doctrine as applied under Section 336, would require a corporation to recognize gain when inventory or property held primarily for sale is sold by its shareholders after a distribution in kind. Cf. United States v. Lynch, 192 F.2d 718 (9 Cir. 1951), cert. denied, 343 U.S. 934, 72 S.Ct. 770, 96 L.Ed. 1342 (1952). If, however, such recognition would otherwise be required, it seemingly could not be avoided by the shareholders' bulk sale of that property to a single purchaser
13
The nonrecognition of losses under Section 337 presents a special problem for any efforts to achieve a parity between Sections 336 and 337. See B. Bittker & J. Eustice, supra, para. 11.65, at 11-69 n. 124. It is interesting to note that the House version of what became Section 337 provided only for the nonrecognition of gains. See H.Rep.No. 1337, 83d Cong., 2d Sess.; [1954] 3 U.S. Code Cong. & Adm.News at 4244. See also Frank W. Verito, 43 T.C. 429, 438 (1965). For purposes of the present case, it is sufficient to note that the approach which we adopt creates no greater disparity in the context of sales at a loss than do the approaches based on the Section 337-1221 analogy
14
The decisions in Kuckenberg, Family Record Plan, Inc., and Williamson, cited in the text, rested upon the Commissioner's authority under 26 U.S.C. Sec. 446(b) to impose upon a taxpayer a method of accounting which clearly reflects income, in addition to the assignment of income doctrine. See also Jud Plumbing & Heating, Inc. v. Commissioner, 153 F.2d 681 (5th Cir. 1946) (allocating to a liquidated corporation its prorata portion of profits under uncompleted contracts, notwithstanding the corporation's completed-contract method of accounting)
While in its answer to the present suit the Government asserted that Surface's profits at issue here were "based upon the percentage of completion of work in process", it has at no time expressly invoked the Commissioner's authority under Section 446(b). We find, however, no authority suggesting that the invocation of Section 446(b) is a prerequisite to judicial application of the assignment of income doctrine.
15
In addition to the three completed contracts which were sold by the corporation pursuant to a Section 337 plan of liquidation, the Kuckenberg case also involved one uncompleted contract which was distributed to the shareholders and completed by them. Again relying upon the Comissioner's authority under Section 446(b) and, presumably, the assignment of income doctrine, the Court of Appeals upheld the Commissioner's imposition of a corporate tax under the percentage of completion method of accounting. See 309 F.2d at 207
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 96-4745
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
ROBERT OSCAR RANDOLPH,
Defendant - Appellant.
Appeal from the United States District Court for the Western Dis-
trict of Virginia, at Big Stone Gap. Glen M. Williams, Senior
District Judge. (CR-96-6-B)
Submitted: October 7, 1997 Decided: December 2, 1997
Before WIDENER, HAMILTON, and MOTZ, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Gregory M. Stewart, STEWART LAW OFFICES, P.C., Norton, Virginia,
for Appellant. Robert P. Crouch, Jr., United States Attorney, Rick
A. Mountcastle, Assistant United States Attorney, Abingdon,
Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Robert Oscar Randolph appeals from his conviction and sentence
for possession of a firearm following a felony conviction in viola-
tion of 18 U.S.C. § 922(g) (1994). Specifically, Randolph contends
that the district court erred in denying his request for a reduc-
tion under U.S. Sentencing Guidelines Manual § 3E1.1 (1995), for
acceptance of responsibility where he admitted to possession of the
firearm but denied firing it, running from the police, throwing the
gun away during the police chase, and threatening his wife and her
family if she testified against him. The district court found
Randolph's denials of these actions to be unbelievable, and for
that reason not an acceptance of responsibility sufficient to
justify denial of a USSG § 3E1.1 reduction. Our review reveals that
this decision was not clearly erroneous. See United States v.
Myers, 66 F.3d 1364, 1372 (4th Cir. 1995) (holding that sentencing
court may look beyond facts that constitute conviction even if
factors are insufficiently relevant to increase sentence). We
further note that Randolph received an enhancement under USSG §
3C1.1, rendering a § 3E1.1 reduction generally inappropriate. See
USSG § 3E1.1, comment. (n.4). Accordingly, we affirm Randolph's
conviction and sentence. We dispense with oral argument because the
facts and legal contentions are adequately presented in the mate-
rials before the court and argument would not aid the decisional
process.
AFFIRMED
2
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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
February 23, 2007
No. 05-14043 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 04-60275-CR-JIC
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
ANTHONY JEROME BELL,
a.k.a. Ant,
a.k.a. Amp,
BRUCE HERMITT BELL,
Defendants-Appellants.
________________________
Appeals from the United States District Court
for the Southern District of Florida
_________________________
(February 23, 2007)
Before TJOFLAT, HULL and BOWMAN,* Circuit Judges.
*
Honorable Pasco M. Bowman II, United States Circuit Judge for the Eighth Circuit,
sitting by designation.
PER CURIAM:
Following a jury trial, defendant Bruce Bell appeals his convictions and
sentences, and defendant Anthony Bell appeals his sentences, for conspiracy to
possess with intent to distribute fifty grams or more of crack cocaine, in violation
of 21 U.S.C. §§ 846 and 841(a)(1) (Count 1), and possession with intent to
distribute fifty grams or more of crack cocaine, in violation of 21 U.S.C. §
841(a)(1) (Count 2). After review and oral argument, we affirm.
I. BACKGROUND
Because this appeal involves issues related to the searches in this case, we
review in detail the events leading up to the two searches.
A. Search of Buchanan Street Apartment
In June 2004, the Hollywood, Florida Police Department (“HPD”)
investigated suspicious activity at an apartment located at 6330 Buchanan Street.
The owner of the apartment, who had leased the apartment to Bruce Bell, called the
HPD’s “Tips Hot Line” to advise the police of suspicious activity at the apartment.
Based on their subsequent surveillance and information from confidential
informants, HPD officers suspected that crack cocaine was being distributed from
the Buchanan Street residence. Over the next three months, a confidential
informant made several controlled purchases of crack cocaine at the Buchanan
Street residence. Officers also learned that Bruce Bell and his cousin, Anthony
2
Bell, were occupants in the Buchanan Street apartment from a police visit to the
residence.
On September 14, 2004, HPD obtained a search warrant for the Buchanan
Street apartment. In preparation for the raid, officers studied pictures of defendants
Anthony and Bruce Bell. The raid did not take place because Anthony and Bruce
Bell had departed the Buchanan Street residence, and their car was found outside
an apartment at 6205 Tyler Street. On September 17, 2004, after officers observed
Anthony Bell entering the Buchanan Street apartment, HPD officers executed the
search warrant for the apartment. Officers saw defendants Anthony and Bruce Bell
standing near a counter top in the kitchen 1 and observed Bruce Bell grab a
substance that looked like crack cocaine. As defendants Anthony and Bruce Bell
ran from the kitchen into a bedroom, police saw Bruce Bell throw the substance
into a closet.
After arresting defendants Anthony and Bruce Bell, HPD officers
confiscated from the Buchanan Street residence: (1) several pieces of crack cocaine
from the kitchen counter; (2) additional pieces of crack cocaine from the bedroom
closet; (3) two surveillance cameras; (4) an open safe in the kitchen; (5) a small
scale located within a kitchen drawer; (6) $2,074 in cash; and (7) mail addressed to
Anthony Bell at the Buchanan Street address. Officers found an ecstasy pill and a
1
Codefendant Curtis Sheffield also was in the apartment with a juvenile, Gustavo Fields.
3
small piece of crack cocaine in Anthony Bell’s pockets. In Bruce Bell’s pockets,
officers found a Florida driver’s license in the name of “Brian Elliot King” and
several keys. The keys later were found to open the Buchanan Street apartment
door, the Tyler Street apartment door, and the safes in the Buchanan Street and
Tyler Street apartments.
B. Miranda warnings
Following defendant Bruce Bell’s arrest on September 17, 2004, HPD
Detective Kathy Wilde advised him of his Miranda rights at the police station
using a written form. Bruce Bell checked and initialed the form indicating that he
understood and waived his Miranda rights, but he initially checked “Yes” as his
response to the question, “[i]n regards to this investigation, have you previously
asked any Police Officer to allow you to speak to an attorney?” Because this
response was contrary to Bruce Bell’s earlier statement that he had not asked for an
attorney, Detective Wilde asked, “Do you understand what you’re checking? You
are saying you don’t want to talk to us so we are going to leave then.” Bruce Bell
then crossed out his “Yes” response on the Miranda waiver form, checked the
“No” response, and initialed the form next to the “No” answer.
After signing the Miranda waiver form, defendant Bruce Bell confessed that
he started selling crack cocaine in August 2003 and described the crack cocaine
production process. Bruce Bell admitted that he rented the Buchanan Street
4
apartment as a distribution site for his crack cocaine, and that he subsequently
rented the Tyler Street apartment “because there was too much police activity” at
Buchanan Street.
C. Search of Tyler Street Apartment
During this same police interrogation, Detective Wilde and HPD Detective
Chris Christianson asked Bruce Bell for consent to search the Tyler Street
apartment. The front apartment at 6205 Tyler Street had three doors: one front
door, one door in the front of the carport, and one rear door at the back of the
building. Bruce Bell indicated that officers should enter the rear door of the front
Tyler Street apartment instead of the front door, and Detective Christianson wrote
“rear” on the search consent form. Bruce Bell said that officers at his arrest took
the key to the rear door of the front Tyler Street apartment from his pocket. Bruce
Bell signed the search consent form in the presence of Detective Wilde and
Detective Christianson.
Detective Wilde then informed HPD Officer Dennis Wynne, who was at the
scene, that he had consent to search the Tyler Street apartment. Officer Wynne
opened the rear door to the front apartment at 6205 Tyler Street using one of the
keys that had been found in Bruce Bell’s pockets, and HPD officers found a safe.
HPD officers used another key that had been found in Bruce Bell’s pockets to open
the safe. Inside the safe, HPD officers found crack cocaine and plastic baggies. A
5
shoe box next to the safe also contained plastic baggies and a digital scale.
D. Bruce Bell’s Second Arrest
Following defendant Bruce Bell’s arrest on September 17, 2004, he was
released on bond. The federal government reviewed the case and issued a federal
arrest warrant for Bruce Bell on October 13, 2004. On that day, Fort Lauderdale
Police Department officers pulled over Bruce Bell’s car in a traffic stop and
arrested him pursuant to the federal arrest warrant. Officers seized about 7.5
ounces of cocaine powder from the center console and $6,000 in cash from the
trunk.
Federal DEA officers, who were present at the arrest, advised Bruce Bell of
his Miranda rights, which he waived. Bruce Bell then told DEA Special Agent
Jason Gifford that the 7.5 ounces of cocaine powder was his and that the $6,000 in
cash was proceeds from drug sales. Bruce Bell admitted that he had delivered two
ounces of cocaine to the Tyler Street apartment two days prior to his arrest. Bruce
Bell also confessed that he had hired a cousin, Central Williams, to sell crack
cocaine from the Tyler Street apartment.
A federal grand jury returned a two-count indictment against Anthony Bell,
Bruce Bell, and Curtis Sheffield, charging them with conspiracy to possess with
intent to distribute fifty grams or more of crack cocaine, in violation of 21 U.S.C.
§§ 846 and 841(a)(1) (Count 1), and possession with intent to distribute fifty grams
6
or more of crack cocaine, in violation of 21 U.S.C. § 841(a)(1) (Count 2).
E. Suppression Hearing
Bruce Bell filed a motion to suppress the drugs and drug paraphernalia
seized at the Tyler Street apartment. Bruce Bell’s main contention was that there
were two separate apartments at 6205 Tyler Street: a front apartment and a rear
apartment. Bruce Bell argued that he had provided written consent to search the
separate rear Tyler Street apartment, which had no connection to the drug
operation, but not consent to search the front Tyler Street apartment where the safe
and drugs were found using keys from his pockets.
At the suppression hearing, Bruce Bell testified that he only entered the front
Tyler Street apartment on the day of his initial arrest to help his cousin Sheffield
move furniture. He denied ever having keys to the front Tyler Street apartment
and insisted that he had no keys in his possession upon his arrest. According to
Bruce Bell, Detective Christianson asked to search the rear Tyler Street apartment,
and Bruce Bell responded, “I don’t care what you do. It’s not my apartment.”
HPD Detective Christianson testified about his interrogation of Bruce Bell at
the police station following the September 17, 2004 arrest. Bruce Bell advised
Detective Christianson that HPD officers had taken his keys to the Tyler Street
apartment. After speaking with officers who were outside the Tyler Street
apartment, Detective Christianson asked Bruce Bell if his key would open the front
7
door of the Tyler Street apartment, and Bruce Bell replied that the key opened the
rear door. Detective Christianson testified that he then wrote “rear” on the search
consent form to indicate that the key opened the rear door. Detective Christianson
did not know that there were two apartments at 6205 Tyler Street, and no “rear”
apartment was discussed with Bruce Bell.
The district court found that Bruce Bell lacked standing based on his own
testimony that he did not rent the front apartment. Alternatively, the district court
determined that even if standing existed, Bruce Bell “freely and voluntarily”
consented to a search of the Tyler Street apartment, no limit was placed on the
scope of the consent, and the “Hollywood Police could reasonably interpret the
consent to encompass both the rear and front area of 6205 Tyler Street.” The court
thus denied the motion to suppress.
F. Trial
During the jury trial, the government presented testimony from the managers
of the Buchanan Street and Tyler Street apartments. Dennis H. Brooks, the owner
of the Buchanan Street apartment, identified Bruce Bell as the Buchanan Street
apartment tenant. The government showed Brooks the driver’s license found on
Bruce Bell at his arrest, and Brooks stated that Bruce Bell showed him the same
license upon entering into the lease. Lydia Zambrana, the property manager for the
Tyler Street apartment, testified that the man depicted on this driver’s license
8
“looked like” the man who signed the rental application.
HPD Detective John Kidd and Officer Wynne described the investigation
into the Buchanan Street drug trafficking operation. Officer Wynne described the
process for cooking cocaine powder into crack cocaine and noted that crack
cocaine is frequently sold as a “cookie,” which typically contains about twenty-
eight grams of crack cocaine. Both officers testified that based on their
observations of people regularly entering and leaving the Buchanan Street
apartment and information provided by informants, they suspected narcotics
dealing in the apartment. A confidential informant also made several controlled
purchases of narcotics at the Buchanan Street apartment in the weeks prior to
Bruce Bell’s initial arrest.
Detective Kidd and Officer Wynne also testified about their participation in
the raid and search conducted on September 17, 2004.2 Officer Wynne described
the items found in the Buchanan Street apartment, and Detective Kidd testified that
he found the “Brian Elliot King” driver’s license and a set of keys in Bruce Bell’s
pockets.
After obtaining consent to search the Tyler Street apartment, Officer Wynne
2
The government also presented testimony from officers who executed the search warrant
at the Buchanan Street apartments. HPD swat team members Jason Thomas and John Graham
testified that they saw Bruce Bell throw crack cocaine into the Buchanan Street bedroom closet
as he attempted to flee out the back door.
9
used one of the keys taken from Bruce Bell to open the rear door to the front Tyler
Street apartment. Detective Kidd and Officer Wynne described the drugs and drug
paraphernalia found in the Tyler Street apartment.
HPD Detective Wilde and DEA Agent Gifford also testified about Bruce
Bell’s incriminating statements after his two arrests. After the September 17, 2004
arrest, Detective Wilde testified that Bruce Bell confessed that he began selling
crack cocaine in August 2003 and started “purchasing larger and larger amounts of
powder cocaine to cook into crack” after his operation became successful.
According to Detective Wilde, Bruce Bell admitted to purchasing kilograms of
cocaine powder for $22,000 per kilogram to cook into crack cocaine. Following
Bruce Bell’s federal arrest on October 13, 2004, Agent Gifford testified that Bruce
Bell admitted that the 7.5 ounces of cocaine powder found in the car was his and
that the money found in his trunk was from drug proceeds.
Matthew Mulligan, a DEA forensic chemist, testified that in total, there were
91.22 grams of cocaine base and 201.9 grams of cocaine powder seized from the
two apartments and Bruce Bell’s vehicle.
The government also presented the testimony of codefendant Sheffield.3
Sheffield, the half-brother of Anthony Bell and cousin of Bruce Bell, testified that
3
Sheffield pled guilty and was ultimately sentenced to 30 months’ imprisonment after his
trial testimony.
10
Bruce Bell trained him to be his money collector for drug deliveries. Beginning in
January 2004, Sheffield rode with Bruce Bell while making deliveries of crack
cocaine. According to Sheffield, Bruce Bell cooked cocaine powder into crack
cocaine and delivered crack cocaine to his approximately fifty-two or fifty-three
customers. Following the delivery, Sheffield would collect an average of $350
from each of Bruce Bell’s customers for half a cookie of crack cocaine each day,
resulting in daily proceeds of $18,000 to $19,000 five days a week.
In June 2004, Bruce Bell told his co-conspirators that Anthony Bell would
be handling future crack cocaine deliveries. Bruce Bell also hired Gustavo Fields
to sell crack cocaine in the Buchanan Street apartment because he believed that
Gustavo’s young age would result in light punishment if police ever raided his
operation. Sheffield also helped sell crack cocaine at the Buchanan Street
apartment. Sheffield testified that Anthony and Bruce Bell managed the drug
operation there. According to Sheffield, Bruce Bell possessed an uzi-like gun, and
Sheffield saw Anthony Bell in possession of a gun on one occasion. Sheffield
described Bruce Bell’s efforts to avoid detection, including the use of surveillance
cameras at both apartments and a bucket of boric acid kept on the premises to
dissolve crack cocaine in case of a police raid. After Sheffield agreed to cooperate
with prosecutors following his arrest, he received a threatening phone call from
Bruce Bell warning him not to cooperate.
11
On cross-examination, defense attorneys impeached Sheffield’s testimony
by noting, inter alia, his prior false statements, his drug use, and his juvenile
convictions.
After the government rested, Anthony and Bruce Bell presented no
witnesses on their behalf. At the conclusion of trial, the jury convicted Anthony
and Bruce Bell on both counts.
G. Sentencing of Bruce Bell
Because the jury found Bruce Bell guilty of drug offenses involving fifty
grams or more of crack cocaine, Bruce Bell’s convictions (as charged in the
indictment and found by the jury) subjected him to a mandatory minimum sentence
of ten years’ imprisonment and a statutory maximum sentence of life imprisonment
under 21 U.S.C. § 841(b)(1)(A). The presentence investigation report (“PSI”) for
Bruce Bell set his base offense level at 38, pursuant to U.S.S.G. § 2D1.1(c)(1),
because his conspiracy offense involved the distribution of more than 1.5
kilograms of crack cocaine.4 The PSI recommended that Bruce Bell’s offense level
be increased by: (1) 2 levels, pursuant to § 2D1.1(b)(1), based on his possession of
a dangerous weapon; (2) 4 levels, pursuant to § 3B1.1(a), based on his leadership
4
The PSI reached this calculation based on Sheffield’s testimony that Bruce Bell
delivered half a cookie of crack cocaine to about fifty-two customers each day, five days a week,
for several months. According to Officer Wynne, a whole cookie contains roughly twenty-eight
grams of crack cocaine.
12
role in a criminal activity involving five or more participants; (3) 2 levels, pursuant
to § 3B1.4, based on his use of a minor, Fields, to commit the offense; and (4) 2
levels, pursuant to § 3C1.1, based on obstruction of justice. Although these
adjustments increased the offense level to 48, the PSI assigned Bruce Bell a total
offense level of 43, the maximum allowable under the guidelines. See U.S.S.G. ch.
5, pt. A, cmt. n.2. With a total offense level of 43 and a criminal history category
of VI, the advisory guidelines range was life imprisonment.
The PSI also listed Bruce Bell’s six prior felony drug offenses.5 Pursuant to
21 U.S.C. § 841(b)(1)(A), a person convicted of a § 841(a) drug offense after “two
or more prior convictions for a felony drug offense . . . shall be sentenced to a
mandatory term of life imprisonment . . . .” 21 U.S.C. § 841(b)(1)(A). Therefore,
Bruce Bell’s § 841(a) conviction along with the prior felony drug offenses
triggered a mandatory sentence of life imprisonment.
At sentencing, the district court denied Bruce Bell’s objections to (1) the 2-
level enhancement for his possession of a dangerous weapon because Sheffield’s
testimony established that Bruce Bell had a firearm; (2) the 4-level enhancement
5
The PSI noted that, pursuant to U.S.S.G. § 4B1.1, Bruce Bell was a career offender
because at least two of his prior felony convictions were for a crime of violence or drug
trafficking crime. However, because the career offender offense level of 37 was less than the
otherwise applicable offense level of 48, the PSI recommended that the greater offense level of
48 be applied.
In the district court, Bruce Bell did not contest that he had the six prior felony drug
offenses listed in the PSI.
13
for his leadership role because Sheffield’s testimony and Bruce Bell’s own
statements indicated that his drug trafficking operation included Anthony Bell,
Sheffield, Fields, Central Williams, and Dawn Ariquette; and (3) the 2-level
enhancement for his use of a minor because Sheffield testified that Bruce Bell had
hired Fields. The district court found that Bruce Bell had an offense level of 43
and a criminal history category of VI, resulting in an advisory guidelines’ sentence
of life imprisonment. After noting its consideration of the sentencing factors in 18
U.S.C. § 3553(a), the district court sentenced Bruce Bell to life imprisonment and
ten years’ supervised release.
H. Sentencing of Anthony Bell
Because the jury found Anthony Bell guilty of drug offenses involving fifty
grams or more of crack cocaine, Anthony Bell’s convictions (as charged in the
indictment and found by the jury) also subjected him to a mandatory minimum
sentence of ten years’ imprisonment and a statutory maximum sentence of life
imprisonment under 21 U.S.C. § 841(b)(1)(A). The PSI for Anthony Bell set his
base offense level at 38 based on the distribution of more than 1.5 kilograms of
crack cocaine. See U.S.S.G. § 2D1.1(c)(1). The PSI also recommended a 2-level
increase, pursuant to § 2D1.1(b)(1), based on possession of a dangerous weapon,
and a 2-level increase, pursuant to § 3C1.1, based on obstruction of justice, for a
total offense level of 42.
14
Pursuant to U.S.S.G. § 4B1.1, Anthony Bell was considered a career
offender because he had two prior felony convictions for a crime of violence.
Although his career offender status did not affect his offense level because he had a
higher, otherwise applicable offense level of 42, his career offender status raised
his criminal history category from V to VI, pursuant to § 4B1.1(b). With a total
offense level of 42 and a criminal history category of VI, Anthony Bell’s advisory
guidelines range was 360 months’ to life imprisonment.
At sentencing, the government presented the testimony of several witnesses.
Richard O’Connor testified that he assisted an undercover purchase of crack
cocaine from Anthony and Bruce Bell. Later that day, O’Connor returned to the
Buchanan Street apartment, and Anthony and Bruce Bell accused him of being a
snitch and brandished guns. O’Connor testified that Anthony and Bruce Bell drove
him to a remote area, and Anthony Bell shot him in the chest. O’Connor survived
the shooting and escaped into the woods. According to O’Connor, he later saw
Anthony Bell in the Broward County Jail in September 2004, and Anthony Bell
offered to pay him money not to testify.
DEA Agent Joanne Molina testified that following Anthony and Bruce
Bell’s guilty verdicts, Anthony Bell made a threatening phone call to Sheffield’s
house in which he stated that he was going to hurt Sheffield and his girlfriend
because of Sheffield’s cooperation.
15
Following this testimony, the district court denied all of Anthony Bell’s
objections. First, the district court concluded that the retroactive application of
United States v. Booker, 543 U.S. 220, 125 S. Ct. 738 (2005), did not violate ex
post facto principles in the Due Process Clause. Second, the district court
determined that Anthony Bell qualified as a career offender, pursuant to U.S.S.G. §
4B1.1, because his two prior convictions for carrying a concealed weapon
constituted crimes of violence.
Third, although the district court found insufficient evidence of Anthony
Bell’s alleged threatening phone call to Sheffield’s house following the guilty
verdict, the district court determined that sufficient testimony supported
enhancements for possession of a dangerous weapon and obstruction of justice.
The district court considered Anthony Bell’s request for a variance from the
advisory guidelines range based on (1) a racial disparity in the crack-to-powder
cocaine sentencing ratio; (2) a sentencing disparity between Anthony Bell and
codefendant Sheffield; and (3) an over-representation of his criminal history. The
district court denied this variance request in light of the sentencing factors in 18
U.S.C. § 3553(a). The district court found that Anthony Bell had an offense level
of 42 and a criminal history category of VI, and it sentenced him to 360 months’
imprisonment, the low end of the advisory guidelines range, and five years’
supervised release.
16
Bruce Bell filed a timely appeal of his convictions and sentences, and
Anthony Bell appeals his sentences.
II. DISCUSSION
A. Bruce Bell’s Challenge to His Convictions
On appeal, defendant Bruce Bell challenges his convictions and sentences.
In his challenge to his convictions, Bruce Bell raises these assignments of error: (1)
evidence seized from the front Tyler Street apartment should have been suppressed
because the search exceeded the scope of his consent;6 (2) Bruce Bell’s post-arrest
statements to Agent Gifford should not have been admitted because the
government failed to furnish these statements before trial, pursuant to Fed. R.
Crim. P. 16;7 (3) Bruce Bell’s post-arrest statements to Detective Wilde, after he
allegedly invoked his right to counsel, should not have been admitted;8 (4) in-court
identifications by Brooks, Sheffield, and Zambrana should not have been admitted
6
The district court’s denial of a motion to suppress presents a mixed question of law and
fact: we review the district court’s factual findings for clear error, and the application of the law
to those facts de novo. United States v. Perez, 443 F.3d 772, 774 (11th Cir. 2006).
7
Where a defendant fails to object to alleged evidentiary errors in the district court, we
review the district court’s evidentiary rulings for plain error. United States v. Turner, __ F.3d
__, No. 05-14388, 2007 WL 64430, at *9 (11th Cir. Jan. 11, 2007). “Plain error occurs where
(1) there is an error; (2) that is plain or obvious; (3) affecting the defendant’s substantial rights in
that it was prejudicial and not harmless; and (4) that seriously affects the fairness, integrity, or
public reputation of the judicial proceedings.” United States v. Raad, 406 F.3d 1322, 1323 (11th
Cir.), cert. denied, 126 S. Ct. 196 (2005) (quotation marks omitted).
8
When a defendant fails to object to an alleged Miranda violation in the district court, we
review the alleged violation for plain error. See United States v. Schier, 438 F.3d 1104, 1106 n.1
(11th Cir. 2006).
17
because of an unduly suggestive identification procedure;9 and (5) the government
presented insufficient evidence that Bruce Bell participated in a conspiracy to
possess with intent to distribute crack cocaine because, inter alia, Sheffield’s
testimony was incredible as a matter of law.10
After careful review of the record, as well as the arguments of both parties
presented in their briefs and at oral argument, we conclude that all of Bruce Bell’s
challenges to his convictions lack merit. Only his first claim challenging the
search of the front Tyler Street apartment warrants further discussion.
On appeal, Bruce Bell contends that he has standing to challenge the search
of the front Tyler Street apartment because the government presented testimony
from Zambrana that Bruce Bell was the leaseholder, despite Bruce Bell’s
suppression hearing testimony that he did not lease the apartment. Alternatively,
Bruce Bell asserts that he has Fourth Amendment standing as an overnight guest in
the front Tyler Street apartment.
In order to establish standing to challenge a search under the Fourth
Amendment, a defendant bears the burden of demonstrating a legitimate
9
In this case, defendant Bruce Bell failed to challenge these in-court identifications in the
district court, and we thus review the admission of these identifications for plain error. See
Turner, 2007 WL 64430, at *9.
10
We review a challenge to the sufficiency of the evidence de novo, and view all evidence
and make all reasonable inferences in the light most favorable to the government. See United
States v. Greer, 440 F.3d 1267, 1271 (11th Cir. 2006).
18
expectation of privacy in the area searched. See United States v. Cooper, 133 F.3d
1394, 1398 (11th Cir. 1998). A person has a legitimate expectation of privacy if
(1) he or she has a subjective expectation of privacy, and (2) society is prepared to
recognize that expectation as objectively reasonable. See United States v.
Miravalles, 280 F.3d 1328, 1331 (11th Cir. 2002).
In this case, Bruce Bell testified at the suppression hearing, and maintains on
appeal, that he was not the leaseholder of the front Tyler Street apartment and that
his only connection to the apartment was a visit to help Sheffield move furniture.
As a result of Bruce Bell’s repeated denials of any ownership of the front Tyler
Street apartment, he has expressly disclaimed a subjective expectation of privacy in
the premises. See Rakas v. Illinois, 439 U.S. 128, 134, 99 S. Ct. 421, 425 (1978)
(“A person who is aggrieved by an illegal search and seizure only through the
introduction of damaging evidence secured by a search of a third person’s premises
or property has not had any of his Fourth Amendment rights infringed.”). Bruce
Bell cannot adopt the government’s evidence that he leased the front Tyler Street
apartment for the limited purpose of establishing standing while challenging the
validity of this same evidence. Notwithstanding the government’s evidence to the
contrary, Bruce Bell has consistently denied any leasehold or interest in the front
Tyler Street apartment, and we thus conclude that the district court’s finding that
he lacked a subjective expectation of privacy was not clearly erroneous.
19
Bruce Bell’s contention that he has Fourth Amendment standing because he
was an overnight guest in the front Tyler Street apartment also is unavailing. The
Supreme Court has recognized that overnight guests in the homes of third persons
can have a reasonable expectation of privacy in those premises. See Minnesota v.
Olson, 495 U.S. 91, 96-97, 110 S. Ct. 1684, 1688 (1990). In order to establish a
reasonable expectation of privacy, however, Bruce Bell would have to prove that
he was a guest for personal reasons, not for a commercial purpose. See Minnesota
v. Carter, 525 U.S. 83, 90-91, 119 S. Ct. 469, 474 (1998).
Here, the government provided ample testimony establishing that Bruce Bell
used the front Tyler Street apartment in his drug operation. According to HPD
Detective Wilde and DEA Agent Gifford, Bruce Bell twice confessed that he used
the front Tyler Street apartment as a distribution site for crack cocaine after the
Buchanan Street apartment attracted too much police attention. Accordingly,
Bruce Bell had no reasonable expectation of privacy as an overnight guest because
he was using the apartment primarily for commercial purposes. See United States
v. Cooper, 203 F.3d 1279, 1285 n.3 (11th Cir. 2000) (noting that defendants likely
would lack standing as overnight guests because evidence suggested that they were
using the premises predominately to engage in narcotics trafficking).
Even if Bruce Bell had established Fourth Amendment standing, the district
court determined that the search was within the scope of his consent. Bruce Bell
20
argues that the government exceeded the scope of his consent to search because he
only consented to a search of the rear Tyler Street apartment. He contends that the
“6205 Tyler St. (rear)” notation on the search consent form indicates that he only
provided consent to search the rear Tyler Street apartment, which was not leased
by or connected to him. However, HPD Detective Christianson, who prepared the
search consent form, explained that he asked Bruce Bell how officers on the scene
should enter the Tyler Street apartment, and Bruce Bell replied that a key found in
Bruce Bell’s pockets upon arrest opened the rear door. Detective Christianson then
wrote “rear” on the search consent form to indicate that Bruce Bell’s key opened
the rear door. Based on Detective Christianson’s explanation of his own notation,
we conclude that the district court did not clearly err in finding that HPD officers
could reasonably interpret the scope of Bruce Bell’s consent to cover the entire
front Tyler Street apartment.
B. Bruce Bell’s Sentencing Claims
In addition to his challenge to his convictions, Bruce Bell also claims that
the district court erred in sentencing. We first address Bruce Bell’s two claims of
Booker error, which were raised for the first time on appeal.11
11
When a defendant fails to raise a Booker challenge in the district court, we review for
plain error. See United States v. Rodriguez, 398 F.3d 1291, 1298 (11th Cir.), cert. denied, 545
U.S. 1127, 125 S. Ct. 2935 (2005).
21
By way of adoption, Bruce Bell argues that the application of the remedial
holding in Booker constituted an ex post facto violation because Blakely v.
Washington, 542 U.S. 296, 124 S. Ct. 2531 (2004) was the controlling law when
he committed his offenses. Because Bruce Bell committed his offenses after
Blakely but before Booker was decided, he argues that he had no fair warning that
he would be sentenced under Booker’s advisory guidelines regime with judicial
factfinding.
We have repeatedly rejected similar ex post facto challenges to the
retroactive application of Booker’s remedial holding. See, e.g., United States v.
Hunt, 459 F.3d 1180, 1181 n.1 (11th Cir. 2006) (rejecting an identical ex post facto
claim when the unlawful conduct occurred after Blakely but before Booker);
United States v. Thomas, 446 F.3d 1348, 1354-55 (11th Cir. 2006) (finding that
defendant had sufficient warning of his potential sentence because of the statutory
maximum), United States v. Martinez, 434 F.3d 1318, 1323-24 (11th Cir.) (same),
cert. denied, __ U.S. __, 126 S. Ct. 2946 (2006). In this case, Bruce Bell had
ample warning that life imprisonment was a possible consequence of his unlawful
conduct. Because Bruce Bell had more than two prior felony drug convictions and
the instant offenses involved more than 50 grams of crack cocaine, he faced a
mandatory sentence of life imprisonment. See 21 U.S.C. § 841(a)(1), (b)(1)(A).
Moreover, because Blakely never applied to the federal sentencing guidelines, the
22
guidelines in effect when Bruce Bell committed the offenses informed him that the
district court could engage in factfinding. See Martinez, 434 F.3d at 1324; see also
Blakely, 542 U.S. at 305 n.9, 124 S. Ct. at 2538 n.9 (“The Federal Guidelines are
not before us, and we express no opinion on them.”). Accordingly, Bruce Bell was
on notice that he could receive a life sentence when he committed his offenses, and
we find no ex post facto violation.
Bruce Bell also contends that the district court plainly erred under Booker in
applying sentencing enhancements that were neither charged in the indictment nor
found by the jury. In sentencing Bruce Bell, the district court clearly indicated that
it applied the guidelines in an advisory fashion. When the district court applies the
guidelines in an advisory manner, nothing in Booker prohibits the district court
from imposing sentencing enhancements based on judicial factfinding by a
preponderance of the evidence. United States v. Chau, 426 F.3d 1318, 1323-24
(11th Cir. 2005); United States v. Rodriguez, 398 F.3d 1291, 1301-02 (11th Cir.),
cert. denied, 545 U.S. 1127, 125 S. Ct. 2935 (2005).
Bruce Bell also argues that the district court erred in applying a 2-level
enhancement for possession of a firearm, pursuant to U.S.S.G. § 2D1.1(b)(1).12
Specifically, Bruce Bell argues that the government failed to establish that Bruce
12
We review a district court’s application and interpretation of the sentencing guidelines
de novo, but its factual findings must be accepted unless clearly erroneous. See United States v.
Ellis, 419 F.3d 1189, 1192 (11th Cir. 2005).
23
Bell possessed a firearm in connection with his offenses.
If evidence establishes that a defendant possessed a firearm, the district court
may apply a 2-level enhancement under § 2D1.1(b)(1) “unless it is clearly
improbable that the weapon was connected with the offense.” U.S.S.G. § 2D1.1
cmt. n.3. Once the government shows that a firearm was present, the burden shifts
to the defendant to show that a connection between the firearm and the offense is
“clearly improbable.” See United States v. Pham, 463 F.3d 1239, 1245 (11th Cir.
2006) (quotation marks omitted). In this case, the government provided
uncontested testimony from co-conspirator Sheffield that Bruce Bell possessed an
uzi-like gun. Bruce Bell provided no evidence or argument that a connection
between this gun and his drug conspiracy offense is “clearly improbable.”
Moreover, we have recognized that “‘guns are a tool of the drug trade. There is a
frequent and overpowering connection between the use of firearms and narcotics
traffic.’” Id. at 1246 (quoting United States v. Cruz, 805 F.2d 1464, 1474 (11th
Cir.1986)). In light of the clear connection between the use of firearms and drug
conspiracies, the district court did not abuse its discretion in applying the 2-level
enhancement for possession of a firearm.
Even if the district court had erred in applying the enhancement, any such
error is harmless. Even excluding the 2-level enhancement, Bruce Bell still would
have a total offense level of 43, the maximum allowable under the guidelines. See
24
U.S.S.G. ch. 5, pt. A, cmt. n.2. Above all, any error in applying the guidelines is
harmless because Bruce Bell was subject to a statutory mandatory life sentence
based on the drug quantity charged in the indictment and found by the jury and his
multiple prior felony drug convictions. See 21 U.S.C. § 841(a)(1), (b)(1)(A).
Finally, by way of adoption, Bruce Bell challenges the reasonableness of his
life sentence in light of the 18 U.S.C. § 3553(a) factors.13 After Booker, in
determining a reasonable sentence, a district court must consider the correctly
calculated advisory guidelines range and the factors in § 3553(a). See Booker, 543
U.S. at 258-64, 125 S. Ct. at 764-67; United States v. Talley, 431 F.3d 784, 786
(11th Cir. 2005). The party who challenges the sentence bears the burden of
showing that it is unreasonable. United States v. Bonilla, 463 F.3d 1176, 1180
(11th Cir. 2006). Although a sentence within the advisory guidelines range is not
per se reasonable, “ordinarily we would expect a sentence within the Guidelines
range to be reasonable.” Talley, 431 F.3d at 788.
After review, we conclude that Bruce Bell fails to show that his life sentence
is unreasonable. The district court correctly calculated his advisory guidelines
range and stated that it had considered the statements of all parties, as well as the §
3553(a) factors. Most importantly, the district court was required by statute to
13
We review sentences imposed under an advisory guidelines system for reasonableness.
See United States v. Talley, 431 F.3d 784, 785 (11th Cir. 2005).
25
sentence Bruce Bell to a mandatory term of life imprisonment. See 21 U.S.C. §
841(a)(1), (b)(1)(A); see also United States v. Shelton, 400 F.3d 1325, 1333 n.10
(11th Cir. 2005) (concluding that post-Booker, district courts are still bound by the
statutory minimum sentence).
For all these reasons, we affirm Bruce Bell’s life sentence.
C. Anthony Bell’s Sentencing Claims
Anthony Bell raises several challenges to his 360-month sentence. We first
address his claim that the district court erroneously determined that he was a career
offender, pursuant to U.S.S.G. § 4B1.1.
Anthony Bell argues that the district court erred in concluding that he was a
career offender under § 4B1.1 because his two prior convictions for carrying a
concealed firearm do not constitute “crimes of violence.” A district court generally
may enhance a defendant’s sentence as a career offender if (1) the defendant was at
least eighteen years old at the time of the instant offense of conviction; (2) the
instant offense of conviction is a felony that is either a “crime of violence” or a
controlled substance offense; and (3) the defendant has at least two prior felony
convictions for either a “crime of violence” or a controlled substance offense.
U.S.S.G. § 4B1.1(a). A felony conviction punishable for a term exceeding one
year constitutes a crime of violence if it “has as an element the use, attempted use,
26
or threatened use of physical force against the person of another” or “is burglary of
a dwelling, arson, or extortion, involves use of explosives, or otherwise involves
conduct that presents a serious potential risk of physical injury to another.”
U.S.S.G. § 4B1.2(a).
Anthony Bell does not dispute that he has two prior felony convictions for
carrying a concealed weapon. Moreover, he acknowledges that we have previously
concluded that carrying a concealed weapon is a crime of violence for purposes of
the career-offender guideline. See United States v. Adams, 316 F.3d 1196, 1197
(11th Cir. 2003); United States v. Gilbert, 138 F.3d 1371, 1372 (11th Cir. 1998).
Although Anthony Bell asks this Court to reconsider this binding precedent, a prior
panel opinion may only be overruled by the Supreme Court or by this Court sitting
en banc. See Adams, 316 F.3d at 1197 n.1. Following our precedent, Anthony
Bell’s two prior felony convictions for carrying a concealed weapon constitute
“crimes of violence.” Accordingly, the district court did not err in applying the
U.S.S.G. § 4B1.1 career-offender enhancement.14
Anthony Bell also contends that his 360-month sentence is unreasonable in
light of the § 3553(a) factors. Specifically, he asserts that a lesser sentence is
14
Additionally, we note that even if the district court had erred in applying the § 4B1.1
enhancement, any error would be harmless. Even without the § 4B1.1 enhancement, Anthony
Bell would have a criminal history category of V and a total offense level of 42, resulting in the
same advisory guidelines range of 360 months’ to life imprisonment.
27
warranted because (1) the offense was merely a neighborhood drug distribution,
not a large-scale operation; (2) he had a troubled upbringing with a single mother
addicted to drugs; and (3) he would benefit from rehabilitation.
After review, we conclude that Anthony Bell has not proven that his 360-
month sentence is unreasonable. The district court correctly calculated his
advisory guidelines range and indicated that it had considered several § 3553(a)
factors, including (1) the nature and circumstances of the offense, 18 U.S.C. §
3553(a)(1); (2) the history and characteristics of the defendant, id.; and (3) the need
to avoid unwarranted sentencing disparities among codefendants, id. § 3553(a)(6).
Although the district court did not explicitly discuss each § 3553(a) factor, it was
not required to engage in a detailed, step-by-step analysis of every factor. See
United States v. Scott, 426 F.3d 1324, 1329 (11th Cir. 2005). Moreover, we
ordinarily expect a sentence within the advisory guidelines range to be reasonable,
and Anthony Bell was sentenced at the low end of the guidelines range. See
Talley, 431 F.3d at 788.15
15
Anthony Bell also raised the identical ex post facto and extra-verdict enhancements
challenges in district court and on appeal that Bruce Bell adopted on appeal. We review de novo
a claim that a defendant’s sentence violated ex post facto principles. See Thomas, 446 F.3d at
1351. As discussed above, we have previously rejected an ex post facto challenge to the
retroactive application of Booker’s remedial holding when the offense conduct occurred after
Blakely but before Booker. See Hunt, 459 F.3d at 1181 n.1. Additionally, we have recognized
that a district court may impose sentencing enhancements based on judicial factfinding after
Booker when the district court applies the guidelines in an advisory fashion. See Chau, 426 F.3d
at 1323-24.
28
For all these reasons, we affirm Anthony Bell’s sentences.
III. CONCLUSION
Accordingly, we affirm Bruce Bell’s convictions and sentences, and we
affirm Anthony Bell’s sentences.
AFFIRMED.
29
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ATTORNEY GENERAL OF TEXAS
GREG ABBOTT
August 26,2004
The Honorable Tempie T. Francis Opinion No. GA-0241
Motley County Attorney
Post Office Box 7 Re: Whether an attorney appointed county attorney
Matador, Texas 79244 pro tern is disqualified from acting as criminal
defense counsel in an adjoining county under Code
of Criminal Procedure article 2.08 (RQ-0190-GA)
Dear Ms. Francis:
Article 2.08 of the Code of Criminal Procedure states: “District and county attorneys shall
not be of counsel adversely to the State in any case, in any court, nor shall they, after they cease to
be such officers, be of counsel adversely to the State in any case in which they have been of counsel
for the State.” TEX. CODE GRIM. PROC. ANN. art. 2.08 (Vernon 1977). You ask a number of
questions, the essence of which is whether the disqualification in article 2.08 applies to an attorney
who has been appointed county attorney pro tern in individual cases, but who in fact performs all of
the functions and duties of a constitutional county attorney.’
You state that an attorney appointed county attorney pro tern in an adjoining county
represents criminal defendants in Motley County. Although you do not elaborate, you state that the
facts are “exactly [as] described” in a letter submitted to this office by Barry L. Macha, Criminal
District Attorney in Wichita County? Consequently, for context, we will assume the facts as related
in the Macha Letter.
The Macha Letter concerned Mr. Paul Scott, an attorney with a general civil and criminal
defense practice in Wilbarger County. Macha Letter, supra note 2, at 1. In 2002, the Baylor County
Commissioners Court approached Mr. Scott about serving as the county’s attorney pro tern. Id.
Baylor County does not currently have an elected county attorney. Id. Mr. Scott agreed to prosecute
all misdemeanors andjuvenile matters for Baylor County for $2600 per month, with the arrangement
terminable at will by either party. Id. at 1,3. It is unclear whether the Baylor County Commissioners
‘See Letter from Honorable Tempie T. Francis, Motley County Attorney, to Nancy Fuller, Chair, Opinion
Committee, Office of the Attorney General (Mar. 4, 2004) (on file with Opinion Committee, also available of
http://www.oag.state.tx.us) [hereinafter Request Letter].
2SeeLetterfromHonorableBarryL. Macha, WichitaCounty CriminalDishictAttomey, to OpinionCommittee,
Off& of the Attorney General (Feb. 24,2004) (on tile with Opinion Committee) [hereinafter Macha Letter].
The Honorable Tempie T. Francis - Page 2 (GA-0241)
Court issued a general order appointing Scott as “Baylor County Attorney Pro Tern,” but in each case
Scott tiled a copy of his oath and a court order appointing Scott as county attorney pro tern for that
case. Id. at 1. ARer entering into this arrangement with Baylor County, Scott continued his criminal
defense practice in counties other than Baylor County? Id at 4.
All of your questions revolve around two issues: (1) whether, as a matter of statutory
construction, the disqualification in article 2.08 applies to an attorney who has been appointed county
attorney pro tern in individual cases; and (2) whether the disqualification in article 2.08 applies to
an attorney who does not hold the office of constitutional county attorney but who has assumed all
of the functions and duties of that office. See Request Letter, supra note 1, at 1-2.
I. Amlicable Law
The prohibition of article 2.08 expressly applies to “[d]istrict and county attorneys.” Under
the Texas Constitution, the office of county attorney is a four-year elected position. TEX. CONST.
art. V, § 21. If the position is vacant, the county commissioners court may appoint a county attorney
to serve until the next general election. Id. Generally, county attorneys represent the state in district
and inferior courts, but when the county is in a district having a district attorney, the county
attorney’s duties are regulated by the Legislature. Id. Baylor County is located in the 50th Judicial
District, and is served by a district attorney. TEX. GOV’T CODEANN. $5 24.152(a), 43.129 (Vernon
2004). However, the Government Code provides for a Baylor County county attorney, who
represents the state in misdemeanor cases. Id. 5 45.112.
Some county attorneys are prohibited from engaging in a private civil or criminal law practice
by chapter 46 ofthe Government Code, the Professional Prosecutors Act. Id. $5 46.001-,007. The
act “applies to all county prosecutors.” Id. 5 46.002. A “countyprosecutor”under the act is defined
as “a constitutional county attorney who does not have general felony jurisdiction and who is not a
state prosecutor.” Id. 5 46.001(l). A county attorney who receives a salary in excess of a statutory
benchmark, and such a county attorney’s assistants, may not engage in the private practice of law.
Id. 5 46.005(a), (c). County attorneys who do not receive a salary in excess of the benchmark are
not subject to the prohibition in the Professional Prosecutors Act against maintaining a private law
practice. See Tex. Att’y Gen. Op. No. GA-0094 (2003) at 3.
By statute, a court may appoint a substitute for an attorney for the state on a pro tern, or
temporary, basis. Article 2.07 of the Code of Criminal Procedure provides for the terms of the
appointment:
‘This office receiveda request for an opinion on this issue from Mr. Scott. See Letter from Paul Scott, Baylor
County Attorney Pro Tern,, to Office of the Attorney General (Oct. 3 1,2003) (on file with Opinion Committee). This
office closed the tile without an opinion because the issue was before a trial court on a motion to disqualify Mr. Scott.
This office generally does not render opinions on matters that are in litigation before the courts. See Tex. Att’y Gen. Op.
Nos. GA-0182 (2004) at 3, JM-803 (1987) at 5. You have informed us that Mr. Scott withdrew as counsel before the
trial court rendered a decision, and that the matter is no longer the subject ofpending litigation. Request Letter, supra
note 1, at l-2.
The Honorable Tempie T. Francis - Page 3 (GA-0241)
(a) Whenever an attorney for the state is disqualified to act in
any case or proceeding, is absent from the county or district, or is
otherwise unable to perform the duties ofhis office, or in any instance
where there is no attorney for the state, the judge of the court in which
he represents the state may appoint any competent attomeyto perform
the duties of the office during the absence or disqualification of the
attorney for the state.
(b) Except as otherwise provided by this subsection, if the
appointed attorney is also an attorney for the state, the duties of the
appointed office are additional duties of his present office, and he is
not entitled to additional compensation. Nothing herein shall prevent
a commissioners court of a county from contracting with another
commissioners court to pay expenses and reimburse compensation
paid by a county to an attorney for the state who is appointed to
perform additional duties.
(b-l) An attorney for the state who is not disqualified to act
may request the court to permit him to recuse himself in a case for
good cause and upon approval by the court is disqualified.
(c) Ifthe appointed attorney is not an attorney for the state, he
is qualified to perform the duties of the office for the period of
absence or disqualification of the attorney for the state on filing an
oath with the clerk ofthe court. He shall receive compensation in the
same amount and manner as an attorney appointed to represent an
indigent person.
(d) In this article, “attorney for the state” means a county
attorney, a district attorney, or a criminal district attorney.
(e) In Subsections (b) and (c) of this article, “attorney for the
state” includes an assistant attorney general.
(f) In Subsection (a) of this article, “competent attorney’
includes an assistant attorney general.
(g) An attorney appointed under Subsection (a) of this article
to perform the duties of the office of an attorney for the state in a
justice or municipal court may be paid a reasonable fee for
performing those duties.
TEX. CODE GRIM. PROC. ANN. art. 2.07 (Vernon Supp. 2004).
The Honorable Tempie T. Francis - Page 4 (GA-0241)
Under article 2.07(a), a court may appoint an attorney to assume county attorney duties pro
tern when the county attorney “[ l] is disqualified to act in any case or proceeding, [2] is absent from
the county or district, or is otherwise unable to perform the duties ofhis office, or [3] in any instance
where there is no attorney for the state.” Id. art. 2.07(a). The last circumstance, when there is no
attorney for the state, does not authorize a judicial court to till a vacancy by appointing an acting
county attorney, because that would usurp the commissioners court’s constitutional appointment
authority. SeeMoorev. State, 119 SW. 858,859 (Tex. Crim. App. 1909); see also Tex. Att’yGen.
Op. No. JM-1246 (1990) at 3 (court may not appoint a district attorney pro tern to till a vacancy in
derogation of the governor’s constitutional appointment authority). An attorney pro tern assumes
the duties and authority of the regular prosecuting attorney, “and in effect replaces the latter in
performing germane functions of officeforpurposes contemplated by the appointment.” State v.
Rosenbaum, 852 S.W.2d 525, 529 (Tex. Crim. App. 1993) (Clinton, .I. concurring) (emphasis
added); see also Stephens v. State, 978 S.W.2d 728,731 (Tex. App.-Austin 1998, pet. ref d).
II. Analvsis
Article 2.08 of the Code of Criminal Procedure prohibits a county attorney fTom appearing
“of counsel adversely to the State in any case, in any court .” TEX. CODE GRIM. PROC.ANN. art. 2.08
(Vernon 1977). The stricture prevents a county attorney from representing a party adverse to the
state in any court in the state. Exparte Ramsey, 642 S.W.2d 483, 484 (Tex. Crim. App. 1982)
(article 2.08 would preclude a county attorney t?om appearing in a court of another county to
challenge a contempt order). Representing a criminal defendant constitutes being “of counsel
adversely to the State.” Id. (stating as a general rule that a county attorney’s “representation of a
defendant in a criminal case may normally fall within the general provisions of Chapter Two”).
No reported court decision has determined whether article 2.08 would also apply to an
attorney appointed as a county or district attorney pro tern. Although an attorney appointed county
attorney pro tern performs the duties of that office, and for purposes of the appointment replaces the
county attorney, the constitutional office of county attorney and a pro tern appointment under article
2.07 of the Code of Criminal Procedure are distinct. See Tex. Att’y Gen. Op. No. GA-0005 (2002)
at 3 (pro tern attorney appointed for specific case does not have authority to alter terms of local
agreement on forfeited property). By its plain terms, article 2.08 disqualifies district and county
attorneys, i.e., constitutional district and county attorneys, from acting as counsel adversely to the
state in any court. Attorneys appointed pro tern to perform the duties of a county or district attorney
are not included. Although the Legislature could have written article 2.08 to also apply to an
attorney appointed pro tern, it did not do so. We may “add words into a statutory provision only
when necessary to give effect to clear legislative intent.” Fitzgerald v. Advanced Spine Fixation
Sys., Inc., 996 S.W.2d 864,867 (Tex. 1999). Moreover, we may consider the consequences of a
particular construction and will presume a feasible result was intended. See TEX. GOV’T CODEANN.
55 311.021(2)-(4), ,023 (Vernon 1998). If an attorney who accepts even one pro tern appointment
for a single case cannot engage in criminal defense in any court in the state, then article 2.08 would
effectively exclude the most qualified private attorneys ~ those with an ongoing defense practice -
from accepting any pro tern appointments. Consequently, we conclude that article 2.08 applies to
The Honorable Tempie T. Francis - Page 5 (GA-0241)
county attorneys under the constitution, but not to attorneys appointed to perform the duties of the
office pro tern.
Under the constitution and the statutes, whether an appointed attorney is a constitutional
county attorney (and therefore subject to article 2.08) depends on the source of the appointed
attorney’s authority. Under article V, section 21, the county commissioners court has the authority
to appoint a county attorney to till a vacancy until the next general election. See TEX. CONST. art.
V, § 21. Neither the constitution nor statutes authorize a commissioners court to appoint a county
attorney on an “at will” basis, Nor does a commissioners court have the authority to appoint a
county attorney pro tern under article 2.07 of the Code of Criminal Procedure; that authority belongs
to the judicial courts. See TEX. CODE CNM. PROC. ANN. art. 2.07(a) (Vernon Supp. 2004). The
judicial court also would not have the authority to appoint an acting county attorney, but it would
have the authority to appoint a county attorney pro tern in individual cases, as was apparently done
as described in the Macha Letter. See Tex. Att’y Gen. Op. No. JM-925 (1988) at 6.4 Consequently,
the attorney described in the Macha Letter would not be a constitutional county attorney.
You have suggested that an attorney appointed county attorney pro tern who performs all
duties of a constitutional county attorney should be considered a “de facto” constitutional county
attorney and subject to the prohibition in article 2.08. Request Letter, supra note 1, at 2. To
illustrate your point you cite the circumstances described in the Macha Letter, which we agree are
not consistent with either the office of county attorney under article V, section 2 1 of the constitution,
or with a pro tern appointment under article 2.07. Under the constitution, a county attorney must
either be elected or appointed to serve until the next general election. TEX. CONST. art. V, 8 21. On
the other hand, an attorney pro tern must be compensated “in the same amount and manner as an
attorney appointed to represent an indigent person,” not by a monthly or annual salary. See TEX.
CODE GRIM. PROC. ANN. art. 2.07(c) (Vernon Supp. 2004).
The de facto offtcer doctrine has been used to preclude a defendant appealing a conviction
from collaterally attaching the prosecutor’s authority to prosecute. See Cook v. State, 176 S.W.2d
941,943 (Tex. Crim. App. 1944). However, no court has applied that doctrine to disqualification
under article 2.08. To apply the doctrine here would require, as a matter of first impression, that we
(1) construe article 2.08 as disqualifying “de facto” county attorneys and (2) formulate a standard
for ascertaining whether a pro tern appointee has become a “de facto” county attorney. We believe
that a court would reject such an expanded construction of article 2.08, and instead determine
whether a county attorney pro tern is disqualified from criminal representation by applying
professional conflict of interest principles. See, e.g., TEX. DISCIPLINARY R. PROF’L CONDUCT
1.06(b)(2), reprinted in TEX. GOV’TCODEANN., tit. 2, subtit. G app. A (Vernon 1998) (TEx. STATE
BAR. R. art. X, 9 9) (requiring an attorney to determine whether representation of one client
“reasonably appears to be or become[s] adversely limited by the lawyer’s or law firm’s
responsibilities to another client”). We note that although the Texas Supreme Court’s Professional
‘In AttorneyGeneralOpinionJM-925,thisoffice determined thata countyattorneyof one countyservingas
countyattorneypro ternin anothercountypursuant to aninterlocalagreement hadthedutyto signaninformation that
initiates prosecution. It is unnecessary for us to revisit that issue here.
The Honorable Tempie T. Francis - Page 6 (GA-0241)
Ethics Committee has extended the prohibition against practicing criminal law to partners and others
associated with a county or district attorney, it has not done so on the basis of a construction of the
language of article 2.08, but on the basis of professional ethics rules and canons. See, e.g., Tex.
Comm. on Prof 1 Ethics, Gp. 539,65 TEX. B.J. 368 (2002), Op. 419,47 TEX. B.J. 1370 (1984), Gp.
345 (1968), Op. 318 (1966). Under the disciplinary rules, whether a pro tern appointment conflicts
with a particular criminal representation would be determined under the circumstances. See Tex.
Comm. on Prof 1 Ethics, Gp. 345 (1968) (concluding that disqualification of a former assistant
district attorney must be decided on circumstances of the particular case).
The Honorable Tempie T. Francis - Page 7 (GA-0241)
SUMMARY
Article 2.08 of the Code of Criminal Procedure does not
disqualify an attorney appointed by a court as county attorney pro tern
from representing criminal defendants in an adjoining county.
BARRY R. MCBEE
First Assistant Attorney General
DON R. WILLETT
Deputy Attorney General for Legal Counsel
NANCY S. FULLER
Chair, Opinion Committee
William A. Hill
Assistant Attorney General, Opinion Committee
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259 B.R. 308 (2001)
In re Ravindra K. JAIRATH, Debtor.
Jacob Bletnitsky, Plaintiff,
v.
Ravindra K. Jairath, Debtor.
Bankruptcy No. 98 B 31163. Adversary No. 99 A 934.
United States Bankruptcy Court, N.D. Illinois, Eastern Division.
March 8, 2001.
*309 *310 *311 Russell C. Green, Parad Law Offices, Chicago, IL, for plaintiff.
James A. Chatz, Kamensky & Rubinstein, Lincolnwood, IL, for defendant.
MEMORANDUM OPINION ON DEBTOR'S MOTION FOR SUMMARY JUDGMENT
JACK B. SCHMETTERER, Bankruptcy Judge.
This adversary proceeding relates to the Chapter 7 bankruptcy petition filed by Ravindra K. Jairath ("Jairath," "Defendant," or "Debtor") on October 2, 1998. Jacob Bletnitsky ("Bletnitsky" or "Plaintiff") filed a Complaint to determine whether the Debtor's debt to the Plaintiff is nondischargeable pursuant to 11 U.S.C. § 523(a)(2)(A). Bletnitsky contends that Jairath is not entitled to receive discharge of that debt because Jairath made false representations to Bletnitsky concerning the sale of an apartment building. Bletnitsky alleges that Jairath induced him to enter into a real estate contract for the property by misrepresenting the number of apartment units in the building that could lawfully be converted into condo units. Bletnitsky also claims that Jairath should not receive a discharge because he failed to keep a post-contract oral agreement to pay any additional property taxes not provided for in the contract.
Jairath moved for summary judgment. For reasons set forth below, the Debtor's Motion for Summary Judgment will be allowed by entry of separate judgment order.
UNDISPUTED FACTS AND BACKGROUND
On March 19, 1997 Jairath, as Seller, and Bletnitsky, as Buyer, entered into a real estate contract (the "Contract") for sale of an apartment building located at 930 Ontario in Oak Park, Illinois for a price of $3.1 million dollars. The contract closed on June 4, 1997.
The parties agree in their pleadings that Jairath represented to Bletnitsky that the building contained twenty-one apartments. Jairath's real estate broker had told Bletnitsky that the building contained twentyone *312 units and the real estate broker's package also stated that the building contained twenty-one units.
While neither Jairath nor his realtor were shown to have stated expressly that all twenty-one units in the building were legally available to be converted to condos, Jairath's real estate broker represented that the building was suitable for conversion into condominiums. Also, the real estate broker's package provided: "for condo developer, this opportunity provides an opportunity with substantial returns." See Real Estate Broker Package, Investment Property Description.
The contract did not state the number of units in the building or warrant that the building was suitable for condominium use. In fact, the contract stated:
It is understood and agreed that the Property is being sold as is; that Buyer has or will have prior to the closing date inspected the Property; and that neither the Seller nor Agent makes any representation or warranty as to the physical condition or value of the Property or its suitability for the Buyer's intended use.
Real Estate Contract, ¶ 7. Bletnitsky admits in his interrogatory responses that prior to closing on the sale he and his partner, Alex Vaisman, inspected the property "two or three times", but Bletnitsky did not hire a professional inspector.
Prior to the closing on June 4, 1997, Bletnitsky received a copy of an inspection report prepared by an agency of the Village of Oak Park ("Oak Park"). The report stated that an inspection had taken place May 27, 1997, and that the apartment building contained only twenty units. On May 30, 1999, Bletnitsky wrote a letter to Jairath and indicated that he had received and read the Oak Park inspection report. In this letter, Bletnitsky stated that the inspection uncovered several violations, listed each violation, and estimated the repair costs at $88,595.
In September of 1997, Bletnitsky sought approval of Oak Park to convert all twenty-one units of the apartment building into condominiums. Oak Park informed Bletnitsky that twenty units could be converted but that unit 1E was an illegal apartment and must be demolished. Bletnitsky was unable to sell that unit as a condominium. Bletnitsky claims that he would not have paid $3.1 million dollars for the building had he known that it only contained twenty legal units. Bletnitsky claims that as a result of Jairath's representation that the building contained twenty-one units, he sustained a loss of $100,000.
On or about June 10, 1998, Bletnitsky initiated an arbitration proceeding against Jairath claiming that Jairath owed him money for the property taxes assertedly promised post-contract, and also for losses allegedly sustained due to Jairath's asserted misrepresentation. Jairath did not appear at the arbitration proceeding, and no arbitration award (if any was entered) is part of the record in this Adversary proceeding.
Jairath filed for Chapter 7 relief on October 2, 1998. The time for filing a complaint under 11 U.S.C. § 523(a)(2)(A) to determine the dischargeability of a debt is governed by Fed.R.Bankr.P. 4007(c). Under Rule 4007(c), such claim must be filed no later than 60 days after the first date set for the meeting of creditors under § 341(a) of the Code, Title 11 U.S.C. Bletnitsky filed this Adversary complaint on July 29, 1999, almost ten months after Jairath filed his bankruptcy petition. Bletnitsky waited almost ten months to file his complaint because he alleges that he did not receive any notice of the bankruptcy filing until that date, since he was not listed in the bankruptcy schedules. Defendant admits that Plaintiff was not scheduled, but denies that he lacked knowledge of the bankruptcy. However, Defendant did not move to dismiss the case under Rule 4007(c), and so Plaintiff's contention as to lack of notice was not contested.
*313 A complaint may be considered timely even if filed after the bar date, if the creditor did not have notice of the bankruptcy case in order to request a timely determination of dischargeability. In re Dewalt, 961 F.2d 848 (9th Cir.1992); The Sophir Co. v. Heiney (In re Heiney), 194 B.R. 898 (D.Colo.1996); Shaheen v. Penrose (In re Shaheen), 174 B.R. 424 (E.D.Va.1994). See also 11 U.S.C. § 523(a)(3)(B). Here the creditor was unscheduled, so he did not have notice of the bar date, nor of the bankruptcy filing.
Further undisputed facts are set forth in the "Discussion" part of this opinion.
JURISDICTION
Jurisdiction over this matter lies under 28 U.S.C. § 1334 and 28 U.S.C. § 157, and the case is referred here by the District Court under Internal Operating Procedure 15(a). This matter constitutes a core proceeding under 28 U.S.C. 157(b)(2)(I).
APPLICABLE STANDARDS
A. Summary Judgment.
Rule 56(c) of the Federal Rules of Civil Procedure, made applicable to adversary proceedings by Rule 7056 Fed.R.Bankr.P., provides that summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." See Russo v. Health, Welfare & Pension Fund, Local 705, 984 F.2d 762 (7th Cir. 1993).
A moving party bears the burden of demonstrating absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Once the moving party has met that burden, the non-moving party must go beyond the pleadings and bring forth specific facts to establish that there is a genuine issue for trial. Becker v. Tenenbaum-Hill Assoc., Inc., 914 F.2d 107, 110 (7th Cir.1990). See also Matsushita Electric Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). To defeat the motion, a non-moving party is required to do more than show mere existence of some possible doubt as to the material facts, but must show a factual dispute between the parties that is determinative of the outcome under applicable law. Id. at 586, 106 S.Ct. at 1356; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). The non-moving party may not rest on its pleadings or on conclusory allegations in affidavits. Waldridge v. American Hoechst Corp., 24 F.3d 918, 920-21 (7th Cir.1994); Cusson-Cobb v. O'Lessker, 953 F.2d 1079, 1081 (7th Cir. 1992).
In determining whether a genuine issue of material fact exists, all facts must be construed in the light most favorable to the non-moving party and all reasonable and justifiable inferences drawn in that party's favor. Popovits v. Circuit City Stores, Inc., 185 F.3d 726, 731 (7th Cir. 1999); See also Anderson, 477 U.S. at 255, 106 S.Ct. at 2513. However, not every conceivable inference must be drawn in favor of the non-moving party, only those inferences that are reasonable and present an outcome determinative disagreement between the parties. Richards v. Combined Ins. Co. of Am., 55 F.3d 247, 251 (7th Cir.1995); See also Anderson, 477 U.S. at 251-52, 106 S.Ct. at 2512.
B. Dischargeability Claim Under 11 U.S.C. § 523(a)(2)(A)
The party seeking to establish an exception to the discharge of a debt bears the burden of proof, Selfreliance Fed. Credit Union v. Harasymiw (In re Harasymiw), 895 F.2d 1170, 1172 (7th Cir.1990), by a preponderance of the evidence. Grogan v. Garner, 498 U.S. 279, 291, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991). Policies underlying the Bankruptcy Code require that exceptions to discharge be strictly construed *314 against creditors and in favor of a fresh start for debtors, Goldberg Secs., Inc. v. Scarlata (In re Scarlata), 979 F.2d 521, 524 (7th Cir.1992), but the Code is intended to afford relief only to the honest but unfortunate debtor. Cohen v. de la Cruz (In re de la Cruz), 523 U.S. 213, 217, 118 S.Ct. 1212, 1216, 140 L.Ed.2d 341 (1998).
Section 523(a)(2)(A) of the Bankruptcy Code excepts from discharge any debt for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained, by false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition. It lists three separate grounds for dischargeability: actual fraud, false pretenses, and false representation. It was originally held that a single test for all three grounds listed in § 523(a)(2)(A) applies even though the elements for each vary under common law, AT & T Universal Card Services v. Alvi (In re Alvi), 191 B.R. 724, 728 (Bankr. N.D.Ill.1996) (Judge Ginsberg), citing, Mayer v. Spanel, 51 F.3d 670, 674 (7th Cir.1995), but a recent Seventh Circuit panel opinion made clear that misrepresentation and reliance thereon is not always required to establish actual fraud. McClellan v. Cantrell, 217 F.3d 890, 894 (7th Cir.2000).
In order to except false pretenses or a false representation from dischargeability, Bletnitsky must establish the following elements: (1) Jairath obtained funds through representations that Jairath either knew to be false, or made with such reckless disregard for the truth as to constitute willful misrepresentations; (2) Jairath possessed the requisite scienter, i.e., he actually intended to deceive Bletnitsky; and (3) to his detriment, Bletnitsky justifiably relied on Jairath's misrepresentations. See Caez v. Jacob (In re Jacob), No. 97-A-01664, 1998 WL 150493, at *4 (Bankr.N.D.Ill. Mar. 23, 1998) (Judge Squires), citing, Mayer v. Spanel Int'l Ltd. (In re Mayer), 51 F.3d 670, 673 (7th Cir. 1995), cert. denied, 516 U.S. 1008, 116 S.Ct. 563, 133 L.Ed.2d 488 (1995). Because the plaintiff must establish each of the above elements to support a finding of a false pretense or misrepresentation, Bletnitsky's failure to establish any one fact is determinative of the outcome. Clark v. Bryant (In re Bryant), 241 B.R. 756, 765 (Bankr. M.D.Fla.1999).
However, a deceitful trick may qualify as a fraud under McClellan, Id., 217 F.3d at 893. Therefore, a different analysis must be used when a plaintiff alleges actual fraud. McClellan v. Cantrell, 217 F.3d 890 (7th Cir.2000). McClellan reasoned that since common law fraud is not always in the form of a misrepresentation, a plaintiff need not allege misrepresentation and reliance thereon to state a claim for actual fraud under § 523(a)(2)(A). Instead, the plaintiff must allege that: 1) a fraud occurred; 2) the debtor was guilty of intent to defraud; and 3) the fraud created the debt that is the subject of the discharge dispute. Id. at 893-94. Apart from that test, the Plaintiff must allege the fraud with particularity. Rule 7009 Fed. R.Bankr.P. [adopting Rule 9(b) Fed.R.Civ. P.].
DISCUSSION
A. The claims of liability under 11 U.S.C. § 523(a)(2)(A) for a false representation.
An intentional falsehood relied on under § 523(a)(2)(A) must concern a material fact. Kadlecek v. Ferguson (In re Ferguson), 222 B.R. 576 (Bankr.N.D.Ill. 1998), citing Mayer v. Spanel Int'l Ltd., 51 F.3d 670, 676 (7th Cir.1995). However, a false representation need not be an overt oral or written lie; it may be established by showing conduct intended deliberately to create and foster a false impression. See Haeske v. Arlington (In re Arlington), 192 B.R. 494, 498 (Bankr.N.D.Ill.1996) (Judge Squires).
In this case, Plaintiff contends that Jairath made a material misrepresentation as *315 to the number of legal units in the building. The Plaintiff shows by way of Jairath's deposition that Jairath knew before selling that one of the twenty-one units was an illegal apartment. Also, Bletnitsky has shown that Jairath marketed the property as suitable for condominium conversion. Therefore, absent more, it might be reasonable to infer that Jairath may well have known that the illegal 21st unit could not be converted into a condominium, while recognizing that Bletnitsky as the buyer wanted to convert all twenty-one units and agreed to pay $3.1 million dollars for the building because he thought he could convert all twenty-one units into condominiums.
Also in the absence of more evidence, it might be reasonable to infer further that Jairath possessed the requisite scienter or intent to deceive Bletnitsky. Proof of intent to deceive is measured by the Debtor's subjective intention at the time the representation was made. Mercantile Bank v. Canovas, 237 B.R. 423, 428 (Bankr.N.D.Ill.1998). Where a person knowingly or recklessly makes false representations which the person knows or should know will induce another to act, the finder of fact may logically infer an intent to deceive. Zirkel v. Tomlinson (In re Tomlinson), No. 96-A-1539, 1999 WL 294879 at *11 (Bankr.N.D.Ill. May 10, 1999) (Judge Katz), citing, In re Sheridan, 57 F.3d 627, 633 (7th Cir.1995).
However, in this case there was much more to the story. Although Bletnitsky produced evidence that might in other circumstances have established the first two elements of a § 523(a)(2)(A) claim, he cannot show that he justifiably relied on Jairath's asserted misrepresentation. To establish a claim under § 523(a)(2)(A) for fraud resting on misrepresentation, the plaintiff must establish that he actually and justifiably relied on the Debtor's misrepresentation. Field v. Mans, 516 U.S. 59, 70, 116 S.Ct. 437, 444, 133 L.Ed.2d 351 (1995); See also Zirkel v. Tomlinson (In re Tomlinson), No. 96-A-1539, 1999 WL 294879 at *7 (Bankr. N.D.Ill. May 10, 1999) (Judge Katz); Mercantile Bank v. Canovas, 237 B.R. 423, 429 (Bankr.N.D.Ill.1998) (Judge Lefkow); and Haeske v. Arlington (In re Arlington), 192 B.R. 494, 498 (Bankr.N.D.Ill.1996) (Judge Squires applied the justifiable reliance standard but noted uncertainty about degree of reliance requirement under § 523(a)(2)(A), commenting that "Justifiable reliance is a lower burden to prove than reasonable reliance and does not mean that the objecting creditor's conduct must conform to the standard of a reasonable man." In re Arlington, 192 B.R. at 498).
On the other hand, justifiable reliance requires more than a finding of reliance in fact. In re Tomlinson at *12. "A plaintiff may not bury his head in the sand and willfully ignore obvious falsehoods." In re Tomlinson at *12 (internal citation omitted). Another opinion has observed:
Justifiability is not without limits, however . . . a person is required to use his sense and cannot recover if he blindly relies on a misrepresentation the falsity of which would be patent to him if he had utilized his opportunity to make a cursory examination or investigation. [Justifiable reliance] is a matter of the qualities and characteristics of the particular plaintiff and the circumstances of a particular case.
AT & T Universal Card Services v. Alvi (In re Alvi), 191 B.R. 724, 731 (Bankr. N.D.Ill.1996) (Judge Ginsberg) (internal citation omitted).
Bletnitsky presents evidence of his reliance in fact by offering an affidavit stating that he had acted in reliance on Jairath's misrepresentation. He has not, however, shown any objective evidence of his justifiable reliance. Indeed, Bletnitsky received prior to the sale closing an official inspection report stating that the building contained only twenty apartments. That was sufficient to put him on notice that he *316 would not be able to convert all twenty-one units into condominiums because one was there illegally. The report, issued by an agency of the Village of Oak Park, was the result of an inspection conducted on May 27, 1997. A May 30, 1997 letter from Bletnitsky to Jairath established that Bletnitsky not only received the Oak Park inspection report, but that he read the report prior to the June 4, 1997 closing day. Bletnitsky stated in his letter that the Oak Park inspection uncovered several repairs that needed to be addressed prior to closing. Moreover in his affidavit, Bletnitsky admits to receiving the inspection report prior to the closing.
The foregoing circumstances demonstrate, particularly in light of Contract ¶ 7 quoted above, that Bletnitsky could not have justifiably relied on any representation by Jairath or his realtor read by the buyer to infer or represent that the building contained twenty-one legally convertible units.
In addition, Bletnitsky bought the property as investment property. An investor is expected to be more sophisticated than the average residential home-buyer. It is clear that Bletnitsky knew enough about real estate to address code violations prior to the closing. If the number of apartment units was material to the transaction, he should have at least paid attention to the report that stated the number of units reported officially to be in the building. His disregard of that information is fatal to his first claim under § 523(a)(2)(A), because he cannot claim justifiable reliance on an inferred misrepresentation contradicted by both the Contract and an official report in his hands. He had no right to close his eyes to those documents and then claim to be deceived by Defendant on an issue addressed in each.
Bletnitsky's second claim for false representation is that Jairath should not receive a discharge because he failed to keep a post-contact oral agreement to pay property taxes not addressed in the contract. This claim must fail because a promise to act in the future is not by itself a false representation under § 523(a)(2)(A). Caez v. Jacob (In re Jacob), No. 97-A-01664, 1998 WL 150493, at *4 (Bankr.N.D.Ill.Mar. 23, 1998) (Judge Squires). See also Rezin v. Barr (In re Barr), 194 B.R. 1009, 1018 (Bankr.N.D.Ill. 1996).
B. That claim of liability under 11 U.S.C. § 523(a)(2)(A) for actual fraud.
Bletnitsky did not with particularity plead a claim for actual fraud, and neither of the parties have briefed this issue. Still, the Court has a duty to consider actual fraud if the plaintiff alleges facts that could support such a finding, Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund, 25 F.3d 417, 421, particularly when the Defendant seeks a final summary judgment barring the suit entirely. Since Bletnitsky claims that Jairath "fraudulently represented" the number of legal units in the building, we must address the actual fraud issue. But even under the recent McClellan discussion, Bletnitsky failed to demonstrate a claim for actual fraud under § 523(a)(2)(A).
McClellan explained that "fraud" is a:
. . . generic term, which embraces all the multifarious means which human ingenuity can devise and which are resorted to by one individual to gain an advantage over another by false suggestions or by the suppression of truth. No definite and invariable rule can be laid down as a general proposition defining fraud, and it includes all surprise, trick, cunning, dissembling, and any unfair way by which another is cheated.
McClellan v. Cantrell, 217 F.3d 890 at 893 (7th Cir.2000).
In McClellan, the plaintiff charged the debtor with aiding the debtor's brother in transferring property to hinder the plaintiff's attempts to collect on a debt. Specifically, the plaintiff sold an ice-making machine to a buyer (the debtor's brother) for *317 $200,000 payable in installments. The plaintiff retained, but did not perfect, a security interest in the machinery. When the buyer defaulted, he sold the machine to his sister, the debtor, for ten dollars. She then sold it for $160,000 and promptly declared bankruptcy to prevent the plaintiff from recovering the collateral or the proceeds from her. The McClellan court stated that the debtor's conduct was "as blatant an abuse of the Bankruptcy Code as we can imagine." McClellan, 217 F.3d at 893.
In the matter at hand, Bletnitsky alleges that the Debtor "knowingly and fraudulently withheld material information from [Bletnitsky] which had a material effect on the terms of the contract, and which resulted in the [Debtor] receiving more money from [Bletnitsky] than he would otherwise have received." (Complaint, ¶ 10). In other words, Bletnitsky claims that Jairath intended to gain a financial advantage over him by withholding the truth regarding the number of legal units in the building. This type of conduct might in some circumstances fall within the definition of actual fraud described in McClellan, i.e. use of a means to gain an advantage over another by suppression of a truth.
Other facts, however, confirm in this case that Jairath did not commit an actual fraud on Bletnitsky. Even if Jairath withheld facts from the Plaintiff to obtain a higher purchase price, Bletnitsky possessed Oak Park's inspection report prior to the closing. The inspection report clearly states that the building contains twenty units. Although McClellan broadly defined fraud as the suppressing of a truth, it emphasized that fraud must have an element of unfairness. This transaction between Bletnitsky and Jairath was not unfair, and Bletnitsky assumed the risk of inability to convert all 21 units to condo use when he failed to give heed to the village report in his possession, which showed that one of the units in the building was an illegal one.
Finally, Jairath's failure to keep a post-contract oral agreement to pay property taxes was not pleaded with particularity as a fraud under § 523(a)(2)(A). Moreover, even if the pleading were amended, the facts could not constitute a fraud. A buyer's new oral promise to convey an uncontracted benefit to a purchaser after the purchase contract has been signed does not give the seller a financial advantage over the buyer under the original contract. Moreover, the merger doctrine integrates all prior discussions into an agreement for conveyance of real estate unless delivery of deed would not fulfill the contract. Neppl v. Murphy, 316 Ill.App.3d 581, 584, 736 N.E.2d 1174, 249 Ill.Dec. 736 (2000). Finally, the mere breach of a post contract promise as here alleged does not constitute a fraud. Caez v. Jacob (In re Jacob), No. 97-A-01664, 1998 WL 150493, at *4 (Bankr.N.D.Ill. Mar. 23, 1998) (Judge Squires). See also Rezin v. Barr (In re Barr), 194 B.R. 1009, 1018 (Bankr.N.D.Ill. 1996).
CONCLUSION
For the foregoing reasons, the Debtor's Motion for Summary Judgment will be allowed by separate order.
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363 F.2d 826
66-2 USTC P 9586
Herold FELLINGER and Clara Fellinger, Plaintiffs-Appellants,v.UNITED STATES of America, Defendant-Appellee.Maurice BERNSTEIN and Irene Bernstein, Plaintiffs-Appellants,v.UNITED STATES of America, Defendant-Appellee.The HIPPODROME BUILDING CO., Petitioner,v.COMMISSIONER OF INTERNAL REVENUE, Respondent.Edwin I. BAMBERGER and Rita Bamberger, Petitioners,v.COMMISSIONER OF INTERNAL REVENUE, Respondent.
Nos. 16391, 16392, 16644, 16645.
United States Court of Appeals Sixth Circuit.
Aug. 5, 1966.
Henry C. Harvey, Cleveland, Ohio, Bruce J. Havighurst, Jones, Day, Cockley & Reavis, Cleveland, Ohio, Elmer J. Babin, Cleveland, Ohio, on beief, for appellants and petitioners.
Lawrence B. Silver, Department of Justice, Washington, D.C., John B. Jones, Jr., Acting Asst. Atty. Gen., Lee A. Jackson, Joseph Kovner, Attorneys, Department of Justice, Washington, D.C., on beief; Merle M. McCurdy, U.S. Atty., Cleveland, Ohio, of counsel, for appellee ans respondent.
Before O'SULLIVAN and CELEBREZZE, Circuit Judges, and CECIL, Senior Circuit Judge.
O'SULLIVAN, Circuit Judge.
1
The question involved is whether $350,000 advanced by taxpayer-appellants Fellinger, Bernstein and Bamberger to taxpayer-appellant The Hippodrome Building Company, a corporation, in exchange for its debentures in substantially that face amount, was a bona fide loan to the company or was an investment of equity capital. The taxpayers treated the debentures as evidence of debt; the holders thereof treated the interest paid thereon as taxable income, but reported no income for payments made on the principal; the company deducted from its income the interest paid on the debentures, and treated payments of principal as retirement of debt. The Commissioner, asserting that the debentures represented equity investment, assessed deficiencies against the holders by including in the income of the Fellingers, Bernsteins and Bambergers, as dividends, all payments made thereon, whether of interest or principal, and by disallowing the deductions taken by the Hippodrome corporation for the interest paid on such debentures.
2
Appellants Fellinger and Bernstein paid the asserted deficiencies and sued in the District Court for a refund. Petitioners Hippodrome Company and Bamberger took their cases to the Tax Court. Judge Kalbfleisch in the District Court, and Judge Dawson in the Tax Court both arrived at the conclusion that the instruments represented equity interests, and upheld the Commissioner. The petition to us for review of the Tax Court decision and the appeal from the District Court judgment were consolidated for hearing in this Court. The facts are as follows: Since 1947, Stuart Scheftel and Alfred G. Vanderbilt had owned all the stock of the Hippodrom Building Company of Cleveland, Ohio. The capital stock of the latter consisted of: 11,350 First Preferred Shares and 3,650 Second Preferred Shares, all held by Vanderbilt; 5,000 Third Preferred Shares held by Scheftel; and 5,000 Common Shares divided equally between Scheftal and Vanderbilt. Until all of the First and Second Preferred Shares were retired ($1.5 million, par value), Vanderbilt was to have control of the company; thereafter, the voting was to be 50-50. No dividends were to be paid to Scheftel until all of Vanderbilt's preferred stock was redeemed. The principal asset of the company was the Hippodrome Building, located in downtown Cleveland, and containing office and shop space, and a theater.
3
In 1953, Vanderbilt wished to liquidate the Company and withdraw his capital. Shceftel desired to preserve the business, and sought to work out an agreement whereby the company would purchase Vanderbilt's interest. Vanderbilt agreed to accept $840,000 in cash and $285,000 in a second mortgage, in effect selling for $1.125 million his right to receive the first $1.5 million of liquidation proceeds. At this time, the company had cash reserves of about $240,000 and the building was subject to a mortgage of $1.25 million. $250,000 was obtained by increasing this mortgage to $1.5 million. This amount plus the corporation's $240,000 cash reserve left it needing $350,000 to complete the required payment of $840,000 cash to Vanderbilit.
4
After two years of unsuccessful efforts to obtain from commercial lenders a loan of the needed $350,000, Scheftel was introduced to Elmer Babin, a Cleveland lawyer and investor. Babin made a proposition whereby he (on behalf of a group to be assembled by him) would advance $350,000 to the corporation in exchange for $349,750 in debentures and 100 shares of new Class A common stock at $2.50 per share. The corporate structure of the corporation was to be rearranged by redeeming and retiring all of Vanderbilt's shares, by Scheftel contributing to the corporation his Third Preferred shares as capital surplus, and by Scheftel exchanging his 2500 shares of common for 100 shares of new Class B common stock. Thus rearranged, the total stock ownership was to be evidenced by 100 shares of Class A owned by the Babin group and 100 shares of Class B. owned by Scheftel. Classes A and B would each elect two of four directors. The Babin investors were to receive one share of Class A stock for each $5,000 in debentures, with Babin and one Irving Hexter receiving 20 and 10 extra shares, respectively, for arranging the transaction. Class A stock was to be entitled to prior cumulative dividends of $500 per share per year after the retirement of the debentures. This would be paid out of surplus or net profits and any further dividends would be divided equally between the holders of the Class A and Class B stock.
5
On October 26, 1955, the plan was carried out; Vanderbilt was paid off; the $350,000 of debentures and the Class A stock were delivered to the Babin group (which included the individual taxpayer-appellants); and Scheftel received the Class B stock. The debentures bore interest at 4% Per annum, payable semiannually, with the principal payable ten years from date. The underlying agreement provided that the 'principal' of and the 'interest' on the debentures would be payable only out of 'available income' and there was no provision for a sinking fund. Because detailed facts are set out in the opinions of the Tax Court and the District Court, we need not here repeat all of the contractual arrangements which, in our view put the Babin group in substantial ownership control of the corporation. That the Babin group was thinking in terms of risk capital to be multiplied by speculative future profits rather than in terms of a secured loan returning a modest but assured interest, is illustrated by Babin's letter inviting participation. He stated:
6
'What makes the deal attractive is that for each $10,000 debenture, you will receive at a cost of ony $2.50 one share of Class A common stock having an intrinsic value of $7,000.00 and entitling you to cumulative preferred dividends of $1,000 per year plus 10% Of all common dividends.'
7
The final agreement provided for 100 shares of Class A instead of 50 as contemplated by the letter. Thus each investor received 2 shares of Class A stock with each $10,000 debenture. Babin also told his investors 'all cash earnings of the company after mortgage requirement will be used to retire the debentures. In my opinion this should take less than five years.' During the tax years involved, 1956 through 1959, substantial payments were made on the principal of the debentures. In one of those years the debenture holders consented to, and as holders of Class A stock received, a $25,000 dividend on the Class A stock. This dividend was presumably to offset of reduction in the rent payable by Scheftel for the theater in the Hippodrome Building.
8
The Tax Court and the District Court sustained the Commissioner holding that the debentures did not represent bona fide indebtedness. Fellinger v. United States, 238 F.Supp. 67 (N.D.Ohio E.D. 1964); Bamberger v. C.I.R., T.C.Memo 1965-25 (Feb. 11, 1965). We affirm.
9
The question of whether the debentures represented bona fide indebtedness was one of fact for the Tax Court and the District Court. We may not set aside their findings unless they were clearly erroneous. Commissioner of Internal Revenue v. Duberstein, 363 U.S. 278, 291, 80 S.Ct. 1190, 4 L.Ed.2d 1218 (1960); R. C. Owen Co. v. Commissioner of Internal Revenue,351 F.2d 410 (CA 6, 1965) cert. den. 86 S.Ct. 1272; Foresun v. Commissioner of Internal Revenue, 348 F.2d 1006 (CA 6, 1965); Commercial Credit Rural Elec. Corp. v. Commissioner of Internal Revenue, 319 F.2d 485 (CA 6, 1963); Gooding Amusement Co. v. Commissioner of Internal Revenue, 236 F.2d 159 (CA 6, 1956). These findings were not clearly erroneous. Both courts were required to make their findings from an appraisal of 'all surrounding facts and circumstances.' Moughon v. Commissioner of Internal Revenue, 329 F.2d 399, 401 (CA 6, 1964).
10
The Tax Court and the District Court made such appraisal and there was ample evidence in each of the records before them to support their respective findings that the involved instruments represented equity investment rather than true indebtedness.
11
Judgments affirmed.
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NO. 07-07-0462-CR
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL C
JULY 30, 2008
______________________________
RICHARD REYES,
Appellant
v.
THE STATE OF TEXAS,
Appellee
_________________________________
FROM THE 286TH DISTRICT COURT OF HOCKLEY COUNTY;
NO. 07-07-6444; HON. PAT PHELAN, PRESIDING
_______________________________
Memorandum Opinion
_______________________________
Before QUINN, C.J., and HANCOCK and PIRTLE, JJ.
Richard Reyes contends he was wrongly convicted of aggravated sexual assault by
presenting two issues. In the first, he complains of the failure of the trial court to include
instructions in the charge on the lesser-included offense of sexual assault and the defense
of consent. In the second, he challenges the sufficiency of the evidence to sustain his
conviction. We overrule both issues, and affirm the judgment.
Issue 1 - Jury Charge
In his first issue, appellant contends that the jury should have been instructed on
both the lesser-included offense of sexual assault and the defense of consent. However,
no objection was made by appellant to the lack of either. When an instruction on a lesser
offense or a defense is not requested by either party, the court has no sua sponte duty to
submit them. See Delgado v. State, 235 S.W.3d 244, 249-50 (Tex. Crim. App. 2007).
Accordingly, the issue has been waived.
Issue 2 - Sufficiency of the Evidence
Next, appellant challenges the legal and factual sufficiency of the evidence to
support the conviction. The standards by which we review the same are well established,
and we refer the parties to Jackson v. Virginia, 443 U.S. 307, 99 S.Ct. 2781, 61 L.Ed.2d
560 (1979) and Watson v. State, 204 S.W.3d 404 (Tex. Crim. App. 2006) for a review of
them.
A person commits aggravated sexual assault if he intentionally or knowingly causes
the penetration of the sexual organ of another person by any means, without that person’s
consent, and in the course of which he uses or exhibits a deadly weapon. Tex. Pen. Code
Ann. §22.021(a)(1)(A)(I) & (2)(A)(iv) (Vernon Supp. 2007). In this instance, the deadly
weapon alleged in the indictment was a knife.
At trial, the complainant testified that appellant had been visiting her and then
became angry and stated that he was “going to teach this bitch a lesson.” Appellant took
out a butterfly knife and a pocket knife that he had with him and held the knives up to her
while striking her. He cut off her bra and underwear with one of the knives, made her sit
in a chair, and forced her to perform oral sex while holding the knives and threatening to
slit her throat. Appellant next penetrated the complainant’s vagina with his penis. The
complainant was lacerated by the knives both before and after the rape.
The complainant’s testimony alone, if believed, is sufficient to sustain the conviction.
Benton v. State, 237 S.W.3d 400, 404 (Tex. App.–Waco 2007, pet. ref’d); Jensen v. State,
66 S.W.3d 528, 534 (Tex. App.–Houston [14th Dist.] 2002, pet. ref’d). Accordingly, a
rational trier of fact could have found beyond a reasonable doubt that appellant committed
the crime of aggravated sexual assault.
Appellant complains that the evidence is insufficient because 1) the complainant
stated she was attacked by a man who had tattoos on his wrists and forearms but
appellant testified he had no tattoos on his wrist or hands, 2) there are purported
inconsistencies in the testimony of Richard Gutierrez (who entered the house after the rape
but while the general assault was still occurring) and Anthony LeCroy (who was waiting for
Gutierrez outside in a vehicle), 3) the complainant failed to recite at trial that she had been
raped when first describing the events of that evening, 4) the police officers did not find a
cut bra or underwear, 5) there was a purported lack of clearly distinguishable blood on the
knives found and 6) the knives were not subjected to any testing. At best, these matters
created conflicts in the evidence and raised issues of witness credibility. As such, they
were for the jury to address and resolve. Given the complainant’s testimony and physical
wounds, her prior knowledge of appellant, her demeanor when the police arrived, and the
corroboration by Gutierrez of some of the events after the rape, we cannot say that the
evidence is too weak to support the verdict or so against the great weight and
preponderance of the evidence as to undermine our confidence in it. In short, the evidence
is both legally and factually sufficient.
The judgment is affirmed.
Brian Quinn
Chief Justice
Do not publish.
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896 P.2d 995 (1995)
127 Idaho 87
STATE of Idaho, Plaintiff-Respondent,
v.
Dale H. VIEHWEG, Defendant-Appellant.
No. 21457.
Court of Appeals of Idaho.
June 6, 1995.
*997 Dial, Looze & May, Pocatello, for appellant.
Alan G. Lance, Atty. Gen., Myrna A.I. Stahman, Deputy Atty. Gen., Boise, for respondent.
PER CURIAM.
Dale H. Viehweg pled guilty to lewd conduct with a minor under the age of sixteen, a felony, I.C. § 18-1508. He received a unified twenty-year sentence with a minimum period *998 of confinement of five years. Viehweg appeals from the judgment of conviction and sentence and from the district court's denial of his I.C.R. 35 motion. For the reasons set forth below, we affirm.
FACTS AND PROCEDURAL BACKGROUND
Dale Viehweg and his wife adopted J.M. when she was eleven years old, after she had been sexually abused by a family member and abandoned. At the time of the adoption, the Viehwegs were aware of the prior abuse. The Viehwegs stated that while J.M. was in their home, she caused on-going problems. Approximately a year after the adoption, Dale Viehweg began spending a great deal of time with J.M. for the purpose of "solving these problems." It was at this time that he began sexually abusing her.
After J.M. had lived with the Viehwegs for over three years, Viehweg took J.M. to see Darrell Skinner at the Idaho Department of Health and Welfare for the purpose of helping her deal with problems she was experiencing at school. J.M. then told Skinner of the sexual abuse by Mr. Viehweg, explaining that Viehweg would pay her money in exchange for her compliance with his sexually-related requests. J.M. further stated that Viehweg often watched her while she was naked, fondled her breasts, placed his fingers inside of her vagina and, on at least two occasions, inserted his penis into her vagina. Viehweg acknowledged that J.M.'s allegations were true. J.M. was fourteen and one-half years of age at the time of the disclosure. She had lived in the Viehwegs' home for three and one-half years, and the abuse took place during approximately the last two years. At the time of the disclosure, Viehweg was sixty years old, and this was his first felony offense.
Viehweg was charged with rape and with lewd conduct with a minor under the age of sixteen. Pursuant to a plea agreement, he pled guilty to the charge of lewd conduct, and the state dismissed the rape charge. The district court ordered a presentence investigation report (PSI). Dr. Gary Horton, a licensed counselor, was asked to evaluate Viehweg. After his first visit, Viehweg elected not to continue counseling with Dr. Horton, and chose to be evaluated by William McKee. McKee's comments were included by the investigator in the PSI.
Both the presentence investigator and the state recommended incarceration, while Viehweg asked the court to consider either withholding judgment or retaining jurisdiction for the purpose of placing him on probation. The district court entered a judgment of conviction and imposed the sentence on June 7, 1994. Thereafter, Viehweg filed a motion to reconsider his sentence under I.C.R. 35 on June 21, 1994, and a motion for a psychological evaluation on June 23. The court denied the motion for the psychological evaluation on July 11, 1994, and, after a hearing, denied the Rule 35 motion on September 13, 1994. Viehweg timely appealed from the judgment of conviction and the order denying his Rule 35 motion.
ISSUES
Viehweg raises several issues. He claims that (1) the district court abused its discretion when imposing the sentence because the court did not order a psychological evaluation for either the PSI or for consideration at the Rule 35 hearing; (2) the court erred when it refused to retain jurisdiction; (3) the court's admission of allegations made by one of Viehweg's biological daughters, which were included in the PSI and provided again by testimony at the sentencing hearing, was in error; and (4) the sentence imposed was excessive and was therefore illegal.
ANALYSIS
I. PSYCHOLOGICAL EVALUATION
A. PSI
Viehweg argues that the district court abused its discretion by imposing a sentence without ordering and reviewing a psychological evaluation. He claims that a letter written by William McKee, which was attached to the PSI, states that Viehweg needed to be tested by "someone competent to do so." Viehweg also argues that the court should have reviewed a psychological evaluation when it considered his Rule 35 motion.
*999 The presentence investigator may recommend a psychological evaluation, but the final determination whether to obtain such an evaluation lies within the sentencing court's discretion. I.C.R. 32(d); State v. Wolfe, 124 Idaho 724, 726, 864 P.2d 170, 172 (Ct.App.1993). A psychological evaluation is not required in every case where the court orders a presentence investigation report. State v. Whitman, 96 Idaho 489, 491, 531 P.2d 579, 581 (1975); Wolfe, 124 Idaho at 726, 864 P.2d at 172. When no objection has been made to a presentence report at the sentencing hearing, and the report substantially addresses the points required by court rule, we will not review a challenge to the report raised for the first time on appeal. State v. Thacker, 98 Idaho 369, 370, 564 P.2d 1278, 1279 (1977); Wolfe, 124 Idaho at 726, 864 P.2d at 172. There is an exception to this rule, however. If there is shown a manifest disregard for the provisions of I.C.R. 32, the questions concerning the presentence report may be reviewed on appeal even if no objection was made below. State v. Toohill, 103 Idaho 565, 566, 650 P.2d 707, 708 (Ct.App. 1982).
According to the PSI, Viehweg did not cooperate with the investigator's attempt to have an evaluation prepared by a court-approved counselor. The investigator elected, however, to attach the evaluation prepared by Viehweg's chosen counselor, McKee. During the sentencing hearing, Viehweg presented corrections to the PSI, addressing statements made by his children and supposedly by himself. He also commented that he believed the PSI was biased and unfair. At no time during the sentencing hearing did Viehweg object to the fact that a psychological evaluation had not been conducted, nor did he ask for such an evaluation. In addition, Viehweg has not argued in his appellate brief that the PSI was prepared in such a manner as to disregard the provisions of I.C.R. 32. Consequently, Viehweg's challenge to the adequacy of the presentence report because the report lacked a psychological evaluation must be disregarded. State v. Lavy, 121 Idaho 842, 845, 828 P.2d 871, 874 (1992).
B. Rule 35 Motion
Viehweg next argues that the court did not order and consider a psychological evaluation when reviewing his I.C.R. 35 motion to reduce his sentence.
The decision whether to reduce a sentence rests in the sound discretion of the sentencing court. State v. Arambula, 97 Idaho 627, 630, 550 P.2d 130, 133 (1976); State v. Lopez, 106 Idaho 447, 450, 680 P.2d 869, 872 (Ct.App.1984). The appellate court's scope of review includes all information submitted at the original sentencing hearing and proffered with respect to the Rule 35 motion. State v. Araiza, 109 Idaho 188, 706 P.2d 77 (Ct.App.1985). A lower court's denial of a Rule 35 motion for reduction of sentence will not be disturbed in the absence of an abuse of discretion, based upon a review of the entire record and application of the same criteria used to determine the reasonableness of the original sentence. State v. Smith, 117 Idaho 657, 658, 791 P.2d 38, 39 (Ct.App.1990).
Having reviewed the record before us, we hold that the district court had sufficient information upon which to arrive at the sentence it imposed. The court did not abuse its discretion when it denied Viehweg's Rule 35 motion without considering a psychological evaluation.
II. RETAINED JURISDICTION
Viehweg claims that the court erred in refusing to retain jurisdiction for the purpose of further evaluating him for probation. He asserts that the court denied him probation because it possessed insufficient information at the time of sentencing. Viehweg further argues that the court did not take into consideration that he was a first-time offender, had no previous criminal record except traffic violations and had been released on his own recognizance until the sentencing hearing.
In determining whether to grant or deny probation, the district court must consider:
(1) all of the facts and circumstances surrounding the offense of which the defendant is convicted;
*1000 (2) whether the defendant is a first offender;
(3) the previous actions and character of the defendant;
(4) whether the defendant might reasonably be expected to be rehabilitated;
(5) whether it reasonably appears that the defendant will abide by the terms of the probation; and
(6) the interests of society in being protected from possible future criminal conduct of the defendant.
State v. Trowbridge, 95 Idaho 640, 641, 516 P.2d 362, 363 (1973). When a sentencing judge has sufficient information at the time of sentencing to deny probation, his refusal to retain jurisdiction for further evaluation is not an abuse of discretion. State v. Bartholomew, 102 Idaho 106, 107, 625 P.2d 1109, 1110 (1981); State v. Dechenne, 124 Idaho 11, 12, 855 P.2d 472, 473 (Ct.App.1993).
The record clearly indicates that the district court considered Viehweg's background and character as mitigating factors prior to imposing sentence. However, the breach of trust by a father with regard to his daughter caused the court concern and supported its reasoning not to retain jurisdiction. The court was concerned that even though Viehweg knew J.M. had been sexually abused before the adoption, Viehweg nevertheless continued this abuse over an extended period of time after J.M. came into the Viehweg home. The court agreed with the investigator's conclusion that Viehweg refused to take responsibility for his acts.
The PSI, and testimony provided both at the sentencing hearing and at the Rule 35 hearing, support this conclusion. The record shows that Viehweg believed J.M. "enticed" him into his conduct which he termed "fun and games." He further told the investigator that he did not feel that the abuse was criminally wrong; only morally wrong because he had cheated on his wife. Even though Viehweg expressed remorse for his acts, we agree that the district court did not abuse its discretion when it decided not to retain jurisdiction for the purpose of considering probation.
III. HEARSAY ALLEGATIONS
Viehweg argues that the admission in evidence of allegations made by one of his biological daughters, which were included in the PSI and provided again by testimony at the sentencing hearing, was error. This daughter told the investigator that on numerous occasions while she was growing up, Viehweg would walk into her bedroom and bathroom when she was nude and watch her. At the sentencing hearing, she further testified to events of this same nature.
The district court has broad discretion in determining what evidence is to be admitted at a sentencing hearing. State v. Johnson, 101 Idaho 581, 583, 618 P.2d 759, 761 (1980). Hearsay evidence in written form is admissible at a sentencing hearing where the defendant is afforded the opportunity to present favorable evidence and to explain or rebut adverse evidence presented. Id. A defendant is entitled to challenge the reliability of the hearsay information contained in a presentence report at the sentencing hearing, and to bring to the court's attention at the hearing matters contained in the report which the defendant believes to be inaccurate. Id.
During the sentencing hearing, Viehweg objected to his daughter's allegations of voyeurism which were included in the PSI. He also exercised his opportunity to cross-examine her. This opportunity gave Viehweg the chance to question his daughter's credibility as well as the reliability of the information she presented. We hold that admission of these allegations through the PSI and through testimony, subject to cross-examination at the sentencing hearing, was proper. Thus, the district court appropriately considered this information prior to imposing sentence.
IV. SENTENCE AND DENIAL OF I.C.R. 35 MOTION
Viehweg asserts that the sentence imposed is illegal because it was excessive. He contends the court should have provided him with more leniency because he is a first-time offender and should have granted his motion under I.C.R. 35 to reduce the sentence.
*1001 A motion to reduce an otherwise lawful sentence is addressed to the sound discretion of the sentencing court. I.C.R. 35; State v. Hooper, 119 Idaho 606, 608, 809 P.2d 467, 469 (1991); State v. Forde, 113 Idaho 21, 22, 740 P.2d 63, 64 (Ct.App.1987). Such a motion essentially is a plea for leniency, which may be granted if the sentence originally imposed was unduly severe. State v. Caldwell, 119 Idaho 281, 284, 805 P.2d 487, 490 (Ct.App.1991); State v. Lopez, 106 Idaho 447, 450, 680 P.2d 869, 872 (Ct.App.1984). The denial of a motion for reduction of sentence will not be disturbed absent a showing that the court abused its sentencing discretion. An abuse of discretion may be found if the sentence is demonstrated to be unreasonable under the facts of the case. State v. Morrison, 119 Idaho 229, 231, 804 P.2d 1360, 1362 (Ct.App.1991); State v. Nice, 103 Idaho 89, 90, 645 P.2d 323, 324 (1982).
The criteria for examining rulings denying the leniency requested are the same as those applied in determining whether the original sentence was reasonable. State v. Gunderson, 120 Idaho 97, 98, 813 P.2d 908, 909 (Ct.App.1991). A sentence of confinement will be upheld as reasonable if it appears at the time of sentencing that confinement is necessary "to accomplish the primary objective of protecting society and to achieve any or all of the related goals of deterrence, rehabilitation or retribution applicable to a given case." State v. Toohill, 103 Idaho 565, 568, 650 P.2d 707, 710 (Ct. App.1982). In reviewing the reasonableness of a sentence, we treat the minimum period specified by the sentencing judge as a probable duration of confinement. I.C. § 19-2513; State v. Sanchez, 115 Idaho 776, 777, 769 P.2d 1148, 1149 (Ct.App.1989). To establish that his sentence was improper, Viehweg must show that, in light of the governing criteria, the sentence was excessive under any reasonable view of the facts. State v. Small, 107 Idaho 504, 505, 690 P.2d 1336, 1337 (1984). In reviewing the reasonableness of a given sentence, we conduct an independent examination of the record, focusing upon the nature of the offense and the character of the offender. State v. Young, 119 Idaho 510, 511, 808 P.2d 429, 430 (Ct. App.1991); State v. Reinke, 103 Idaho 771, 772, 653 P.2d 1183, 1184 (Ct.App.1982).
If the sentence is not excessive when pronounced, the defendant must show that it is excessive in view of new or additional information presented with his motion for reduction. State v. Hernandez, 121 Idaho 114, 117, 822 P.2d 1011, 1014 (Ct.App.1991). When the defendant fails to make this showing, we cannot say that denial of the motion by the district court represents an abuse of discretion. Hernandez, 121 Idaho at 117-18, 822 P.2d at 1014-15.
Having reviewed the evidence presented in this case, we are not persuaded that Viehweg's sentence was either improperly imposed or was unreasonable. Idaho Code § 18-1508 provides that any person convicted of lewd conduct with a child under the age of sixteen, is guilty of a felony and shall be imprisoned in the state prison for a term of not more than life. The district court took into consideration that Viehweg had a good employment history, had raised five children of his own, and had previously committed only a few traffic violations. The court also reviewed all of the information in the PSI, including statements of character prepared by family members and friends. However, the court further noted that before J.M. came to the Viehwegs' home, the Viehwegs were aware that J.M. had been previously abused sexually. The court observed that J.M. was in Viehweg's home as a matter of trust, with Viehweg as a father figure, "and you breached that trust by sexually abusing her." Although this was Viehweg's first felony conviction, the crime itself was not an isolated occurrence. The district court commented: "The abuse went on for one and a half to two years. It's not like it's an infrequent situation. And I think that it's just pretty disgusting conduct." After reviewing all of the information submitted at the sentencing proceeding, the district court concluded that the offense charged was very serious when coupled with J.M.'s previous situation. It is clear that the court properly considered the nature of the offense, the character of the offender and the objectives of sentencing in pronouncing the sentence.
*1002 Upon reviewing the record, we hold that the district court did not abuse its discretion in imposing the sentence. The unified twenty-year sentence, with five years as a minimum period of confinement, was within the limit provided by I.C. § 18-1508 and was not illegal. The sentence was reasonable under the circumstances present in this case. We also are not persuaded that the district court abused its discretion by denying the motion under Rule 35 to reduce the sentence.
CONCLUSION
We hold that the district court did not abuse its discretion when it (1) imposed the sentence and denied the Rule 35 motion without conducting a psychological evaluation; (2) refused to retain jurisdiction; and (3) allowed allegations made by Viehweg's daughter which were provided in the PSI and by her testimony at the sentencing hearing. Accordingly, we affirm the judgment of conviction and sentence and the order denying Viehweg's Rule 35 motion.
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-30961
Summary Calendar
KENNETH VINCENT,
Petitioner-Appellant,
versus
BURL CAIN, Warden, Louisiana State Penitentiary,
Respondent-Appellee.
- - - - - - - - - -
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 99-CV-764-B
- - - - - - - - - -
September 14, 2000
Before EMILIO M. GARZA, STEWART, and PARKER, Circuit Judges.
PER CURIAM:*
Kenneth Vincent, Louisiana prisoner # 95434, appeals from
the denial of his application for habeas corpus relief filed
pursuant to 28 U.S.C. § 2254. He has filed a motion for panel
review of the one-judge order granting his certificate of
appealability (“COA”) in part and denying his COA in part.
Because he failed to file his motion within 14 days after entry
of the challenged order, his motion is DENIED as untimely. See
FED. R. APP. P. 27(c); 5TH CIR. R. 27.2.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 99-30961
-2-
Vincent argues that the prosecution’s failure to disclose
favorable evidence to him violated his constitutional rights as
set forth in Brady v. Maryland, 373 U.S. 83, 86-87 (1963). This
issue was adjudicated on the merits in state court. Accordingly,
habeas corpus relief is only available regarding this issue if
the adjudication of the claim:
(1) resulted in a decision that was contrary to, or
involved an unreasonable application of, clearly
established Federal law, as determined by the Supreme
Court of the United States; or
(2) resulted in a decision that was based on an
unreasonable determination of the facts in light of the
evidence presented in the State court proceeding.
28 U.S.C. § 2254(d). After consideration of Vincent’s Brady
claim, we have determined that he has failed to meet this
standard. The district court’s denial of the instant claim was
therefore not error.
Vincent also contends that he was denied due process because
the jury was given a reasonable-doubt instruction that was
constitutionally impermissible under Cage v. Louisiana, 498 U.S.
39, 41 (1990). The instant Cage issue was not adjudicated on the
merits in state court, and is therefore reviewed de novo. See
Nobles v. Johnson, 127 F.3d 409, 416 (5th Cir. 1997). Vincent
procedurally defaulted the instant issue by failing to object
contemporaneously to the challenged instruction. See Muhleisen
v. Ieyoub, 168 F.3d 840, 843 (5th Cir. 1999)(Louisiana’s
application of the contemporaneous-objection rule to Cage claims
is adequate constitutionally to establish procedural default).
We may nonetheless review the merits of Vincent’s Cage claim
because he has overcome the procedural bar by showing cause and
No. 99-30961
-3-
prejudice for failing to object contemporaneously. See Fairman
v. Anderson, 188 F.3d 635, 641 (5th Cir. 1999)(applicant may
overcome procedural bar by showing cause and prejudice for the
procedural default).
The reasonable-doubt instruction given to the jury at
Vincent’s criminal trial was essentially identical to the
reasonable-doubt instruction held unconstitutional in Humphrey v.
Cain, 138 F.3d 552, 553 (5th Cir.)(en banc), cert. denied, 523
U.S. 935, 943 (1998). The challenged instruction was therefore
constitutionally impermissible under Cage. See 498 U.S. at 40-
41.
Accordingly, the district court’s denial of the instant
§ 2254 application as to the Cage claim is REVERSED and the case
is REMANDED to district court with instructions to grant the writ
of habeas corpus unless the State of Louisiana retries Vincent
within a reasonable time.
MOTION DENIED; REVERSED AND REMANDED.
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FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT November 16, 2015
_________________________________
Elisabeth A. Shumaker
Clerk of Court
VERONICA GARCIA, on behalf of the
minor children, PCG, PCG, VCG, and
SCG; THE ESTATE OF JORGE
ALBERTO CARRERA ALVAREZ,
Plaintiffs - Appellants,
No. 14-2226
v. (D.C. No. 2:13-CV-00827-WJ-LAM)
(D. N.M.)
UNITED STATES OF AMERICA,
Defendant - Appellee.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before HARTZ, PORFILIO, and PHILLIPS, Circuit Judges.
_________________________________
Veronica Garcia appeals the district court’s grant of summary judgment to the
government on her malpractice claims brought under the Federal Tort Claims Act
(FTCA), 28 U.S.C. §§ 1346(b)(1), 2671-80. Exercising jurisdiction under 28 U.S.C.
§ 1291, we affirm.
*
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. See Fed. R. App. P.
32.1 and 10th Cir. R. 32.1.
I
Ms. Garcia filed this suit on behalf of her children and the estate of her
deceased husband, Jorge Alberto Carrera Alvarez,1 who died two days after he was
diagnosed with acute myeloid leukemia. On July 5, 2011, Mr. Carrera and
Ms. Garcia went to the Ben Archer Health Center (BAHC) in Las Cruces, New
Mexico.2 Mr. Carrera had headaches, fatigue, a fever, and a rash. He was examined
by a certified nurse practitioner, Lauri Greis, who noted that Mr. Carrera’s rash was a
condition known as “purpura” (purple blotches on the skin) of unknown etiology.
Ms. Greis ordered multiple blood tests, a urinalysis, and a chest x-ray. She instructed
Mr. Carrera to have the tests done that day, refrain from work, rest, and return to the
clinic in the morning.
Ms. Garcia and Mr. Carrera returned to BAHC at 10:00 a.m. on July 6. They
met with Ms. Greis, who testified that she told them he had leukemia and needed a
“swift eval[uation]” by a hematologist at the only facility in the state capable of
providing the level of care he required—the University of New Mexico Medical
Center (UNM) in Albuquerque. Aplt. App. at 147. After Ms. Greis conferred with
Dr. Robert Francis at UNM, she referred Mr. Carrera to Dr. Francis and Dr. William
1
We follow the parties’ lead and refer to Mr. Carrera Alvarez as
“Mr. Carrera.”
2
Mr. Carrera had been treated at BAHC on June 22, 2011, for pain and
bleeding from his gums, which was diagnosed as acute necrotizing ulcerative
gingivitis. Ms. Garcia agreed to dismiss her claims based on that treatment but
maintained that Mr. Carrera’s dental record remained relevant to BAHC’s evaluation
of him at later appointments.
2
Adler, and cautioned him that “delay could cause suffering, complications, [and]
even death.” Id.
Ms. Garcia and Mr. Carrera left the clinic, but by 2:00 p.m. they had not
arrived at UNM. This prompted calls from Ms. Greis’s colleague, Gloria Marmolejo,
who spoke to Ms. Garcia at 2:03 p.m. Ms. Marmolejo urged Ms. Garcia “to go to
Albuquerque right away” for an “urgent transfusion” or Mr. Carrera could die. Id. at
151-52. Ms. Garcia explained, however, that they could not go to Albuquerque
because they were undocumented aliens and could not travel with their daughters
through the border patrol checkpoint along the route to Albuquerque, in Truth or
Consequences, New Mexico. This information was relayed to Dr. Francis, who
instructed that Mr. Carrera go to an oncologist at the University Medical Center at
Thomason Hospital in El Paso, Texas. Mr. Carrera was admitted to Thomason later
that day, but he died on July 8.
Ms. Garcia filed this suit under the FTCA,3 alleging that BAHC negligently
mishandled his treatment.4 The district court granted summary judgment to the
government.
3
The FTCA authorizes persons to sue the United States “for injury or loss of
property, or personal injury or death caused by the negligent or wrongful act or
omission of any employee of the Government while acting within the scope of his
office or employment, under circumstances where the United States, if a private
person, would be liable to the claimant in accordance with the law of the place where
the act or omission occurred.” 28 U.S.C. § 1346(b)(1). It is undisputed that BAHC
is a qualified entity subject to the FTCA.
(continued)
3
II
“We review the district court’s grant of summary judgment de novo[,] . . .
view[ing] the evidence and draw[ing] reasonable inferences in the light most
favorable to the nonmovant.” Seifert v. Unified Gov’t, 779 F.3d 1141, 1150
(10th Cir. 2015). Summary judgment is appropriate “if the movant shows that there
is no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a). “To defeat a motion for summary judgment,
the nonmoving party must show specific evidence that creates a genuine issue as to a
material fact.” Rice v. Office of Servicemembers’ Grp. Life Ins., 260 F.3d 1240, 1249
(10th Cir. 2001).
One of the district court’s grounds for granting summary judgment was that
causation had to be proved by expert testimony but Ms. Garcia offered no such
testimony. See Miller v. United States, 463 F.3d 1122, 1123 (10th Cir. 2006) (FTCA
liability determined under law of state where act or omission occurred); Gerety v.
Demers, 589 P.2d 180, 191 (N.M. 1978) (“[I]n most medical malpractice suits expert
medical testimony must be adduced to establish a standard of care, to assess the
doctor’s performance in light of the standard, and to prove causation.”). On appeal
Ms. Garcia does not dispute the need for expert testimony on causation; and since
Mr. Carrera’s condition is outside the common experience of lay people, expert
4
Ms. Garcia asserted claims for loss of chance, negligence, loss of consortium,
prima facie tort, vicarious liability, medical malpractice, wrongful death, intentional
infliction of emotional distress, and negligent infliction of emotional distress.
4
testimony was clearly necessary, see Alberts v. Schultz, 975 P.2d 1279, 1284
(N.M. 1999). Yet Ms. Garcia does not point to any expert testimony to support
causation, and we have found none.
Ms. Garcia offered a report from Dr. Robert Gale in which he opined that
Mr. Carrera had acute myeloid leukemia, a condition that can probably be treated
successfully. But the report did not address whether his condition was still treatable
at the time he was seen at BAHC; and at Dr. Gale’s deposition, he explicitly testified
that he had no opinion on whether the care provided by Ms. Greis and others at
BAHC caused Mr. Carrera’s injuries and death. Ms. Garcia also offered a report
from certified nurse practitioner Christina Sanders. But the report addresses only
standard of care, not causation; and at her deposition she declined to offer an opinion
on causation, stating, “I don’t have a causation opinion. I think the earlier you have
access to care, the higher the likelihood that you can have a positive result at the end,
but it’s outside of my scope of practice to opine on causation in this matter,”
Aplt. App. at 108. In the absence of any evidence of causation, we must affirm.
Although Ms. Garcia argues that there are factual disputes, none are relevant to
causation because she has not presented any expert testimony supporting causation
under any version of the facts.
The judgment of the district court is affirmed.
Entered for the Court
Harris L Hartz
Circuit Judge
5
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315 F.Supp.2d 623 (2004)
WÄRTSILÄ NSD NORTH AMERICA, INC., Plaintiff,
v.
HILL INTERNATIONAL, INC., Defendant/Third-Party Plaintiff,
v.
John H. Clegg, Esquire, Daphne McNutt, Esquire, and Chaffe, McCall, Phillips, Toler & Sarpy, L.L.P. Third-Party Defendants.
No. CIV.A. 99-4565 SSB.
United States District Court, D. New Jersey.
March 30, 2004.
Michael Ochs Adelman, Esq., Drinker Biddle & Shanley LLP, Florham Park, NJ, for Plaintiff Wärtsilä NSD North America Inc.
Jane Ward Voegele, Esq., Dechert, Price & Rhoads, Princeton, NJ, for Defendant/Third-Party Plaintiff Hill International, Inc.
Marianne Johnston, Esq., Stradley, Ronon, Stevens & Young, Woodland Falls Corporate Park, Cherry Hill, NJ, for Third-Party Defendants John H. Clegg, Esq., Daphne McNutt, Esq., and Chaffe, McCall, Phillips, Toler & Sarpy LLP.
OPINION REGARDING DEFENDANT'S MOTION FOR RULE 11 SANCTIONS
BROTMAN, District Judge.
Presently before the Court is a motion for sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure filed by Defendant Hill International Inc. ("Hill"). For the reasons discussed below, Defendant's *624 motion will be denied. As the prevailing party, the Plaintiff will be awarded the reasonable expenses and attorney's fees incurred in opposing Hill's motion, pursuant to Rule 11(c)(1)(A).
I. INTRODUCTION
This litigation arises out of a business relationship between Wärtsilä Diesel, an engineering and construction company and the predecessor to Plaintiff Wärtsilä NSD North America, Inc ("Wärtsilä"), and Hill International, construction consulting firm in the business of providing expert advice and project management for major construction projects. Richard LeFebvre, one of Hill's "expert" employees, was assigned to the Wärtsilä project, first as a Hill employee but later as an independent contractor on the Wärtsilä payroll. As it would turn out, LeFebvre lacked the credentials claimed in his resume. Namely, he did not hold either the engineering degrees or the professional certifications represented. Wärtsilä's complaint alleges that the late discovery of these defects in LeFebvre's resume ultimately caused the company to lose millions of dollars in arbitration claims and related litigation.
Hill has brought the present motion for Rule 11 sanctions contending that two crucial allegations in Wärtsilä's Complaint are "completely false" and were submitted with knowledge of their falsity: (1) "That Hill intentionally gave plaintiff a false resume for LeFebvre;" and, (2) that "plaintiff relied on incorrect information in Richard LeFebvre's resume concerning his college degrees when plaintiff entered into the January 1995 consulting agreement." According to Hill, information gleaned from the deposition of Kevin Curran, a Wärtsilä manager who had previously known LeFebvre, "indisputably" demonstrates the falsity of the allegations contained in Wärtsilä's complaint. Moreover, Hill asserts that Wärtsilä's negligence claim is without evidentiary foundation. For Wärtsilä's reluctance to withdraw its claims against Hill in the face of this evidence, or the lack thereof, Hill seeks (among other things) to strike the relevant allegations by way of a Rule 11 sanction, an action that would lead inevitably to a dismissal of all remaining claims against it.
II. FACTUAL AND PROCEDURAL BACKGROUND
In July 1994, Wärtsilä entered into a contract with Coastal Salvadorian Ltd. ("Coastal") wherein Wärtsilä agreed to design, engineer, procure, construct, start up and test a diesel engine power plant in Nejapa, El Salvador ("the Project"). Wärtsilä, whose business had up to that point focused primarily on the sale and maintenance of diesel engines, in turn subcontracted much of the plant's construction to a variety of other entities, including Black & Veatch International ("BVT"). Within a matter of months, the Project fell behind schedule, resulting in numerous contractual disputes between Wärtsilä, BVI, and Coastal. In an effort to get the project back on track, Wärtsilä sought the services of the Defendant, Hill International.
According to Wärtsilä's first amended complaint, Hill submitted a proposal for the consulting position on January 18, 1995. (Pl.'s First Amended Compl. at ¶ 31.) In its proposal, Hill recommended that Richard LeFebvre, one of the firm's senior consultants, be assigned to the Project to "collect, organize and evaluate ... factual information and report ... his findings as to the best way to proceed with the completion of the project." (Id. at ¶ 33.) LeFebvre's responsibilities were to include gathering information and materials related to the construction project, visiting the *625 project site "to evaluate the adequacy of the plans and specifications," and comparing the actual performance of the construction work to Wärtsilä's obligations under its contract with Coastal. (Id.) Attached to the proposal was a copy of LeFebvre's professional resume which represented that he: (a) had received a B.S. in electrical engineering from Penn State in 1966; (b) had earned a B.A. in business administration from Duquesne University in 1969; (c) had taken courses in business law at the University of North Florida in 1983; and (d) was registered and licensed as a professional engineer in Pennsylvania, New York, and Massachusetts. (Id. at ¶ 32.)
On January 24, 1995, Wärtsilä and Hill International entered into a written consulting agreement that incorporated by reference the January 18 proposal. (Id. at ¶ 34.) Pursuant to the terms of the agreement, Hill assigned Richard LeFebvre to work as a senior consultant on the Project. (Id. at ¶ 35.) LeFebvre was quickly promoted by Wärtsilä to the position of Project Manager and continued to work on the Project as a Hill employee until May 25, 1995. (Id. at ¶¶ 37, 40.) Among his responsibilities was the task of analyzing issues bearing on potential claims and defenses in contractual disputes between Wärtsilä and BVI. (Id. at ¶¶ 38-39.)
On June 1, 1995, with Hill's approval, Wärtsilä hired LeFebvre "as an independent contractor to provide assistance with construction and claims management on the Project." (Id. at ¶ 41.) Allegedly acting in reliance on LeFebvre's analysis and recommendations, Wärtsilä in May 1996 decided to pursue claims against BVI before the American Arbitration Association and retained the Louisiana law firm of Chaffe, McCall, Phillips, Toler & Sarpy, L.L.P., and two of its attorneys, John H. Clegg, Esq., and Daphne McNutt, Esq., to initiate arbitration proceedings against BVI in Charlotte, North Carolina. (Id. at ¶ 43; Third Party Complaint at ¶ 11.) LeFebvre was considered a "key witness" in the proceedings due to his intimate and extensive knowledge of the facts underlying the points of contention between the two parties and his participation in the drafting of various "claim support" documents. (Pl.'s First Amended Compl. at ¶¶ 43-44.)
At the arbitration proceedings in September 1997, LeFebvre offered testimony regarding the academic and professional credentials listed on his resume. (Id. at ¶ 47.) On September 8, 1997, toward the end of his direct testimony, Wärtsilä became aware, "for the first time," that there were questions concerning LeFebvre's educational and professional credentials when counsel for BVI requested that LeFebvre execute a release for background academic information. (Id. at ¶ 48.) Later that day, after the proceedings had been adjourned, LeFebvre admitted to Wärtsilä's attorneys that the statements on his resume concerning a business degree from Duquesne University were not accurate. (Id. at ¶ 49.) He allegedly told Wärtsilä that Hill had asked him to overstate the extent of his training at Duquesne. (Id.)
The next morning, LeFebvre requested and received from Hill a revised resume which omitted any reference to a business degree from Duquesne or business law courses at North Florida and modified the date on which he claimed to have received an electrical engineering degree from Penn State. (Id. at ¶ 50.) When the proceedings resumed later that day, BVI's attorneys subjected LeFebvre to a vigorous cross-examination, forcing him to acknowledge the obvious inconsistencies between the two resumes. LeFebvre nevertheless insisted *626 that the revised resume was entirely accurate and truthful. (Id. at ¶ 50(b).) However, by the conclusion of the day's proceedings, Wärtsilä's attorneys were forced to concede that a hasty investigation into LeFebvre's academic credentials had uncovered no evidence that he had ever received an engineering degree from Penn State or attended any of the other schools listed on his resume. (Id. at ¶ 51.) Wärtsilä also found no evidence that LeFebvre had ever been licensed as a professional engineer in either New York, Pennsylvania, or Massachusetts. (Id.)
In light of LeFebvre's perjury, Wärtsilä's counsel withdrew his testimony, and the arbitration panel granted Wärtsilä a short recess to restructure its case based on new witnesses. (Id. at ¶ 53.) During that time, the company re-examined materials prepared by LeFebvre and allegedly discovered that he had improperly altered original "claim support" documents. (Id. at ¶ 53.) Consequently, Wärtsilä claims it was forced to withdraw certain claims. (Id.) On March 5, 1998, the arbitration panel issued a judgment of $4.65 million in favor of BVI. Wärtsilä attributes the arbitration award to the complete loss of credibility it allegedly suffered as a result of LeFebvre's blatant misrepresentations, both on his resume and in his testimony before the arbitration panel. (Id. at ¶ 52.)
In November 1997, shortly after LeFebvre was exposed as a fraud and a perjurer, BVI brought claims in tort and contract against Wärtsilä in the United States District Court for the District of Kansas ("Kansas litigation"). (Id. at ¶ 58, 60.) The lawsuit was based on Wärtsilä's "placement of an individual lacking in the necessary education, skills, professional licenses and trustworthiness as Project Manager charged with oversight of BVI's work." (Id. at ¶ 59.) Wärtsilä ultimately settled this dispute with BVI for $850,000. Wärtsilä subsequently initiated the present litigation against Hill in the United States District Court for the District of New Jersey.[1]
Wärtsilä's Original Complaint asserted claims for negligence (count I), fraud (count II), consumer fraud (count III), and breach of contract (count IV). On September 29, 2000, the Court dismissed Counts I (negligence) and III (consumer fraud) for failure to state a claim on which relief may be granted. Wärtsilä NSD North America, Inc. v. Hill Int'l, Inc., No. 99-4565 (D.N.J. Sept. 29, 2000). However, the negligence claim was later reinstated.
On reconsideration, the Court found that the negligence claim could prevail under a theory of negligent hiring contingent on the existence of certain facts; for instance, if the Plaintiff could prove that LeFebvre altered Wärtsilä claims support documents while he was still under the direct employ of Hill International. The Court also reconsidered but rejected the viability of the *627 claim under a theory of negligent misrepresentation. Applying § 552 of the Restatement (Second) of Torts, it found that the theory must fail because the "Restatement makes clear that liability attaches only when the defendant has a pecuniary interest in the transaction in which the information is given" and Wärtsilä's Original Complaint offered "no indication that Hill had a pecuniary interest in the arbitration hearing for which the updated resume was provided." Wärtsilä NSD North America, Inc. v. Hill Int'l, Inc., No. 99-4565, slip op. at 8 (D.N.J. June 27, 2001). Yet the Court left open the possibility that this defect in the pleadings could be (and had been) cured.
By the time of the motion for reconsideration, Wärtsilä's Original Complaint had been superceded by a First Amended Complaint. Although the Court briefly mentioned the amendments in its opinion, the scope of reconsideration was necessarily limited to the pleadings before the Court at the time of the underlying opinion on dismissal. The Court noted that "Plaintiff has amended its Complaint to allege that after Wärtsilä hired LeFebvre directly, LeFebvre remained employed by Hill on other matters through the time of the arbitration hearing" but declined to "consider the allegation because it was not in the record before the Court at the time of the motion to dismiss." Wärtsilä slip op. at 9 n. 1 (D.N.J. June 27, 2001).
As it now stands, Wärtsilä's First Amended Complaint asserts claims for negligence, fraud, and breach of contract and seeks recovery of both compensatory and punitive damages for the harm allegedly suffered as a result of the misrepresentations concerning LeFebvre's academic and professional credentials. It has never been directly challenged either by filing a second motion to dismiss or a motion for summary judgment. Instead, Hill's only response to the First Amended Complaint has been to submit the present motion, seeking to dismiss the claims by way of Rule 11 sanctions.
III. THE RULE 11 STANDARD
Federal Rule of Civil Procedure 11 has undergone many significant revisions since it was first adopted in 1937. See Hockley v. Shan Enterprises, 19 F.Supp.2d 235 (D.N.J.1998) (Brotman, J.) (discussing the history of the rule, up through the 1993 amendments). In its latest incarnation, Rule 11 provides that by submitting a "pleading, written motion, or other paper" to the court, a person is certifying, among other things, that to the best their knowledge the legal arguments contained therein are supported by a existing law, or a non-frivolous argument for extension, modification or reversal and that the facts contained therein are supported by existing evidence or are likely to be supported after reasonable inquiry. FED. R. CIV. P. 11(b). Despite progressive amendments to the Rule, the basic duty imposed remains largely unchanged. Put simply, Rule 11 requires a person contemplating filing a paper with the court to "stop, think, and investigate" before doing so. In appropriate circumstances, the Rule allows for a litigant to seek sanctions for a violation of the standards found in subsection (b). However, such a motion should not be sought reflexively or as a matter of course.
The imposition of Rule 11 sanctions is properly reserved for exceptional circumstances, Teamsters Local Union No. 430 v. Cement Express Inc., 841 F.2d 66, 68 (3d Cir.1988), and motions "should not be made or threatened for minor, inconsequential violations" of the standards. Fed. R. Civ. P. 11, Advisory Committee Notes (1993 amendments). Perhaps even more important than when a party decides to deploy a Rule 11 motion is the way in *628 which it was used. "A motion should not be employed as a discovery device or to test the legal sufficiency or efficacy of allegations in the pleadings; other motions are available for those purposes." Id.; CTC Imports and Exports v. Nigerian Petroleum Corp., 951 F.2d 573, 579 (3d Cir.1991) ("In imposing Rule 11 sanction ... the court does not pass judgment on the merits of an action.") (citing Gaiardo v. Ethyl Corp., 835 F.2d 479 (3d Cir.1987)); 5A Charles Alan Wright & Arthur R. Miller, Federal Practice And Procedure § 1336 (2003 Supp.) ("Even in its amended form, Rule 11 should not be used to raise issues of legal sufficiency that more properly can be disposed of by ... a motion for summary judgment."); see also Gaiardo, 835 F.2d at 482 ("Rule [11] must not be used as an automatic penalty against an attorney or a party advocating the losing side of a dispute."). Even if a Rule 11 motion is ultimately denied, the moving party may be effectively rewarded if the motion is allowed to lead the Court into a searching evaluation of the merits of a case.
IV. DISCUSSION
In the present motion, Hill attacks two explicit allegations made in Wärtsilä's Amended Complaint and one "implied allegation" supposedly raised by Wärtsilä's continued assertion of the negligence claim against Hill: (1) "That Hill intentionally gave plaintiff a false resume for LeFebvre;" (2) that "plaintiff relied on incorrect information in Richard LeFebvre's resume concerning his college degrees when plaintiff entered into the January 1995 consulting agreement;" and (3) that LeFebvre altered claim support documents while directly employed by Hill International. According to Hill, there is a complete lack of proof that Hill knew of the fabrications in LeFebvre's resume when it was provided to Wärtsilä. Moreover, Hill contends that the deposition testimony of Kevin Curran, a Wärtsilä manager intricately involved in the Najepa Project, conclusively establishes a lack of reliance on LeFebvre's credentials. For Wärtsilä's decision to maintain its claims for fraud and breach of contract without such evidence, Hill seeks sanctions in the form of a dismissal of those claims. Finally, Hill asserts that an "implied allegation" that LeFebvre altered certain claim support document is entirely unsupported by the evidence. For maintaining the negligence claim without evidence of alterations, Hill seeks sanctions in the form of a dismissal of that claim. Thus, if Hill's Rule 11 motion were granted in its entirety, the case against it would be dismissed.
With regard to the fraud claim, Wärtsilä admits in its reply brief that there is no "smoking gun" conclusively establishing Hill's knowledge that the resume was fabricated. However, Wärtsilä has pointed to myriad circumstantial evidence that would suggest that Hill "knew or should have known" of the falsity of the LeFebvre resume, not the least of which are Hill's provision of a second "corrected" resume and the admission by Hill principal Irvin Richter that the company did not follow its own procedures with regard to LeFebvre's resume. (Deposition of Irvin Richter at 62.) Without undertaking a detailed examination of the sufficiency of the proffered evidence, as might be appropriate on a motion for summary judgment, it is enough to note here that Wärtsilä has established that this allegation is far from patently frivolous. Although Wärtsilä may face difficulty establishing the requisite knowledge on the part of Hill, "[t]o say that a party confronts difficult questions of factual sufficiency is not the same as saying its claims are patently frivolous." Ford Motor Company v. Summit Motor Products, Inc., 930 F.2d 277, 290 (3d Cir. 1991). *629 It is in the nature of fraud cases that the scienter element will ordinarily be difficult to establish. This does not make the pressing of the claim itself a sanctionable activity.
As to the question of reliance, Hill has submitted the deposition testimony of Kevin Curran. According to Hill, Curran is a central figure in the decision to retain the services of Hill International and Richard LeFebvre. He is the person responsible for contacting Hill, receiving Hill's proposal, and signing the contract between Wärtsilä and Hill. In his deposition, Curran testified that he never relied on LeFebvre's resume in hiring him, that he was not looking for an individual with a college degree or professional engineer's license, and that he knew LeFebvre had no college degrees. (Deposition of Kevin Curran at 20-21, 28, 69-71, 102-03.) Curran further testified that he would have retained LeFebvre's services regardless of his employer. As it turned out, LeFebvre was employed by Hill at the time.
Hill claims that Curran's testimony irrefutably proves that there was no reliance on the representations that LeFebvre was a college graduate with numerous professional certifications, and hence no reliance on the resumes provided by Hill. But Hill's assertion is in fact refuted by the depositions of other key players in the decision to retain LeFebvre, most notably that of Wärtsilä General Counsel John Weisse. Weisse testified that he was approached early on by Curran, who asked for his assistance in convincing the Wärtsilä President and other Wärtsilä managers that the company should hire a claims consultant to protect itself in the likely event of litigation. (Deposition of John Weisse at 55-57.) If management could be convinced, Curran allegedly asked Weisse to "help [Curran] figure out whether we got the right guys." (Id. at 57.) Weisse was also present at the January 1995 meeting between Curran, LeFebvre and Bill Lowe, a representative of Hill International, at which time the LeFebvre resume was first provided. Without assessing the sufficiency of the proffered evidence for support of Wärtsilä's claims-which would only be appropriate on a motion for summary judgment the Court notes that the proffered evidence clearly establishes that Wärtsilä's fraud claim is not patently frivolous.
Moreover, Curran's own testimony falls far short of conclusively demonstrating a lack of reliance on the part of Wärtsilä. By his own admission, Curran only reached the realization that LeFebvre lacked the credentials listed in his resume sometime around November of 2001, long after the decision to hire LeFebvre had been made, after this litigation was initiated, and even after Wärtsilä's Amended Complaint had been filed with the Court. (Curran Dep. at 104-06.) In fact, Curran testified that the discovery of LeFebvre's fabricated credentials after the collapse of the BVI arbitration took him as a "big shock." (Id. at 105.) Leaving aside the inconsistency of Curran's recollection and the conflicting inferences that can be drawn from his deposition testimony, it is clear that Curran's late acquired recollection is of no moment to the question of reliance at the time when decisions regarding LeFebvre's employment were being made. Hill's proffer of this testimony for the present purposes is entirely misplaced.
Finally, with regard to the negligence claim Hill points to Wärtsilä's December 28, 2001, response to interrogatories, indicating that Wärtsilä had no evidence of any alterations in claim support documents made during the time LeFebvre was under the direct employ of Hill International. (See Response No. 7 of Plaintiffs Responses to Defendant's for Production of Documents). Wärtsilä responds that evidence *630 of alterations was since discovered and provided to Hill. However, even if such evidence had not been forthcoming, Hill's reliance on this point as a basis for sanctions would still be entirely untenable. In drawing all reasonable inferences in Defendant's favor, this Court's June 27, 2001 Opinion on Reconsideration of its earlier Opinion on 12(b)6 dismissal merely cited one possible way in which Wärtsilä could sustain its claim under a theory of negligent hiring. It did not convert alterations of documents into an evidentiary prerequisite, as Hill now seems to claim. Moreover, the Court's Opinion clearly avoided decision on the viability of Wärtsilä's claim under a theory of negligent misrepresentation pursuant to the Amended Complaint. As with the other points of the present motion, this issue is more appropriately addressed in a substantive motion on the merits and not through a collateral motion for sanctions. For now, the Court finds only that Wärtsilä's pursuit of a negligence claim, with or without evidence of claims alteration, is not by any stretch patently frivolous or sanctionable activity.
V. CONCLUSION
Nine months have now passed since Hill submitted this motion. It has been a year and a half since Hill took Mr. Curran's deposition and `discovered' the alleged misrepresentations in Wärtsilä's Complaint. This case as a whole has consumed nearly five years of litigation with no trial yet in sight. In these circumstances it is difficult, if not impossible, to understand why a motion for summary judgment was not forthcoming from the Defendant, if as Hill here asserts it felt that Wärtsilä's complaint is legally insufficient in light of Mr. Curran's statements. Since it was not forthcoming, the Court is extremely reluctant to review the legal sufficiency of Wärtsilä's complaint on a Rule 11 motion. Such analysis is properly reserved for a motion on the merits.
For the foregoing reasons the Defendants motion for Rule 11 sanctions will be denied. Furthermore, because the Court at various points above finds that the allegations in the present motion are untenable, misplaced, inappropriate for a Rule 11 motion, or simply inexplicable in light of the much more stringent test of the Plaintiff's proofs that is available through a motion for summary judgment, the Plaintiff will be awarded the costs associated with responding to this motion as the prevailing party under Rule 11(c)(1)(A). Rule 11 sanctions are properly deployed only in exceptional circumstances, this is not such a circumstance.
NOTES
[1] Wärtsilä initially retained attorneys Clegg and McNutt, who had left the Chaffe firm to join the New Orleans law firm of McGlinchey Stafford, LLC, to represent it in this suit. However, Clegg and McNutt have since been added as Third Party Defendants in this case and thus they are no longer representing Wärtsilä. Hill filed the Third Party Complaint in August of 2001, asserting claims for contribution and indemnification against Clegg, McNutt, and the Chaffe law firm. Hill's complaint alleges that, as counsel for Wärtsilä during the BVI arbitration proceedings, Third Party Defendants acted recklessly and negligently and that it was their failure to provide Wärtsilä with "adequate legal representation" which caused the losses Wärtsilä allegedly sustained in both the BVI arbitration and the Kansas litigation. See generally Wartsila v. Hill International, Inc., 269 F.Supp.2d 547 (D.N.J.2003) (denying third party defendants' motion to dismiss for lack of personal jurisdiction).
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975 So.2d 1138 (2008)
KAISER
v.
STATE.
No. 1D07-4175.
District Court of Appeal of Florida, First District.
February 20, 2008.
Decision without published opinion. Affirmed.
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642 F.Supp.2d 891 (2009)
Harry R. ELLWANGER, Plaintiff,
v.
Michael J. ASTRUE, Commissioner of Social Security, Defendant.
No. 09-cv-80-bbc.
United States District Court, W.D. Wisconsin.
August 13, 2009.
*893 Frederick J. Daley, Daley, Debofsky & Bryant, Chicago, IL, for Plaintiff.
*894 Commissioner of Social Security, Office of General Counsel, Region 5, Chicago, IL, Richard D. Humphrey, U.S. Attorney's Office, Madison, WI, for Defendant.
OPINION AND ORDER
BARBARA B. CRABB, District Judge.
This is an action for judicial review of an adverse decision of the Commissioner of Social Security, denying plaintiff Harry R. Ellwanger's application for Supplemental Security Income under Title XVI of the Social Security Act, codified at 42 U.S.C. § 1382(c)(3)(A). Plaintiff is an obese 45-year-old former bartender who has problems with weakness and swelling in his lower left leg resulting from an injury he sustained when he was 14. In addition, he has weakness in his hands following carpal tunnel surgery. While plaintiff was working behind the bar in June 2005, his left ankle gave out, causing it to break. In August 2005, plaintiff applied for supplemental security income, alleging that he was unable to work because he could not walk or stand for very long. After the state agency denied his application, plaintiff requested a hearing before an administrative law judge, who determined that plaintiff had significant limitations. Specifically, he found that plaintiff could perform only sedentary jobs that did not require him to lift more than 10 pounds, stand for more than 10 minutes at a time or perform more than occasional fine or gross manipulation with his dominant left hand. A vocational expert testifying at the hearing was ultimately able to identify only one occupation that satisfied these restrictions, that of customer service representative. The expert told the administrative law judge at the hearing that a person with the restrictions outlined by the administrative law judge could meet the requirements of this job and that her testimony was consistent with information provided in the Dictionary of Occupational Titles, published by the Department of Labor. In a decision issued June 5, 2008, the administrative law judge relied on this testimony as a basis for finding that plaintiff was not disabled.
I agree with plaintiff that this case must be remanded. According to the Dictionary of Occupational Titles, the occupation of customer service representative is a skilled job. However, the administrative law judge found that plaintiff could perform only unskilled work. In that respect, a conflict exists between the vocational expert's testimony and the Dictionary that was never explained at the hearing and that calls into question the reliability of the expert's testimony. In addition, the administrative law judge conducted a faulty evaluation of the medical evidence in evaluating plaintiff's subjective complaints. In particular, his decision suggests that he disregarded the effect of plaintiff's 1977 injury and other impairments on his present condition and focused solely on the evidence relating to plaintiff's broken ankle. Accordingly, because it is unclear whether plaintiff actually is capable of performing the jobs identified by the vocational expert and because the administrative law judge failed to make a well-reasoned credibility determination, I am remanding the case to the commissioner for further proceedings.
The following facts are drawn from the administrative record (AR):
FACTS
A. Background
Plaintiff was born on September 19, 1963. AR 288. He completed high school and has past relevant work as a bartender. AR 141, 147. In 1977, plaintiff suffered an injury to his left leg when he was hit by a motor vehicle. Since then, he has suffered some chronic loss of sensation and weakness *895 in his left leg. AR 198, 262. He is obese, weighing about 330 pounds and standing six feet, two inches.
B. Medical Evidence
1. Dr. R.E. Huizenga
In June 2005, plaintiff's left ankle "gave out" while he was at work tending bar. AR 200. An x-ray showed a nondisplaced ankle fracture. AR 202. On July 1, 2005, Dr. R.E. Huizenga, an orthopedist, saw plaintiff for his fractured ankle. He noted that plaintiff's entire left leg was discolored, with moderate swelling and tenderness at the ankle. Huizenga prescribed hydrocodone for plaintiff's pain. AR 216. Plaintiff saw Huizenga throughout July. The hydrocodone seemed to be helping, but plaintiff was unable to bear weight on his left ankle. He was unable to work because of swelling and tenderness in the ankle and a marked limitation of motion. AR 213. On August 11, 2005, plaintiff saw Huizenga and reported pain and an inability to function at his previous level of activity. AR 212. Huizenga prescribed physical therapy three times a week to increase plaintiff's range of motion and to strengthen his ankle. AR 213.
At plaintiff's first physical therapy appointment on August 16, 2005, he was using a cane and had decreased left ankle strength and range of motion. The therapist thought plaintiff's rehabilitation potential was good. AR 194. After six visits, however, the therapist noted that plaintiff's progress was slow and that he was still suffering from more pain with prolonged standing and walking. AR 191.
On September 8, 2005, plaintiff saw Huizenga. On examination, Huizenga noted that plaintiff had moderate swelling and tenderness of the left ankle and diffuse weakness in the left lower limb, especially at the knee, ankle and toes. Huizenga noted that before he broke his ankle, plaintiff walked with a limp because of the injury to his leg when he was 14. Huizenga continued plaintiff's physical therapy. AR 210.
When plaintiff returned to Dr. Huizenga on October 6, 2005, he reported left ankle pain and instability. He told Huizenga that he had recently used some of the hydrocodone that had been prescribed three months earlier. Huizenga noted that plaintiff had tenderness and swelling of his ankle. After looking at the x-rays again, Huizenga noted no evidence of osteoarthritis at the ankle. AR 210. Huizenga told plaintiff that he might have persistent ankle problems because of the weakness secondary to his childhood injury and his excessive weight. Because plaintiff was making very little progress in physical therapy, Huizenga discontinued it. AR 211.
On March 16, 2006, plaintiff returned to see Dr. Huizenga. He reported ongoing severe ankle pain and weakness, with frequent giving way of the ankle. Plaintiff walked with a cane. Plaintiff said that his left leg had been lacerated during the 1977 accident, causing vascular and nerve damage and permanent weakness in the lower leg. An x-ray showed that plaintiff's left ankle fracture had healed completely with no evidence of osteoarthritis. AR 272. Huizenga noted that plaintiff was grossly overweight. Plaintiff walked with a limp favoring the left leg. Huizenga detected weakness in plaintiff's left ankle and knee and observed extensive scarring in plaintiff's left leg. He prescribed an ankle foot orthotic. AR 262. After a visit with plaintiff on December 20, 2006, Huizenga wrote that, because of the weakness in plaintiff's left lower limb, he would never be able to do any standing work. AR 263.
In June 2007, plaintiff reported to Dr. Huizenga that the pain in his left ankle had worsened and that he also had knee and low back pain. Plaintiff was using a cane and reported that he could be on his *896 feet for 15 minutes at a time at most and could walk 200-300 feet at most and then only if he went slowly. He said his left ankle swelled frequently. On examination, Huizenga noted that plaintiff's left ankle was mildly swollen and the left leg had very prominent venous stasis dermatitis. (Venous stasis dermatitis is an inflammatory skin disease that occurs on the lower extremities in patients with chronic venous insufficiency. It rarely occurs before the age of 50 except in patients who have had surgery, trauma or thrombosis. Http:// emedicine.medscape.com/article/1084813-overview.) A repeat x-ray of the left ankle was unremarkable. Huizenga recommended that plaintiff get knee-high compression hose for his left leg. He wrote: "I still consider him disabled and unable to do any kind of work that involves standing." AR 264. That same day, Huizenga completed a form for plaintiff's insurance company, indicating that plaintiff had weakness in his left leg secondary to nerve injury, morbid obesity and venous insufficiency. He wrote that plaintiff could never return to work and was unable to walk or stand. AR 176.
2. Dr. Tejesh Patel
On February 1, 2006, plaintiff saw Dr. Tejesh Patel for hypertension. Patel encouraged plaintiff to lose weight, exercise, quit chewing tobacco and reduce his alcohol intake to no more than one to two drinks at a time. He also prescribed medication for plaintiff's hypertension. AR 244A. A week later, plaintiff returned to Patel's office suffering a hypertensive emergency. He was treated in the emergency room. AR 245.
On February 21, 2006, plaintiff returned to see Dr. Patel, who noted that the Toprol XL was proving effective. AR 245A-46. Plaintiff continued to see Patel for hypertension through at least March 2008. AR 247A-55.
In March 2007, Patel referred plaintiff to Dr. T. Wang, a gastroenterologist, after plaintiff had abnormal liver function tests. Wang observed that plaintiff had mild edema in his left leg. Laboratory and ultrasound testing showed that plaintiff had fatty inflammation of the liver. Wang advised plaintiff to stop drinking alcohol and lose weight. AR 243A.
3. Dr. K. Goetzen
In October 2007, plaintiff visited neurologist Dr. K. Goetzen for tingling in both hands and legs. Plaintiff had normal strength in his left lower extremity, but occasionally had poor effort because of his left leg pain. AR 256-57. X-rays showed degenerative changes of the thoracic, lumbar and cervical spine. AR 268-70.
4. Dr. A. Matloob
In November 2007, plaintiff visited orthopedist Dr. A. Matloob, complaining of numbness and tingling in the fingers of his left hand. Nerve conduction studies revealed bilateral carpal tunnel syndrome. AR 265. On December 6, 2007, plaintiff had left carpal tunnel surgery. AR 275-76. In January 2008, plaintiff was doing very well and was happy with the results of his surgery. AR 266. He had right carpal tunnel surgery on January 15, 2008. AR 266, 273-74. Nine days after surgery, plaintiff was happy with the results. AR 267.
C. Consulting Physicians
On October 26, 2005, state agency physician Mina Khorshidi completed a physical residual functional capacity assessment for plaintiff, listing diagnoses of left ankle fracture, old left leg injury, hypertension and back pain. Khorshidi found that plaintiff could lift 10 pounds occasionally and less than 10 pounds frequently, stand or walk two hours in an eight-hour work-day *897 and sit six hours in an eight-hour work day with no other limitations. AR 217-24.
On February 24, 2006, state agency physician Dar Muceno completed a physical residual functional capacity assessment for plaintiff, listing diagnoses of remote left leg trauma and status post left ankle fracture. Muceno found that plaintiff could lift 20 pounds occasionally and 10 pounds frequently, stand or walk two hours in an eight-hour workday and sit six hours in an eight-hour work day with no other limitations. He also concluded that plaintiff could climb ramps and stairs, stoop, kneel, crouch and crawl occasionally, but could never climb ladders, ropes or scaffolds. Muceno also noted that plaintiff should avoid concentrated exposure to hazards such as machinery or heights. AR 225-32.
D. Hearing Testimony
Plaintiff testified at the hearing as follows:
He last worked on June 25, 2005, tending bar 10 hours a day in a bar owned by his wife. He quit working after his ankle broke while he was just standing at the bar. AR 288-89. One doctor told him his ankle had broken because all the muscles in his left side were deteriorating as a result of the left leg injury he suffered in 1977. Plaintiff wears a plastic ankle brace and uses a cane. AR 291.
Plaintiff elevates his leg because his ankle swells. Also he has a skin condition on his left leg. AR 292. He falls without notice and can stand for only five minutes. AR 293-94. His lower back and legs are uncomfortable when he is sitting. AR 296. He drives, but his wife helps him shower, dress and put on his ankle brace. AR 299. He spends most of his day watching television with his leg elevated. AR 302. He grocery shops on occasion. He does not cook, clean, do dishes, laundry, take care of the lawn or read. AR 303.
Plaintiff testified that he had carpal tunnel surgery on both hands. AR 299. He said that at first, the numbness in his fingers went away. However, it returned and was worse than it had been before the surgery. Plaintiff said he no longer has any strength in his hands and cannot even open a plastic soda bottle. AR 301.
The administrative law judge called Catherine Anderson to testify as a neutral vocational expert. AR 304. Anderson testified that plaintiff had performed his past work as a bartender at the semi-skilled, medium level. AR 305 She further testified that the skills from plaintiff's bartender job were not transferrable to any other jobs at the sedentary exertional level. AR 206.
The administrative law judge asked Anderson whether occupations existed in Wisconsin that could be performed by an individual of plaintiff's age, educational background, work experience and the residual functional capacity to perform sedentary work with occasional stooping, bending, or crouching; occasional gross or fine manipulation with the dominant left hand; and no climbing, crawling or kneeling. Anderson responded that such a person would be able to perform jobs existing in Wisconsin as a cashier (11,800 jobs), inspector or sorter (1,500 jobs), shipping or receiving clerk (2,900 jobs), assembler (1,000 jobs) and customer service representative (7,100 jobs). AR 306. The administrative law judge asked Anderson whether her testimony differed from the information in the Dictionary of Occupational Titles. She responded. "No, it has not." AR 307. Although Anderson had testified that these positions did not require more than occasional handling with the left hand, after an off-the-record discussion, she modified her testimony and stated that all the positions except customer service representative would require more than occasional handling with the left hand. Therefore, she eliminated these *898 other positions from the available jobs. AR. 310-12.
On cross-examination, plaintiff's attorney asked Anderson whether competitive work would be eliminated if the hypothetical individual had to lie down for an hour a day. She answered that it would. AR 307. She also testified that if the individual had to elevate his leg while sitting, he could not perform the customer service representative position. AR 314. Plaintiff's lawyer did not pose any questions about the level of skill the job would require. (Under the commissioner's regulations, jobs are classified as unskilled, semi-skilled or skilled. 20 C.F.R. § 416.968.)
E. The Administrative Law Judge's Decision
In reaching his conclusion that plaintiff was not disabled, the administrative law judge performed the required five-step sequential analysis. See 20 C.F.R. §§ 404.1520, 416.920. Under this test, the administrative law judge considers sequentially 1) whether the claimant is currently employed, 2) whether the claimant has a severe impairment, 3) whether the claimant's impairment meets or equals one of the impairments listed in 20 C.F.R. § 404, Subpt. P, App. 1, 4) whether the claimant can perform his past work and 5) whether the claimant is capable of performing work in the national economy. Knight v. Chater, 55 F.3d 309, 313 (7th Cir.1995). If a claimant satisfies steps one through three, he is found automatically to be disabled. If the claimant meets steps one and two, but not three, then he must satisfy step four. Id. The claimant bears the burden of proof in steps one through four. If the claimant satisfies step four, the burden shifts to the commissioner to prove that the claimant is capable of performing work in the national economy. Id.
At step one, the administrative law judge found that plaintiff had not engaged in substantial gainful activity since June 25, 2005, his original alleged onset date. At step two, he found that a plaintiff had severe impairments of obesity, residuals of a nondisplaced supramalleolar fracture and carpal tunnel syndrome. AR 106. At step three, the administrative law judge found that plaintiff did not have a physical impairment or combination of impairments that met or medically equaled any impairment listed in 20 C.F.R. 404, Subpart P, Appendix 1. AR 107.
The administrative law judge found that plaintiff retained the residual functional capacity to perform a range of sedentary work with occasional stooping, bending and crouching; occasional fine or gross manipulation with his dominant left hand; no climbing, crawling or kneeling; and standing for only 10 minutes at a time. In reaching this conclusion, the administrative law judge stated that he had "taken into consideration" Dr. Huizenga's opinion that plaintiff could not do work involving standing, even though he found that the opinion "lack[ed] clinical corroboration." AR 109. The administrative law judge explained that Huizenga had based his opinion on plaintiff's reports of a long-standing nerve and vascular injury "which is largely undocumented in the clinical evidence." AR 108. With respect to the ankle injury, the administrative law judge noted that plaintiff's ankle had healed without any consequent arthritis and that the state agency had questioned whether plaintiff's impairment even met the 12-month durational requirement for disability. AR 108. As for plaintiff's testimony regarding his limitations, the administrative law judge found it "highly questionable," noting that his injury was "in essence an entirely healed fracture" and plaintiff had not taken much pain medication. Id.
At step four, the administrative law judge found that plaintiff was not able to perform his past work, which he performed *899 at a medium exertional level. AR 109. At step five, the administrative law judge found, based on the vocational expert's testimony, that there were 7,100 customer service jobs available in Wisconsin that plaintiff could perform. The administrative law judge found the expert's testimony was consistent with the information contained in the Dictionary of Occupational Titles. He then concluded that plaintiff was not disabled. AR 110.
OPINION
A. Standard of Review
The standard by which a federal court reviews a final decision by the commissioner is well settled: the commissioner's findings of fact are "conclusive" so long as they are supported by "substantial evidence." 42 U.S.C. § 405(g). Substantial evidence means "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971). When reviewing the commissioner's findings under § 405(g), the court cannot reconsider facts, reweigh the evidence, decide questions of credibility or otherwise substitute its own judgment for that of the administrative law judge. Clifford v. Apfel, 227 F.3d 863, 869 (7th Cir.2000). Thus, where conflicting evidence allows reasonable minds to reach different conclusions about a claimant's disability, the responsibility for the decision falls on the commissioner. Edwards v. Sullivan, 985 F.2d 334, 336 (7th Cir.1993). Nevertheless, the court must conduct a "critical review of the evidence" before affirming the commissioner's decision, id., and the decision cannot stand if it lacks evidentiary support or "is so poorly articulated as to prevent meaningful review." Steele v. Barnhart, 290 F.3d 936, 940 (7th Cir.2002). When the administrative law judge denies benefits, he must build a logical and accurate bridge from the evidence to his conclusion. Zurawski v. Halter, 245 F.3d 881, 887 (7th Cir.2001).
B. Step Five
An administrative law judge may rely on testimony from a vocational expert to satisfy the commissioner's burden to produce evidence of a significant number of jobs that the claimant can perform in spite of his limitations. SSR 00-4p; Warmoth v. Bowen, 798 F.2d 1109, 1112 (7th Cir. 1986). When, as in this case, an administrative law judge takes testimony from a vocational expert about the requirements of a particular job, SSR 00-4p requires him to ask whether that testimony conflicts with the Dictionary before relying on that evidence to support a determination of nondisability. If the expert identifies a conflict or the evidence provided by the expert seems on its face to conflict with information in the Dictionary, the administrative law judge must obtain a reasonable explanation from the expert for the conflict. 20 C.F.R. § 416.966(e); SSR 00-4p; Overman v. Astrue, 546 F.3d 456, 463 (7th Cir.2008). In the absence of an apparent conflict, a vocational expert's testimony, even if little more than a "bottom line," may satisfy the commissioner's burden at step five if no one questions the basis of the vocational expert's conclusions at the hearing. Overman, 546 F.3d at 465; Donahue v. Barnhart, 279 F.3d 441, 446 (7th Cir.2002).
Plaintiff argues that the vocational expert's testimony in this case conflicts with the Dictionary and is not reliable. Specifically, plaintiff argues that all of the customer service representative jobs in the Dictionary exceed his abilities because they are skilled positions. As plaintiff points out, there are seven customer service representative jobs listed in the Dictionary. (D.O.T. ## 205.362-026; *900 032.362-010; 239.362-014; 959.361-010; 241,267-032; 239.227-010 and 239.137-014). Only four of these are sedentary jobs and all seven have a Specific Vocational Preparation (SVP) level of five or more, indicating that it is skilled work. (Under the commissioner's regulations, jobs are classified as unskilled, semi-skilled or skilled. 20 C.F.R. § 416.968. Skilled work corresponds to a SVP of five to nine. SSR 00-4P.) However, the vocational expert testified that plaintiff had no skills from his past relevant work that could be transferred to sedentary work. This meant that the relevant occupational base had to be restricted to unskilled jobs. 20 C.F.R. § 416.965(a) ("If you cannot use your skills in other skilled or semi-skilled work, we will consider your work background the same as unskilled.").
The commissioner responds that plaintiff's transferability-of-skills argument is a "red-herring." Like the administrative law judge, the commissioner asserts that the issue was irrelevant because of plaintiff's age, citing 20 C.F.R. § 416.968(d)(4). This regulation, which prescribes special rules regarding transferability of skills that apply to individuals aged 55 or older, has no relevance to this case. Plaintiff was 45 at the time the administrative law judge issued his decision. Why the administrative law judge cited the regulation in his decision and why the commissioner relies on it now is a mystery.
Absent evidence that plaintiff has skills that can be transferred to either semi-skilled or skilled work, I agree with plaintiff that the vocational expert was required to limit her testimony to jobs at the unskilled level. Indeed, the administrative law judge's decision indicates that he recognized this as the appropriate job base. AR 110 ("To determine the extent to which these limitations erode the unskilled sedentary occupational base, I asked the vocational expert . . .".) Apart from its misplaced "red-herring" argument, the commissioner has not made any attempt to refute plaintiff's contention that no customer service representative position identified in the Dictionary can be performed at the unskilled level or to otherwise challenge plaintiff's attack on the reliability of the vocational expert's testimony. Although an argument could be made that the administrative law judge was entitled to rely on the vocational expert's testimony because the conflict with the Dictionary was not obvious and plaintiff did not challenge the vocational expert's testimony regarding the skill level required of a customer service representative, Overman, 546 F.3d at 465, the commissioner has not taken this position. Accordingly, because plaintiff has called into question the reliability of the expert's testimony concerning plaintiff's ability to meet the skill requirements of customer service representative jobs, this case must be remanded for further proceedings.
C. Residual Functional Capacity
Plaintiff contends that the administrative law judge erred in determining his residual functional capacity. First, he argues that the administrative law judge erred by stating that he "considered" Dr. Huizenga's opinion instead of explaining how much weight he gave it. 20 C.F.R. § 416.927(d)(2) ("We will always give good reasons in our notice of determination or decision for the weight we give your treating source's opinion."); Hofslien v. Barnhart, 439 F.3d 375, 377 (7th Cir.2006). Although I agree that the administrative law judge may have committed a technical violation of the regulations concerning opinions from treating physicians, plaintiff cannot show that he was harmed by it. In spite of making several comments that indicated that Huizenga's opinion lacked clinical support, the administrative law judge ultimately adopted it. Huizenga indicated *901 that plaintiff was not capable of work involving standing or walking, and the administrative law judge eliminated such jobs by restricting plaintiff to sedentary work with no standing for more than 10 minutes at a time.
More persuasive is plaintiff's contention that the administrative law judge failed to properly evaluate his testimony that he must elevate his leg when seated because of swelling in his leg. The administrative law judge noted this testimony, but found that it was not entirely credible, writing:
The claimant's statements regarding residual limitations from what is in essence an entirely healed fracture, including his statement that he needs his wife's help to dress, appear highly questionable. Notably Dr. Huizenga's records indicate at one point that the claimant had only recently used some of the pain medication he had prescribed three months earlier and that he was not on any significant pain medication at all by February 2006.
AR 108. The administrative law judge's belief that plaintiff's problems stemmed from "what is in essence an entirely healed fracture" mirrors comments he made elsewhere in his decision, which evince his skepticism of plaintiff's allegations of having sustained nerve and vascular injury to the left leg in 1977. AR 107 (noting nothing in record to confirm plaintiff's history of problems in the left leg), AR 108 (noting that Huizenga had based his opinions on plaintiff's self-reports of long-standing nerve and vascular injury, which were "largely undocumented in the clinical evidence"). Although it may be true that the record lacked records from 1977 documenting the injury, it did contain evidence corroborating plaintiff's account, including the extensive scarring on his leg, documented left leg weakness and swelling and the venous stasis dermatitis, not to mention the fact that plaintiff's ankle had "given out" and broken with ordinary activity. More important, no doctor, including his orthopedist, Dr. Huizenga, questioned that the nerves and vessels in plaintiff's left leg were damaged. In addition, the administrative law judge seems to have given short shrift to plaintiff's obesity and hypertension, both of which likely contribute to the swelling in his leg. Barrett v. Barnhart, 355 F.3d 1065, 1068 (7th Cir.2004) (administrative law judge must consider applicant's medical situation as whole). By limiting the scope of his inquiry to the limitations that could credibly result from plaintiff's ankle injury and ignoring the other impairments documented in the record, the administrative law judge overstepped his bounds and "played doctor." Murphy v. Astrue, 496 F.3d 630, 634 (7th Cir.2007) (administrative law judge "cannot play the role of doctor and interpret medical evidence when he or she is not qualified to do so"). Finally, the fact that plaintiff did not take pain medication for his ankle does little to undermine his complaints of swelling and weakness.
It is true that there is no medical record showing that any physician or therapist advised plaintiff to elevate his leg during the day. However, in formulating a claimant's residual functional capacity, an administrative law judge must consider all relevant evidence, both medical and non-medical, including a claimant's own statement of what he or she is able or unable to do. 20 C.F.R. § 416.945(a)(3). Of course, an administrative law judge need not accept some or all of a plaintiff's subjective complaints, but he must provide sound reasons, supported by the record, for rejecting them. Skarbeck v. Barnhart, 390 F.3d 500, 505 (7th Cir.2004). The administrative law judge failed to do that in this case. Accordingly, on remand, the administrative law judge must conduct a new credibility assessment that builds a *902 rational bridge from the evidence to his conclusion and that takes into account the entire constellation of plaintiff's impairments.
ORDER
IT IS ORDERED that the decision of defendant Michael J. Astrue, Commissioner of Social Security, denying plaintiff Harry R. Ellwanger's application for disability insurance benefits is REVERSED AND REMANDED pursuant to sentence four of 42 U.S.C. § 405(g) for further proceedings consistent with this opinion. The clerk of court is directed to enter judgment for plaintiff and close this case.
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405 F.Supp. 911 (1975)
WALKER TRUCK CONTRACTORS, INC.
v.
CRANE CARRIER CO., et al.
Civ. No. 3-75-118.
United States District Court, E. D. Tennessee, N. D.
July 25, 1975.
Supplemental Memorandum August 8, 1975.
*912 Calvin N. Taylor, Knoxville, Tenn., for plaintiff.
J. W. Baker, Robert R. Campbell, E. Bruce Foster, Knoxville, Tenn., for defendants.
BENCH MEMORANDUM
ROBERT L. TAYLOR, District Judge.
Walker Truck Contractors, Inc., seeks damages against Crane Carrier Co., Spicer Division of Dana Corporation, and North American Rockwell for damages arising out of some nineteen trucks purchased by Walker from the Tennessee Truck & Equipment Company. Fifteen of these trucks were the 1972 model and four were the 1973 model. At least fifteen of them were purchased upon the representation that these vehicles would perform at least equivalent to Mack trucks with which Walker was familiar and were the proper type of vehicle for the Walker operation.
From the beginning of the use of these trucks, mechanical problems developed in the drive train so that Walker was unable to use the vehicles in its business at times because of an innumerable number of breakdowns.
Walker claims that the vehicles were in an unreasonably dangerous condition both as to the component parts and as to the overall vehicle at the time the vehicles and the parts left the manufacturers.
Walker claims that the vehicles were negligently designed and manufactured both as to the overall truck and the component parts. Walker relies on an alleged violations of 402A, 402B, and 552D of the Restatement of the Law of Torts, 2d Ed.
Section 402A does not apply because the evidence is not sufficient to show that these trucks and the component parts were defective to the extent that they were unreasonably dangerous. Neither does 402B apply because that section only relates to situations where personal injuries are involved.
Walker says further that the defendants breached the implied warranties set out in 47-2-315 and 47-2-314, T.C.A.
This contention raises serious questions, many of which have not been definitely settled by court decisions, but to which brief reference will be made later.
As defenses, Crane Carrier says that the trucks were assembled as required without third axles and dump bodies, and in the assembly it used a transmission which was supplied by Spicer and differentials which were supplied by Rockwell. Both Spicer and Rockwell approved the use of their respective components in the truck with knowledge of the other components to be used including the power train engine, the transmission and differential.
Crane denies that it was at fault and denies it is liable to Walker on any theory. If Crane is liable in any amount it claims that it is entitled to be indemnified by Spicer and Rockwell, one or both, whichever may be shown to be at fault.
Crane has sued Spicer and Rockwell to recover any amount which it may be obligated to pay.
Spicer and Rockwell have made claims by way of cross-actions against Crane.
Crane says in effect that if it is determined that Spicer and Rockwell, one or both, supplied defective components so as to be liable to Walker, then it should be permitted to recover against Spicer and Rockwell.
Spicer denies liability to plaintiff and to Crane. It admits that it manufactured and sold the transmissions which were installed by Crane upon certain trucks which were acquired by Walker. Spicer denies that it made the warranties that are claimed by Walker, and denies *913 that it breached any warranties if it is held that such warranties existed, and further denies that Walker may proceed on the theory of warranty by reason of a lack of privity. Spicer further denies the applicability of Sections 402A and 402B, Restatement of Torts, 2d Ed.
Spicer says further that if the averments in the complaint referring to wrongful acts and omissions on the part of Crane and North American Rockwell are true, such acts and omissions comprise the sole cause of Walker's damages, or the alternative comprises efficient intervening causes isolating Spicer from the claims of Walker.
Spicer further says that Crane and Walker misused the products of Spicer, meaning the component parts furnished by Spicer and which went into the trucks.
Spicer denies any and all liability to the cross-claimant. Spicer says further that if it is liable to Walker, which is denied, it is entitled to judgment over against Crane by reason of Crane's misuse of Spicer products.
The theories of Rockwell are that Crane purchased rear axle assemblies from it which Crane combined with other components either purchased from third parties or manufactured by Crane and that the resulting products or trucks were sold to various purchasers and that the trucks in litigation were sold by Crane to Tennessee Truck & Equipment Co., Inc., which in turn sold said trucks to Walker and there could be no liability upon the part of Rockwell.
Rockwell says further that the products sold by Rockwell to Crane were sold and accepted by Crane pursuant to express warranties specifically excluding the implied warranties of merchantability and fitness for purpose and excluding the right of recovery of consequential damages against Rockwell. Rockwell's only obligation under its warranty was to replace defective parts within the time specified in the warranty which was done.
The axle assemblies sold by Rockwell were ordered by Crane by catalog number which described axles made in accordance with certain detailed specifications known to Crane at the time the orders were placed. The axle assemblies were manufactured and delivered to Crane as ordered. Said axle assemblies had been manufactured and distributed by Rockwell in accordance with those same specifications without material modification for more than twenty years and had been used successfully in various truck operations throughout the entire period of their manufacture, and the axles delivered to Crane were exactly as ordered.
Rockwell says further that by reason of its express warranty excluding all implied warranties it is not liable to Walker for breach of warranty and in no event can it be held liable for consequential damages.
Rockwell says further that Walker accepted the terms, conditions and disclaimers contained in an express warranty made to Walker by defendant Crane and by reason of the terms and conditions contained in said express warranty the claims of Walker are barred in whole or in part. Rockwell denies that Walker may successfully proceed on the theory of breach of warranty by reason of lack of privity.
Rockwell denies it negligently designed, engineered and manufactured the axle assemblies or that they were inherently dangerous.
The Court agrees with Rockwell that Section 402A and 402B, Restatement of Torts, 2d Ed. do not apply to the facts as developed by the evidence in this trial.
Rockwell denies that it breached any duty owed to Walker. Rockwell says further than Walker ordered the trucks involved in the litigation from Crane specifying a particular power train consisting of a specifically described engine, transmission and rear axle assembly and that the trucks purchased by *914 Walker contained a power train exactly as specified including the rear axle assembly manufactured by Rockwell.
Rockwell says further that one or more of the following constituted the proximate cause of Walker's claimed damages:
(a) Specifications by Walker of vehicles of insufficient capacity for the use to which they were to be subjected;
(b) Specification by Walker of vehicles with power train components which were incapable for the use to which they were to be put;
(c) Abuse of vehicles;
(d) Subjecting of the vehicles to stress beyond their capacity;
(e) Lack of or insufficient service and maintenance of the vehicles;
(f) Matters set forth in the complaint which if true fix the responsibility upon Crane and Spicer.
Rockwell denies that it is liable on the cross-claim filed against it by Crane.
Rockwell says it is entitled to recover under its cross-claim against Crane.
The issues as formulated in the Pretrial Order are as follows:
(1) Were the vehicles described in the complaint negligently designed and manufactured both as to the over-all truck and component parts and were they unreasonably dangerous when placed on the market in violation of Section 402A, Restatement of Torts, 2d Ed., or Section 402B?
As previously indicated there can be no liability in this case under either Section 402A or Section 402B.
(2) Did the defendants in placing the trucks on the market violate an express or implied warranty and thereby violate Section 47-2-315 and/or 47-2-314, T.C. A., as to implied warranty of fitness or merchantability?
(3) If plaintiff is entitled to recover, from what defendant or defendants and how much?
The evidence shows that the Walker Truck Contractors have for many years been engaged in the business of contract hauling in Knox County, Tennessee and surrounding areas as well as in various southern states. Sometime prior to December of 1970 Crane representatives, manufacturers of dump trucks and other trucks, contacted Walker, through their dealer and in person, and advised Walker that they had manufactured a truck which was equivalent to any truck on the market and particularly to the Mack truck which Walker had been using.
In December of 1970 at the invitation of Crane, a meeting was held in Tulsa, Oklahoma, and a model was displayed by Crane at that meeting. Crane representatives stated that with certain modifications they would use a 1972 model as modified which would be equal to or better than the Maxidine Mack Truck, and upon this representation Walker placed an order for fifteen 1972 model Crane Carrier trucks.
The power train in the truck consisted of an engine, transmission and a differential. Walker accepted the change in the power train, particularly insofar as the Cummins engine is concerned in the design of the truck, and the power train was approved by Rockwell and also by Crane. All of the approval was done on paper and there was no field testing.
The trucks were in due time delivered to Walker here in Knoxville in September of 1972 with the Cummins diesel engine, the Spicer transmission and the Rockwell differential having a ratio of 5.21. Soon after delivery Walker experienced extreme difficulty in keeping the trucks on the road on account of numerous breakdowns due to the fact, among other things, that the input shaft was too soft and the gears both in the transmission and differential were overloaded and the vehicles began to break down.
Walker contacted almost every parts dealer that it could find in an effort to secure parts to keep the trucks on the road. The record indicates that he was able to keep the trucks on the road for at least periods of time. The input shafts were replaced with harder metal *915 shafts and thereafter there was certain shearing of bolts within the differential which were also replaced.
During this period Walker was in desperate financial circumstances and he went beyond the line of duty apparenly to keep the trucks on the road.
Upon discovery of the trouble Walker contacted the defendants and their representatives were dispatched to Knoxville to study the problem. The input shafts were defective and in order to alleviate the defects in the power train a ratio change from 5.21 to 5.78 was suggested, and when this did not relieve the defective condition another ratio was suggested of 6.44; however, due to the defective manufacture of the trucks the change in the ratio did not alleviate the problems with which Walker was confronted.
Walker continued to experience trouble with the ring gear and pinion, breaking of bolts, bolts coming off or shearing off, and it was finally ascertained that the gears in the differential were overloaded and inadequately designed and manufactured according to approved standards.
As a result of the defective condition of the trucks as previously indicated, many breakdowns or failures occurred which required replacing of parts and labor incident thereto.
In the opinion of the Court, and the Court finds, Crane is liable to Walker Truck Contractors for the damage sustained by Walker as a direct and proximate result of the defects in the trucks. This liability stems from Section 552D of the Restatement of Torts, 2d Ed., Tentative Draft, and possibly a breach of implied warranty of fitness under Sec. 47-2-315, Tenn.Code Annotated. We do not think the disclaimer of Crane is sufficient to relieve Crane of liability from an implied warranty of fitness for the purpose that the trucks were to be used.
It is the Court's present view without so holding at this time, as it desires to make further study of the question, that Rockwell is liable. The defenses made by Rockwell in the case do not appeal to this Court.
Rockwell has sought by its evidence to show that all of the fault for the troubles which are the subject of this lawsuit was that of Walker. Serious doubt is cast on this contention by certain statements of its representative, Mr. Grace, as follows. Mr. Grace said:
"I think some of the significant things mentioned to me they have never bent a housing or lost a wheel bearing or broke an axle shaft on any one of the vehicles with the SRDD; furthermore, they have never had clutch trouble with them so it would not indicate they are over-loading the things or treating them as rough as some of our people may want to believe."
That quotation is taken from a letter of Mr. Grace dated December 7, 1973 to Mr. Clemence, another Rockwell employee.
Again, in another letter dated September 7, 1974, Mr. Grace said, in part:
"I know most of our people don't have any sympathy much with construction operators and it is always the case of overloaded or not geared right or something, but when our axle fails where our single reduction axle goes in and does the job, competitors axles do the job, something has got to be wrong.
"There is another thing for sure, Crane Carrier has more damn failures than any other one carrier I run across. Every time they use our stuff, it looks like they are using wrong axles or something is wrong. I wish to goodness we would get some body (sic) to go there and straighten them out, either sell right axles or quick (sic) putting them out in the field. We get a tremendous amount of grief over these things. I don't know how the company feels about Tennessee Truck and Equipment Company and whether they want to do anything for them, perhaps not but *916 it sure is a disgusting situation. I walked back in the shop yesterday and most of trucks in there had the rear ends out of them, they were SRDD's. I would appreciate your comments and, also, like to be advised of the SRDD."
It was agreed by the parties that Judge Bare, Referee in Bankruptcy of this Court, would fix whatever damages, if any, that have been sustained by Walker. In fixing these damages the Referee will not allow any item of damage unless it is proved by Walker with reasonable certainty. The Referee will allow all items of property damages to the fifteen 1972 model trucks as against Crane which are established by a preponderance of the evidence. He will also allow as against Crane what some of the courts refer to as economic losses, if any are established, which would include any profits that were lost as a direct and proximate result of the wrongs complained of in the complaint and found by this Court to have existed. Economic losses would also include the purchase of parts and costs of repair of the trucks directly and proximately resulting from the aforementioned wrongs. The Referee will examine with care any damages sought by reason of loss of profits as well as other items of damage in this case.
The Court will not presently reach a decision on the four 1973 model trucks since the Court was under a misapprehension of facts regarding these trucks until this afternoon when counsel advised the Court of the true facts.
In the opinion of the Court the proof fails to show that the component part (transmission) sold by Spicer was defective at the time it left the factory of Spicer. On the other hand, the witness whose name was Dr. Speckhart, the U.T. professor, stated that there was nothing wrong with the Spicer transmission. So far as he could determine the defect resulted after the parts were put together by Crane for which Spicer, in the opinion of the Court, could not be held responsible.
Upon further consideration the Court finds and holds that Rockwell is liable along with Crane for the property damages proximately caused to the 1972 model trucks as a result of their defective condition. Rockwell is not liable, however, for the economic losses, if any, suffered by Walker as a result of the defective condition of the trucks. Privity has been abolished in product liability actions in Tennessee only with regard to "personal injury or property damage." T.C.A. 23-3004. This statute does not contemplate abolishment of privity with respect to purely economic losses (i. e. costs of repair, replacement of parts, or loss of profits) and Rockwell is therefore not liable for such losses. The basis of holding Rockwell liable for property damages is that it breached an implied warranty of merchantability.
Similarly, Rockwell and Crane are liable to Walker for property damage caused to the 1973 model trucks by their breach of implied warranties of merchantability, but they are not liable for purely economic losses, if any, sustained by Walker on account of the purchase of these trucks. Crane, as previously indicated, is liable to Walker for economic losses caused by the purchase of the fifteen 1972 model trucks under Section 552D of the Restatement of Torts, 2d.
Regarding the cross-actions between Crane and Rockwell, there is no basis under the facts and circumstances of this case for either to recover.
SUPPLEMENTAL MEMORANDUM
This Memorandum supplements and amends, in part, the Court's previous findings of fact and conclusions of law which were rendered from the bench on July 23, 1975 and filed July 25th. The basic facts involved in the action are set out in the Bench Memorandum and need not be restated. The Court will now proceed to discuss the basis of its finding of liability with respect to defendants *917 Crane Carrier Corporation and Rockwell International Corporation.
1972 Model Trucks
Section 552D of the Restatement of Torts, 2d, as adopted in Tennessee[1], provides as follows:
"One engaged in the business of selling chattels who, by advertising, labels or otherwise, makes to the public a misrepresentation of a material fact concerning the character or quality of a chattel sold by him is subject to liability for pecuniary loss caused to another by his purchase of the chattel in justifiable reliance upon the misrepresentation, even though it is not made fraudulently or negligently."
This Section permits recovery for pecuniary loss caused by a defective product regardless of the existence of privity between the supplier of the product and the ultimate purchaser, Cooper Paintings & Coatings, Inc. v. S.C.M. Corporation, 457 S.W.2d 864, 867 (Tenn.App.1970), and disclaimers of liability by the supplier are ineffectual to defeat recovery. Id.; Ford Motor Co. v. Taylor, 60 Tenn.App. 271, 446 S.W.2d 521 (1969). Furthermore, this Section is applicable to transactions in a commercial setting as well as transactions involving pecuniary losses suffered by ordinary consumers. Benco Plastics, Inc. v. Westinghouse Electric Corp., 387 F.Supp. 772, 785, n.22 (1974).
Representatives of Walker Truck Contractors, Inc., (Walker) were invited to a meeting in December of 1970 at Tulsa, Oklahoma (Crane's principal place of business). Officials of Crane represented to Walker that the 1972 model Crane Carrier truck would perform as well as or better than the Mack "Maxidine" truck. Walker was familiar with the Mack truck and felt that a truck better than or equal to the Maxidine would work well in its operation. Relying on this representation, Walker took delivery of fifteen of the Crane 1972 model trucks in September 1972. Walker's reliance was justified because Crane had knowledge of Walker's "heavy-duty" hauling operation and Crane accepted the responsibility for the overall design of the completed product.[2]
It was not seriously disputed at trial that Walker suffered repeated breakdowns with the 1972 model trucks. The source of the problems centered around failures of the drive train components.[3] The real controversy between the parties concerned the issue of causation. Defendants Rockwell and Crane contend that Walker's drivers abused the trucks by operating them beyond their design limits and by repeatedly overloading the trucks. Defendants further contend that the "pusher axles" were not properly utilized when the trucks were fully loaded.[4]
As pointed out in the Bench Memorandum, had the trucks been repeatedly overloaded or abused, there would have been evidence of excessive failures of *918 wheel bearings, axles, and clutches. There was no evidence that such failures were other than normal for a heavy-duty hauling operation like Walker's. Mr. C. L. Walker testified that there was no substantial change in the trucking operation after the 1972 model trucks were put into service. Furthermore, there are some one hundred dump trucks of all makes in use in the Walker operation and there was no evidence that abuse had caused difficulties with these trucks.
There was evidence that the pusher axles were not always promptly installed on the fifteen 1972 model trucks, and there was evidence that the drivers did not always properly use the pusher axles even if they were installed.[5] The Court is unconvinced, however, that this was a significant causal factor in the difficulties experienced by Walker.
The technical reason given by defendants to explain why use of the pusher axle is necessary is that by distributing the weight of the fully-loaded truck over four axles instead of three, there will be less torque[6] on the drive train components. Mr. Joseph Speth, Rockwell's Manager of Applications Engineering, testified that with the pusher axle in service there would "conceivably" be more slip torque, thereby reducing the stress on the drive train assembly.[7] The defendants produced no evidence on the magnitude of the effect of the nonuse of the pusher axle with regard to stress on the drive line components. In light of this and the other factors mentioned above the Court concludes that the pusher axle was primarily designed to prevent overloads on the other axles. We remain unconvinced, however, that Walker's failure to use the pusher axles from time to time was a significant causal factor in the difficulties experienced with the 1972 model trucks.[8]
A preponderance of the evidence shows that the drive train assemblies were not properly designed by Crane to withstand normal operation in Walker's business. As a proximate result of Crane's misrepresentations to Walker concerning the 1972 model trucks, Walker suffered serious pecuniary damage and is entitled to recover therefor under Section 552D.[9]
Although there was insufficient evidence to establish that Rockwell tortiously misrepresented its product to Walker, there was substantial evidence that Rockwell's rear-axle assemblies were not fit for the ordinary purposes for which Walker used them, and, as a proximate result, Walker suffered damage to its property. T.C.A. 47-2-314.
Under the case law of this State prior to the passage of T.C.A. 23-3004 (Supp. 1974), privity of contract was required *919 to maintain a warranty action. See Hargrove v. Newsome, 225 Tenn. 462, 470 S.W.2d 348 (1971) and cases cited therein. On April 10, 1972, the Tennessee General Assembly abolished the requirement of privity by virtue of the aforementioned statute which provides as follows:
"In all causes of action for personal injury or property damage brought on account of negligence, strict liability or breach of warranty, including actions brought under the provisions of the Uniform Commercial Code, privity shall not be a requirement to maintain said action."[10]
Although no cases were found in which this statute has been applied to allow recovery against a remote supplier in a warranty action, the statute makes it clear that lack of privity is not a defense in warranty actions involving "personal injury and property damage."
Defendants seek to characterize the nature of the action as one for "economic injuries" alone. We disagree. The evidence showed that Rockwell's rear-axle assemblies were defective and caused serious physical harm not only to themselves but also to other drive train components. The vibrations along the drive train caused by Rockwell's defective product and Crane's deficient design caused cracking of the transmission casings, loosening of drive train components, and serious premature wear to the whole assembly. This damage, proximately resulting from the nonmerchantability of Rockwell's product, is recoverable under the provisions of the Tennessee commercial law. T.C.A. 47-2-715(2)(b).[11]
Rockwell approved the use of its SRDD rear-axle assembly in the 1972 model trucks. Exhibit 5. The record is replete with evidence that the SRDD's were defective and caused serious problems in various applications. See e. g. Exhibits 32, 33, 38, 44, 45. Rockwell admitted that some of the rear-axle assemblies were defective as delivered because improperly sized bolts were used in the manufacturing process. Other bolts were improperly torqued when the product left Rockwell's hands. Furthermore, all of the original input shafts to the rear-axle assemblies had to be replaced with stronger input shafts. When this replacement was made, the internal gears of the rear-axle assemblies began failing with regularity.
Rockwell relies on the disclaimer of implied warranties that was in existence between it and Crane to defeat Walker's recovery of property damage.[12] Even assuming, arguendo, that Walker was subject to the disclaimer of implied warranties made by Rockwell, under the facts and circumstances of this case, the limited and exclusive remedy failed of its essential purpose, and Walker is entitled to the available remedies under the Tennessee commercial law. T.C.A. 47-2-719(2); Benco Plastics, Inc. v. Westinghouse Electric Corp., supra at 781; Moore v. Howard Pontiac-American, Inc., 492 S.W.2d 227 (Tenn.App.1972).[13]
1973 Model Trucks
Upon further consideration of the case and examination of the authorities, we are convinced we were wrong in our original view that was expressed from the bench that Crane and Rockwell *920 were liable to Walker for damages sustained by reason of the alleged defects in the four 1973 model trucks. The preponderance of the proof, if not all the proof, showed that the trucks were used for purposes for which they were not manufactured namely, they were used for both off-highway and sustained highway service, when, in fact, they were designed for off-highway and limited highway operation. The technical explanation for why the trucks were misused is that the trucks were not designed with inter-axle differentials.[14] These four trucks were bought out of stock from the distributor. There was testimony that these trucks were designed for limited highway use as cement mixer trucks.[15]
Measure of Damages
Crane is liable under Section 552D for the difference between the actual value of the 1972 model trucks and what the trucks would have been worth as represented. Further, Crane is liable for consequential damages proximately resulting from the defective design of the truck. Ford Motor Co. v. Lonon, supra.
Rockwell's liability, on the other hand, is limited to the property damage its product caused to the 1972 model trucks. Walker is not entitled to a double recovery on the damage done to its trucks. As was stated above, the damage to the trucks was proximately caused by a combination of defective design by Crane and defective rear-axle assemblies supplied by Rockwell. Accordingly, Walker is entitled to the following recovery:
1. As against Crane and Rockwell, jointly, Walker is entitled to damages in the amount of the difference between the actual value of the 1972 model trucks and the value of the trucks at the time of purchase had they been as represented to Walker.
2. In addition to the property damages, Walker is entitled to recover from Crane for consequential damages proximately resulting from the tortious misrepresentation of the 1972 model trucks.
As indicated from the bench, by agreement of the parties, the case was referred to Judge Bare to determine the amount of the damages after hearing proof and in accordance with the standards set forth above. Following the report of Judge Bare, a final order will enter.
NOTES
[1] Ford Motor Co. v. Lonon, 217 Tenn. 400, 398 S.W.2d 240 (1966).
[2] At least one representative of Crane visited the Walker operation prior to delivery of the 1972 model trucks. This representative was shown Walker's hauling operation and the roads over which the trucks would be required to travel. Mr. Stuart Metz, of Crane, acknowledged on cross-examination that Crane accepted the responsibility for the overall design of the trucks and depended on its salesmen for general information as to component parts.
[3] For purposes of this litigation the important drive train components are the engine, transmission, and rear-axle assembly. (This latter component was also referred to during the course of the trial as the "rear end" or "differential".)
[4] The "pusher axle" or "third axle" as it is called is an axle with wheels located just forward of the two rear drive axles. It is designed to support part of the load when the truck is fully loaded and must be lowered by the driver from the cab of the truck. The pusher axle is not a driving axle, that is, it is not connected to the drive train, and it provides additional support to the frame of the truck.
[5] Crane shipped the trucks to Tennessee Truck & Equipment Co., Inc. (the distributor) without dump bodies and without pusher axles. Walker and Tennessee Truck were to be responsible for installation of these items. Two of the 1972 model trucks did not have pusher axles installed until February 1973.
[6] Dr. Frank Speckart, plaintiff's expert, explained "torque" in layman's terms as being the twisting force that the engine transmits to the drive train assembly.
[7] "Slip torque", as the term was used in this litigation, denotes slippage of the rear tires. This slippage occurs between the tires themselves and the surface on which the trucks are being driven.
[8] Much was also said at trial about the fact that Walker specified a rear-axle ratio of 5.21 for the 1972 model trucks. The term "5.21 rear-axle ratio" means literally that for every 5.21 revolutions of the input shaft to the rear-axle assembly, the drive wheels turn one revolution. A 5.21 ratio provided Walker with trucks capable of higher highway speeds than the slower rear-axle ratio utilized in the prototype truck shown Walker at the 1970 meeting in Tulsa. The evidence showed that the different ratio specified by Walker was not a significant causal factor in its difficulties, since slower ratios (6.44) were subsequently installed in some of the rear axle assemblies and the difficulties continued nevertheless.
[9] In light of this disposition of the case as to Crane, it is not necessary to consider Walker's allegations against Crane of negligence, strict liability in tort, and breach of warranty.
[10] The statute applies to this action since the trucks were delivered to Walker in September of 1972, after the statute had gone into effect. See Cumberland Corp. v. E. I. DuPont de NeMours and Co., 383 F.Supp. 595 (E.D.Tenn.1973).
[11] For a discussion of the difficulties faced in characterizing damages as "property damage" or "economic loss" see White & Summers, Handbook of the Law under the Uniform Commercial Code, § 11-4 (1972).
[12] Walker cannot recover purely "economic losses" against Rockwell because T.C.A. 23-3004 (Supp.1974) abolishes privity as a defense only with respect to actions for personal injuries or property damage.
[13] In light of the above disposition of the case as to Rockwell, it is not deemed necessary to consider the other alleged grounds of recovery for damages to the 1972 model trucks.
[14] This device (also referred to at trial as a "power divider") allows the gearing of the second driving axle to operate at a somewhat different speed than the forward driving axle. This feature is important to trucks which are to be used extensively on the highway because it prevents the two rear drive axles from exerting stress on each other which avoids premature wear and failure of the entire rear-axle assembly.
[15] Counsel for Walker contended during final argument that Walker had relied upon Crane's original representations as to the 1972 model trucks when it purchased the 1973 model trucks. In light of the extensive problems Walker had experienced with the 1972 model trucks, this reliance, if any, was not justifiable when it purchased the 1973 trucks.
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No. 79-112
IN THE SUPREME COURT OF THE STATE OF MONTANA
1980
CONTINENTAL INSURANCE COMPANY and
RAYMOND CORCORAN TRUCKING, Employer,
Defendant and Appellant,
RICHARD B. HORTON,
Claimant and Respondent.
Appeal from: Workers' Compensation Court
Honorable William E. Hunt, Judge presiding.
Counsel of Record:
For Appellant:
Pedersen, Herndon, Harper & Munro, Billings, Montana
For Respondent:
William T. Kelly, Billings, Montana
Submitted on briefs: April 24, 1980
Decided : JUL 2 2 1~
Filed: JUL 2 2 I Y B ~
Mr. C h i e f J u s t i c e F r a n k I. Haswell d e l i v e r e d t h e O p i n i o n of the
Court.
C o n t i n e n t a l I n s u r a n c e Company a p p e a l s f r o m a n o r d e r o f the
Workers' C o m p e n s a t i o n C o u r t d e n y i n g t h e I n s u r a n c e Company's
motion f o r an evidentiary hearing p r i o r t o a j u d i c i a l deter-
mination of a n award of a t t o r n e y f e e s and c o s t s .
R i c h a r d B. H o r t o n ( c l a i m a n t ) was i n j u r e d i n a n i n d u s t r i a l
a c c i d e n t o n May 2 8 , 1975. H i s i n j u r y a r o s e o u t of and i n t h e
c o u r s e of h i s employment. Initially, t h e I n s u r a n c e Company p a i d
c l a i m a n t h i s p r o p e r d i s a b i l i t y r a t e and c e r t a i n m e d i c a l expenses.
During approximately t h e next 18 months t h e claimant sought addi-
t i o n a l m e d i c a l a s s i s t a n c e f o r h i s i n j u r y and u n d e r w e n t two
operations. By J u n e , 1 9 7 7 , t h e I n s u r a n c e Company w a s r e f u s i n g t o
pay c e r t a i n m e d i c a l e x p e n s e s i n c u r r e d by c l a i m a n t . They a l s o
r e f u s e d t o pay c l a i m a n t ' s full disability rate. As a r e s u l t ,
claimant f i l e d a p e t i t i o n f o r an emergency h e a r i n g b e f o r e t h e
Workers' Compensation Court. That Court e n t e r e d f i n d i n g s of
fact, c o n c l u s i o n s of law and judgment in claimant's favor.
The judgment awarded a t t o r n e y f e e s and c o s t s t o c l a i m a n t
p u r s u a n t t o s e c t i o n 92-616, R.C.M. 1947 [now s e c t i o n
39-71-611, MCA]. Claimant's attorney submitted a statement t o
t h e Workers' Compensation Court c l a i m i n g a t t o r n e y f e e s and c o s t s
i n c u r r e d i n t h e c a s e t o t a l i n g $3,355.19. Subsequently, the
I n s u r a n c e Company f i l e d a p e t i t i o n r e q u e s t i n g a h e a r i n g o n t h e
question of attorney fees.
A h e a r i n g was h e l d b e f o r e t h e W o r k e r s ' Compensation Court
f o r t h e l i m i t e d p u r p o s e o f h e a r i n g a r g u m e n t s on w h e t h e r a h e a r i n g
on a t t o r n e y f e e s should be g r a n t e d . The Workers' Compensation
Court entered an order granting Horton's motion f o r leave
t o verify h i s previously filed statement for attorney fees
and c o s t s , and d e n i e d t h e I n s u r a n c e Company's m o t i o n f o r a n e v i -
d e n t i a r y h e a r i n g p r i o r t o a n award of a t t o r n e y f e e s and c o s t s .
This appeal followed.
The s o l e i s s u e , a s f r a m e d b y a p p e l l a n t I n s u r a n c e Company,
i s w h e t h e r t h e 1979 amendment t o s e c t i o n 39-71-611, MCA, pro-
v i d i n g t h a t a t t o r n e y f e e s s h a l l b e e s t a b l i s h e d by t h e W o r k e r s '
Compensation judge i n s t e a d of t h e D i v i s i o n of Workers'
Compensation r e q u i r e s t h e o p p o r t u n i t y f o r an e v i d e n t i a r y h e a r i n g ,
i n c l u d i n g sworn t e s t i m o n y and c r o s s - e x a m i n a t i o n prior t o the
j u d i c i a l d e t e r m i n a t i o n and award of attorney fees.
I n 1 9 7 9 , s e c t i o n 39-71-611, MCA, was amended. Prior to
t h e amendment t h i s s t a t u t e read:
"In the event the insurer denies the claim for
compensation o r terminates compensation
b e n e f i t s , and t h e c l a i m is l a t e r adjudged
c o m p e n s a b l e , b y t h e d i v i s i o n o r o n a p p e a l , the
insurer shall reasonable & attor-
-
n e y s ' - -a s e s t a b l i s h e d by t h e d i v i s i o n . . . "
fees
(Emphasis added.)
A f t e r t h e amendment t h i s s t a t u t e read:
"In the event an insurer denies l i a b i l i t y for
a c l a i m f o r c o m p e n s a t i o n o r t e r m i n a t e s compen-
s a t i o n b e n e f i t s and t h e c l a i m i s l a t e r
a d j u d g e d c o m p e n s a b l e b y t h e w o r k e r s ' compen-
s a t i o n j u d g e o r o n a p p e a l , the i n s u r e r s h a l l
pay r e a s o n a b l e c o s t s & a t t o r n e y s ' -e-a s fe s
e s t a b l i s h e d by the w o r k e r s ' c o m p e n s a t i o n
judge." (Emphasis added.)
For t h e purposes of this case, the only pertinent distinc-
t i o n between t h i s s t a t u t e as i t e x i s t e d p r i o r t o t h e amendment
a n d a f t e r t h e amendment is t h e s u b s t i t u t i o n of "workers' compen-
s a t i o n judge" for "division."
I n 1 9 7 8 , p r i o r t o t h e amendment, t h i s Court decided t h e
c a s e of Smith v. P i e r c e P a c k i n g Co. (19781, M o n t . -9 58 1
P.2d 8 3 4 , 35 St.Rep. 979. I n Smith, as i n the present case, the
a p p e l l a n t contended t h a t an award of a t t o r n e y f e e s was improper
f o r t h e r e a s o n t h a t no e v i d e n c e o f s u c h f e e s was a d d u c e d b e f o r e
t h e Workers' Compensation Court. I n Smith, as in the present
case, t h e a p p e l l a n t c i t e d C r n c e v i c h v. Georgetown R e c r e a t i o n
Corp. (1975), 1 6 8 Mont. 1 1 3 , 5 4 1 P.2d 56, for the proposition
t h a t e v i d e n c e must be i n t r o d u c e d i n t h e D i s t r i c t Court to
d e m o n s t r a t e t h e p r o p e r amount o f attorney fees. This Court's
response t o the appellant's c o n t e n t i o n i n S m i t h was a s f o l l o w s :
" F u r t h e r , c l a i m a n t a r g u e s t h a t no e v i d e n c e p e r
s e of a t t o r n e y f e e s need be p r e s e n t e d i n a
workers' compensation case, as the procedure
e n t a i l s submission of a v e r i f i e d p e t i t i o n t o
t h e d i v i s i o n , s e t t i n g f o r t h t h e number of h o u r s
s p e n t and s e r v i c e s performed. The d i v i s i o n
a d m i n i s t r a t o r t h e n reviews t h e p e t i t i o n and s e t s
a 'reasonable fee'. W concur."
e M o n t . -9
5 8 1 P.2d a t 8 3 8 , 3 5 S t . R e p . a t 9 8 4 .
I n o t h e r words, the rules pertaining to attorney fees as
e n u n c i a t e d i n C r n c e v i c h do n o t a p p l y i n w o r k e r s ' compensation
cases. I n the present case, the appellant contends that the
amendment t o s e c t i o n 39-71-611, MCA, r e q u i r e s us to overrule
Smith and a p p l y t h e Crncevich r u l e t o w o r k e r s ' compensation
cases. W decline t o s o hold.
e
The amendment, n o t e d a b o v e , m e r e l y c h a n g e s t h e p a r t y who
s e t s the reasonable fee. The amendment t o s e c t i o n 39-71-611,
MCA, does not change t h e Smith d e c i s i o n . The s t a t u t e b o t h b e f o r e
a n d a f t e r t h e amendment d o e s n o t r e q u i r e a n e v i d e n t i a r y h e a r i n g
t o determine attorney fees i n workers' compensation cases. The
method used t o f i x a t t o r n e y f e e s i s d i s c r e t i o n a r y w i t h t h e
Workers' Compensation judge, and t h e m a t t e r of allowing a hearing
concerning attorney fees is also discretionary. The f a i l u r e t o
a l l o w such a h e a r i n g i s not p e r s e a n abuse of discretion. In
the present case, the appellant's only a l l e g a t i o n of abuse of
d i s c r e t i o n i s t h e f a i l u r e t o p r o v i d e a h e a r i n g on a t t o r n e y f e e s .
S i n c e we h o l d t h a t s u c h a h e a r i n g i s n o t required f o r workers'
compensation cases, t h e Workers' Compensation Court is affirmed.
Affirmed.
Chief J u s t i c e
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265 F.2d 698
UNITED STATES of America, Appellant,v.Walter H. BRYAN and Riverside Bank of Jacksonville,Claimants of One 1957 Ford Wrecker-Truck, SerialNo. F80F7H13614, Appellees.
No. 17240.
United States Court of Appeals Fifth Circuit.
April 16, 1959.
E. Coleman Madsen, Asst. U.S. Atty., James L. Guilmartin, U.S. Atty., Southern District of Florida, Jacksonville, Fla., for appellant.
John W. Muskoff, W. Gregory Smith, Jacksonville, Fla., for appellees.
Before HUTCHESON, Chief Judge, and TUTTLE and JONES, Circuit Judges.
TUTTLE, Circuit Judge.
1
This is an appeal from a judgment entered on a directed verdict in favor of the claimants of a tow truck libeled by the United States. The single question presented for our consideration is whether the United States made a sufficient showing the vehicle was being used at the time of its seizure so as to be subject to forfeiture under the provisions of section 7301(e) of the Internal Revenue Code of 1954, 26 U.S.C.A. 7301(e). The lower court held that it had not. We conclude that this was error.
2
The appellees submitted the case here without argument and without filing a brief. The case was tried in the district court before a jury, but at the end of the government's case the district court granted a directed verdict in the claimants' favor on the ground that the appellant's evidence was not sufficient to prove intent to violate the internal revenue laws. The court stated that 'the inference is equally strong, if not stronger' that neither the owner nor the driver of the vehicle had such intent.
3
On a motion for directed verdict, the evidence must be viewed in the light most favorable to the party opposing the motion, giving him the benefit of every favorable inference which may be fairly drawn. Atantic Greyhound Corp. v. Crowder, 5 Cir., 177 F.2d 633. Whenever the evidence is such that fair minded men might draw differing inferences therefrom and might reasonably disagree as to what the verdict should be, the motion must be denied. American Fidelity and Cas. Co. v. Drexler, 5 Cir., 220 F.2d 930.
4
With these fundamental rules in mind, we briefly summarize some of the evidence and inferences which the jury could reasonably have drawn therefrom.
5
On November 18, 1957, at 2:00 A.M., two troopers of the Weight Division of the Florida Highway Patrol were driving on Florida State Highway 23 north of Macclenny, Florida, and were looking for overweight trucks which might be attempting to wait out a road block in Macclenny. They observed a 1946 Chevrolet van truck parked at a truck stop about two miles north of Macclenny. This truck was formerly owned and used by a linen service company, but had since been sold and had its signs painted over so that its panels were blank and without identifying trade signs. (This is the van which was being towed by the tow truck when they were both seized by the law enforcement officers.)
6
On the afternoon of November 18, at about 3:45 P.M., the state troopers observed the tow truck traveling west toward Macclenny on U.S. Route 90 from Jacksonville, Florida. At about 4:40 P.M., a local sheriff passed the tow truck, which had apparently passed through Macclenny on Route 90 and turned north on Florida State Road 127, which runs parallel to and west of Highway 23.
7
At about 6:45 P.M. on this same day, the state troopers observed the tow truck pulling the van coming south on Highway 23 in Macclenny and turning east toward Jacksonville on Route 90. The troopers followed the trucks and observed that the rear tires on the van, the front tires of which were suspended above the ground by the tower, were mashed down quite flat, indicating that the truck might be very heavily loaded. The officers stopped the trucks and questioned the driver of the tow truck. The doors to the van were padlocked shut, but the officers were able to detect through a crack in the door that the truck was loaded with bags of sugar. Upon making this discovery they notified internal revenue liquor agents and waited until they came to take custody of the trucks.
8
In the cab of the wrecker the troopers found a young man named Grady Allen Shad. Shad told them he had been hitchhiking and had been picked up just north of the Florida-Georgia state line on the Georgia extension of Route 23. This statement conflicted with the statement of the driver of the wrecker, Rhodes, who stated he picked up Shad in Florida. Shad said he had been cutting pulpwood in the woods all day, but the officers testified that his hands and clothes were clean.
9
Rhodes told them that when he picked up the van there was no one around it and that he had simply gone after the truck as a result of a telephone call to the garage operated by claimant Bryan in Jacksonville. However, a new denim jacket which fitted Shad perfectly and which bore the same brand name as the new denim pants Shad was wearing was found in the cab of the van-truck. In addition, the telephone call to claimant's garage was shown to have been made by Shad.
10
Rhodes told the officers that he had picked up the van on Florida State Road 2 which runs east and west north of U.S. Route 90, but the aforementioned sheriff testified that he had driven along that road just before he passed the wrecker going north on Road 127 at 4:40 P.M., and he testified that he had not seen the van anywhere along that route.
11
The telephone call to claimant's garage was placed by Shad from a pay station in Statenville, near Valdosta, Georgia, which is to the northwest of the point in Florida where Rhodes claimed to have picked up the truck. Claimant Bryan told the investigating officers that he did not know who placed the call, but the telephone company's records show that it was a collect call and that the call was accepted by someone at the garage, and according to the statements attributed to Bryan, it was accepted either by Bryan or his wife, and in either case he spoke to the person making the call.
12
When the federal officers arrived at the place where the trucks had been halted, they lowered the front wheels of the van to the ground and started its engine running. Several of the officers testified that the truck was in good running condition at that time, and one of the federal officers drove the truck, which was loaded with 10,000 pounds of sugar, all the way to Jacksonville (a distance of approximately twenty-eight miles) under its own power, thus supporting the Government's claim that the tow truck's services were not required because of a breakdown of the van.
13
There is no dispute about the fact that the libeled wrecker was providing the motive power to move the loaded van and was thus being used to 'transport' the contraband contents of the truck.
14
The United States instituted this proceeding under 26 U.S.C.A. 7301. The pertinent portions of that statute read as follows:
15
'(b) Raw materials.-- All property found in the possession of any person intending to manufacture the same into property of a kind subject to tax for the purpose of selling such taxable property in fraud of the internal revenue laws, or with design to evade the payment of such tax, may * * * be seized and shall be forfeited to the United States.
16
'(e) Conveyances.-- Any property (including aircraft, vehicles, vessels, or draft animals) used to transport or for the deposit or concealment of property described in subsection (a) or (b) may also be seized, and shall be forfeited to the United States.'
17
The allegations of the libel which are of pertinence were the following:
18
'Fourth: That the said 1957 Ford Wrecker-Truck, Serial No. F80F7H13614 when seized as aforesaid was being used to transport and for the deposit and concealment of 10,000 pounds of sugar which sugar was intended to be used in the manufacture of distilled alcoholic spirits on which the tax imposed by the laws of the United States had not been paid, nor were the same to be paid, with intent to defraud the United States of the tax due on said distilled spirits.'
19
The United States was required to prove every essential allegation of this libel by a preponderance of the evidence, but in was not required to prove them beyond a reasonable doubt. Anderson v. United States, 5 Cir., 185 F.2d 343.
20
It is not entirely clear whether appellant intended to allege that the transportation was carried out with intent to defraud the United States, that is, with knowledge of the facts, but the parties and the trial court all correctly assumed that such intent was a prerequisite to forfeiture of the tow truck.
21
There was ample evidence to demand that the issue be submitted to a jury. Shad's possession of the sugar with illegal intent was strongly suggested by the evidence. Knowledge of the intent to defraud could be inferred from the evidence and otherwise. Anderson v. United States, 5 Cir.,185 F.2d 343; Busic v. United States, 4 Cir., 149 F.2d 794. Here was a large quantity of sugar in an unmarked, padlocked truck which the jury could infer was in Shad's possession although he denied it. It was first seen on the road at an odd hour of the day and thereafter seen in the course of being towed approximately ninety miles despite the fact that it was able to proceed under its own power and was apparently in good running condition. In the absence of any exculpatory evidence, these and other proven circumstances permitted an inference of guilty intent.1 Likewise, Grady Shad's placing of the telephone call to claimant's garage, his presence in the tow truck, and other facts connecting him with the van, including his inconsistent testimony, clearly indicated that he was in possession of the van and its contents and had the requisite illegal intent. These same equivocal facts, including the inference that could be drawn from the conflicts in testimony, were sufficient to authorize a jury to find that claimant or his driver shared the knowledge and intent of Shad.
22
The order appealed from must be set aside and the case remanded for a new trial.
23
Reversed and remanded.
1
Compare United States v. One 1955 Mercury Sedan, 4 Cir., 242 F.2d 429; United States v. 2265 One-Gallon Paraffined Tin Cans, 5 Cir., 260 F.2d 105
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504 F.3d 56 (2007)
Sunoto SUNOTO, Petitioner,
v.
Alberto GONZALES, Attorney General of the United States, Respondent.
No. 06-1366.
United States Court of Appeals, First Circuit.
Submitted February 5, 2007.
Decided September 27, 2007.
*57 William A. Hahn and Hahn & Matkov on brief for petitioner.
Hillel R. Smith, Trial Attorney, Office of Immigration Litigation, Civil Division, United States Department of Justice, Peter D. Keisler, Assistant Attorney General, Greg D. Mack, Senior Litigation Counsel, on brief for respondent.
Before LIPEZ, Circuit Judge, GIBSON[*] and STAHL, Senior Circuit Judges.
LIPEZ, Circuit Judge.
Sunoto, a native and citizen of Indonesia, petitions for review of a decision of the Board of Immigration Appeals ("BIA") affirming the denial of his application for asylum, withholding of removal and voluntary departure. An Immigration Judge ("IJ") found that Sunoto was not eligible for relief because, inter alia, he originally submitted a fraudulent application and failed to present credible testimony in support of his amended application. The BIA adopted and affirmed the IJ's decision. Sunoto challenges the IJ's decision on a host of grounds, most of which were not raised in his appeal to the BIA. On those omitted issues, he unquestionably failed to exhaust his administrative remedies, see 8 U.S.C. § 1252(d)(1), leaving us without jurisdiction to review the agency's decision on those issues. Berrio-Barrera v. Gonzales, 460 F.3d 163, 167 (1st Cir.2006). Two issues may be deemed preserved only if his BIA submissions are viewed generously. Those issues are, in any event, unavailing, and we therefore deny the petition for review.
I.
Sunoto[1] lawfully entered the United States in July 1991 as a non-immigrant alien in transit and was authorized to remain in the country until the end of August that same year. On June 3, 2002, he filed an asylum application with the former Immigration and Naturalization Service claiming that he was a Christian who feared Muslim extremists in his native Indonesia. Among other past episodes described in the application, he claimed that his father, a church deacon, had been shot and killed by the extremists. He reiterated this background in an interview with an asylum officer.
More than two years later, while removal proceedings were pending against him, *58 Sunoto filed a new asylum application and admitted that his earlier application was almost entirely false. He explained at a hearing before an IJ that he had allowed an individual with whom he lived to fabricate the facts in the first application because Sunoto was newly arrived in the United States, he "did not know anything," and he "did not want to argue because [he] did not want to make that person angry." Sunoto admitted that, in fact, he had become a Christian only after arriving in the United States, and neither he nor any family members had experienced mistreatment in Indonesia. However, he repeated his fear of future persecution based on his newly adopted Christian beliefs.
In an oral ruling, the IJ denied Sunoto's application for asylum and withholding of removal, and also found that he was not entitled to protection under the Convention Against Torture.[2] The IJ found Sunoto statutorily ineligible for asylum on two grounds: (1) his revised application was untimely because it was not filed within one year of his arrival in the United States, see 8 U.S.C. § 1158(a)(2)(B), and (2) Sunoto knowingly filed a frivolous application for asylum, and gave fraudulent and fabricated testimony before an asylum officer, disqualifying him from obtaining benefits under the Immigration and Naturalization Act, see 8 U.S.C. § 1158(d)(6). The IJ alternatively concluded that Sunoto had failed to present credible testimony in support of his application, finding Sunoto to be "evasive, nonresponsive, furtive, and a wholly incredible witness." In making the credibility finding, the IJ pointed to inconsistencies in Sunoto's testimony at the hearing, his admittedly fraudulent first application, the subsequent false testimony he gave to the asylum officer, and his explanation for his earlier conduct which the IJ termed "disingenuous at best." The negative credibility finding also doomed Sunoto's request for withholding of removal. See Abdullah v. Gonzales, 461 F.3d 92, 97 (1st Cir.2006) ("An alien who fails to satisfy the standard for asylum automatically fails to satisfy the more stringent standard for withholding of removal.").
In his notice of appeal to the BIA, which apparently was filed without the assistance of counsel, Sunoto complained that "[t]he judge was not fair enough to listen to my testimony" and asserted that "I told everything the truth, but the judge said I was lie." A subsequently filed "brief" consisted of a three-page statement describing his conversion to Christianity, the absence of religious freedom in Indonesia, and his fear that he would be a target of persecution if he returned there. In reference to his first application, he explained: "I realized that my application for asylum was fraud. The reason I changed my affidavit on the hearing last year just because I couldn't lie to myself anymore. I already received the truth from God. I convinced myself always to tell the truth to everyone." Attached to his statement were copies of news reports about religious violence in Indonesia.
The BIA adopted and affirmed the IJ's decision in February 2006. It declined to decide whether Sunoto's second application was timely filed, but agreed with the IJ that he was in any event ineligible for asylum because he had filed a frivolous application. Although the Board disagreed with the IJ's finding of inconsistencies in Sunoto's testimony,[3] it agreed that *59 he was not a credible witness based on the other reasons cited by the IJ and that he therefore failed to prove his claim for withholding of removal. The BIA also endorsed the IJ's rejection of voluntary departure. It treated Sunoto's submission of new documents as a motion to remand, but concluded that, given the adverse credibility finding, he could not meet his "heavy burden" to prove a likely change in result if the proceedings were reopened. See Abdullah, 461 F.3d at 100 (referring to the "heavy burden" faced by an alien seeking to reopen immigration proceedings).
In his petition for review to this court, Sunoto presents six issues: (1) the IJ erred as a matter of law in ruling that his fraudulent application permanently barred him from receiving any immigration benefits; (2) the IJ erroneously ruled that his amended asylum application was untimely; (3) the BIA erroneously failed to give full effect to its finding that the IJ improperly identified inconsistencies in his hearing testimony; (4) the IJ improperly used an irrebuttable presumption that he was incapable of telling the truth; (5) the IJ's "clear predisposition" to find that he was incapable of telling the truth denied him due process of law; and (6) the case must be remanded because the IJ did not rule on his amended application.
As revealed by our description of Sunoto's notice of appeal and supporting materials, none of these claims was explicitly presented to the BIA. A petitioner who fails to present a claim to the BIA has failed to exhaust his administrative remedies on that issue, and we consequently lack jurisdiction to review the claim. Berrio-Barrera, 460 F.3d at 167; see also Olujoke v. Gonzales, 411 F.3d 16, 23 (1st Cir.2005).
However, among the six asserted challenges in Sunoto's brief are two focusing on the IJ's credibility finding the irrebuttable presumption and due process claims that resemble his contentions to the BIA that the IJ was unfair in not listening to his testimony and called him "a lie." Whether the similarity is enough to warrant our review is doubtful. The exhaustion of remedies doctrine extends not only to claims omitted from an appeal to the BIA but also to claims that were "insufficiently developed before the BIA." Silva v. Gonzales, 463 F.3d 68, 72 (1st Cir. 2006); Olujoke, 411 F.3d at 22-23.[4] Nonetheless, preferring to apply this standard generously, we briefly consider his objections concerning the IJ's approach toward his truthfulness.
II.
When the BIA adopts and affirms an IJ's decision, we review the IJ's *60 decision "to the extent of the adoption, and the BIA's decision as to [any] additional ground." Berrio-Barrera, 460 F.3d at 167; see also Chen v. Ashcroft, 376 F.3d 215, 222 (3d Cir.2004) ("[W]hen the BIA both adopts the findings of the IJ and discusses some of the bases for the IJ's decision, we have authority to review the decisions of both the IJ and the BIA."). In conducting our review, we use the deferential substantial evidence standard for factual findings and credibility determinations. Silva, 463 F.3d at 72. That approach requires us to "uphold the BIA's decision `unless any reasonable adjudicator would be compelled to conclude to the contrary.'" Id. (quoting 8 U.S.C. § 1252(b)(4)(B)).
At bottom, Sunoto's due process and irrebuttable presumption claims are both assertions that the IJ unfairly relied on the fraudulent application in making the adverse credibility finding, and lacked a sufficient basis in the record for that finding. The BIA determined that the IJ erred with respect to one rationale that Sunoto had testified inconsistently about his knowledge of the contents of his fraudulent application but held that the finding was sufficiently supported by other factors: "the respondent's fraudulent filing and testimony before the asylum office, his demeanor, [and] his implausible explanation for why he pursued a fraudulent claim. . . ."
Sunoto does not challenge the relevance and validity of these other reasons; indeed, it cannot be debated that his earlier fabrications carry some weight. However, he claims that the IJ began the credibility assessment with an unfair emphasis on his past conduct and then unfairly bolstered the inference of untruthfulness by relying heavily on the inconsistency that the BIA rejected. Sunoto cites several comments made by the IJ, including that "[t]his respondent is incapable of telling the truth," and that "this Court cannot find anything that comes out of the respondent's mouth or anything that he submits to this Court in writing to be credible." Sunoto argues that the predisposition reflected in this "strong language" is "particularly objectionable because it is based on a view of Sunoto's testimony that the BIA has found unwarranted." He further asserts that these statements suggest a predisposition that diminishes the force of the other factors cited by the IJ and prevented him from having a fair hearing.[5]
While the IJ's credibility determination undoubtedly was influenced to some extent by his erroneous finding of an inconsistency, he cited as noted above multiple other reasons for his conclusion and observed that "[a]ll of these actions go to the heart of the matter before this Court today, that is, is the respondent a credible witness." For example, in rejecting Sunoto's explanation that he filed the fraudulent application because he feared confronting his friend, the IJ observed that if he were "afraid to contradict his roommate and change his asylum application because he thought he would be kicked out of his house, [he] certainly would have refused to *61 go under oath and perjure himself in such grave and great detail before the United States asylum officer." The IJ thus found that Sunoto was "a full, willing participant in this fraud on the United States."
We therefore are persuaded that the IJ did not, as Sunoto suggests, prejudge his credibility. Rather, the judge deemed his new story unbelievable and, among other reasons, factored in his assessment of demeanor. Moreover, the BIA reviewed the record with care, discounting the IJ's subsidiary finding of inconsistency.[6] On this record, we cannot say that the IJ's credibility finding was unfairly derived or that the nature of the proceedings compelled the BIA to reject the IJ's credibility determination.[7]
The petition for review is denied.
NOTES
[*] Of the United States Court of Appeals for the Eighth Circuit, sitting by designation.
[1] Although the official record refers to petitioner as "Sunoto Sunoto," he testified that his name is simply "Sunoto."
[2] Sunoto did not seek relief under the Convention, but the IJ nonetheless considered his eligibility under its provisions.
[3] The testimony at issue concerned Sunoto's knowledge of the contents of his original asylum application. The IJ stated that Sunoto first testified that he understood the fabrications in that application, but changed his testimony on cross-examination to say that he was unfamiliar with the answers given on the form. The BIA noted that petitioner's original testimony concerned the substantive material in the application, but the cross-examination testimony followed questioning about his understanding of written warnings about frivolous applications. The BIA concluded that the latter testimony about his lack of understanding was "not clearly inconsistent with his prior testimony . . . that he knew the substance of the application."
[4] In Bencosme de Rodriguez v. Gonzales, 433 F.3d 163, 164 (1st Cir.2005), we declined to review "the petitioner's claim that improper judicial conduct by the Immigration Judge violated her due process rights because the petitioner failed to raise this claim in her appeal to the BIA and therefore failed to exhaust her administrative remedies." Although some constitutional claims are exempt from the exhaustion requirement because the BIA lacks authority to address them, that exception does not apply to a claim of "bias and misconduct by [the] Immigration Judge." Id. at 165 (citing Sayyah v. Farquharson, 382 F.3d 20, 27 (1st Cir.2004)).
[5] Sunoto also attempted to buttress his due process claim by pointing to the immigration judge's statement that he (the judge) was "uncertain of the respondent's identity." Sunoto notes that no questions ever were raised concerning his identity, and the IJ's comment was therefore further indication of an unfair predisposition toward petitioner. We can agree that the IJ's reference to identity was unnecessary and without basis, but, in context, it is more reasonably understood as a general comment on Sunoto's credibility based on the other factors noted above than a challenge to Sunoto's identity. There is no indication that identity played a consequential role in the IJ's decision or any role in the BIA's assessment of the IJ's ruling.
[6] The BIA also pointed out a legal error in the IJ's decision, noting that submission of a frivolous application forecloses asylum but does not as the IJ stated also preclude withholding of removal. See 8 C.F.R. § 1208.20.
[7] While we do not reach Sunoto's other claims, we note that the credibility finding renders them moot.
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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 9, 2013 Decided June 18, 2013
No. 11-5353
IN RE: POLAR BEAR ENDANGERED SPECIES ACT LISTING AND
SECTION 4(D) RULE LITIGATION–MDL NO. 1993,
SAFARI CLUB INTERNATIONAL, ET AL.,
APPELLANTS
v.
SALLY JEWELL, SECRETARY OF THE INTERIOR, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:08-mc-00764)
Douglas S. Burdin argued the cause for appellants. With
him on the briefs were Anna M. Seidman and Paul Minnich.
Sean E. Summers entered an appearance.
Katherine W. Hazard argued the cause for appellees. On
the brief were Maggie B. Smith and David Shilton.
Howard M. Crystal, Eric R. Glitzenstein, Brendan R.
Cummings, Kassia R. Siegel, and Rebecca J. Riley were on
the brief for intervenors Humane Society of the United States,
2
et al. in support of appellee. Benjamin H. Longstreth and
Jason C. Rylander entered appearances.
Before: ROGERS and TATEL, Circuit Judges, and
RANDOLPH, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: After listing the polar bear as a
threatened species under the Endangered Species Act, the
U.S. Fish and Wildlife Service, acting pursuant to a related
statute—the Marine Mammal Protection Act—barred the
importation of polar bear trophies. Hunters and hunting
organizations challenge this determination, raising both
statutory and procedural arguments. Finding them all without
merit, the district court granted summary judgment to the
Service. We affirm.
I.
“[T]he largest of the living bear species,” polar bears are
characterized by their “large body size, a stocky form, and fur
color that varies from white to yellow.” Determination of
Threatened Status for the Polar Bear (Ursus maritimus)
Throughout Its Range (“Listing Rule”), 73 Fed. Reg. 28,212,
28,212 (May 15, 2008). Evolutionarily adapted to sea-ice
habitats, polar bears live in “ice-covered seas” in Russia,
northern Europe, the Canadian Arctic, and parts of Alaska. Id.
at 28,212–13. A 2006 study estimated the “total number of
polar bears worldwide” to be 20,000–25,000, comprised of
“19 relatively discrete populations” in different geographic
regions. See id. at 28,215.
This case is not about living polar bears. Instead, it
concerns polar bear trophies—“mount[s], rug[s] or other
display item[s] composed of the hide, hair, skull, teeth,
3
baculum, bones, and claws of the specimen which [were]
taken . . . during a sport hunt for personal, noncommercial
use.” 50 C.F.R. § 18.30(b)(1). Plaintiffs, Safari Club
International and Safari Club International Foundation, along
with individual hunters Ronald Kreider and Donald Hershey,
seek to import polar bear trophies from sport hunts in the
Canadian Arctic.
Two federal statutes, the Marine Mammal Protection Act
(“MMPA”), 16 U.S.C. §§ 1361 et seq., and the Endangered
Species Act (“ESA”), 16 U.S.C. §§ 1531 et seq., govern the
importation of polar bear trophies. Congress enacted the first
of these statutes, the MMPA, because “certain species and
population stocks of marine mammals are, or may be, in
danger of extinction or depletion as a result of” human
activities. Id. § 1361(1). The MMPA restricts the importation
and “taking”—i.e., harassing, hunting, capturing, or killing,
see id. § 1362(13)—of polar bears, as well as other marine
mammals such as seals, dolphins, walruses, and sea lions.
The MMPA establishes a “stepwise approach” to the
conservation of marine mammals. Appellees’ Br. 5. At step
one, the statute imposes a general “moratorium on the taking
and importation” of all marine mammals, regardless of the
species’ scarcity or abundance. See 16 U.S.C. § 1371(a). This
moratorium has several enumerated exceptions, including one
for importation of sport-hunted polar bear trophies. Id.
§ 1371(a)(1) (providing an exception to the general
moratorium for “importation of polar bear parts . . . taken in
sport hunts in Canada”). Specifically, section 104(c)(5)
authorizes the Service to “issue a permit for the importation of
polar bear parts (other than internal organs) taken in sport
hunts in Canada” and provides that the Service “shall” do so
when certain criteria are satisfied. Id. § 1374(c)(5)(A).
Pursuant to this provision, the Service approved the issuance
4
of permits for importation of trophies from certain Canadian
polar bear populations. See 50 C.F.R. § 18.30(i)(1).
Going beyond the general moratorium, step two of the
MMPA’s conservation scheme imposes additional protections
for species the Secretary designates as “depleted.” See 16
U.S.C. §§ 1371(a)(3)(B), 1372(b)(3). The MMPA defines the
term “depleted” as “any case in which” (1) the Secretary
“determines that a species or population stock is below its
optimum sustainable population”; (2) an authorized State
makes the same determination; or (3) “a species or population
stock is listed as an endangered species or a threatened
species under the Endangered Species Act of 1973.” Id.
§ 1362(1). Two provisions of the MMPA prohibit importation
of species that have been designated as depleted. Section
101(a)(3)(B) provides that:
Except for scientific research purposes, photography
for educational or commercial purposes, or
enhancing the survival or recovery of a species or
stock as provided for in paragraph (1) of this
subsection, or as provided for under paragraph (5) of
this subsection, during the moratorium no permit
may be issued for the taking of any marine mammal
which has been designated by the Secretary as
depleted, and no importation may be made of any
such mammal.
Id. § 1371(a)(3)(B). And section 102(b)(3) reads:
Except pursuant to a permit for scientific research, or
for enhancing the survival or recovery of a species or
stock, issued under section 1374(c) of this title, it is
unlawful to import into the United States any marine
mammal if such mammal was . . . taken from a
5
species or population stock which the Secretary has,
by regulation published in the Federal Register,
designated as a depleted species or stock . . . .
Id. § 1372(b)(3).
On May 15, 2008, the Service published a rule listing the
polar bear as a threatened species under the ESA. See
Determination of Threatened Status for the Polar Bear (Ursus
maritimus) Throughout Its Range, 73 Fed. Reg. 28,212 (May
15, 2008). In the same rule, the Service also determined that
the listing had the effect of designating the polar bear as
“depleted” under the MMPA and that MMPA sections
101(a)(3)(B) and 102(b)(3) thus barred continued importation
of sport-hunted polar bear trophies under that statute. Id. at
28,236, 28,242, 28,301–02. As a consequence, the Service
administratively closed Kreider’s and Hershey’s permit
applications, which sought to import polar bears killed prior
to the bear’s threatened listing. In identical letters sent to
Kreider and Hershey, the Service explained that, due to the
polar bear’s depleted status, the MMPA provision “allow[ing]
for the import of sport-hunted polar bear trophies from
Canada is no longer available, even if your bear was hunted
prior to the effective date of the ESA listing.”
A number of industry groups, environmental
organizations, hunters, and states challenged the Listing Rule
in several district courts. These challenges, including those by
Kreider, Hershey, and the Safari Club, were consolidated as a
Multidistrict Litigation case in the United States District
Court for the District of Columbia. With respect to the actions
challenging the Service’s decision to list the polar bear as a
threatened species under the ESA, the district court granted
summary judgment to the Service, and we sustained that
ruling earlier this year. In re Polar Bear Endangered Species
6
Act Listing & Section 4(d) Rule Litigation, 709 F.3d 1 (D.C.
Cir. 2013). In a separate ruling, the district court also granted
summary judgment to the Service on the issue now before
us—whether the MMPA authorizes importation of sport-
hunted polar bear trophies following the Listing Rule.
According to the district court, the Service “properly
concluded that the polar bear is a depleted species within the
meaning of the MMPA as of the publication of the Listing
Rule,” meaning that “the MMPA mandates the Service’s
conclusion that sport-hunted polar bear trophies are no longer
eligible for import as a result of the species’ depleted status.”
In re Polar Bear Endangered Species Act Listing & Section
4(d) Rule Litigation, 818 F. Supp. 2d 240, 245 (D.D.C. 2011).
The Safari Club now appeals the district court’s grant of
summary judgment on the importation issue, raising both
statutory and procedural challenges. Several conservation
groups, including the Humane Society of the United States,
have intervened on behalf of the Service. “In a case like the
instant one, in which the District Court reviewed an agency
action under the APA, we review the administrative action
directly, according no particular deference to the judgment of
the District Court.” Holland v. National Mining Association,
309 F.3d 808, 814 (D.C. Cir. 2002). In reviewing the
Service’s interpretation of the MMPA, a statute the agency
has sole authority to administer with respect to polar bears
and certain other marine mammals, we apply the familiar two-
step analysis set forth in Chevron U.S.A. Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984).
Because we conclude that Congress has “directly spoken to
the precise question[s] at issue” here, we have no need to
resolve the parties’ debate about whether the Service’s
interpretation of the MMPA qualifies for Chevron step two
deference. Id. at 842–43; see also Pharmaceutical Research
7
& Manufacturers of America v. Thompson, 251 F.3d 219, 224
(D.C. Cir. 2001).
II.
We begin with the Service’s argument that the Safari
Club’s claims are unripe for review. See Wyoming Outdoor
Council v. U.S. Forest Service, 165 F.3d 43, 48 (D.C. Cir.
1999) (“[A]n Article III court cannot entertain the claims of a
litigant unless they are ‘constitutionally and prudentially
ripe.’ ” (quoting Louisiana Environmental Action Network v.
Browner, 87 F.3d 1379, 1381 (D.C. Cir. 1996))). Although
conceding that Hershey’s and Kreider’s challenges to the
disposition of their permit applications are ripe, the Service
contends that the Safari Club’s challenge to the Listing Rule’s
import determination was “not fit for judicial review” “[a]t
the time the Final Rule was published” because the Service
had yet to “appl[y] the legal reasoning [in the Rule] to any
particular case.” Appellees’ Br. 21. But because “ripeness is
peculiarly a question of timing, it is the situation now . . . that
must govern,” Regional Rail Reorganization Act Cases, 419
U.S. 102, 140 (1974), not the situation at the time the Listing
Rule was published. Viewed through this lens, the Safari
Club’s challenge to the Listing Rule is indisputably fit for
judicial resolution. Not only does the Safari Club raise
“purely legal” issues of statutory interpretation, but the
Service has now applied the Listing Rule to dispose of
individual permit applications, including those filed by
Hershey and Kreider, thus demonstrating the finality of the
agency’s action and rendering further factual development
unnecessary. See Clean Air Act Implementation Project v.
EPA, 150 F.3d 1200, 1204 (D.C. Cir. 1998) (ripeness
doctrine’s first requirement is concerned with “whether the
issue ‘is purely legal, whether consideration of the issue
would benefit from a more concrete setting, and whether the
agency’s action is sufficiently final’ ” (quoting NRDC v. EPA,
8
22 F.3d 1125, 1133 (D.C. Cir. 1994))). Moreover, the Service
nowhere disputes that the Safari Club will suffer hardship
associated with the inability to import polar bear trophies if
court consideration is withheld. See Abbott Laboratories v.
Gardner, 387 U.S. 136, 149 (1967) (ripeness doctrine’s
second requirement requires us to consider “the hardship to
the parties of withholding court consideration”), overruled on
other grounds by Califano v. Sanders, 430 U.S. 99 (1977).
We thus turn to the merits.
The Service’s challenged determination rests on three
premises: (1) that the polar bear’s ESA listing had the effect
of “designating” the species as depleted within the meaning of
MMPA sections 101(a)(3)(B) and 102(b)(3); (2) that once
these import prohibitions were triggered, polar bears could no
longer be imported under section 104(c)(5)’s trophy import
authorization; and (3) that these import prohibitions apply
even to bears taken before the species was designated as
depleted. The Safari Club disputes all three propositions and
adds two procedural challenges. We consider each claim in
turn.
A.
The Safari Club argues that sections 101(a)(3)(B) and
102(b)(3) pose no bar to trophy importation because the polar
bear was never “designated” as a depleted species within the
meaning of those provisions. Recall that the MMPA specifies
three methods by which a species can become “depleted”:
(1) the Secretary “determines that a species or population
stock is below its optimum sustainable population”; (2) an
authorized State makes the same determination; or (3) “a
species or population stock is listed as an endangered species
or a threatened species under the [ESA].” 16 U.S.C.
§ 1362(1). According to the Safari Club, a species is
“designated” as depleted only when an affirmative
9
determination is made, through the procedures set forth in
MMPA section 115(a), that the species has fallen below its
optimum sustainable population. When a species is instead
listed as threatened under the ESA, the Safari Club contends
that the species becomes depleted automatically and thus is
not “designated” as depleted within the meaning of MMPA
sections 101(a)(3)(B) and 102(b)(3).
The Safari Club places far too much emphasis on the
term “designate.” As the district court explained, because “the
MMPA expressly identifies three methods by which a species
earns ‘depleted’ status” and “[n]one of these methods is
particularly defined or otherwise referred to as a
‘designation,’ ” the “most natural reading of the statute” is
“that a species may be designated as depleted through any one
of these three methods.” In re Polar Bear Endangered Species
Act Listing, 818 F. Supp. 2d at 254. Indeed, other MMPA
provisions refer to a species as being “designated” as depleted
“because of” or “on the basis of” its listing as an endangered
or threatened species under the ESA, thus demonstrating that
Congress believed an ESA listing could amount to a
“designation.” See 16 U.S.C. §§ 1371(a)(5)(E)(i); 1387(a)(2).
Under the Safari Club’s interpretation, moreover,
whether a particular species is protected by the import
prohibitions would turn on the procedural mechanism by
which that species became depleted. Nothing in the legislative
record, however, suggests that Congress intended such an odd
result. The Safari Club insists that threatened species should
be treated differently because, unlike species found to be
presently below their optimum sustainable population,
threatened species may “currently enjoy historically high
population numbers” but be ESA-listed “because of
predictions about [future] conditions.” Appellants’ Br. 41. But
Congress thought otherwise: “species that are listed under the
10
Endangered Species Act are, a fortiori, not at their optimum
sustainable population and, therefore, should be considered
depleted.” H.R. Rep. No. 97-228, at 16 (1981), reprinted in
1981 U.S.C.C.A.N. 1458, 1466. In any event, even were a
species in fact at its optimum sustainable population and
listed as threatened based solely on predicted future
conditions, the Safari Club fails to explain why, given the
MMPA’s overarching goal of protecting species “in danger of
extinction or depletion,” 16 U.S.C. § 1361(1), Congress
would have wanted that species to drop below its optimum
sustainable population before the MMPA’s import
prohibitions for depleted species could apply. We thus think it
quite clear that Congress intended to extend the protections of
sections 101(a)(3)(B) and 102(b)(3) to all depleted species,
regardless of how they achieve their depleted status.
B.
The Safari Club next argues that MMPA section
104(c)(5) requires the Service to authorize importation of
sport-hunted polar bear trophies even where the polar bear is
designated as depleted under the MMPA. The district court
rejected this argument, finding “the intent of Congress . . .
clear” that section 104(c)(5) “must give way to restrictions on
importing depleted species.” In re Polar Bear Endangered
Species Act Listing, 818 F. Supp. 2d at 253. We agree.
Sections 101(a)(3)(B) and 102(b)(3) prohibit importation of
depleted species, unless the importation falls into one of the
narrow exceptions for specific purposes such as scientific
research and enhancing survival of the species. See 16 U.S.C.
§§ 1371(a)(3)(B), 1372(b). Importation of sport-hunted
trophies is not among these enumerated exceptions. See
Andrus v. Glover Construction Co., 446 U.S. 608, 616–17
(1980) (“Where Congress explicitly enumerates certain
exceptions to a general prohibition, additional exceptions are
11
not to be implied, in the absence of evidence of a contrary
legislative intent.”).
Conceding the obvious—that neither section 101(a)(3)(B)
nor section 102(b) exempts trophy importation—the Safari
Club nonetheless insists that these provisions must give way
to section 104(c)(5)’s “express and mandatory Congressional
authorization of imports of legally harvested polar bears.”
Appellants’ Br. 27. As the Safari Club sees it, these
provisions are in irreconcilable conflict: section 104(c)(5)
requires the Service to authorize importation of sport-hunted
polar bear trophies (and contains no exception for depleted
polar bears), whereas sections 101(a)(3)(B) and 102(b)(3)
prohibit any such importation. Invoking a bevy of statutory
construction canons, the Safari Club argues that section
104(c)(5) should govern because the provision (1) is “narrow,
precise and specific” to importation of polar bear trophies;
(2) was enacted later in time; and (3) would otherwise be
rendered superfluous. Appellants’ Br. 29–31 (internal
quotation marks omitted).
These arguments rest on a mistaken premise. Read in
context, the provisions in question do not conflict but instead
operate in different spheres of the MMPA’s stepwise scheme.
Although section 104(c)(5) does authorize trophy importation,
that provision—like the statute’s other permit
authorizations—remains subject to the MMPA’s more
stringent protections for depleted species. When Congress
wanted permit authorizations, such as those for scientific
research and enhancement, to apply even to depleted species,
it made this clear by including exceptions for those purposes
in sections 101(a)(3)(B) and 102(b). But Congress included
no such exception for trophy importation, thus demonstrating,
as the district court explained, that although “importation of
sport-hunted polar bear trophies from Canada is a permissible
12
exception to the general moratorium on importing marine
mammals and marine mammal products, it is not an
authorized exception where depleted marine mammals are
concerned.” In re Polar Bear Endangered Species Act Listing,
818 F. Supp. 2d at 253.
C.
In support of its argument that the import prohibitions
apply only to polar bears taken after the species became
depleted, the Safari Club first points to section 102(b)(3),
which prohibits importation of any marine mammal “taken
from a species or population stock which the Secretary has,
by regulation published in the Federal Register, designated as
a depleted species or stock.” 16 U.S.C. § 1372(b)(3).
According to the Safari Club, this provision applies only to
mammals taken from species that had already been
designated as depleted at the time they were taken. The
district court disagreed, as do we. See In re Polar Bear
Endangered Species Act Listing, 818 F. Supp. 2d at 256 &
n.11. The provision refers not to mammals taken from species
the Secretary had designated as depleted but instead mammals
taken from species the Secretary has so designated. If
Congress intended section 102(b)(3) to apply only to
mammals taken after the species became depleted, it would
have replaced the verb “has” with “had.”
Reinforcing this conclusion, other provisions of section
102(b) are expressly limited by the phrase “at the time of
taking.” Specifically, sections 102(b)(1) and 102(b)(2),
respectively, prohibit importation of mammals “pregnant at
the time of taking” and “nursing at the time of taking.” 16
U.S.C. § 1372(b)(1)–(b)(2). By contrast, section 102(b)(3)
contains no language limiting its operation to species
designated as depleted “at the time of taking.” See Barnhart v.
Sigmon Coal Co., 534 U.S. 438, 452 (2002) (“[W]hen
13
‘Congress includes particular language in one section of a
statute but omits it in another section of the same Act, it is
generally presumed that Congress acts intentionally and
purposely in the disparate inclusion or exclusion.’ ” (quoting
Russello v. United States, 464 U.S. 16, 23 (1983))).
Alternatively, the Safari Club relies on section
101(a)(3)(B), but that provision cannot permit what section
102(b)(3) expressly prohibits without rendering the latter
superfluous. See Davis County Solid Waste Management v.
EPA, 101 F.3d 1395, 1404 (D.C. Cir. 1996) (“[I]t is of course
a well-established maxim of statutory construction that courts
should avoid interpretations that render a statutory provision
superfluous.”). Indeed, counsel for the Safari Club conceded
as much at oral argument, stating that if the trophies in
question cannot be imported under section 102(b)(3), “it
doesn’t help that they might be able to [be imported] under
the other provision.” Oral Arg. Rec. 15:13–15:19.
D.
This brings us finally to the Safari Club’s procedural
challenges.
The Safari Club first argues that the Service failed to
comply with MMPA section 115(a) when it promulgated the
Listing Rule. That provision requires the Service, in taking
“any action . . . to determine if a species or stock should be
designated as depleted,” to follow certain procedural
requirements, such as publishing in the Federal Register a call
for assistance in obtaining scientific information and utilizing
informal working groups to the extent feasible. 16 U.S.C.
§ 1383b(a). Acknowledging that it did not follow section
115(a)’s requirements, the Service contends that it had no
obligation to do so. We agree. Section 115(a) applies only to
actions “to determine if a species or stock should be
14
designated as depleted.” Id. (emphasis added). This clearly
refers to the first mechanism for designating a species as
depleted—where “the Secretary . . . determines that a species
or population stock is below its optimum sustainable
population.” Id. § 1362(1)(A). By contrast, where a species is
listed under the ESA, it automatically becomes designated as
depleted under the MMPA. See id. § 1362(1)(C).
Accordingly, because an ESA listing results in a depleted
designation under the MMPA but entails no “determination”
to that effect, section 115(a) is inapplicable.
Next, the Safari Club argues that the proposed Listing
Rule failed to provide adequate notice that the Service “was
designating the polar bear as a depleted marine mammal
under the MMPA.” Appellants’ Br. 47. Had it been given
notice, the Safari Club claims it “would have argued . . . that
simply listing a species as threatened was not a ‘designation’
of a marine mammal as depleted.” Appellants’ Br. 49. The
district court rejected this argument, finding that the proposed
rule in fact “provided sufficient notice of the potential effects
of the Listing Rule and of the polar bear’s depleted status.” In
re Polar Bear Endangered Species Act Listing, 818 F. Supp.
2d at 255. Again, we agree.
The notice of proposed rulemaking clearly advised
stakeholders that the ESA listing could have the effect of
designating the polar bear as a depleted species within the
meaning of the MMPA’s import prohibitions. The proposed
rule explained that:
Regarding ongoing importation of polar bear
trophies taken from approved populations in Canada
into the United States, we anticipate conducting an
evaluation of the merits of continuing the presently
authorized imports. Under the MMPA Section 102—
15
Prohibitions [Importation of pregnant or nursing
animals; depleted species which includes those listed
as threatened or endangered under the ESA] it is
unlawful to import into the United States any marine
mammal if the mammal was taken from a species or
population stock that the Secretary has, by regulation
published in the Federal Register, designated as a
depleted species or stock.
Proposed Rule to List the Polar Bear (Ursus maritimus) as
Threatened Throughout Its Range, 72 Fed. Reg. 1064, 1098
(Jan. 9, 2007) (bracketed text in original). In other words, the
proposed rule not only explained the Service’s view that
“depleted species . . . include[] those listed as threatened or
endangered under the ESA,” but also alerted interested parties
that the MMPA could therefore bar continued trophy
importation. Id. Indeed, the Safari Club seems to have
understood this: it submitted comments to the Service
warning that “[l]isting under the ESA would make it
impossible for U.S. citizens to import sport-hunted polar bear
trophies into the United States, at least without the adoption
of special rules and permits to allow such imports.” Thus, the
Safari Club “should have anticipated”—and did in fact
anticipate—“the agency’s final course in light of the initial
notice,” rendering the final rule a “logical outgrowth of its
notice.” Covad Communications Co. v. FCC, 450 F.3d 528,
548 (D.C. Cir. 2006) (internal quotation marks omitted).
III.
For the foregoing reasons, we affirm.
So ordered.
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921 So.2d 32 (2006)
Joel PAREDES, Appellant,
v.
The STATE of Florida, Appellee.
No. 3D05-500.
District Court of Appeal of Florida, Third District.
January 25, 2006.
Rehearing Denied March 9, 2006.
*33 Joel Paredes, in proper person.
Charles J. Crist, Jr., Attorney General, for appellee.
Before FLETCHER, WELLS, and SHEPHERD, JJ.
FLETCHER, Judge.
Joel Paredes seeks to reverse an order denying his motion for post-conviction relief filed pursuant to Florida Rule of Criminal Procedure 3.850. We affirm.
Paredes was convicted after a jury trial of second degree murder and attempted second degree murder for his participation in a schoolyard driveby shooting. He confessed to being the shooter while his brother drove the car. Paredes was sentenced to an upward departure sentence of forty years. His judgment and sentence were affirmed by this court upon direct appeal. Paredes v. State, 760 So.2d 167 (Fla. 3d DCA 2000). Paredes timely raised eight issues in his petition for post-conviction relief.
*34 First, Paredes claims that his trial counsel was ineffective for failing to move to strike the jury panel based on allegedly improper prosecution questioning. This claim fails to raise a viable claim of Strickland[1] ineffectiveness given the record of defense counsel's repeated objections to the state's "pre-trying" the case to the jury. [Petitioner's Appendix E]. Further, the issue was raised at trial and properly preserved for appellate review; it is improper to attempt now to fashion the issue as an ineffectiveness claim. See, e.g., Parker v. State, 611 So.2d 1224 (Fla.1992).
Next, Paredes claims that counsel was ineffective for failing to challenge for cause or use peremptory strikes against three jurors. This claim fails because Paredes does not demonstrate any prejudice in these jurors, or how their seating on the jury panel resulted in an unfair trial. Trial counsel's failure to challenge them, without more, is not evidence of ineffectiveness. See Jenkins v. State, 824 So.2d 977 (Fla. 4th DCA 2002)("[T]he Strickland requirement of actual prejudice imposes a more stringent test before a new trial can be ordered for the failure to object to a person's service on a jury.").
Paredes claims that his trial counsel failed to preserve "meritorious issues." Paredes lists seven general areas where he believes his trial counsel should have made objections, but he fails to explain how these alleged omissions prejudiced the proceedings or negatively affected the outcome of his trial. The defendant bears the burden of establishing a prima facie case based upon a legally valid claim; mere conclusory allegations are not sufficient to meet this burden. See Kennedy v. State, 547 So.2d 912 (Fla.1989).
Paredes further asserts that his trial counsel failed to proffer testimony of a defense eyewitness. However, the record shows that defense counsel requested a hearing to determine whether statements made by the state to the witness had biased the witness against the defense. After the hearing, the trial court denied the defense motion for mistrial. Trial counsel was not ineffective for failing to proffer the original testimony because the record shows that witness eventually testified on behalf of the defense, and that defense counsel extensively impeached the witness as to her former testimony and did his best to rehabilitate.
Next, Paredes claims that his counsel failed to investigate the type of gun used. However, Paredes fails to demonstrate a reasonable probability that the trial outcome would have been different had defense counsel hired his own ballistics expert to testify at trial. In addition, Paredes himself acknowledged in his sworn statement that he used an MP.45, which he knew from reading the name off of the gun's stock. No Strickland error here.
Paredes claims that he told his counsel that it was his brother who actually fired the weapon and was in a gang. However, the record shows that defense counsel did impeach the co-defendant's testimony; as well, Paredes testified about his brother's arrest problems and admitted to shooting the gun. We find no Strickland error in any of the claims raised in Paredes' motion for post-conviction relief.
Paredes' remaining claims are without merit, as the issues were or should have been raised on direct appeal and are procedurally barred.
Affirmed.
NOTES
[1] Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984).
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101 So.2d 295 (1958)
CITY OF MOBILE
v.
JAX DISTRIBUTING COMPANY, Inc., et al.
1 Div. 757.
Supreme Court of Alabama.
March 6, 1958.
*296 Fred G. Collins and Collins, Galloway & Murphy, Mobile, for appellant.
Cunningham & Wilkins, Mobile, for appellees.
MERRILL, Justice.
Appeal from a decree overruling demurrer to the bill as amended which seeks a declaratory judgment as to the validity of an ordinance levying a license on each wholesaler, distributor or jobber of malt or brewed beverages.
Ordinarily, where the bill for a declaratory judgment shows a bona fide justiciable controversy which should be settled, the demurrer thereto should be overruled and a declaration of rights made and entered only after answer and on such evidence as the parties may deem proper to introduce on submission for final decree. Water Works and Sanitary Sewer Board of City of Montgomery v. Campbell, 262 Ala. 508, 80 So.2d 250; Curjel v. Ash, 261 Ala. 42, 72 So.2d 732; City of Bessemer v. Bessemer Theatres, 252 Ala. 117, 39 So.2d 658; Alabama State Milk Control Board v. Graham, 250 Ala. 49, 33 So.2d 11.
This is not a case where counsel for both sides desire to have the matter considered on appeal from the ruling on demurrer and argue the case on that basis as was the situation in Mobile Battle House v. City of Mobile, 262 Ala. 270, 78 So.2d 642, and Atkins v. Curtis, 259 Ala. 311, 66 So.2d 455.
In the instant case, appellant argues that the bill as amended does not allege a bona fide justiciable controversy. The bill must show such a controversy to exist before the court has jurisdiction to grant declaratory relief under the Declaratory Judgment Act. Bagwell v. Woodward Iron Co., 236 Ala. 668, 184 So. 692; 7 Ala.
The bill of complaint in the instant case follows closely the bill in City of Bessemer v. Bessemer Theatres, supra, including the facts on which the allegations that the tax levied by the ordinance is in violation of the Constitutions of the United States and of the State of Alabama, and that it is unreasonable, arbitrary, capricious *297 and oppressive. We are clear to the conclusion that the allegations in paragraph 8 of the amended bill present a bona fide justiciable controversy.
In view of the authorities cited in this opinion, the decree of the lower court must be affirmed.
The record shows that notice was given to the Attorney General under the provision of Tit. 7, § 166, Code 1940. See Busch Jewelry Co. v. City of Bessemer, 266 Ala. 492, 98 So.2d 50; Bond's Jewelry Co. v. City of Mobile, 266 Ala. 463, 97 So.2d 582, and Wheeler v. Bullington, 264 Ala. 264, 87 So.2d 27.
Affirmed. LAWSON, SIMPSON, GOODWYN and COLEMAN, JJ., concur.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 97-7681
HERBERT CURTIS,
Plaintiff - Appellant,
versus
ROBERT WARD, Warden of Evans Correctional
Institute; STUKEY, Major at Evans Correctional
Institute; PAT BROWN, Lieutenant at Evans
Correctional Institute; GIBSON, Correctional
Officer at Evans Correctional Institute;
GRIFFIN, Investigator at Evans Correctional
Institute; M. K. GALLOWAY, Head of Grievance
at Evans Correctional Institute,
Defendants - Appellees.
Appeal from the United States District Court for the District of
South Carolina, at Florence. David C. Norton, District Judge.
(CA-97-2515-4-18BE)
Submitted: February 26, 1998 Decided: March 20, 1998
Before WILKINS, NIEMEYER, and HAMILTON, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Herbert Curtis, Appellant Pro Se.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Appellant appeals the district court's order denying relief on
his 42 U.S.C. § 1983 (1994) complaint. We have reviewed the record
and the district court's opinion accepting the magistrate judge's
recommendation and find no reversible error. Accordingly, we affirm
on the reasoning of the district court. Curtis v. Ward, No. CA-97-
2515-4-18BE (D.S.C. Oct. 27, 1997). 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 deci-
sional process.
AFFIRMED
2
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108 F.3d 329
NOTICE: THIS SUMMARY ORDER MAY NOT BE CITED AS PRECEDENTIAL AUTHORITY, BUT MAY BE CALLED TO THE ATTENTION OF THE COURT IN A SUBSEQUENT STAGE OF THIS CASE, IN A RELATED CASE, OR IN ANY CASE FOR PURPOSES OF COLLATERAL ESTOPPEL OR RES JUDICATA. SEE SECOND CIRCUIT RULE 0.23.JACKSON SQUARE ASSOCIATES, a New York Limited Partnership,Plaintiff-Appellant,v.UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT,Buffalo Office-Region II, Defendant-Appellee.
No. 96-6179.
United States Court of Appeals, Second Circuit.
March 6, 1997.
APPEARING FOR APPELLANT:JOHN J. PHELAN, Buffalo, New York.
APPEARING FOR APPELLEE:Gail Y. Mitchell, Assistant United States Attorney, Western District of New York, Buffalo, New York (Patrick J. NeMoyer, United States Attorney, Western District of New York, John J. Cahill, Associate Field Counsel, United States Department of Housing and Urban Development, on the brief).
PRESENT: ELLSWORTH A. VAN GRAAFEILAND, THOMAS J. MESKILL, JOSE A. CABRANES, Circuit Judges.
1
This cause came on to be heard on the transcript of record from the United States District Court for the Western District of New York and was argued.
2
ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
3
Plaintiff Jackson Square Associates ("Jackson Square") appeals from the judgment of the United States District Court for the Western District of New York. The district court granted defendant's motion for summary judgment on plaintiff's cause of action for judicial review of a United States Housing and Urban Development ("HUD") action on the ground that it was arbitrary and illegal. The district court had previously dismissed plaintiff's claim against HUD for breach of contract.
4
Jackson Square owns a low-income housing development in Amherst, New York. On March 13, 1979, it entered into a housing assistance payments ("HAP") contract with HUD under 42 U.S.C. § 1437(f), pursuant to which HUD agreed to make rental assistance payments to Jackson Square for certain of the development's tenants. This case involves a dispute between the parties over the amount of an adjustment HUD made in the monthly rent payable to Jackson Square to account for an inaccurate estimate of the utility expenses for the housing project.
5
Jackson Square essentially raises two claims on appeal: (i) that the district court erred when it found that HUD's application of the rental adjustment was not arbitrary and capricious; and (ii) that the district court erred when it dismissed Jackson Square's breach of contract claim against HUD.
6
We affirm. We affirm the district court's judgment dismissing Jackson Square's claim that HUD's application of the rental adjustment was arbitrary and capricious for substantially the reasons stated by the district court in its order dated May 7, 1996, as amended on May 15, 1996. See Jackson Square Associates v. United States Department of Housing and Urban Development, 927 F.Supp. 75 (W.D.N.Y.1996). We affirm the district court's judgment dismissing Jackson Square's breach of contract claim against HUD for substantially the reasons stated by the district court in its order dated November 8, 1994. See Jackson Square Associates v. United States Department of Housing and Urban Development, 869 F.Supp. 133 (W.D.N.Y.1994).
7
We have considered all of the plaintiff's claims on appeal and find them to be without merit.
8
Accordingly, the judgment of the District Court is hereby AFFIRMED.
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76 So.3d 871 (2010)
C & C CONSTR., LLC, AND CHARLES GARY GEBHART
v.
JAMES R. MARSHALL AND ANITA MARSHALL, INDIVIDUALLY AND D/B/A MARSHALL ENTERS.
No. 1080626.
Supreme Court of Alabama.
February 26, 2010.
DECISION WITHOUT PUBLISHED OPINION
Affirmed.
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16 Utah 2d 52 (1964)
395 P.2d 724
WILMA W. WOOTTON, PLAINTIFF AND RESPONDENT,
v.
COMBINED INSURANCE COMPANY OF AMERICA, DEFENDANT AND APPELLANT.
No. 10108.
Supreme Court of Utah.
October 14, 1964.
Christenson, Paulson & Taylor, Ford R. Paulson, Provo, for appellant.
Howard & Lewis, Jackson B. Howard, Provo, for respondent.
WADE, Justice.
Combined Insurance Company of America appeals from a summary judgment rendered by the court in favor of Wilma W. Wootton, respondent herein, who brought an action for payment as beneficiary of a life insurance policy issued by appellant on the life of her husband. Appellant refused payment on the grounds of fraud and misrepresentation by respondent in procuring the issuance of said policy of insurance.
This being an appeal from a summary judgment it will only be sustained if from the pleadings, depositions, affidavits, and admissions it is apparent that there is no genuine issue of fact, and that the judgment should be granted as a matter of law.[1]
From the pleadings, depositions and affidavit it appears that respondent's husband died on December 3, 1962, from injuries sustained when hit by a car as he was crossing a road. On September 24, 1962, appellant had issued to respondent a Hospital or Medical-Surgical Policy for herself and her husband, Harold Wootton and an "Accidental Death Rider" thereto on the life of Harold Wootton in the principal sum of $5,000.
The application for the policy which also applied to the rider is dated September 24, 1962, and is in the handwriting of the insurance agent. This agent had known both respondent and her husband for a number of years and was friendly with both. The agent was aware that respondent's husband had a physical disability since he could see that he walked with a limp. Among the questions asked in the application was one which inquired whether any medical advice or treatment had been received in certain named diseases or "any other sickness, injury or defect." Applicant answered "no" to the named diseases and "yes" to the question of any other sickness, injury, or defect. She there disclosed that her husband had polio when three years of age. In completing the information on this sickness, respondent informed the agent that the polio had left her husband with a slight limp, that his recovery was complete, that he had no recurrence and was not still under a doctor's care, and that the doctor who was in attendance is deceased. She also answered "yes" to the next question which read: "To the best of your knowledge are you and all family dependent members now in good health and free from any physical defect, injury, or disease and are not now under medical care?" The policy issued contained a rider exempting appellant from coverage of Harold Wootton from loss on account of poliomyelitis or residual paralysis.
Respondent's husband had retired from his job in July, 1962, because the work was adversely affecting his weak leg; and a doctor whom he had consulted had advised him that if he continued in his job, he might lose the use of his good leg. In November, 1962, respondent's husband applied for Social Security at the age of 57 on the claim that he was completely and totally disabled.
Appellant contends that it was improper to grant a summary judgment because there is a genuine issue of a material fact which can only be resolved upon trial of this matter on its merits. Appellant argues that the issue to be determined as a matter of fact concerns the intentional misrepresentation with intent to deceive by respondent of her husband's health as revealed by her answers to the questions in her application and by the record.
Unless the misrepresentations in the negotiation for an insurance policy are made with the intent to deceive and "materially affected either the acceptance of the risk or the hazard assumed by the insurer" the insurance contract cannot be avoided by an insurance company.[2] Mere falsity of answers to questions propounded are insufficient if not knowingly made with intent to deceive and defraud.[3]
It appears to be appellant's contention that because respondent's husband had consulted a doctor in July, 1962, and had resigned his job that same month and had subsequently in November, 1962, applied for Social Security on the claim that he was completely and totally disabled, respondent had falsely answered questions regarding the state of his health at the time of the application and whether such false answers were wilful with intent to deceive and defraud the insurer under such circumstances is a jury question. We find no merit to such contention.
It should be noted that respondent Mrs. Wootton was originally primarily interested in the hospital and surgical phase of the coverage. The life insurance phase was added as a "rider" to this policy. Respondent in response to the questions asked in the application for such hospital and surgical insurance revealed that her husband had been afflicted with polio when three years of age, the residual effect of which was a slight limp. The agent asking the questions was aware of the physical disability of respondent's husband but had not known what was its cause. Her subsequent answer that to her best knowledge her husband was in good health and free from any physical defect or disease at the time of the application must be taken in conjunction with the disclosure that her husband suffered from a residual physical defect as the result of his childhood polio attack. Viewed in this light it does not appear that respondent misrepresented any fact. What weakness her husband had was due to the residual effect of polio. He had completely recovered from the disease itself and was not under a doctor's care for it. Appellant did not rely on respondent's statement that her husband was completely recovered from polio, because it excluded from coverage under the policy issued any loss sustained on account of disability caused or contributed to by "poliomyelitis or residual paralysis." Having knowledge sufficient to cause it to exclude recovery for any loss which the applicant might sustain due to polio or residual paralysis, there could be no reasonable basis for a finding that respondent had wilfully misrepresented a material fact with intent to defraud or deceive appellant.
The failure of respondent to volunteer the information that her husband had resigned his job in July because with the added work his weak leg was being adversely affected cannot reasonably be considered as sufficient evidence upon which to base a finding of intent to defraud. Appellant had sufficient knowledge of the physical disability of respondent's husband to ascertain all the facts it needed as to its extent, if it had deemed it important, by either asking further questions or conducting an investigation; and it cannot blind itself from ascertaining the truth and then claim wilful misrepresentation of the truth on which it relied in order to avoid payment under a policy.[4] This would appear to be especially applicable in the instant case where the accidental death of respondent's husband was not in any way related to his physical defect. From the pleadings, affidavit and depositions it is apparent respondent is entitled to a judgment as a matter of law. The court therefore did not err in granting summary judgment.
Affirmed. Costs to respondent.
HENRIOD, C.J., and McDONOUGH, CALLISTER and CROCKETT, JJ., concur.
NOTES
[1] Kidman v. White, 14 Utah 2d 142, 378 P.2d 898.
[2] Sec. 31-19-8, U.C.A. 1953.
[3] Chadwick v. Beneficial Life Ins. Co., 54 Utah 443, 181 P. 448; New York Life Ins. Co. v. Grow, 103 Utah 285, 135 P.2d 120; Zolintakis v. Equitable Life Assurance Society, 10 Cir., 97 F.2d 583, 108 F.2d 902; Prudential Ins. Co. of America v. Willsey, 10 Cir., 214 F.2d 729.
[4] New York Life Ins. Co. v. Strudel, 5 Cir., 243 F.2d 90.
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 00-20426
Summary Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
MELQUIADES ROCHA LEOS, also known as
Jose Leos, also known as El Pelon,
Defendant-Appellant.
--------------------
Appeal from the United States District Court
for the Southern District of Texas
USDC No. H-99-CR-370-2
--------------------
June 1, 2001
Before SMITH, BENAVIDES, and DENNIS, Circuit Judges.
PER CURIAM:*
Counsel for Melquiades Rocha Leos has moved for leave to
withdraw and has filed a brief as required by Anders v.
California, 386 U.S. 738 (1967). Leos has received a copy of
counsel's brief and has filed a response.
Leos argues that the district court improperly enhanced his
sentence under United States Sentencing Guidelines §§ 2D1.1(b)(1)
and 3B1.1(b). Leos knowingly and voluntarily waived his right to
appeal his sentence or the manner in which it was determined.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 00-20426
-2-
See United States v. Portillo, 18 F.3d 290, 292 (5th Cir. 1994).
This argument is therefore foreclosed.
Leos also challenges the indictment, the sentence, and
counsel’s performance on the basis of Apprendi v. New Jersey, 530
U.S. 466 (2000), and Jones v. United States, 526 U.S. 227 (1999).
There can be no Apprendi or Jones violation because Leos’s
sentence was not increased above the statutory maximum of life
imprisonment by any of the findings made by the district court at
sentencing. United States v. Keith, 230 F.3d 784, 786-87 (5th
Cir. 2000), cert. denied, 121 S. Ct. 1163 (2001).
We do not address Leos’s conclusional assertion that counsel
was ineffective because he failed to investigate the case or
prepare for trial. See United States v. Volsken, 766 F.2d 190,
193 (5th Cir. 1985).
Our independent review of the brief, the record, and Leos’s
response discloses no nonfrivolous issue for appeal.
Accordingly, counsel’s motion for leave to withdraw is GRANTED,
counsel is excused from further responsibilities herein, and the
APPEAL IS DISMISSED. See 5th Cir. R. 42.2. Leos’s motion for
appointment of new counsel is DENIED.
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384 So.2d 265 (1980)
GRIFFIN BUILDERS SUPPLY, INC., Appellant,
v.
Ruth JONES, Appellee.
No. 79-912.
District Court of Appeal of Florida, Second District.
June 6, 1980.
Robert G. Jacobson of Farr, Farr, Haymans, Moseley, Odom & Emerich, Port Charlotte, for appellant.
Robert J. Norton of Norton & Marryott, Punta Gorda, for appellee.
*266 RYDER, Judge.
Griffin Builders Supply, Inc. appeals the grant of summary judgment to appellee Jones, alleging that material issues of disputed facts remain regarding the effect of a release signed by appellant's representative. We agree.
Appellant and appellee allegedly entered into an oral contract for appellant to build a house for appellee in return for costs plus an agreed profit of $3,817.62. After substantially completing construction, appellant's supervisor executed a contractor's affidavit to obtain the remainder of mortgage proceeds from Coast Federal Savings and Loan Association. The affidavit stated:
That in addition to the above listed amounts, if any, there is now due said contractor the final payment in full on said improvements in the sum of $7,506.25; or any amount due or to become due thereunder; that payment to said contractor of said sums shall constitute a full release by said contractor of any and all claims arising out of said contract.
Appellant accepted the $7,506.25. Bloomport, appellant's supervisor, averred by affidavit that he gave Coast Federal, as appellee's agent, the affidavit only to obtain the money and did not intend that the document release appellee from further payment under the contract. The alleged costs plus agreed profit exceeded payments by $3,757.33 after the final mortgage payment was made, and appellant sought that additional amount from appellee. We reject the contention of appellant's supervisor, since a releasor cannot avoid the effect of a release by stating that he did not read it before signing. See Florida East Coast Ry. Co. v. Thompson, 93 Fla. 30, 111 So. 525 (1927); 66 Am.Jur.2d Release § 15 (1973).
The affidavit provides for the final payment of the mortgage proceeds to appellant to be a full release of claims from the contract with appellee. Appellant urges that inclusion of the phrase "or any amount due or to become due thereunder" implies that later payments could be required. The release is ambiguous, since the language "or any amount due or to become due" implies that further payments may be anticipated, while the words "final payment in full" imply general release.
We have held that an ambiguous contract creates genuine issues of material fact as to the correct interpretation of the contract, thus precluding summary judgment. Tampa Electric Co. v. Florida Power Corp., 267 So.2d 110 (Fla. 2d DCA 1972). See Buckel Corp. v. Fidelity & Deposit Co. of Maryland, 370 So.2d 824 (Fla. 2d DCA 1979). When the wording of an agreement is ambiguous and parties suggest different interpretations, the issue of proper interpretation becomes one of fact precluding grant of summary judgment. Westchester Fire Ins. Co. v. In-sink-erator, 252 So.2d 856 (Fla. 4th DCA 1971); Commercial Trading Co. v. Zero Food Storage, Inc., 199 So.2d 109 (Fla. 3d DCA 1967).
The release considered below was ambiguous and thus created genuine issues of material fact. The summary judgment is REVERSED, and the case REMANDED for further proceedings.
GRIMES, C.J., and BOARDMAN, J., concur.
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466 S.W.2d 348 (1971)
Sheridan C. LEWIS, Appellant,
v.
RIVER OAKS CAPITAL CORPORATION et al., Appellees.
No. 15725.
Court of Civil Appeals of Texas, Houston (1st Dist.).
April 15, 1971.
Rehearing Denied May 6, 1971.
*349 Fred Parks, Gail Borden Tennant, Jr., Houston, for appellant.
Fulbright, Crooker, Freeman, Bates & Jaworski, M. W. Parse, Jr., J. Robert Dickerson, Houston, for appellees River Oaks Bank & Trust.
James E. Lyon, John R. Cope, Houston, for appellees River Oaks Capital Corp., Bracewell & Patterson, Houston, of counsel.
*350 BELL, Chief Justice.
This is an appeal from a summary judgment rendered against appellant whereby River Oaks Capital Corporation recovered judgment in the amount of $41,500.00 plus interest and attorney's fees. The judgment also decreed that appellant take nothing on his cross-action against that corporation and on his third-party action against River Oaks Bank and Trust Co. and its president, James E. Lyon.
The suit originated when River Oaks Capital Corporation, herein called Capital, an assignee from River Oaks Bank and Trust Company, herein called Bank, filed suit to recover the balance due on a promissory note in the original amount of $138,000.00 given by appellant to the Bank's corporate predecessor, River Oaks State Bank. The note was dated August 29, 1962. Suit was filed July 20, 1968. A formal answer was filed. Capital filed a motion for summary judgment. Appellant, before a hearing, filed his first amended original answer, a cross-action and a third-party complaint against Bank and Lyon. He sought cancellation of the note and recovery from Bank and Lyon of $116,669.00. This was what appellant had paid on the note. This was filed September 13, 1968. Appellant also filed a reply to the first motion for summary judgment. The first motion was overruled.
The defense asserted to Bank's suit on the note, and also the basis for affirmative relief, were alleged false representations made by Lyon. It was alleged that Lyon represented that the Bank had title to the provisional stock certificate for 312,053 shares of stock in Central Minera, S. A., a Mexican corporation, and could sell it, when in fact title to such certificate was in Bankers Trust, Inc., Oil Industries Factors, Inc. and Life Underwriters, Inc. Appellant alleged that Lyon at the time furnished him with an opinion of the Bank's attorney, William R. Hoge, Jr., which opinion represented and stated the Bank had good title. Reliance on the representations is asserted. He also alleged that while Guaranty Trust had filed suit for title to the stock against Bank, the suit was without merit when in fact it was known to be a dangerous one. Further, appellant alleged that about 60 days before filing his pleading he for the first time learned of the falsity of the representations. As additional grounds of defense and recovery appellant alleged that in June, 1968, he demanded the stock, as he had a right to do, so he could vote it at a stockholders meeting in Mexico, but that Lyon refused to make the certificate available and the meeting could not be held.
Attached to the pleading and a part of it by incorporation by reference were various exhibits. Exhibits labeled A and B were the agreement by which the Bank sold the provisional certificate, 51 permanent certificates for 100 shares each, a note for $125,000.00 executed by Oil Industries Factors, Inc. and Life Underwriters, Inc., and 13 promissory notes executed by Texas International Sulphur Company aggregating $250,000.00, the collateral pledge agreement and the $138,000.00 note given by appellant for the purchase price of the above property. It is admitted by all that the notes were worthless. Appellant in fact alleges he knew the notes were worthless and that the value was in the stock. Exhibit C was a contract dated October 1, 1956, between Texas International Sulphur Co. and Guaranty Trust, Inc., by which the Sulphur Company obtained a line of credit with Guaranty in the amount of $5,000,000.00. It is recited that the Sulphur Company would upon demand sell, transfer and deliver to Guaranty 40% of any stock issued or to be issued by Central.
Bank and Lyon by way of answer plead denial, an affirmative assertion that appellant knew and was informed of all the facts, and that recovery was barred by one or more of the statutes of limitation. Capital answered the cross-action by a denial and an assertion of one or more of the statutes of limitation.
*351 In their separate motions for summary judgment, each of which was sustained, appellees asserted that on a basis of the pleadings, affidavits, answers to interrogatories by Lewis and certified copies of the record in Cause No. 590,018, styled Life Underwriters, Inc. v. Texas International Sulphur Co. et al, pending in the 151st District Court of Harris County, there was no genuine issue of material fact and the movants were entitled to judgment as a matter of law.
In opposing the motions appellant filed a reply supported by his affidavit.
We conclude the trial court correctly held there was no genuine issue of material fact but appellees were entitled to judgment as a matter of law.
There was no contention in the trial court through pleadings, affidavit, exhibits or otherwise that the note was not in default after its anniversary date in 1967.
On appeal for the first time appellant asserts there was an issue of fact as to whether the note was in default when appellant requested, in June of 1968, that the stock be sent to him so he could vote it at a stockholders meeting. There is no fact in the summary judgment evidence, raising any issue as to whether the note was in default. The final installment was due August 29, 1967. It was not paid.
The real questions on appeal are whether the summary judgment evidence established the following as a matter of law:
1. There was in law no legal fraud.
2. Assuming fraud, the third-party action was barred by the four year statute of limitation.
3. The Bank did not breach its agreement to make the stock available for voting purposes because appellant himself had breached it by defaulting in payment of the note.
The misrepresentation asserted by appellant was a mere matter of opinion upon which he had no right to rely. Further, where the facts show it was clearly expressed as an opinion, a party has no right to rely on it as a factual representation. Also, where it appears that the representation was one of law and the parties have equal opportunity to determine the matter there can be no defense or action based on fraud. Safety Casualty Co. v. McGee, 133 Tex. 233, 127 S.W.2d 176; Bell v. Henson, 74 S.W.2d 455 (Tex.Civ. App.) wr. dism'd; Scott v. McWilliams, 60 S.W.2d 491 (Tex.Civ.App.), wr. dism'd; Cross v. Thomas, 264 S.W.2d 539 (Tex.Civ. App.), ref., n. r. e.; Corbett v. McGregor, 62 Tex.Civ.App. 354, 131 S.W. 422, writ ref.; Hawkins v. Wells, 17 Tex.Civ.App. 360, 43 S.W. 816, wr. ref.; Traders & General Insurance Co. v. Keith, 107 S.W.2d 710 (Tex.Civ.App.), wr. dism'd.
The undisputed summary judgment evidence shows that the statement that Bank had title to the stock was given as a matter of legal opinion. Appellant's pleading states that Lyon told him that Bank was the owner and had good title to the certificate and furnished him, on August 29, 1962, the written opinion of Bank's attorney, William R. Hoge, Jr., which opinion represented the Bank had good title and could lawfully sell and convey same. The opinion addressed to appellate states that Hoge is giving his "impressions with regard to the legal questions involved in the pending litigation involving Life Underwriters, Inc. et al, * * * and our client, River Oaks Bank and Trust Co." The opinion affirmatively shows that the Bank is defendant in a suit by Guaranty Trust, Inc. in which Guaranty was alleging Bank was not entitled to the stock and that Guaranty relies on an agreement it had with Texas International Sulphur. It sets forth Guaranty's contentions and then gives Hoge's opinion that the Bank would prevail but in case of settlement it would be only on a nuisance value basis. Hoge gives the reasons for his opinion.
The collateral pledge agreement signed by appellant August 29, 1962, the same date the note was executed, expressly provides the assignment was made without recourse *352 or warranty, express or implied, on the part of Bank. It also recited that there was pending in the District Court of Harris County a lawsuit entitled Life Underwriters, Inc. Et Al v. Texas International Sulphur Co. Et Al, being cause No. 590,018, to which Bank was a party. Appellant agreed to assume all liability of Bank and fully indemnify Bank and comply with any judgment rendered. He also agreed to pay all court costs, expenses and attorney's fees.
The evidence undisputedly shows that on August 10, 1962, appellant, through his attorney, was seeking to settle the claim of Guaranty.
Appellant was an attorney is good standing licensed to practice in Texas. There is no claim that this was not an arms length transaction.
Insofar as the third-party action is concerned the claim was barred by the four year statute of limitations.
The claim as asserted shows it was barred. Where this is true, to avoid the running of the statute, the party seeking to avoid must allege concealment of the fraud or facts which show he could not have discovered the alleged fraud by the exercise of reasonable diligence. This appellant did not do. Pitman v. Holmes, 34 Tex.Civ.App. 485, 78 S.W. 961; Luling Oil & Gas Co. v. Humble Oil & Refining Co., 144 Tex. 475, 191 S.W.2d 716; McCord v. Bass, 223 S.W. 192 (Tex.Com.App.), judgment approved; Blum v. Elkins, 369 S.W.2d 810 (Tex.Civ. App.), n. w. h.
As a matter of law appellant failed to exercise due diligence to discover the alleged fraud. He knew of the lawsuit against the Bank. In fact he agreed to pay the costs of court, expenses and attorney's fees. By examining the papers in the cause he would have found out that Guaranty was claiming rights to the certificate and the basis of the claim. The record shows conclusively that appellant had notice of the lawsuit. Knowledge of facts that would cause a reasonably prudent person to make inquiry which would lead to the discovery of the fraud is in law knowledge of the fraud. White v. Bond, 362 S.W.2d 295 (Tex.Sup.); Glenn v. Steele, 61 S.W.2d 810 (Tex.Sup.); Powell v. March, 169 S. W. 936 (Tex.Civ.App.), wr. ref.
There was no breach of the contract by Bank in refusing to make the stock available to appellant for voting in June, 1968. The contract between the parties provided that subject to the obligation of appellant to make timely payments on the note appellant would have the right to have the stock so he could vote it. The Bank agreed to fully cooperate in making said stock available for such purpose. At the time of the demand by appellant, he was in default in making the agreed payments on the note. He had been in default since August 29, 1967. This constituted a material breach of the contract by appellant. This excused Bank from performance. Battles v. Adams, 415 S.W.2d 479 (Tex. Civ.App.), wr. ref., n. r. e.; Kidd-Scruggs Company v. Tyler Hotel Company, 270 S.W. 566 (Tex.Civ.App.), wr. ref.
Affirmed.
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132 Cal.Rptr.2d 490 (2003)
30 Cal.4th 167
65 P.3d 1255
Marietta SMALL, as Public Administrator, etc.,[*] Plaintiff and Appellant,
v.
FRITZ COMPANIES, INC., et al., Defendants and Respondents.
No. S091297.
Supreme Court of California.
April 7, 2003.
*491 Stull, Stull & Brody, Michael D. Braun, Marc L. Godino, Los Angeles, Timothy J. Burke, Jules Brody and Mark Levine for Plaintiff and Appellant.
Orrick, Herrington & Sutcliffe, William F. Alderman, San Francisco, and E. Anne Hawkins for Defendants and Respondents.
Wilson Sonsini Goodrich & Rosati, Boris Feldman, Douglas J. Clark and Cheryl W. Foung, Palo Alto, for Electronics for Imaging, Inc., as Amicus Curiae on behalf of Defendants and Respondents.
Skadden, Arps, Slate, Meagher & Flom, Raoul D. Kennedy, San Francisco, Garrett J. Waltzer, Palo Alto, David E. Springer and Frances P. Kao for Ifilm Corp. and SGW Holding Inc., as Amici Curiae on behalf of Defendants and Respondents.
Munger, Tolles & Olson, Charles D. Siegal, George M. Garvey, Los Angeles, and Janice M. Kroll for Securities Industry Association as Amicus Curiae on behalf of Defendants and Respondents.
Richard I. Miller; Wilke, Fleury, Hoffelt, Gould & Birney, Matthew W. Powell, Sacramento, Paul A. Dorris, Daniel L. Baxter; Willkie Farr & Gallagher, Kelly *492 M. Hnatt and Daniel B. Rosenthal for American Institute of Certified Accountants as Amicus Curiae on behalf of Defendants and Respondents.
KENNARD, J.
This is a stockholder's action charging that defendant corporation and its officers sent its stockholders a fraudulent quarterly financial report that grossly overreported earnings and profits. Plaintiff alleged that when the fraud was discovered, the price of the corporate stock dropped precipitously, causing injury to stockholders like himself.[1] The trial court sustained a demurrer without leave to amend and entered judgment for defendants; the Court of Appeal reversed. We granted defendants' petition for review.
The petition for review raised only a single issue: "Should the tort of common law fraud (including negligent misrepresentation) be expanded to permit suits by those who claim that alleged misstatements by defendants induced them not to buy and sell securities?" This overstates the matterthis case does not involve any claim by persons who do not own stock and are fraudulently induced not to buy. It does, however, present the issue whether California should recognize a cause of action by persons wrongfully induced to hold stock instead of selling it. (For convenience, we shall refer to such a lawsuit as a "holder's action" to distinguish it from suits claiming damages from the purchase or sale of stock.)
We conclude that California law should allow a holder's action for fraud or negligent misrepresentation. California has long acknowledged that if the effect of a misrepresentation is to induce forbearanceto induce persons not to take actionand those persons are damaged as a result, they have a cause of action for fraud or negligent misrepresentation. We are not persuaded to create an exception to this rule when the forbearance is to refrain from selling stock. This conclusion does not expand the tort of common law fraud, but simply applies long-established legal principles to the factual setting of misrepresentations that induce stockholders to hold on to their stock.
This cause of action should be limited to stockholders who can make a bona fide showing of actual reliance upon the misrepresentations. Plaintiff here has failed to plead the element of actual reliance with sufficient specificity to show that he can meet that requirement. We therefore reverse the judgment of the Court of Appeal and remand the cause to that court, with directions to have the trial court sustain defendants' demurrer but grant plaintiff leave to amend his complaint.
I. PROCEEDINGS BELOW
"In reviewing a judgment of dismissal after a demurrer is sustained without leave to amend, we must assume the truth of all facts properly pleaded by the plaintiffs, as well as those that are judicially noticeable." (Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809, 814, 107 Cal.Rptr.2d 369, 23 P.3d 601.) Our opinion in this case should not be construed as indicating whether or not defendants actually committed fraud or negligent misrepresentation.
Stockholder Harvey Greenfield filed this action in 1996 against Fritz Companies, Inc., a corporation, and against three officers: Lynn Fritz, the company president, chairman of the board, and owner of *493 39 percent of the common stock; John Johung, the chief financial officer and a director; and Stephen Mattessich, the corporate controller and a director.[2] The action was filed as a class action on behalf of all shareholders in Fritz "who owned and held Fritz common stock as of April 2, 1996 through at least July 24, 1996, in reliance on defendants' material misrepresentations and omissions ... and who were damaged thereby." The complaint alleged causes of action for common law fraud and negligent misrepresentation, and for violations of Civil Code sections 1709 and 1710, which codify the common law actions for fraud and deceit.
Before us is the validity of plaintiffs second amended complaint. It alleged that Fritz provides services for importers and exporters. Between April 1995 and May 1996, Fritz acquired Intertrans Corporation and then numerous other companies in the import and export businesses. Fritz encountered difficulties with these acquisitions, and in particular with the Intertrans accounting system, which it adopted for much of its business. Nevertheless, on April 2, 1996, Fritz issued a press release that reported third quarter revenues of $274.3 million, net income of $10.3 million, and earnings per share of $29. The same figures appeared in its third quarter report to shareholders, issued on April 15, 1996, for the quarter ending February 29, 1996. According to plaintiff, that report was incorrect for a variety of reasons: the inadequate integration of the Intertrans and Fritz accounting systems led to recording revenue that did not exist; Fritz failed to provide adequate reserves for uncollectible accounts receivable; and Fritz misstated the costs of its acquisitions.
The complaint alleged that on July 24, 1996, Fritz restated its previously reported revenues and earnings for the third quarter. Estimated third quarter earnings were reduced from $10.3 million to $3.1 million. Further, Fritz announced that it would incur a loss of $3.4 million in the fourth quarter.
The complaint then set forth in detail the reasons why the original third quarter report was inaccurate: improper accounting for merger and acquisition costs; improper classification of ordinary operating expenses as merger costs; improper revenue recognition; improper capitalized software development costs; and failure to allow for uncollectible accounts receivable. It alleged that the individual defendants knew or should have known that the third quarter report and press releases were false and misleading. When defendants made these statements, "defendants intended that investors, including plaintiff and the Class, would rely upon and act on the basis of those misrepresentations in deciding whether to retain the Fritz shares."
The complaint further asserted that plaintiff and all class members received Fritz's third quarter statement, "read this statement, including the information related to the reported revenue, net income and earnings per share, and relied on this information in deciding to hold Fritz stock through [July 24, 1996]."
With respect to damages, the complaint alleged: "In response to defendant's disclosures on July 24, 1996, Fritz's stock plunged more than 55% in one day, dropping $15.25 to close at $12.25 per share.... Had defendants disclosed correct third quarter revenue, net income and earnings per share on April 2, 1996, as *494 required by GAAP [generally accepted accounting practices], Fritz's stock price would likely have declined on April 2, 1996, and plaintiff and the Class would have disposed of their shares at a price above the $12.25 per share closing price of that day."
Defendants demurred to plaintiffs second amended complaint on two grounds: (1) "California law does not recognize any [cause of action] on behalf of shareholders who neither bought nor sold shares based upon any alleged misstatement or omission"; and (2) the complaint failed to "plead with the requisite specificity the facts alleged to constitute actual reliance." The trial court sustained the demurrer on the second ground only and entered judgment for defendants. Plaintiff appealed.
The Court of Appeal reversed. It held that the complaint stated causes of action for fraud and negligent misrepresentation and alleged actual reliance with sufficient specificity. (It did not decide whether the case should be certified as a class action.) We granted defendants' petition for review.
II. California Recognizes a Cause of Action for Stockholders Induced by Fraud or Negligent Misrepresentation to Refrain from Selling Stock
Defendants contend that California should not recognize a cause of action for fraud or negligent misrepresentation when the plaintiff relies on the false representation by retaining stock, instead of buying or selling it. We disagree.
"`The elements of fraud, which gives rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or "scienter"); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.'" (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638, 49 Cal.Rptr.2d 377, 909 P.2d 981.) The tort of negligent misrepresentation does not require scienter or intent to defraud. (Gagne v. Bertran (1954) 43 Cal.2d 481, 487-488, 275 P.2d 15.) It encompasses "[t]he assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true" (Civ.Code, § 1710, subd. 2), and "[t]he positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true" (Civ.Code, § 1572, subd. 2; see Fox v. Pollack (1986) 181 Cal.App.3d 954, 962, 226 Cal.Rptr. 532 [describing elements of the tort]). When such misrepresentations have occurred in connection with the sale of corporate stock, the California courts have entertained common law actions for fraud or negligent misrepresentation. (E.g., Hobart v. Hobart Estate Co. (1945) 26 Cal.2d 412, 159 P.2d 958; Sewell v. Christie (1912) 163 Cal. 76,124 P. 713.)
Forbearancethe decision not to exercise a right or poweris sufficient consideration to support a contract and to overcome the statute of frauds. (E.g., Schumm v. Berg (1951) 37 Cal.2d 174, 185, 187-188, 231 P.2d 39; Rest.2d Contracts, §§ 90, 139; 1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts, § 214, p. 223.) It is also sufficient to fulfill the element of reliance necessary to sustain a cause of action for fraud or negligent misrepresentation. Section 525 of the Restatement Second of Torts states: "One who fraudulently makes a misrepresentation of fact, opinion, intention or law for the purpose of inducing another to act or to refrain from action in reliance upon it, is subject to liability to the other in deceit for pecuniary loss caused to him by his justifiable reliance upon the misrepresentation." (Rest.2d Torts, § 525, italics added.) Section 531 states the "general rule" *495 that "[o]ne who makes a fraudulent misrepresentation is subject to liability to the persons or class of persons whom he intends or has reason to expect to act or to refrain from action in reliance upon the misrepresentation, for pecuniary loss suffered by them through their justifiable reliance in the type of transaction in which he intends or has reason to expect their conduct to be influenced." (Rest.2d Torts, § 531, italics added.) And section 551, subdivision (1) states: "One who fails to disclose to another a fact that he knows may justifiably induce the other to act or refrain from acting in a business transaction is subject to the same liability to the other as though he had represented the nonexistence of the matter that he has failed to disclose...." (Rest.2d Torts, § 551, italics added.)
California law has long recognized the principle that induced forbearance can be the basis for tort liability. (Marshall v. Buchanan (1868) 35 Cal. 264; Pollack v. Lytle (1981) 120 Cal.App.3d 931, 941, 175 Cal.Rptr. 81, overruled on other grounds in Beck v. Wecht (2002) 28 Cal.4th 289, 121 Cal.Rptr.2d 384, 48 P.3d 417; Carlson v. Richardson (1968) 267 Cal.App.2d 204, 206-208, 72 Cal.Rptr. 769; Halagan v. Ohanesian (1967) 257 Cal.App.2d 14, 17-19, 64 Cal.Rptr. 792; see Pinney & Topliff v. Chrysler Corporation (S.D.Cal.1959) 176 F.Supp. 801.) California has not yet applied this principle to lawsuits involving misrepresentations affecting corporate stock, but, as we shall explain, we should not make an exception for such cases. Most other states that have confronted this issue have concluded that forbearance from selling stock is sufficient reliance to support a cause of action. (See David v. Belmont (1935) 291 Mass. 450 [197 N.E. 83]; Fottler v. Moseley (1901) 179 Mass. 295 [60 N.E. 788]; see Duffy v. Smith (1895) 57 N.J.L. 679, 32 A. 371 [sub nom. Duffy v. Smith, 32 A. 371] [plaintiff fraudulently induced to buy stock could recover damages for period of retaining stock in reliance on same representation]; Continental Insurance Co. v. Mercadante (1927) 222 A.D. 181 [225 N.Y.S. 488]; Rothmiller v. Stein (1894) 143 N.Y. 581 [38 N.E. 718]; but see Chanoff v. U.S. Surgical Corp. (D.Conn.1994) 857 F.Supp. 1011, 1018 [applying Connecticut law]; see generally Ratner, Stockholders' holding Claims Class Actions Under State Law After the Uniform Standards Act of 1998 (2001) 68 U. Chi. L.Rev. 1035, 1039 (hereafter Ratner).) Gutman v. Howard Sav. Bank (D.N.J.1990) 748 F.Supp. 254, 264, upholding a holder's action based on forbearance under New York and New Jersey law, said: "Lies which deceive and injure do not become innocent merely because the deceived continue to do something rather than begin to do something else. Inducement is the substance of reliance; the form of relianceaction or inactionis not critical to the actionability of fraud." (Fn.omitted.)
Indeed, defendants do not dispute that forbearance is generally sufficient reliance to permit a cause of action for fraud or negligent misrepresentation. Neither do they dispute that forbearance would be sufficient reliance if a stockholder were induced to refrain from selling his stock by a face-to-face conversation with a corporate officer or director. Borrowing a phrase from the United States Supreme Court opinion in Blue Chip Stamps v. Manor Drug Stores (1975) 421 U.S. 723, 745, 95 S.Ct. 1917, 44 L.Ed.2d 539 (Blue Chip Stamps ), however, defendants argue that all such cases are "light years away" from the world of stock transactions on a national exchange.
Defendants first assert that in the context of stock sold on a national exchange, a corporation cannot be found to *496 have knowingly intended to defraud "an anonymous shareholder like plaintiff Greenfield," because no corporate officer or director had a face-to-face or personal communication with him. Nevertheless, although many fraud cases involve personal communications, that has never been an element of the cause of action. (See Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 218-219, 197 Cal.Rptr. 783, 673 P.2d 660 [fraud perpetrated by misleading advertisements on nationally broadcast television shows].) Fraud can be perpetrated by any means of communication intended to reach and influence the recipient.
But defendants' principal argument is that in a case such as this involving a widely held, nationally traded stock, there are compelling policy considerations that argue against recognizing a holder's cause of action. In particular, they contend that allowing a holder's action will permit the filing of nonmeritorious "strike" suits designed to coerce settlements (see Blue Chip Stamps, supra, 421 U.S. at pp. 739-742, 95 S.Ct. 1917; Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1107, 23 Cal.Rptr.2d 101, 858 P.2d 568 (Mirkin); Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 401, 406, 11 Cal.Rptr.2d 51, 834 P.2d 745 (Bily)). We recognize the importance of the policy considerations defendants advance, but although those considerations may justify placing limitations on a holder's cause of action, they do not justify a categorical denial of that cause of action. In explaining the basis for this conclusion, we first examine the federal cases and statutes on which defendants rely, then the California cases, and finally defendants' specific policy concerns.
A. Federal Law
Congress enacted the first federal laws regulating securities in the early 1930's in response to the stock market crash of 1929. (See Ratner, supra, 68 U. Chi. L.Rev. at p. 1042.) The Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) "was designed to protect investors against manipulation of stock prices" and to that end established extensive disclosure requirements. (Basic Inc. v. Levinson (1988) 485 U.S. 224, 230, 108 S.Ct. 978, 99 L.Ed.2d 194.) Under the authority granted by that act, the Securities and Exchange Commission in 1942 promulgated a regulation making it "unlawful for any person ... [¶] ... to employ any device, scheme or artifice to defraud, [¶] ... [t]o make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made ... not misleading, or [¶] ... [t]o engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security." (17 C.F.R. § 240.10b-5 (2002) (hereafter Rule 10b-5).) Lower federal courts implied a private right of action to enforce Rule 10b-5, and the United States Supreme Court eventually endorsed this view in 1988. (Basic Inc. v. Levinson, supra, 485 U.S. at pp. 230-231, 108 S.Ct. 978.)
In Birnbaum v. Newport Steel Corp. (2nd Cir.1952) 193 F.2d 461, the United States Court of Appeals for the Second Circuit interpreted Rule 10b-5 as aimed only at "`a fraud perpetrated upon the purchaser or seller' of securities and as having no relation to breaches of fiduciary duty by corporate insiders resulting in fraud upon those who were not purchasers or sellers." (Birnbaum, at p. 463.) This interpretation of Rule 10b-5 barred holder's actions under that rule.
In 1975, the United States Supreme Court agreed that Rule 10b-5 did not permit holder's actions. (Blue Chip Stamps, supra, 421 U.S. at pp. 733, 749, 95 S.Ct. 1917.) Its decision was based largely on *497 two policy considerations: The danger of vexatious and meritless suits filed simply to extort a settlement (id. at pp. 739-740, 95 S.Ct. 1917) and the difficulties of proof that arise when the crucial issues may depend entirely on oral testimony from the stockholder (id. at pp. 743-747, 95 S.Ct. 1917).
But then the high court addressed the argument that complete nonrecognition of holder's actions would result in injustice by denying relief to victims of fraud. That injustice would not occur, the court observed, because its decision was limited to actions under Rule 10b-5; defrauded stockholders might still have a remedy in state court. The high court said: "A great majority of the many commentators on the issue before us have taken the view that the Birnbaum limitation on the plaintiff class in a Rule 10b-5 action for damages is an arbitrary restriction which unreasonably prevents some deserving plaintiffs from recovering damages which have in fact been caused by violations of Rule 10b-5.... We have no doubt that this is indeed a disadvantage of the Birnbaum rule, and if it had no countervailing advantages it would be undesirable as a matter of policy...." (Blue Chip Stamps, supra, 421 U.S. at pp. 738-739, 95 S.Ct. 1917, fn. omitted.) Then in a footnote, the court observed: "Obviously this disadvantage is attenuated to the extent that remedies are available to nonpurchasers and nonsellers under state law. [Citations.] Thus, for example, in Birnbaum itself, while the plaintiffs found themselves without federal remedies, the conduct alleged as the gravamen of the federal complaint later provided the basis for recovery in a cause of action based on state law. [Citation.] And in the immediate case, respondent has filed a state-court class action held in abeyance pending the outcome of this suit. [Citation.]" (Id. at p. 739, fn. 9, 95 S.Ct. 1917.) In short, the high court's decision in Blue Chip Stamps, while recognizing policy considerations similar to those defendants advance here, did not view those considerations as justification for a total denial of relief to defrauded holders; it reasoned only that the federal courts could deny a forum to wronged stockholders who are not sellers or buyers without unjust consequences because these stockholders retained a remedy in state courts.
Defendants here also refer to later federal legislation. In 1995, Congress, over presidential veto, passed the Private Securities Litigation Reform Act of 1995 (hereafter sometimes referred to as PSLRA) (Pub.L. No. 104-67 (Dec. 22, 1995) 109 Stat. 737). The PSLRA arose from congressional concern that the "current system of private liability under the federal securities laws d[id] not adequately distinguish between meritorious and frivolous claims." (Sen. Com. on Banking, Housing, and Urban Affairs, Subcom. on Securities and Investment, Staff Rep. on Private Securities Litigation (May 17, 1994) p. 13, as cited in Perino, Fraud and Federalism: Preempting Private State Securities Fraud. Causes of Action (1998) 50 Stan. L.Rev. 273, 290.) "Congress enacted the PSLRA to deter opportunistic private plaintiffs from filing abusive securities fraud claims, in part, by raising the pleading standards for private securities fraud plaintiffs." (In re Silicon Graphics Inc. Securities Litigation (9th Cir.1999) 183 F.3d 970, 973.) To this end, the PSLRA imposed a heightened pleading requirement, requiring plaintiffs in Rule 10b-5 cases to "state with particularity facts giving rise to a strong inference that the defendants acted with the required state of mind." (15 U.S.C. § 78u-4(b)(2).) Later, concerned that plaintiffs were evading the PSLRA by filing in state court, Congress in 1998 passed the Uniform Standards Act, which preempts state court class actions *498 based on untrue statements or omissions in connection with the purchase or sale of a security. (15 U.S.C. § 77p(b).) The recent Sarbanes Oxley Act of 2002, which imposes numerous restrictions on corporate accounting practices, does not restrict private causes of action, but instead extends the period for filing suit. (15 U.S.C. § 7201 et seq.)
The two statutes on which defendants rely, the PSLRA and the Uniform Standards Act, do not affect state court holder's actions; the PSLRA governs only actions in federal court, and the Uniform Standards Act by its terms applies only to suits involving the purchase or sale of stock. As defendants note, both acts demonstrate that Congress in 1995 and in 1998 viewed stockholder class actions with considerable suspicion. Yet Congress did not abolish stockholder class actions under Rule 10b-5: by requiring specific pleading, it attempted to bar abusive suits while permitting meritorious suits. The Sarbanes Oxley Act of 2002 shows Congress's recent concern to reduce procedural barriers to meritorious suits.
B. California Decisions
Neither the California Legislature nor the California electorate through its initiative power has enacted measures limiting stockholder actions. In 1996, two competing initiatives were defeated at the polls; one would have deterred stockholder suits, the other would have encouraged such suits. (Compare Ballot Pamp., Primary Elec. (Mar. 26, 1996) text of Prop. 201, pp. 68-70 with Ballot Pamp., Gen. Elec. (Nov. 5, 1996) text of Prop. 211, pp. 95-96.)
Defendants, however, rely on two decisions of this court that have cited policy concerns in limiting liability to stockholders: Bily, supra, 3 Cal.4th 370, 11 Cal. Rptr.2d 51, 834 P.2d 745, and Mirkin, supra, 5 Cal.4th 1082, 23 Cal.Rptr.2d 101, 858 P.2d 568.
In Bily, a majority of this court held that an accounting firm was not liable in negligence to persons who relied on its audit to purchase corporate stock. The decision weighed the advantages and disadvantages of recognizing such a cause of action (Bily, supra, 3 Cal.4th at pp. 396-407, 11 Cal.Rptr.2d 51, 834 P.2d 745), and concluded that lenders and investors may not recover for negligence (id. at p. 407, 11 Cal.Rptr.2d 51, 834 P.2d 745) but may recover for fraud (id. at p. 376, 11 Cal. Rptr.2d 51, 834 P.2d 745) and negligent misrepresentation (id. at p. 413, 11 Cal. Rptr.2d 51, 834 P.2d 745). The majority explained: "By allowing recovery for negligent misrepresentation (as opposed to mere negligence), we emphasize the indispensability of justifiable reliance on the statements contained in the report.... [A] general negligence charge directs attention to defendant's level of care and compliance with professional standards established by expert testimony, as opposed to plaintiffs reliance on a materially false statement made by defendant.... In contrast, an instruction based on the elements of negligent misrepresentation necessarily and properly focuses the jury's attention on the truth or falsity of the audit report's representations and plaintiffs actual and justifiable reliance on them. Because the audit report, not the audit itself, is the foundation of the third person's claim, negligent misrepresentation more precisely captures the gravamen of the cause...." (Ibid., fn. omitted.) Bily thus supports our conclusion here that California recognizes a holder's action based on fraud or negligent misrepresentation.
Bily's holding denying a cause of action for negligence rested on the premise that auditors, because they contract only with the corporation, owe no duty of *499 care to the stockholders. (Bily, supra, 3 Cal.4th at p. 376, 11 Cal.Rptr.2d 51, 834 P.2d 745.) That reasoning cannot be applied in this case. A corporation has a statutory duty to furnish stockholders with an annual report (Corp.Code, § 1501, subd. (a)); furnishing a report that is false, misleading, or improperly prepared is a breach of duty. Officers and directors owe a fiduciary duty to stockholders. (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 31, 216 Cal.Rptr. 130, 702 P.2d 212; Jones v. H.F. Ahmanson & Co. (1969) 1 Cal.3d 93, 109-110, 81 Cal.Rptr. 592, 460 P.2d 464; Fisher v. Pennsylvania Life Co. (1977) 69 Cal.App.3d 506, 513, 138 Cal.Rptr. 181.) A controlling stockholder, such as defendant Lynn Fritz here, also owes fiduciary duties to minority stockholders. (Jones v. H.F. Ahmanson & Co., supra, at pp. 109-110, 81 Cal.Rptr. 592, 460 P.2d 464.) Thus the complaint alleges breach of duties that are already well established in California law.
In Mirkin, a majority of this court rejected the "fraud on the market" doctrine used in federal cases under Rule 10b-5. That doctrine makes it unnecessary for buyers or sellers of stock to prove they relied on a defendant's misrepresentations, on the theory that whether or not they relied the misrepresentation influenced the market price at which they later bought or sold. (See Basic Inc. v. Levinson, supra, 485 U.S. 224, 108 S.Ct. 978, 99 L.Ed.2d 194.) By rejecting the "fraud on the market" doctrine, Mirkin held that a plaintiff suing for fraud or negligent misrepresentation under California law must prove actual reliance. (Mirkin, supra, 5 Cal.4th at pp. 1090-1098, 23 Cal.Rptr.2d 101, 858 P.2d 568.) The court carefully noted that its decision did not deprive the plaintiffs who did not actually rely on the misrepresentation of a remedy for fraud, for they retained remedies under both state and federal securities laws that presumed reliance on material misrepresentations. (Id. at p. 1090, 23 Cal.Rptr.2d 101, 858 P.2d 568, citing federal Rule 10b-5, Corp.Code, §§ 25000, 25400, & Bowden v. Robinson (1977) 67 Cal.App.3d 705, 714, 136 Cal.Rptr. 871.)
Mirkin involved a suit by a seller of securities. But Mirkin impliedly recognized that holders also have a cause of action under California law when it noted that if it had adopted the fraud on the market doctrine, persons could sue on the ground that they missed a favorable opportunity to sell stock "because the market was affected by negligent misrepresentations that they never heard." (Mirkin, supra, 5 Cal.4th at p. 1108, 23 Cal.Rptr.2d 101, 858 P.2d 568, italics added.) The italicized language implies that holders retain a cause of action if they can prove actual reliance on a misrepresentation instead of fraud on the market.
In contrast to Mirkin, supra, 5 Cal.4th 1082, 23 Cal.Rptr.2d 101, 858 P.2d 568, the complaint before us asserts that plaintiff read the false financial statement and relied on it. And, unlike the buyers of securities who sued in Mirkin, persons who hold stock in reliance upon misrepresentations are totally dependent for redress upon state common law causes of action. They have no remedy under either federal Rule 10b-5 or Corporations Code sections 25000 and 25400, because all of these provisions are limited to suits by buyers or sellers of securities.
In sum, the federal and state decisions and actions we have examined recognize the danger that shareholders may bring abusive and nonmeritorious suits to force a settlement from the corporation and its officers, but they do not view that danger as justifying outright denial of all shareholders' causes of action. To the contrary, when courts deny relief to the plaintiff before them, they affirm that the plaintiff *500 could seek redress in another forum (Blue Chip Stamps, supra, 421 U.S. at p. 739, fn. 9, 95 S.Ct. 1917) [plaintiff could sue in state court]; Mirkin, supra, 5 Cal.4th at p. 1090, 23 Cal.Rptr.2d 101, 858 P.2d 568 [plaintiff could sue in federal court]; or that the plaintiff could prevail by bringing a cause of action for fraud or negligent misrepresentation instead of one for ordinary negligence (Bily, supra, 3 Cal.4th at pp. 376, 407, 11 Cal.Rptr.2d 51, 834 P.2d 745).
C. Defendants' Policy Arguments
Our examination of the specifics of defendants' policy contentions also yields the conclusion that they may justify limiting a holder's cause of action but do not justify total denial of the cause of action. Each of defendants' policy contentions shares the same defect. Defendants do not argue that a holder's suit for fraud is intrinsically unjust; instead, they claim that some of those suits will be nonmeritorious, or frivolous, or will be filed solely to coerce a settlement, or will raise problems of pleading or proof. And instead of offering a proposal to separate the wheat from the chaff, defendants contend that we should deny holders a cause of action entirely, thus rejecting the just and the unjust alike. Yet defendants' own authorities confirm the validity of state court holder's actions and suggest that any proposal to limit them should be more discriminating than outright denial of the cause of action.
With respect to defendants' first concern, that allowing a holder's action will lead to the filing of nonmeritorious "strike" suits, commentators distinguish between two opposite undesirable outcomes: (a) allowing a plaintiff to obtain a large settlement or judgment when no fraud occurred, and (b) denying redress when fraud actually occurred. (They refer to these outcomes as "type I error" and "type II error," respectively.) (See Painter, Responding to a False Alarm: Federal Preemption of State Securities Fraud Causes of Action (1998) 84 Cornell L.Rev. 1, 71; Stout, Type I Error, Type II Error, and the Private Securities Litigation Reform Act (1996) 38 Ariz. L.Rev. 711 (hereafter Stout).)
When Congress enacted the Private Securities Litigation Reform Act of 1995 and the Uniform Standards Act of 1998, it was almost entirely concerned with preventing nonmeritorious suits. (Stout, supra, 38 Ariz. L.Rev. 711.) But events since 1998 have changed the perspective. The last few years have seen repeated reports of false financial statements and accounting fraud, demonstrating that many charges of corporate fraud were neither speculative nor attempts to extort settlement money, but were based on actual misconduct. "To open the newspaper today is to receive a daily dose of scandal, from Adelphia to Enron and beyond. Sadly, each of us knows that these newly publicized instances of accounting-related securities fraud are no longer out of the ordinary, save perhaps in scale alone." (Schulman, et al. The Sarbanes-Oxley Act: The Impact on Civil Litigation under the Federal Securities Laws from the Plaintiffs' Perspective (2002 ALI-ABA Cont. Legal Ed.) p. 1.) The victims of the reported frauds, moreover, are often persons who were induced to hold corporate stock by rosy but false financial reports, while others who knew the true state of affairs exercised stock options and sold at inflated prices. (See Purcell, The Enron Bankruptcy and Employer Stock in Retirement Plans, Congressional Research Service (Mar. 11, 2002).) Eliminating barriers that deny redress to actual victims of fraud now assumes an importance equal to that of deterring nonmeritorious suits.
*501 Defendants argue that under plaintiffs theory an entire universe of potential investors could state a class action for fraud any time a stock price fluctuated. If stock prices went up, investors could allege that they had elected not to purchase shares based on a company's inadequately optimistic forecasts. If stock prices dropped, investors could allege that they decided not to sell (or not to buy "put options") based on unduly optimistic disclosures. This argument overstates the case, however. We are here concerned not with the universe of potential investors who might decide to buy Fritz's stock, but with the more limited group of owners of that stock who actually relied on false representations. Although any owner can file suit when the price of a stock drops, to survive a demurrer to the complaint the owner must allege fraud with specificity. (Lazar v. Superior Court, supra, 12 Cal.4th at p. 635, 49 Cal.Rptr.2d 377, 909 P.2d 981.) A pleading that merely alleges a decline in the market price of stock obviously does not state a cause of action.
Defendants further argue that even if a plaintiff adequately pleads reliance, proof of reliance will often depend on oral testimony: The stockholder will testify that he read the financial statement but there may be no written record that he did so; he will testify that he decided not to sell the stock, and perhaps that he told his broker, or a friend, or a spouse, of his decision, but there may be no writing to evidence this fact. Thus, defendants are concerned that they will have no way to rebut false claims of reliance.
A corporation's financial report invites shareholders to read and rely on it. Some undoubtedly will do so. The possibility that a shareholder will commit perjury and falsely claim to have read and relied on the report does not differ in kind from the many other credibility issues routinely resolved by triers of fact in civil litigation. It cannot justify a blanket rule of nonliability.
There are, moreover, strong countervailing policy arguments in favor of allowing a holder's cause of action. "California ... has a legitimate and compelling interest in preserving a business climate free of fraud and deceptive practices." (Diamond Multimedia Systems, Inc. v. Superior Court (1999) 19 Cal.4th 1036, 1064, 80 Cal. Rptr.2d 828, 968 P.2d 539.) When corporate financial statements are revealed to be false or misleading, the harm done may extend well beyond the particular investors who receive those statements. Financial institutions will hesitate to loan money to corporations if they cannot trust the corporate books, and the refusal of lenders to advance funds can doom a corporation, harming its stockholders, creditors, and employees. Potential investors, learning of one corporate fraud, will fear there may be others yet unrevealed, and may discount the price of that corporation (and possibly other corporations) below what the bare financial data would warrant. The resulting losses can have economywide consequences in terms of loss of employment and failure of investor confidence in the stock market. (See Stout, supra, 38 Ariz. L.Rev. at pp. 713-714; House Com. on Fin. Services, The Enron Collapse: Impact on Investors and Financial Markets, 107th Cong, 1st Sess. (Dec. 12, 2001).)
Civil Code section 3274 declares that in California money damages are not only the prescribed remedy "for the violation of private rights" but also "the means of securing their observance." Because of the limited resources available for enforcing the Security and Exchange Commission's mandatory disclosure system, "private litigation has been frequently recognized as performing a useful augmentative deterrent, as well as a compensatory role." *502 (Seligman, The Merits Do Matter (1994) 108 Harv. L.Rev. 438, 456.) "The SEC repeatedly has noted that government regulation alone is not sufficient to keep markets honest. It has consistently stated that the private civil remedy is a key element in establishing a trusted market in which individuals and pension funds could safely invest." (Labaton, Consequences, Intended and Unintended, of Securities Law Reform (1999) 29 Stetson L.Rev. 395, 401.) Denying a cause of action to persons who hold stock in reliance upon corporate misrepresentations reduces substantially the number of persons who can enforce corporate honesty.
Finally, as this court said in Emery v. Emery (1955) 45 Cal.2d 421, 430, 289 P.2d 218, "[e]xceptions to the general principle of liability (Civ.Code, § 3523 [`For every wrong there is a remedy.']) ... are not to be lightly created...." We have recognized some exceptions, notably in cases where it would conflict with the need to protect the finality of adjudication (see Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1, 10-11, 74 Cal. Rptr.2d 248, 954 P.2d 511), or in which the defendant owed no duty to the person injured (e.g., Bily, supra, 3 Cal.4th 370, 11 Cal.Rptr.2d 51, 834 P.2d 745). But the reasons for those exceptions do not apply here. Persons claiming that, for reasons of policy, they should be immune from liability for intentional fraud bear a very heavy burden of persuasion, one that defendants here have not sustained. We recognize, however, that the risk of encouraging nonmeritorious suits justifies using the requirement for specific pleading to place limits on the cause of action. (See Cedars-Sinai, supra, 18 Cal.4th at pp. 13-14, 74 Cal.Rptr.2d 248, 954 P.2d 511.) We explain those limits in the next part.
III. ADEQUACY OF PLAINTIFF'S PLEADING OF RELIANCE
Defendants here attack plaintiffs pleading indirectly. Instead of arguing that plaintiffs complaint does not adequately plead reliance, defendants' brief argues that this court should reject a holder's cause of action because it raises troublesome questions of pleading and proving reliance. For the reasons stated in part II. of this opinion, defendants' arguments are insufficient to justify an absolute denial of a holder's cause of action. For the guidance of the parties and future litigants, however, we will discuss the adequacy of plaintiffs complaint.
Ideally, what is needed is some device to separate meritorious and nonmeritorious cases, if possible in advance of trial. California's requirement for specific pleading in fraud cases serves that purpose (Committee on Children's Television, Inc. v. General Foods Corp., supra, 35 Cal.3d at pp. 216-217, 197 Cal.Rptr. 783, 673 P.2d 660). "In California, fraud must be pled specifically; general and conclusory allegations do not suffice. [Citations.] `Thus "`the policy of liberal construction of the pleadings ... will not ordinarily be invoked to sustain a pleading defective in any material respect.'" [Citation.] This particularity requirement necessitates pleading facts which "show how, when, where, to whom, and by what means the representations were tendered."'" (Lazar v. Superior Court, supra, 12 Cal.4th at p. 645, 49 Cal.Rptr.2d 377, 909 P.2d 981.)
California courts have never decided whether the tort of negligent misrepresentation, alleged in the complaint here, must also be pled with specificity. But such a requirement is implied in the reasoning of two decisions (Committee on Children's Television, Inc. v. General Foods Corp., supra, 35 Cal.3d at p. 216, 197 Cal.Rptr. 783, 673 P.2d 660; B.L.M. v. Sabo & Deitsch (1997) 55 Cal.App.4th 823, 835-837, 64 Cal.Rptr.2d 335) and was asserted *503 expressly in Justice Mosk's dissenting opinion in Garcia v. Superior Court (1990) 50 Cal.3d 728, 748, 268 Cal.Rptr. 779, 789 P.2d 960. Because of the potential for false claims, we hold that a complaint for negligent misrepresentation in a holder's action should be pled with the same specificity required in a holder's action for fraud. (We express no view on whether this pleading requirement would apply in other actions for negligent misrepresentation.)
In the trial court and the Court of Appeal, defendants claimed that plaintiffs assertion of having relied on defendants' misrepresentations was insufficient. We agree that in view of the danger of nonmeritorious suits, such conclusory language does not satisfy the specificity requirement. In a holder's action a plaintiff must allege specific reliance on the defendants' representations: for example, that if the plaintiff had read a truthful account of the corporation's financial status the plaintiff would have sold the stock, how many shares the plaintiff would have sold, and when the sale would have taken place. The plaintiff must allege actions, as distinguished from unspoken and unrecorded thoughts and decisions, that would indicate that the plaintiff actually relied on the misrepresentations.
Plaintiffs who cannot plead with sufficient specificity to show a bona fide claim of actual reliance do not stand out from the mass of stockholders who rely on the market. Under Mirkin, supra, 5 Cal.4th 1082, 23 Cal.Rptr.2d 101, 858 P.2d 568, such persons cannot bring individual or class actions for fraud or misrepresentation. They may, however, be able to bring a corporate derivative action against the corporate officers and directors for harm caused to the corporation. (Sutter v. General Petroleum Corp. (1946) 28 Cal.2d 525, 530, 170 P.2d 898.) Because a plaintiff in a derivative action is suing on behalf of the corporation, he or she need not show personal reliance.
Plaintiff here did not attempt to bring a derivative action, however. His complaint does not allege injury to the corporation or a wrong common to the entire body of stockholders, but only to those stockholders who actually relied on defendants' misrepresentations.[3] Thus the complaint must stand or fall on the allegations of personal reliance.
We conclude that plaintiff did not adequately plead reliance in this case. But because the requirement we set forth here has not been stated in previous cases, plaintiff should be given leave to amend his complaint to make the necessary allegations.
The judgment of the Court of Appeal is reversed, and the cause is remanded for further proceedings consistent with this opinion.
WE CONCUR: GEORGE, C.J., and WERDEGAR and MORENO, JJ.
Concurring Opinion by KENNARD, J.
The majority opinion, which I authored, upholds the right of stockholders to sue for fraudulent or negligent misrepresentation when they reasonably rely on the misrepresentation to refrain from selling their stock. It does not discuss whether the plaintiff here has adequately pled damage, because defendants did not raise that question. I write separately to explain my disagreement with the separate opinions of Justices Baxter and Brown.
*504 I
Justice Baxter's concurrence urges this court to declare that holder plaintiffs must allege they sustained realized, permanent damage. Such a requirement, he acknowledges, would mean in many cases that plaintiffs must allege they sold the stock after learning of the fraud.
Justice Baxter begins his discussion with the correct proposition that a plaintiff must show actual damages. But he asserts two more propositions that are unsound and unsupported by any authority. First, he asserts that defrauded stockholders incur no damages unless the value of their stock was permanently diminished. Second, he maintains that if, after an initial decline when the fraud is revealed, the price of the stock at any later time rises for reasons unrelated to the fraud, this rise reduces or eliminates the plaintiffs loss.[1] The possibility of such a rise, he maintains, would make damages too speculative. These premises lead Justice Baxter to conclude that in most instances stockholders must sell their stock in order to sue, because there is no other way they can fix the amount of damages suffered and prove they will not benefit from an increase in the value of the stock, at some unknown future date, arising from unknowable future circumstances.
But Justice Baxter's premises are wrong. Temporary injury is legally compensable. Examples abound. One who sustains personal injuries may sue even if the injuries will eventually heal. A temporary taking of property is compensable, even if the property is later returned. (See, e.g., Kimball Laundry Co. v. U.S. (1949) 338 U.S. 1, 69 S.Ct. 1434, 93 L.Ed. 1765 [eminent domain]; Zaslow v. Kroenert (1946) 29 Cal.2d 541, 176 P.2d 1 [conversion].) To state a cause of action, a plaintiff whose property is damaged need not plead that its value will be forever impaired. (See, e.g., Wolfsen v. Hathaway (1948) 32 Cal.2d 632, 198 P.2d 1 [temporary damage to pasturage, which would regenerate naturally].) In Mears v. Crocker First Nat. Bank (1948) 84 Cal. App.2d 637, 191 P.2d 501, the appellate court upheld a cause of action for conversion when a company wrongfully refused for six weeks to transfer title to stock on its books.
Justice Baxter acknowledges that in other areas of tort law a temporary loss of enjoyment or use of property is compensable. (Cone, opn., post, 132 Cal.Rptr.2d at p. 515, 65 P.3d at p. 1275.) The property owner is not required to "realize" the loss by selling the property before the damage has been cured. Underlying Justice Baxter's proposal of a different, unique rule for securities fraud may be his sense that losses in stock value are mere "paper" losses, and somehow not real. (Cone, opn., post, at p. 512, 65 P.3d at p. 1273, italics omitted.)
I disagree. The economy is filled with what could derisively be termed "paper assets"the appreciated value of real estate, the goodwill of a business, uncollected accounts receivable, the balance of a checking account, etc. Business and individual investors make decisions based on the value of such assets. A decline in the value of stock, like a decline in the balance of a bank account or in the worth of a physical asset, is a decline in the net worth of the stockholder, whether or not *505 the stock is sold. For individual stockholders, it affects such matters as whether the stockholders will take a vacation, whether they can get a mortgage, and what other investments they make or do not make. It can have drastic effects on retirement plans. Businesses and institutions also hold stock. A decline in the value of the stock it holds can lead a college to raise tuition or an insurer to raise premiums. It affects a company's ability to borrow money or issue new stock. In sum, ours is a paper economy, and declines in stock prices have real and serious effects whether or not the stockholders sell the stock.
I disagree also with Justice Baxter's second premisethat the damages defrauded stockholders should receive would become unduly speculative if they continued to hold the stock because of the possibility that the price of the stock might increase later, at any time into the indefinite future, because of matters unrelated to the fraud. The accepted rule is to the contrary. In a securities fraud case, the loss is calculated by using the "market price after the fraud is discovered when the price ceases to be fictitious [i.e., based on false data] and represents the consensus of buying and selling opinion of the value of the securities." (Rest.2d Torts, § 549, com. c, p. 110.) Later price changes, in either direction, do not affect the calculation of the loss.
This rule does not necessarily mean that damages must be computed on the basis of the market price of the stock on the day the possible fraud is revealed; the market may take longer to digest and react to the news. In 1995 Congress, in the Public Securities Litigation Reform Act of 1995 (PSLRA), addressed proof of damages in cases in which a plaintiff who was fraudulently induced to purchase securities sued the corporation and its officers after the fraud was revealed and the price fell. (15 U.S.C. § 78u-4(e).) The PSLRA calculates damages based on the mean trading price of the security within a 90-day period after the date when the misstated or omitted fact is disclosed to the market. (Kaufman, Securities Litigation: Damages (2002) § 3.13, pp. 3-95 to 3-102.) (The mean trading price is the average of the closing prices of the security throughout the 90-day period.) If, however, the plaintiffs sell the security before the expiration of the 90-day period, damages are based on the mean trading price in the postdisclosure period ending on the date of the sale.[2](Ibid.) There are differences between the buyer's actions regulated by the PSLRA and the holder's actions at issue here, but they share a common need: to fix a postdisclosure date and price to use in calculating damages. In this respect the two actions are analogous, and the federal legislation regulating buyer's action suggests a workable rule for computing damages in holder's actions: It recognizes that the market may overreact to news of fraud, and that a later price may be a better indicator of the true postdisclosure value of the stock, but it does not diminish a plaintiffs damages because of the possibility that long-term economic factors may eventually cause the stock price to rise to its predisclosure level.
Justice Baxter's proposal that stockholders should not be able to sue until they "realize" their loss is a notion rarely mentioned and never endorsed in the cases and commentaries on securities regulation.[3] A *506 quarter of a century ago a similar argument was rejected in Harris v. American Investment Company (8th Cir.1975) 523 F.2d 220, 227-228, which held that in a buyer's action no sale was required: "A defrauded buyer of securities may maintain an action for damages under § 10(b) ... even though he continues to hold the securities. [Citations.] At common law, a defrauded purchaser of securities is under no duty to sell them prior to maintaining an action for deceit but may hold them for investment purposes if he chooses. [Citations.] Thus, Harris was under no duty to sell his ... stock, for mitigation of damages or any other purposes, prior to commencing this action. [¶] ... Harris's damages may be measured as of the date of public discovery of the fraud. Under those circumstances `[t]he plaintiff will not be able to avail himself of any further decrease in the value of the security after that date. So also the defendant should not be able to avail itself of any increase in the value of the stock after that date. This is the only method in which a consistent measure of damages can be obtained.'" This reasoning applies equally to a holder's action as involved here.
No commentators, including those critical of holder's actions, support or even discuss the notion advanced by Justice Baxter that, except in cases of corporate bankruptcy or special damages, stockholders must sell their stock before bringing suit. This proposal was not briefed in this case; it arose only during questioning at oral argument. We should be very hesitant to adopt a rule of our own invention that has not been briefed or previously tested by judicial opinion or academic commentary.[4]
Moreover, a "sell to sue" rule might have harmful consequences. Justice Baxter considers it unlikely that defrauded stockholders would sell to preserve their right to damages, further depressing the price of the stock, unless they planned to sell anyway. This is speculation without analysis. Mutual funds and institutional stockholders make daily decisions how to allocate their assets and might well decide that holding stock affected by fraud is less attractive than some alternative investment if, by not selling their shares, they would lose the opportunity to recover damages in a class fraud action. Individual investors who think the stock may eventually recover some of its value may still believe that possibility of recovery is worth less than their right to damages. And some investors may try to have their cake and eat it too; selling their stock to "realize" their loss, so they can join in a fraud suit, then repurchasing the stock so they can share in any future appreciation. Ultimately, the question of the effect of a "sell to sue" rule is an empirical one. If this court were to adopt a "sell to sue" rule, it would launch an experiment, without any input from economists or market analysts, which might have severe consequences.
II
I disagree also with Justice Brown's concurring and dissenting opinion. Justice Brown notes that plaintiff pled that Fritz Companies, Inc.'s (Fritz's) shares were traded in an "efficient market," and she declines to accept or reject the efficient capital market hypothesis[5] (cone. & dis. *507 opn., post, 132 Cal.Rptr.2d at p. 518, 65 P.3d at p. 1278), but despite her disclaimer she relies on that economic theory for her analysis.[6] The efficient capital markets hypothesis, however, does not support her analysis.
I agree with Justice Brown that plaintiff here is not entitled to damages on the theory that he would have sold Fritz stock at artificially high prices maintained through Fritz's concealment of adverse information. "Plaintiffs cannot claim the right to profit from what they allege was an unlawfully inflated stock value." (Chanoff v. U.S. Surgical Corp., supra, 857 F.Supp. at p. 1018; see Arent v. Distribution Sciences, Inc. (8th Cir.1992) 975 F.2d 1370, 1374; Crocker v. Federal Deposit Ins. Corp. (5th Cir.1987) 826 F.2d 347, 351-352.) Plaintiff is entitled only to damages attributable to the fraud, that is, to defendants' false representations in April 1996 and their concealment of the true financial condition of Fritz until July 24, 1996.
Justice Brown, however, relies on the efficient capital market hypothesis to argue that as a matter of law plaintiff sustained no damage. She asserts: "The true worth of Fritz's stock on July 24 necessarily reflected the fact that the restated third quarter results should have been reported on April 2. Thus, the price of Fritz stock on July 24 was, by definition, the same price the stock would have had on that date if defendants had reported Fritz's true third quarter results on April 2." (Cone. & dis. opn, post, 132 Cal.Rptr.2d at p. 520, 65 P.3d at p. 1279.) This argument is logically unsound. Under the semistrong version of the efficient capital market hypothesis (see ante, fn. 5), the price of Fritz's stock on July 24 necessarily reflected the fact that the third quarter results should have been reported on April 2. But that does not mean the price on July 24 was the same price the stock would have had on that date if Fritz had reported those results on April 2. Here is why: On July 24 the market had additional informationthat the April 2 report was false and that the true facts had been concealed for over three and one-half months. Justice Brown asserts that in an efficient market, "the market price of a stock reflects all *508 publicly available information." (Conc. & dis. opn., post, at p. 518, 65 P.3d at p. 1278.) The efficient capital market hypothesis does not presume that investors consider only hard economic data and ignore other information casting doubt on the integrity or competence of management. There is no logical reason under the efficient capital market hypothesis to assume that investors would disregard information showing false earnings reports and concealment of true data and would value the stock as if no such things had occurred.
Justice Brown goes on to say: "While loss of investor confidence in management may adversely affect a stock's price, the July 24 announcement would have caused investors to lose confidence in Fritz's managements even if it had been made on April 2." (Cone. & dis. opn., post, 132 Cal. Rptr.2d at p. 520, 65 P.3d at p. 1279.) A company's announcement of a quarterly loss will indeed shake investor confidence. But an announcement that its past report was false and that the loss was concealed from public view generates far greater anxiety. Investors will not only question management's competence but also its integrity. Investors would have reason to wonder whether there were other, yet undisclosed instances of fraud, and to doubt whether management really recognized its duty to protect the interests of stockholders. Investors would be concerned, too, that lenders would doubt the integrity of the management and question their financial data, affecting the company's credit status. They would fear that the company might incur the disruption and expense of defending numerous lawsuits, such as this one. In sum, revelations of false financial statements and management misrepresentations raise a host of concerns that may lead to a decline in stock values beyond that warranted by the financial information itself.
Justice Brown argues alternatively that damages would be speculative because of the difficulty in separating the loss in value attributable to fraud from that attributable to the disclosure of truthful but unfavorable financial data. But "though the fact of damage must be clearly established, the amount need not be proved with the same degree of certainty but may be left to reasonable approximation or inference. Any other rule would mean that sometimes a plaintiff who had suffered substantial damage would be wholly denied recovery because the particular items could not, for some reason, be precisely determined." (6 Witkin, Summary Cal. Law (9th ed. 1988) Torts, § 1325, p. 782.) Numerous decisions support this principle. (See Clemente v. State of California (1985) 40 Cal.3d 202, 219, 219 Cal.Rptr. 445, 707 P.2d 818; 6 Witkin, Summary of Cal. Law, supra, Torts, § 1325, p. 783 and cases there cited.) It is particularly applicable in fraud cases. "Because of the extra measure of blameworthiness inhering in fraud" (Lazar v. Superior Court (1996) 12 Cal.4th 631, 646, 49 Cal.Rptr.2d 377, 909 P.2d 981), the "modern tendency is to impose broader consequences ... than where [the defendant's] conduct was merely negligent." (6 Witkin, Summary of Cal. Law, supra, Torts, § 1323, p. 781.)
Thus, once a plaintiff holder can show that a portion of the loss is attributable to fraud, difficulty in proving the amount of the damages will not bar a cause of action. Proof will, of course, often require expert evidence. Such evidence is commonplace in securities fraud actions. (See Sowell v. Butcher & Singer, Inc. (3d Cir.1991) 926 F.2d 289, 301; Behrens v. Wometco Enterprises, Inc. (S.D.Fla.1988) 118 F.R.D. 534, 542.) Experts may disagreethey often dobut that is no reason to reject a holder's cause of action.
*509 Justice Brown fears that under the majority opinion a company would be subject to securities fraud claims whenever it announces bad news or a negative correction. "[P]laintiffs," she says, "would merely have to allege a loss of investor confidence due to investor speculation that the bad news resulted from fraud or incompetence." (Cone. & dis. opn, post, 132 Cal.Rptr.2d at p. 521, 65 P.3d at p. 1280.) To the contrary, under the principles stated in the majority opinion, plaintiffs would have to allege fraud with specificity to state a cause of action.
It is unclear what limits Justice Brown would place on the class of holders who could recover damages. She distinguishes cases upholding claims by persons who rely on face-to-face misrepresentations by defendants, thus implying that in her view such persons would have a valid cause of action. But the class of persons who rely on face-to-face misrepresentations is a miniscule class and the face-to-face nature of the representations may not make damages any more or less speculative than in other cases, depending upon whether the defendants made the same representations to the stockholders generally.
She also distinguishes cases in which the investors "alleged facts indicating that they were preparing to sell or considering the sale of their stock or property and that the misrepresentations induced them not to sell."[7] (Cone. & dis. opn, post 132 Cal.Rptr.2d at p. 523, 65 P.3d at p. 1282.) If she maintains that such persons have a valid cause of action for fraud, then her position differs only in nuance from the majority opinion, which states that a holder plaintiff "must allege specific reliance on the defendant's representations: for example, that if the plaintiff had read a truthful account of the corporation's financial status the plaintiff would have sold the stock, how many shares the plaintiff would have sold, and when the sale would have taken place." (Maj. opn, ante, at p. 503, 65 P.3d at p. 1265, italics added.) The difference between the majority and Justice Brown appears to be that the majority would allow a cause of action if the stockholder would have sold the stock if he or she had been given truthful information, while Justice Brown would limit the cause of action to persons who were dissuaded from selling by false informationwhich may be two ways of saying the same thing. Moreover, Justice Brown would allow greater damages than the majority proposes, allowing persons who actually rely on misrepresentations to claim damages for "drops in market price due to intervening causes unrelated to the misrepresentations." (Cone. & dis. opn, post, at p. 523, 65 P.3d at p. 1282.)
III
In sum, disclosures during the past three years have revealed extensive fraud involving numerous corporations, often involving false financial reports and the concealment of true financial datafraud so massive that it contributed to an overall decline in the stock market and perhaps to a decline in the economy generally. The victims include not only those who bought or sold stock in reliance upon the false statements, but also those who held stock in reliance. The majority opinion allows such holders to sue for damages. That *510 remedy should not be so hedged and qualified that only a fraction of those actually injured would be able to gain redress.
Concurring Opinion by BAXTER, J.
I agree with the majority's reasoning and result as far as they go. Thus, I accept in principle that the shareholder of a publicly traded company may have a direct common law action against the company and its officials when their intentional or negligent misrepresentations about the company's financial condition, on which he personally relied, induced him not to sell his shares, and thus caused him damage. Despite an "efficient market" for the shares, I can conceive that delayed disclosure of bad news, under circumstances suggesting that earlier reports were dishonestly or incompetently false, might have an effect on the market price of the shares beyond the effect of the bad news itself.
I also strongly agree that in a suit of this kinda so-called holder's actionthe complaint must plead specific facts showing actual, personal reliance on the defendants' alleged misrepresentations. As the majority indicate, the complaint before us is not specific enough in its allegations of actual reliance, and a remand for possible amendment is appropriate.[1]
But under the protracted circumstances of this case, the majority's disposition is incomplete. Counting the original complaint, filed in October 1996, there have been three attempts to state a cause of action. So far, these efforts have produced three appellate decisions, two from the Court of Appeal and one from this court. It is time to move this long-pending lawsuit beyond the pleading stage, one way or the other, by providing guidance on all the significant legal issues bearing on the sufficiency of the complaint.[2]
However, the majority encourage yet another round of pleading litigation, because they omit all reference to an element even more crucial and basic than those they discuss. The majority properly demand specificity in the complaint's allegations of reliance, but they overlook, by failing to address, the brief and conclusory way in which damage is pled.[3]
*511 On that point, the second amended complaint contains an additional fatal gap. The complaint recites that the original named plaintiff and other members of the alleged class are persons who held Fritz stock from before April 2, 1996, when Fritz first overstated its third quarter results, through July 24, 1996, when Fritz downgraded its third quarter figures and also announced disappointing fourth quarter earnings. According to the complaint, these investors suffered "detriment" when the price of Fritz shares plummeted by 55 percent, to $12.25 per share, on July 24, 1996detriment they could have avoided if, as they would have done, they had sold their shares upon a timely disclosure of the truth.
There are many uncertainties in this vague claim of damage, as defendants and their amici curiae have stressed at length. But the most fundamental flaw is the complaint's utter failure to state whether, or how, the described shareholders have suffered a realized loss as a result of the alleged fraud. The complaint does not allege that any such investor sold shares at a price depressed by revelation of the scandal. Nor does it articulate any other way in which this group of Fritz shareholders sustained actual out-of-pocket damage as a direct result of the July 24, 1996, disclosures. The complaint simply suggests that because these persons were holding Fritz shares on July 24, they are entitled to recover any difference between the price to which the shares actually fell on that date, and the price at which the shares could have been promptly sold if the true third quarter results had been announced in timely fashion.
These allegations are insufficient to support monetary recovery for the alleged fraud and deceit. In California, "recovery in a tort action for fraud is limited to the actual damages suffered by the plaintiff. [Citations.]" (Ward v. Taggart (1959) 51 Cal.2d 736, 741, 336 P.2d 534, italics added.) "`Actual' is defined as `existing in fact or reality,' as contrasted with `potential' or `hypothetical,' and as distinguished from `apparent' or `nominal' (Webster's Third New Internat. Diet. (1964) p. 22.) It follows that `actual damages' are those which compensate someone for the harm from which he or she has been proven to currently suffer or from which the evidence shows he or she is certain to suffer in the future." (Saunders v. Taylor (1996) 42 Cal.App.4th 1538, 1543, 50 Cal.Rptr.2d 395.)
Where fraud is alleged to have caused damage in connection with the purchase, sale, or exchange of property, California applies the out-of-pocket loss rule. This doctrine limits recovery to the difference between the actual values, intrinsic and economic, of that which the defrauded person gave up and that which he or she received in return, plus sums expended in reliance on the fraud, and it precludes recovery based on the "benefit of the bargain," i.e., the plaintiffs expectancy interest created by the fraud. (Civ.Code, § 3343; see Alliance Mortgage Co. v. *512 Rothwell (1995) 10 Cal.4th 1226, 1240, 44 Cal.Rptr.2d 352, 900 P.2d 601.)
Similar limitations to actual out-of-pocket loss must, of course, apply where one alleges that he was induced by fraud or deceit to hold property he would otherwise have sold. At the least, the defrauded person must plead and prove that, aside from any specific reliance expenses, he ultimately gave up more value, or received less, in exchange for the property, or that its value was permanently diminished, as a result of the fraud.
All persons who bought Fritz shares at a price unfairly inflated by the false reports of April 1996, or who sold such shares at the depressed price produced by the July 24, 1996, disclosure of the misrepresentations, either gave up more, or received less, for their shares than if the alleged fraud had not occurred. This gap between what the shareholders actually paid or received, and what they fairly should have paid or received, will never diminish or disappear, no matter what happens to the price of the stock thereafter. If capable of measurement, the difference represents actual out-of-pocket damage that the law should compensate.
The same premise does not necessarily apply, however, where there was neither a purchase nor a sale related to the fraud. In a holder's action, the plaintiff presumably bought the shares at their fair prefraud value. If he did not sell them when the fraud was disclosed, at a price influenced by the disclosure, but instead retained them for a substantial period thereafter, their value, subject to the daily fluctuations of an efficient securities market, may have risen or fallen during that time for reasons, and in an amount, unrelated to the fraud.
Of course, persons who held Fritz shares on July 24 suffered at least momentary paper losses when the price of those shares dropped. These investors' balance sheets of assets and liabilities, computed as of July 24, would show lower values for their Fritz shares than on July 23. However, such shareholders did not necessarily suffer permanent realized losses, and the law may compensate only the latter. Only those who sold the shares on the bad news, or otherwise incurred measurable, irretrievable out-of-pocket losses as a result, should be deemed to have suffered actual damage subject to recovery. Otherwise, damages are entirely speculative, and the opportunity for windfall recoveries is manifest.
If a company's stock was held for a substantial period after the fraud and its disclosure, intervening events may have obliterated the effect of the fraud on the value of the shareholders' investments. An efficient public securities market responds rapidly and accurately both to changing general economic conditions, and to the shifting prospects of each business whose shares are traded therein. Transitory events that affected the price of the company's shares on certain days during a particular year may have little to do with the value of the shares months or years later. A company's fortunes may rebound from fraud, perhaps under new and honest management, such that an investment retained for the long term may ultimately be worth more than if the fraud had never occurred. Certainly an attempt to trace the effect of a fraud that occurred in 1996 on the current value of the company's shares is an exercise in futile speculation.
Thus, I cannot accept the narrow "snapshot" theory of damage on which the current complaint asks us to focus. Any instantaneous paper loss incurred by longtime Fritz shareholders who saw their share values drop on July 24, 1996, but did nothing in response, is not necessarily an accurate measure of the actual damage, *513 if any, they ultimately did or will suffer because of the company's misrepresentations.[4]
No case I have found squarely embraces or rejects the notion that one who alleges he was induced by fraud to retain securities can recover damages simply by pleading and proving that he continued to hold the shares after disclosure of the truth caused their value to drop. Of course, there are no prior California decisions recognizing a cause of action for fraudulent inducement to hold publicly traded securities. Most of the authorities the majority cite from other jurisdictions are of ancient vintage and do not focus on measurement of damages for marketplace fraud in a modern efficient securities market.
In the most recent "proholder" case cited by the majority (Gutman v. Howard Sav. Bank (D.N.J.1990) 748 F.Supp. 254), the complaint expressly alleged that when the fraud was disclosed, the plaintiffs did sell their stock "at great loss." (Id. at p. 257.) On the other hand, the one recent "antiholder" decision acknowledged by the majority (Chanoff v. U.S. Surgical Corp. (D.Conn.1994) 857 F.Supp. 1011 (Chanoff)), affd. (2d Cir.1994) 31 F.3d 66, cert, den. (1994) 513 U.S. 1058, 115 S.Ct. 667, 130 L.Ed.2d 601 reasoned at length that damages for securities fraud, where there has been neither a purchase nor a sale in reliance on the fraud, were too speculative to be actionable. (Chanoff, supra, 857 F.Supp. at p. 1018.)
Even if my reasoning means that, in some cases, investors would have to sell their shares in order to recover, I foresee no dire market consequences. In the first place, the class of shareholders to whom such a requirement would apply is relatively small. For reasons indicated above, those who bought shares in reliance on the company's misrepresentations would never have to sell to sue. Among those who bought before the fraud occurred, the only ones who could sue in any event would be those with evidence, other than their own uncorroborated claims, that they had intended to sell but were induced not to do so by their personal reliance on the misrepresentations. It thus seems likely that the general loss of confidence in company management by investors, particularly institutional investors, would far overshadow any market effect of shareholders induced to sell only to preserve their rights to bring holder's actions.
In any event, it seems unlikely that defrauded holders will sell simply to preserve their right to sue and recover damages, when they otherwise would have been inclined to retain their shares despite the disclosure of the fraud. Those who sell on the disclosure presumably do so because they make a rational decision to cut their losses. Those who decide not to sell may be acting on an equally rational belief that the company and its shares will recover and prosper. This latter group may believe they will profit less by selling and suing than by waiting for the recovery. Whichever choice an investor makes, he should not have his cake and eat it too. Both economics and law are replete with elections of this kind. I see no fundamental problem with imposing one here.
Indeed, by allowing holders to sue and recover even when they realized no loss, we do more harm to the company's prospects, and to the value of its shares, than by withholding such eligibility. Investors are likely to display little interest in the stock of a corporation saddled with such unjustified liabilities.
I do not suggest that an open-market sale of the company's shares is the only *514 possible way a shareholder can incur a realized loss. If fraud caused a company to fail, such that its shares became permanently worthless, or led to a merger or acquisition in which remaining shareholders received a low value traceable to the effect of the fraud, that might suffice.[5] So might any showing that a fraud-related collapse of the company's share prices led to a margin call against a suing shareholder, at least where pledged collateral was sold at an unfavorable price to cover the margin loan. (But see Chanoff, supra, 857 F.Supp. 1011, 1018.)
I am not concerned that the limitations I propose would allow Fritz and its dishonest officials to escape liability for their fraud. Anybody who bought shares at an artificially high price in reliance on the falsely optimistic report of April 2, 1996, or sold them at a depressed price when the dishonesty was disclosed on July 24, 1996, or could otherwise demonstrate an actually realized loss from the misrepresentation, would have a remedy. To exclude persons who cannot demonstrate actual loss of this kind is simply to recognize one element of a common law action for fraud, i.e., damage caused by the fraud.
In her separate concurring opinion, Justice Kennard insists my conclusions flow from two false premisesthat temporary loss is not compensable (cone. opn. of Kennard, J., ante, 132 Cal.Rptr.2d at p. 504, 65 P.3d at pp. 1266-1267), and that damages would be too speculative if the shares continued to be held until after intervening market forces, unrelated to the fraud, had determined their value (id. at p. 504, 65 P.3d at pp. 1266-1267). Her contentions are not persuasive.
At the outset, her examples of compensable "temporary" losses are inapt. I agree that any demonstrable loss or damage arising from temporary deprivation of the full possession, enjoyment, and use of one's property is compensable where caused by such acts as conversion, trespass, or eminent domain. (See, e.g., Kimball Laundry Co. v. U.S. (1949) 338 U.S. 1, 69 S.Ct. 1434, 93 L.Ed. 1765 [condemnation of laundry plant for duration of war]; Wolfsen v. Hathaway (1948) 32 Cal.2d 632, 198 P.2d 1 [wrongful temporary damage to pasturage]; Zaslow v. Kroenert (1946) 29 Cal.2d 541, 176 P.2d 1 [conversion of real property]; Mears v. Crocker First Nat. Bank (1948) 84 Cal.App.2d 637, 191 P.2d 501 [conversion by failure to transfer ownership of stock on company books; measure of damages not discussed].)
No such issue arises in this case. There is no claim of deprivation of the possession, enjoyment, or use of the shares at issue here. All the rights, privileges, and powers of ownership were retained, including the right to sell the shares, or not to do so, *515 when the alleged fraud was disclosed. Plaintiff simply seeks compensation for a drop in their trading value on a particular day, claiming it resulted from the fraud. But the complaint pleads no facts indicating that this downward turn on the price chart for the shares, however temporary, caused an actual, realized loss.
Justice Kennard's argument that "paper" losses are real because they influence the actual conduct of economic affairs is also beside the point. The fact remains that in California, one does not suffer legally cognizable damage merely because disclosure of a fraud caused a transitory "blip" in the value of one's stock portfolio. On the contrary, damages for fraud or deceit in connection with the purchase, sale, or exchange of property are limited to out-of-pocket lossi.e., the difference between the actual value of that with which the defrauded person parted, and that which the defrauded person received, as a result of the fraud. In other words, the person must actually give more, or receive less, for property than if the fraud had not occurred. (Civ.Code, § 3343.)
As a consequence, one who did not purchase, but merely held, shares in reliance on fraud cannot establish an out-of-pocket loss simply on the theory that a later disclosure of the fraud caused the daily trading value of the shares to fall on a particular day. Yet this is the sum and substance of the damage allegations here.[6]
Though the plaintiff in this case seeks damages measured by the price to which Fritz shares fell on the very day the alleged fraud was disclosed, I do not contend that one must sell on that very day in order to show compensable damage. I have no quarrel with Justice Kennard's observation that the market may take some time to digest the bad news, that a somewhat later date may provide a better measure of how the market reacted to the fraud and its disclosure. All I propose is that the plaintiff in a holder's action must plead and prove an actual, realized loss which can be directly attributed, in a specified amount, to the fraud and its disclosure. It simply stands to reason that the longer the interval between disclosure on the one hand, and the moment a loss was allegedly realized on the other, the less likely it may become that this link can be established.
Nor do I suggest that such a claim is obviated by the passage of time simply because the value ultimately received for *516 the stock was influenced in part by intervening market forces unrelated to the fraud. But in an efficient public securities market, which responds rapidly to changing conditions, events subsequent to the fraud may so intervene that, as a logical matter, the value the plaintiff ultimately obtained bears no relationship whatever to the fraud. In such a case, I continue to believe, fraud-related damages should not be recoverable.
Accordingly, I would require that those who assert they were induced by fraud to hold company shares must plead and prove specific facts showing that they actually realized out-of-pocket losses as a result of the fraud and its disclosure. Pleading and proof that the price of the shares fell on a particular day as a result of disclosure of the fraud would not suffice. Because that is all the current complaint claims, I find its damage allegations inadequate to state a cause of action. I would allow an opportunity to amend the complaint in accordance with the views expressed in this opinion.
Concurring and Dissenting Opinion by BROWN, J.
Like the majority, I agree that California law does not categorically preclude a cause of action for fraud or negligent misrepresentation alleging that the plaintiff refrained from selling stock due to the defendant's misrepresentations. (See maj. opn., ante, 132 Cal.Rptr.2d at pp. 494-502, 65 P.3d at pp. 1258-1265.) I also agree that plaintiff did not state such a cause of action because he failed to plead actual reliance with adequate specificity. (See id. at pp. 502-503, 65 P.3d at pp. 1265-1266.) In particular, plaintiff failed to "allege actions, as distinguished from unspoken and unrecorded thoughts and decisions, that would indicate that [he] actually relied on the misrepresentations." (Id. at p. 503, 65 P.3d at p. 1265.) I also agree with Justice Baxter that plaintiff, in order to allege damages with sufficient particularity, "must plead and prove an actual, realized loss which can be directly attributed, in a specified amount, to the fraud and its disclosure." (Cone. opn. of Baxter, J., ante, at p. 515, 65 P.3d at p. 1276.) Nonetheless, I write separately because I believe plaintiff does not and cannot allege a causal relationship between the alleged misrepresentations and damages. Accordingly, I would affirm the trial court's decision to sustain defendants' demurrer without leave to amend.
I
As a threshold matter, this court may address the issue of whether plaintiff adequately pled damage causation even though neither the trial court nor the Court of Appeal considered it. First, the parties had ample opportunity to address the issue. Various amici curiae raised the issue of damage causation, and plaintiff had an opportunity to respond. Moreover, the parties specifically briefed the court on the issue of "whether, in light of the socalled efficient capital markets hypothesis, the complaint sufficiently alleges a causal relationship between the alleged misrepresentations and any alleged nonspeculative damages." Thus, our resolution of the issue of damage causation should come as no surprise.
Second, upon reviewing a judgment of dismissal following the sustenance of a demurrer, the reviewing court may affirm "on any grounds stated in the demurrer, whether or not the [lower] court acted on that ground." (Carman v. Alvord (1982) 31 Cal.3d 318, 324, 182 Cal.Rptr. 506, 644 P.2d 192.) "`[I]t is the validity of the court's action, and not of the reason for its action, which is reviewable.'" (E.L. White, *517 Inc. v. City of Huntington Beach (1978) 21 Cal.3d 497, 504, fn. 2, 146 Cal.Rptr. 614, 579 P.2d 505, quoting Weinstock v. Eissler (1964) 224 Cal.App.2d 212, 225, 36 Cal. Rptr. 537.) The trial court in this case sustained defendants' general demurrer, which alleged, among other things, that plaintiff failed to "state facts sufficient to constitute a cause of action." (Code Civ. Proc., § 430.10, subd. (e).) Thus, we must affirm the judgment of dismissal if the complaint, for any reason, fails to state a cause of action. (See Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967, 9 Cal.Rptr.2d 92, 831 P.2d 317 ["The judgment must be affirmed `if any one of the several grounds of demurrer is well taken' "].) Because damage causation is an essential element of any cause of action for fraud or negligent misrepresentation, I see no reason to remand for further proceedings if plaintiff cannot sufficiently plead this element. And I do not believe he can.
II
"In an action for [common law] fraud, damage is an essential element of the cause of action." (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 219, 197 Cal. Rptr. 783, 673 P.2d 660 (Committee on Children's Television).) "Misrepresentation, even maliciously committed, does not support a cause of action unless the plaintiff suffered consequential damages." (Conrad v. Bank of America (1996) 45 Cal.App.4th 133, 159, 53 Cal.Rptr.2d 336.) "A `complete causal relationship' between the fraud or deceit and the plaintiffs damages is required." (Williams v. Wraxall (1995) 33 Cal.App.4th 120, 132, 39 Cal. Rptr.2d 658, quoting Garcia v. Superior Court (1990) 50 Cal.3d 728, 737, 268 Cal. Rptr. 779, 789 P.2d 960.) At the pleading stage, the complaint "must show a cause and effect relationship between the fraud and damages sought; otherwise no cause of action is stated." (Zumbrun v. University of Southern California (1972) 25 Cal. App.3d 1, 12, 101 Cal.Rptr. 499 (Zumbrun).)
Like any other element of fraud or negligent misrepresentation, damage causation "must be pled specifically; general and conclusory allegations do not suffice." (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645, 49 Cal.Rptr.2d 377, 909 P.2d 981.) "Allegations of damages without allegations of fact to support them are but conclusions of law, which are not admitted by demurrer." (Zumbrun, supra, 25 Cal. App.3d at p. 12, 101 Cal.Rptr. 499.) If the existenceand not the amountof damages alleged in a fraud pleading is "too remote, speculative or uncertain," then the pleading cannot state a claim for relief. (Block v. Tobin (1975) 45 Cal.App.3d 214, 219, 119 Cal.Rptr. 288; see also Agnew v. Parks (1959) 172 Cal.App.2d 756, 768, 343 P.2d 118.) And "`the policy of liberal construction of the pleadings ... will not ordinarily be invoked to sustain a pleading defective'" in alleging damages caused by the alleged misrepresentations. (Committee on Children's Television, supra, 35 Cal.3d at p. 216, 197 Cal.Rptr. 783, 673 P.2d 660, quoting 3 Witkin, Cal. Procedure (2d ed. 1971) Pleadings, § 574.)
In this case, plaintiff alleges that defendants' misrepresentations induced him to forbear from selling his stock in Fritz Companies, Inc. (Fritz). Plaintiff claims he suffered damages from this induced forbearance because, absent the misrepresentations, he would have sold his stock at a price higher than the price of the stock on the day defendants revealed their misrepresentations. As explained below, plaintiff cannot sufficiently allege a causal relationship between the alleged damages and the alleged misrepresentations.
*518 Because we must "`accept as true all the material allegations of the complaint'" (Charles J. Vacanti, M.D., Inc. v. State Comp. Ins. Fund (2001) 24 Cal.4th 800, 807, 102 Cal.Rptr.2d 562, 14 P.3d 234, quoting Shoemaker v. Myers (1990) 52 Cal.3d 1, 7, 276 Cal.Rptr. 303, 801 P.2d 1054), I assume, for purposes of this appeal, that Fritz stock traded in an efficient market.[1] In an efficient market, "the market price of shares ... reflects all publicly available information, and, hence, any material misrepresentations." (Basic Inc. v. Levinson (1988) 485 U.S. 224, 246, 108 S.Ct. 978, 99 L.Ed.2d 194, fn. omitted.) "[P]ublicly available information relevant to stock values is so quickly reflected in market prices that, as a general matter, investors cannot expect to profit from trading on such information." (Stout, Are Takeover Premiums Really Premiums? Market Price, Fair Value, and Corporate Law (1990) 99 Yale L.J. 1235, 1240, fn. omitted.) "The [efficient] market not only reflects publicly available information with great rapidity, it also anticipates formal public announcements of much information." (Saari, The Efficient Capital Market Hypothesis, Economic Theory and the Regulation of the Securities Industry (1977) 29 Stan. L.Rev. 1031, 1050 (The Efficient Capital Market Hypothesis).) Therefore, such a market, by definition, is "efficient in assimilating the information available to it." (Id. at p. 1056.)
With this in mind, I now turn to plaintiffs damage allegations. Plaintiff claims as damages the difference between the price of Fritz stock on the date he would have sold the stock if defendants had timely reported Fritz's true third quarter resuits on April 2, 1996, and the price of Fritz stock on July 24, 1996the date defendants actually announced Fritz's true third quarter results. In other words, plaintiff seeks to recover some portion of the $15.25 drop in Fritz stock price that occurred on July 24the day defendants publicly corrected the alleged misrepresentations they made in April. Although the complaint is less than clear, plaintiff appears to claim that this drop in stock price is recoverable as damages because it was caused by: (1) the content of defendants' misrepresentations; (2) the timing of the announcement of Fritz's true third quarter results, which coincided with the announcement of Fritz's disappointing fourth quarter results; (3) the loss of investor confidence in Fritz's management resulting from the delayed disclosure of the bad news; and (4) intervening causes with no connection to the misrepresentations, i.e., portions of the fourth quarter results. Plaintiffs theories of damage causation, however, cannot support a claim for fraud or negligent misrepresentation.
First, plaintiff suffered no injury due to the content of the alleged misrepresentations.[2] All of the alleged misrepresentations concerned public information that defendants had to disclose. In an efficient market, the market price of a stock reflects all publicly available information. (Basic Inc. v. Levinson, supra, 485 U.S. at p. 246, 108 S.Ct. 978.) Therefore, the price of Fritz stock after the April 2 misrepresentations was unlawfully inflated. If Fritz had timely reported its true third quarter results on April 2, then the market price of Fritz stock would have reflected *519 this information and would have dropped accordingly. (See Arent v. Distribution Sciences, Inc. (8th Cir.1992) 975 F.2d 1370, 1374 (Arent) ["But if everyone had known this adverse fact, then the stock's value would have reflected the adversity"].) Even assuming plaintiff would have sold his stock immediately after a timely announcement of Fritz's true third quarter results, he would have suffered a drop in share price commensurate to the inflation in share price caused by the content of the misrepresentations. Because the market accurately and efficiently assimilates all public information (see The Efficient Capital Market Hypothesis, supra, 29 Stan. L.Rev. at p. 1044), this drop in share price would have been equal to any drop in share price attributable to the representations made on July 24 (see Chanoff v. U.S. Surgical Corp. (D.Conn.1994) 857 F.Supp. 1011, 1018, affd. (2d Cir.1994) 31 F.3d 66 (Chanoff) ["plaintiffs cannot claim the right to profit from what they allege was an unlawfully inflated stock value"]). As such, plaintiff could not have profited from a timely announcement of Fritz's third quarter results absent "insider trading in violation of the securities laws." (Crocker v. Federal Deposit Ins. Co. (5th Cir.1987) 826 F.2d 347, 351, fn. 6 (Crocker); see also Levine v. Seilon, Inc. (2d Cir.1971) 439 F.2d 328, 333, fn. omitted [plaintiff "could hardly be heard to claim compensation ... from some innocent victim if he had known of the fraud and the buyer did not"].) Thus, as a matter of law, plaintiff suffered no damages due to the misrepresentations themselves. (See Arnlund v. Deloitte & Touche LLP (E.D.Va.2002) 199 F.Supp.2d 461, 489 (Arnlund) [finding that stockholders who allegedly held their stock in reliance on the defendant's public misrepresentations cannot, as a matter of law, state a common law fraud claim, because they failed "adequately to plead causation between the misrepresentation and the harm"].)
Second, plaintiff suffered no cognizable injury from the timing of the announcement of Fritz's true third quarter results. (See Chanoff, supra, 857 F.Supp. at p. 1018 [rejecting claim that the timing of the disclosure caused damage].) Plaintiff contends the drop in Fritz's stock price was more dramatic on July 24 because Fritz simultaneously announced its restated third quarter and disappointing fourth quarter results. Plaintiff, however, ignores his own allegations. According to plaintiff, defendants concealed the costs of Fritz's acquisitions on April 2 and did not reveal these costs until July 24. Specifically, plaintiff alleged that defendants deliberately concealed that Fritz would have to take an $11 million charge in the third quarter and an additional $11.5 million charge in the fourth quarter. Thus, even if Fritz had timely announced these charges on April 2, the announcement would have not only resulted in lower reported third quarter earnings, but also presaged Fritz's fourth quarter loss. Indeed, when Fritz announced these charges on July 24, it expressly acknowledged that these charges reduced its previously reported third quarter earnings and caused the reported fourth quarter loss. As such, any psychological effect allegedly caused by the timing of the announcement would have occurred even if defendants had timely reported the information allegedly concealed by Fritz's management for three months. Any damages attributable to the combined effect of the negative third and fourth quarter earnings announcement on July 24 are therefore illusory.
In any event, plaintiff forgets that stock prices in an efficient market "react quickly and in an unbiased fashion to publicly available information." (The Efficient Capital Market Hypothesis, supra, 29 *520 Stan. L.Rev. at p. 1044, italics added.) Stock prices in an efficient market "are by definition `fair' ... [and] it is impossible for investors to be cheated by paying more for securities than their true worth." (Id at p. 1069, fn. omitted.) The true worth of Fritz's stock on July 24 necessarily reflected the fact that the restated third quarter results should have been reported on April 2. Thus, the price of Fritz stock on July 24 was, by definition, the same price the stock would have had on that date if defendants had reported Fritz's true third quarter results on April 2. (See ibid.)
Third, any drop in stock price due to an alleged loss in investor confidence in Fritz management caused by the delayed announcement is either illusory or too speculative to constitute cognizable damages.[3] While loss of investor confidence in management may adversely affect a stock's price, the July 24 announcement would have caused investors to lose confidence in Fritz's management even if it had been made on April 2. As alleged in the complaint, Fritz's management made a series of acquisitions. During these acquisitions, Fritz touted its ability to seamlessly integrate these acquisitions into its existing infrastructure and claimed that these acquisitions would improve Fritz's financial performance. However, the July 24 announcementwhich stated that previously unreported acquisition costs had lowered Fritz's third and fourth quarter earningsrefuted these claims. As such, the July 24 announcement established that Fritz's management had miscalculated its strategy, mismanaged the acquisitions and failed to achieve its corporate objectives regardless of its timing. Thus, the contents of the July 24 announcement had, by itself and irrespective of any fraudulent delay in reporting these contents, already destroyed investor confidence in Fritz's management. Indeed, the analyst reports cited in plaintiffs supplemental brief verify this.
Moreover, any drop in stock price attributable to the additional loss of investor confidence resulting from investor suspicion of fraud induced by the delay in the announcement is too remote and speculative to support cognizable damages. As an initial matter, the allegedly fraudulent nature of the delay could not have affected Fritz's stock price. When Fritz made the July 24 announcement, Fritz did not announce that it had intentionally or negligently concealed the acquisition costs or misrepresented its third quarter earnings on April 2. Rather, Fritz announced that it had failed to account for certain acquisition costs, which lowered its previously reported third quarter earnings and caused a fourth quarter loss. Unlike recent cases of corporate fraud, nothing in this record even suggests that the public attributed the three-month delay in announcing these acquisition costs to fraud or negligence at the time of the announcement or that pub-He suspicion of fraud somehow resulted in a greater drop in stock price than would have otherwise occurred. Thus, any deliberate or negligent concealment of these costs by defendants could not have influenced Fritz's stock price on July 24.
Investors could certainly speculate that Fritz's management engaged in wrongdoing or acted incompetently in delaying the announcement. But such investor speculation could occur in every case in which a company announces bad news or issues a negative correction. Thus, any drop in stock price allegedly caused by investor *521 speculation that earlier company statements were dishonestly or incompetently false will occur regardless of whether the defendants acted fraudulently. As such, defendants' alleged misrepresentations could not have caused the drop in stock price resulting from such investor speculation. In any event, any claim that the mere possibility of fraudulent conduct by defendants may have caused a greater drop in investor confidence and a correspondingly greater drop in stock price than would have otherwise occurred is highly speculative and should not be cognizable as a matter of law. (See Marino v. Coburn Corp. of America (E.D.N.Y, Feb. 19, 1971, No. 70-C-960) 1971 WL 247, *4 [in determining damages, courts should ignore "fanciful speculation about the psychology of investors"].)
Indeed, recognizing such a theory of damages would subject a company to securities fraud claims, including buyer or seller claims, whenever that company announces bad news or issues a negative correction. In order to escape dismissal, the securities plaintiffs would merely have to allege a loss of investor confidence due to investor speculation that the bad news resulted from fraud or incompetence. As such, companies would be forced to expend considerable resources defending against claims of fraud or negligent misrepresentation regardless of their merits. Rather than make California the locale of choice for securities class actions, I would refuse to recognize such speculative damages.
Finally, to the extent plaintiff claims injury due to drops in the stock price unrelated to the misrepresentations, i.e., the announcement of fourth quarter losses, he does not allege the requisite causal relationship. "Remote results, produced by intermediate sequences of causes, are beyond the reach of any just and practicable rule of damages." (Martin v. Deetz (1894) 102 Cal. 55, 68, 36 P. 368; see also Hotaling v. A.B. Leach & Co., Inc. (1928) 247 N.Y. 84, 87 [159 N.E. 870] (Hotaling) ["defendants [guilty of securities fraud] should not be held liable for any part of plaintiffs loss caused by subsequent events not connected with such fraud"].) Plaintiff, as a matter of law, cannot establish that any portion of the drop in Fritz's stock price on July 24 was caused by defendants' alleged misrepresentations. (See ante, 132 Cal.Rptr.2d at pp. 518-521, 65 P.3d at pp. 1278-1280.) Consequently, plaintiff cannot claim any drop in Fritz's stock price attributable to other causes as damages in his fraud and negligent misrepresentation claims. (See Martin, at p. 68, 36 P. 368; Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1818-1819, 52 Cal.Rptr.2d 650 [no causal connection between damages caused by termination of contract and fraud which induced plaintiff to enter into contract]; cf. Carlson v. Richardson (1968) 267 Cal. App.2d 204, 208, 72 Cal.Rptr. 769 [no unjust enrichment where the increase in property value "resulted from market conditions rather than from any act or forbearance to act" on the part of plaintiff].)
Plaintiffs inability to allege this requisite causal connection simply reflects the speculative nature of these damages. Plaintiff alleges that he would have avoided drops in Fritz's stock price unrelated to the misrepresentations because he would have sold his stock at some indefinite date after April 2the date defendants should have reported Fritz's true third quarter results. Plaintiff, however, alleges no facts indicating when he would have sold his stock. He does not allege any facts suggesting that he was planning or considering such a sale before the misrepresentations. He does not even allege that he sold his Fritz stock after defendants revealed the fraud on July 24. (See Blake v. *522 Miller (1922) 178 Wis. 228, 189 N.W. 472, 476 [absent allegation that plaintiff was considering some sort of action, allegation of forbearance is wholly speculative].) Because the date on which plaintiff would have sold his shares is, at best, conjectural, it is impossible to ascertain which drops in stock price he would have avoided. Thus, the existence of any damages due to intervening causes unrelated to the misrepresentations is too remote, speculative and uncertain to support a fraud claim. (See Crocker, supra, 826 F.2d at p. 351 [claim that plaintiff would have sold his stock at some indefinite date is too speculative to state an injury]; Seibu Corp. v. KPMG LLP (N.D.Tex. Oct. 2, 2001, No. 3-00-C1639-X) 2001 WL 1167317, *7 [rejecting claim that fraud negatively affected the timing and quantity of plaintiffs stock sales in some indefinite manner as too speculative to state a claim for damages]; Himes v. Brown & Co. Securities Corp. (Fla.Dist.Ct.App.1987) 518 So.2d 937, 938-939 [holding that lack of evidence indicating when plaintiff would have sold the stock renders his claim of damages too speculative to recover]; see also Calistoga Civic Club v. City of Calistoga (1983) 143 Cal.App.3d 111, 119, 191 Cal.Rptr. 571 [finding fraud claim too speculative and uncertain because there was no determinable basis for ascertaining damages].)
In concluding that plaintiff failed to adequately plead damage causation, I would not preclude all fraud or deceit claims premised on induced forbearance. As the majority notes, California courts have long recognized that plaintiffs may suffer cognizable damages from forbearance induced by fraud or deceit. (See, e.g., Marshall v. Buchanan (1868) 35 Cal. 264, 268 [allegations that defendant's face-to-face misrepresentations induced plaintiff not to enforce a judgment stated a claim for fraud].) Holding that plaintiff failed to allege damage causation would not diminish the vitality of those cases. Rather, I merely apply timeworn principles governing fraud claims to the unique context of securities allegedly trading in an efficient market.
Indeed, my conclusion would not preclude stockholders who allegedly held stock in reliance on another's misrepresentations from stating a cause of action for fraud or deceit. Under a different set of facts, these stockholders may be able to allege cognizable damages. Indeed, the out-of-state cases cited by plaintiffwhich are distinguishable from the facts of this caseoffer examples of such facts. For example, many of these cases involved individual or face-to-face misrepresentations made directly to the investor.[4] Unlike the public misrepresentations alleged in this case, these private misrepresentations would not be immediately reflected in the market price of the stock. Thus, the investors in these out-of-state cases could have profited from accurate information and therefore suffered cognizable damages.[5] (See The Efficient Capital Market *523 Hypothesis, supra, 29 Stan. L.Rev. at p. 1053 [investors with access to nonpublic information may generate superior returns].)
Likewise, the investors in many of these out-of-state cases alleged facts indicating that they were preparing to sell or considering the sale of their stock or property and that the misrepresentations induced them not to sell prior to the revelation of the truth.[6] Unlike plaintiff, these investors did not simply allege that they would have sold their stock or property at some indefinite date after the revelation of the truth absent the misrepresentations; they alleged facts indicating a specific date on which they would have sold prior to the revelation of the truth. Thus, the claim of these investors that they would have avoided certain drops in market price due to intervening causes unrelated to the misrepresentations was neither speculative nor uncertain.[7]
Finally, the investors in most of the out-of-state cases cited by plaintiff alleged that the misrepresentations induced them to purchase and retain their stock or property.[8] These investors not only paid more than they should have for the stock or property but also would have avoided subsequent drops in market price because they would not have otherwise purchased the stock or property. In other words, the date of purchase established a clear and *524 definite point at which the defendants' fraud subjected these investors to risks i.e., drops in market price due to intervening causesthat they would not have otherwise faced. The proper measure of damages was therefore the difference between the amount of the fraudulently induced investment and the value of the stock or property "after the fraud ceased to be operative." (Duffy, supra, 32 A. at p. 372; see also Marbury, supra, 629 F.2d at p. 708; Hotaling, supra, 247 N.Y. at pp. 87-88 [159 N.E. at p. 873]; Singleton, supra, 272 N.Y.S. at p. 906 [152 Misc. at p. 324]; Kaufmann, supra, 229 N.Y.S. at p. 547 [224 A.D. at p. 30].)
In contrast, plaintiff, as a matter of law, cannot recover any losses from a drop in market price caused by the misrepresentations. (See ante, 132 Cal.Rptr.2d at pp. 518-522, 65 P.3d at pp. 1278-1281.) Moreover, the misrepresentations did not induce plaintiff to subject himself to the risk of drops in market price due to intervening causes unrelated to the misrepresentations. Plaintiff agreed to take this risk before the misrepresentations. Under these circumstances, he can hardly claim damages based on the fruition of these risks, especially where, as here, the date on which he would have sold the stock is wholly speculative. Any contrary conclusion would make defendants the unpaid insurers of plaintiffs risk. Accordingly, I would follow those courts that have dismissed fraud and negligent misrepresentation claims virtually identical to plaintiffs and affirm the dismissal of plaintiffs complaint. (See, e.g., Arent, supra, 975 F.2d at p. 1374; Arnlund, supra, 199 F.Supp.2d at p. 489; Chanoff, supra, 857 F.Supp. at p. 1019.)
I also see no reason to remand in order to give plaintiff an opportunity to amend the complaint to allege damage causation. Although the sustaining of a demurrer without leave to amend is generally an abuse of discretion "`if there is any reasonable possibility that the defect can be cured by amendment,'" "`the burden is on the plaintiff to demonstrate that the trial court abused its discretion.'" (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349, 134 Cal.Rptr. 375, 556 P.2d 737, quoting Cooper v. Leslie Salt Co. (1969) 70 Cal.2d 627, 636, 75 Cal.Rptr. 766, 451 P.2d 406.) "`Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.'" (Goodman at p. 349, 134 Cal.Rptr. 375, 556 P.2d 737, quoting Cooper v. Leslie Salt Co., supra, at 636, 75 Cal.Rptr. 766, 451 P.2d 406.) Although defendants raised the damage causation issue in their first demurrer, and plaintiff had two opportunities to amend, nothing in the record suggests plaintiff can amend his complaint to allege damage causation. Plaintiffs supplemental briefswhich specifically addressed the issue of damage causationconfirm this. In his briefs, plaintiff claims that his complaint adequately pleads damage causation premised on the loss of investor confidence in Fritz's management. In espousing this theory of damage causation, however, he offered no alternative if the court rejected his theory and never asked for an opportunity to amend the complaint to allege damage causation. Because "[n]either the record nor the tenor of [plaintiffs] briefs or oral argument indicates any ability upon [his] part to plead and prove facts which would establish" the element of damage causation, the trial court did not abuse its discretion by refusing leave to amend. (Goodman, at pp. 349-350, 134 Cal.Rptr. 375, 556 P.2d 737.)
In reaching this conclusion, I remain true to the purpose behind the heightened pleading standard for fraud claims. "The pleading of fraud ... is ... the last remaining habitat of the common law notion that a complaint should be sufficiently specific that the court can weed out nonmeritorious actions on the basis of the pleadings." (Committee on Children's *525 Television, supra, 35 Cal.3d at pp. 216-217, 197 Cal.Rptr. 783, 673 P.2d 660.) This weeding out process is especially important in the securities context. As the United States Supreme Court recognized over 25 years ago, securities fraud litigation "presents a danger of vexatiousness different in degree and in kind from that which accompanies litigation in general." (Blue Chip Stamps v. Manor Drug Stores (1975) 421 U.S. 723, 739, 95 S.Ct. 1917, 44 L.Ed.2d 539.) Because "a complaint which by objective standards may have very little chance of success at trial has a settlement value to the plaintiff out of any proportion to its prospect of success at trial so long as he may prevent the suit from being resolved against him by dismissal or summary judgment," the danger of nuisance or strike suits is significant. (Id at p. 740, 95 S.Ct. 1917.) The potential disruption of a defendant's normal business activities (ibid.), the disproportionate discovery burden on the defendant (id. at p. 741, 95 S.Ct. 1917), and the fact that these claims often turn on the oral testimony of the plaintiff (id. at p. 742, 95 S.Ct. 1917), render these lawsuits ripe for abuse. Accordingly, I believe we must vigorously enforce our well-established standards for pleading damage causation in fraud cases and would therefore affirm the judgment of dismissal.
I CONCUR: CHIN, J.
NOTES
[*] Harvey Greenfield, plaintiff in the superior court, died while this case was pending here. We granted the motion of Marietta Small, the Public Administrator for the Estate of Harvey Greenfield, to substitute as appellant.
[1] The trial court has the initial responsibility whether to certify this case as a class action. It has not yet ruled on the matter. Consequently, we do not discuss whether class certification is appropriate.
[2] Unless otherwise indicated, Fritz refers to Fritz Companies, Inc., not to Lynn Fritz, its president and chairman of the board.
[3] We express no view on whether the facts as alleged in the complaint imply a wrong to the corporation, or whether the corporation, by perpetrating a fraud on the market, wronged the entire body of stockholders.
[1] He does not, however, argue that if the price of the stock falls further because of factors unrelated to the fraud, this decline increases the plaintiff's damages. Justice Brown's concurring and dissenting opinion, on the other hand, does imply that a decline caused by intervening causes unrelated to the fraud would increase the plaintiff's damage. (See cone. & dis. opn., post, 132 Cal.Rptr.2d at p. 523, 65 P.3d at p. 1282.)
[2] Not on the sale price alone, as Justice Baxter proposes.
[3] Justice Baxter cites Chanoff v. U.S. Surgical Corp. (D.Conn.1994) 857 F.Supp. 1011, but that case held that courts should not entertain a holder's action at alla minority view and one that Justice Baxter rejects. Chanoff did not say that a holder's action could be sustained if the holder sold the stock after disclosure of the fraud.
[4] Adopting a "sell to sue" rule would require a court to decide two questions: (1) How soon must the stockholder sell after the disclosure? (2) How long, if at all, must the stockholder wait before buying back for the court to recognize the sale as valid to "realize" the loss?
[5] There are three versions of the efficient capital market hypothesis. The weak version holds that market prices eventually reflect all publicly available information. The semistrong version says that prices do so rapidly. The strong version holds that prices reflect all material information, even that not available to the public. (Saari, The Efficient Capital Market Hypothesis, Economic Theory and the Regulation of the Securities Industry (1977) 29 Stan. L.Rev. 1031, 1041.)
The weak version obviously does not aid Justice Brown's position. For reasons stated in text (post, at 132 Cal.Rptr.2d at p. 507, 65 P.3d at p. 1269), neither does the semi-strong version. The strong version, which would imply that the market knew Fritz's financial reports were false long before Fritz disclosed this fact, would assist Justice Brown, but "[n]o one these days accepts the strongest version of the efficient capital market hypothesis, under which non-public information automatically affects prices. That version is empirically false...." (West v. Prudential Securities (7th Cir.2002) 282 F.3d 935, 938.)
[6] Numerous factual assertions in her opinion are not statements of proven fact, but propositions derived from the efficient capital market hypothesis. These include:
(a) "`The [efficient] market not only reflects publicly available information with great rapidity: it also anticipated formal public announcements of much information.'" (Cone. & dis. opn., post, 132 Cal.Rptr.2d at p. 518, 65 P.3d at p. 1278.)
(b) "Because the market accurately and efficiently assimilates all public information ..." (Cone. & dis. opn., post, at p. 519, 65 P.3d at p. 1278.)
(c) "[P]laintiff forgets that stock prices in an efficient market `react quickly and in an unbiased fashion to publicly available information.'" (Cone. & dis. opn., post, at p. 519, 65 P.3d at p. 1279.)
Each of these statements is based on or a quotation from Saari, The Efficient Capital Market Hypothesis, Economic Theory and the Regulation of the Securities Industry, supra, 29 Stan. L.Rev. 1031, 1050.
[7] Justice Brown's assertion that plaintiff cannot allege a causal relationship between the misrepresentations and damages (cone. & dis. opn., post, 132 Cal.Rptr.2d at p. 516, 65 P.3d at p. 1276) assumes that plaintiff cannot allege that he was prepared to sell or considering the sale of his Fritz stock and that the misrepresentations induced him not to sell. This may or may not be true. Until this decision was filed, plaintiff did not know what he had to allege to state a cause of action. This is why the court gives him leave to amend.
[1] As the majority set forth, the second amended complaint does aver that the original named plaintiff (and all other alleged class members) "`read [the allegedly inaccurate third quarter statement of defendant Fritz Companies, Inc. (Fritz)], ... and relied on [the inaccurate] information [contained therein] in deciding to hold Fritz stock through [July 24, 1996].'" (Maj. opn., ante, 132 Cal. Rptr.2d at p. 493, 65 P.3d at p. 1258, italics added; see also id. at p. 499, 65 P.3d at p. 1263.) The majority do not quite say so, but I assume that, consistent with Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 23 Cal.Rptr.2d 101, 858 P.2d 568, they would deem the pleading of some such form of direct personal reliance minimally necessary in order to eliminate persons who merely seek to invoke the "fraud on the market" doctrine that we rejected in Mirkin for purposes of California common law securities litigation. In addition, as the majority assert, the plaintiff must plead, "for example, that if the plaintiff had read a truthful account of the corporation's financial status the plaintiff would have sold the [corporation's] stock, how many shares the plaintiff would have sold, and when the sale would have taken place" (maj. opn., ante, at p. 503, 65 P.3d at p. 1265), and must also "allege actions, as distinguished from unspoken and unrecorded thoughts and decisions, that would indicate that the plaintiff actually relied on the misrepresentations" (ibid.).
[2] I acknowledge we cannot resolve at this stage whether the case may properly proceed as a class action. But we facilitate that determination by specifying all the elements of an individual cause of action.
[3] Throughout this litigation, defendants and their amici curiae have volunteered only two attacks on the various complaints filed herein: first, that there is no California common law holder's action, and second, that the allegations of reliance are insufficient. Perhaps, therefore, the majority are within their technical rights to avoid other issues. However, this court did solicit and receive supplemental briefs on the issue "whether, in light of the socalled `efficient capital markets hypothesis' or otherwise, the complaint sufficiently alleges a causal relationship between the alleged misrepresentations and any alleged, nonspeculative damages." (Italics added.) At oral argument, I questioned counsel specifically about the problem of realized loss. Hence, the parties have had reasonable notice and opportunity to brief and argue the issue, and we may resolve it in the interest of judicial efficiency. (Cal. Rules of Court, rule 29(b)(2).)
[4] When questioned about these difficulties at oral argument, plaintiff's counsel responded gamely but offered little to refute my concerns.
[5] Injuries of this kind, I realize, might be considered "`injury to the corporation, or to the whole body of its stock or property without any severance or distribution among individual shareholders'" (Sutter v. General Petroleum Corp. (1946) 28 Cal.2d 525, 530, 170 P.2d 898), such that only a derivative action would be available.
Though neither the record nor the parties have so informed us, it appears that in May 2001, nearly five years after the alleged 1996 fraud and its disclosure, Fritz was acquired for substantial value by United Parcel Service, Inc. (Yahoo! Finance, EDGAR Online, SEC Filings, Fritz Companies Inc. (FRTZ), form 8-k (May 24, 2001) [as of April 7, 2003]; UPS Pressroom, 2001 Press Releases, UPS to Acquire Fritz Companies, Inc. for $450 Million in Class B Common Stock (Jan. 10, 2001) [as of April 7, 2003].) This intervening development only underscores the difficulty of tracing the effect of long-past events on the current value of investments retained for substantial periods after those events occurred.
[6] I agree that where one was induced by marketplace fraud to buy publicly traded shares at an inflated price, and did not sell them before the fraud was disclosed, the amount of any compensable loss must be measured by the accurate value the market places on the shares when the truth becomes known (see Rest.2d Torts, § 549, com. c, p. 110, cited in cone. opn. of Kennard, J., ante, 132 Cal.Rptr.2d at p. 505, 65 P.3d at p. 1267)at least after discounting factors unrelated to the fraud that may also have affected the intervening change in price. This only restates the fundamental truth that one who paid too much as a result of fraud is entitled to recover the excess over what he should have paid, no more or less. It does not mean that compensable damage is necessarily suffered by one who merely held shares in reliance on fraud, then did nothing when disclosure of the fraud caused the market price of the shares to fall.
Harris v. American Investment Company (8th Cir.1975) 523 F.2d 220, which Justice Kennard cites for the proposition that a defrauded shareholder need not "realize" his loss in order to recover, is unavailing for similar reasons. That case involved a defrauded purchaser. As I have explained at length (see ante, at 132 Cal.Rptr.2d at p. 512, 65 P.3d at p. 1273), defrauded buyers are always damaged, and permanently so, by the difference between the fraud-inflated price they paid and the true value of the shares at that time. Persons who merely held shares through both the fraud and its disclosure are not similarly situated.
[1] In doing so, I neither accept nor reject the so-called efficient capital markets hypothesis. (See Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1101, fn. 7, 23 Cal.Rptr.2d 101, 858 P.2d 568.)
[2] Although plaintiff acknowledged that he may not recover all of the drop in stock price that occurred on July 24, he did not eschew recovery of some of the declines in stock price allegedly caused by the misrepresentations.
[3] In reaching this conclusion, I do not, as Justice Kennard suggests, rely on the efficient capital market hypothesis. (See cone. opn. of Kennard, J., ante, 132 Cal.Rptr.2d at p. 507, 65 P.3d at p. 1269.)
[4] (See, e.g., Marbury Management, Inc. v. Kohn (2d Cir.1980) 629 F.2d 705, 707 (Marbury) [defendant made individual misrepresentations directly to plaintiffs which induced them to buy and hold securities]; Gutman v. Howard Sav. Bank (D.N.J. 1990) 748 F.Supp. 254, 260, 266 [defendants made individual misrepresentations directly to plaintiffs which allayed their concerns about defendants' misleading public statements]; Fottler v. Moseley (1901) 179 Mass. 295, 60 N.E. 788, 788 [defendant made face-to-face misrepresentations which induced plaintiff to hold his stock]; Duffy v. Smith (N.J.Ct.App.1895) 57 N.J.L. 679, 32 A. 371, 372 (Duffy) [same]; Rothmiller v. Stein (1894) 143 N.Y. 581, 586-587 [38 N.E. 718, 719] [same]; Seideman v. Sheboygan Loan & Trust Co. (1929) 198 Wis. 97, 223 N.W. 430, 432 (Seideman ) [same].)
[5] Many of these cases predate federal securities laws which defined required disclosures to the public and prohibited insider trading.
[6] (See, e.g., David v. Belmont (1935) 291 Mass. 450, 197 N.E. 83, 85 [evidence established that plaintiff intended to sell his stock until he saw the misrepresentations]; Fottler v. Moseley, supra, 60 N.E. at p. 788 [defendant broker knew that plaintiff had given him a sell order]; Continental Ins. Co. v. Mercadante (1927) 225 N.Y.S. 488, 489 [222 A.D. 181, 182] [defendants knew plaintiffs were planning to sell the bonds if the obligor's financial condition deteriorated]; Rothmiller v. Stein, supra, 38 N.E. at p. 719 [defendants knew plaintiff had received two offers for his stock and was considering a sale]; Seideman, supra, 223 N.W. at p. 432 [plaintiff informed defendants that she wanted a refund of her investment].)
[7] Because these cases predate federal securities law, their specific facts are unlikely to arise in today's highly regulated world of securities trading. Perhaps the only modern analogy is the situation where an investor tells his or her broker to sell a company's stock if it drops below a specific price. Due to the company's misrepresentations, however, the stock price never falls below that price and the investor either cancels the sell order or allows it to lapse. Following the revelation of the truth, the company's stock price falls below the price at which the investor had previously intended to sell. Like the investors in the cited cases, this investor can identify a specific drop in stock price that he or she would have avoided absent the misrepresentations and can therefore allege damage causation.
[8] (See, e.g., Marbury, supra, 629 F.2d at p. 710 [emphasizing that plaintiffs did not merely allege an inducement to hold, but to both purchase and retain, stock]; Primavera Familienstifung v. Askin (S.D.N.Y.2001) 130 F.Supp.2d 450, 504-507, amended on reconsideration on other grounds 137 F.Supp.2d 438 [complaint alleging induced purchase and retention of stock stated cognizable damages]; Zivitz v. Greenburg (N.D.Ill.Dec. 3, 1999, No. 98-C-5350) 1999 WL 1129605, *1 [fraud induced plaintiffs to "buy and hold stock"]; Kaufman v. Chase Manhattan Bank, N.A. (S.D.N.Y.1984) 581 F.Supp. 350, 354 [finding damage causation where the fraud induced plaintiff to purchase and retain the investment]; Freschi v. Grand Coal Venture (S.D.N.Y.1982) 551 F.Supp. 1220, 1230 [claim that fraud induced purchase and retention of investment alleged ongoing fraud]; Duffy, supra, 32 A. at p. 372 [fraud induced plaintiff to both purchase and retain stock]; Hotaling, supra, 247 N.Y. at pp. 86, 91-92 [159 N.E. at pp. 871, 872-873] [fraud induced plaintiff to purchase and retain bonds]; Singleton v. Harriman (1933) 272 N.Y.S. 905, 906 [152 Misc. 323, 324] (Singleton) [fraud induced plaintiff to purchase and retain stock for investment]; Kaufmann v. Delafield (1928) 229 N.Y.S. 545, 546-547 [224 A.D. 29, 30-31] (Kaufmann ) [fraud induced plaintiff to purchase and retain investment].)
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People v Lee (2018 NY Slip Op 02141)
People v Lee
2018 NY Slip Op 02141
Decided on March 27, 2018
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 March 27, 2018
Mazzarelli, J.P., Andrias, Webber, Oing, Moulton, JJ.
6116 4152N/14
[*1]The People of the State of New York, Respondent,
vBarry Lee, Defendant-Appellant.
Seymour W. James, Jr., The Legal Aid Society, New York (Joanne Legano Ross of counsel), for appellant.
Judgment, Supreme Court, New York County (Neil Ross, J.), rendered June 29, 2015, unanimously affirmed.
Application by defendant's counsel to withdraw as counsel is granted (see Anders v California , 386 US 738 [1967]; People v Saunders , 52 AD2d 833 [1st Dept 1976]). We have reviewed this record and agree with defendant's assigned counsel that there are no non-frivolous points which could be raised on this appeal.
Pursuant to Criminal Procedure Law § 460.20, defendant may apply for leave to appeal to the Court of Appeals by making application to the Chief Judge of that Court and by submitting such application to the Clerk of that Court or to a Justice of the Appellate Division of the Supreme Court of this Department on reasonable notice to the respondent within thirty (30) days after service of a copy of this order.
Denial of the application for permission to appeal by the judge or justice first applied to is final and no new application may thereafter be made to any other judge or justice.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: MARCH 27, 2018
CLERK
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823 F.2d 284
Theodore KANNE and Beatriz Kanne, Plaintiffs and Appellees,v.CONNECTICUT GENERAL LIFE INSURANCE COMPANY, Defendant and Appellant.
Nos. 85-5641, 85-5642.
United States Court of Appeals,Ninth Circuit.
July 23, 1987.
1
Leonard Sacks, Encino, Cal., Carol A. Hay, and Andrew O. Feringa, Lakewood, Cal., for plaintiffs-appellees-appellants.
2
James S. Cline, Suzette Clover, David L. Bacon, and Bruce A. Beckman, Los Angeles, Cal., for defendants-appellants-appellees.
3
Appeal from the United States District Court for the Central District of California; Edward Rafeedie, District Judge.
4
Before FLETCHER and PREGERSON, Circuit Judges and WILKINS*, District Judge.
ORDER
5
The parties shall submit simultaneous briefs of not more than thirty (30) pages by August 17, 1987, addressing two issues:
6
1) Whether the insurance policy in question is a plan governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Sec. 1001, et seq., and
7
2) Whether Cal.Ins.Code Sec. 790.03(h)(2) is preempted by ERISA.
8
Oral argument may be scheduled at a later date.
9
This court's opinion, filed June 4, 1987, 819 F.2d 204, is hereby withdrawn.
*
Hon. Philip C. Wilkins, Senior United States District Judge, for the Eastern District of California, sitting by designation
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ACCEPTED
04-15-00267-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
7/9/2015 2:30:53 PM
KEITH HOTTLE
CLERK
FILED IN
4th COURT OF APPEALS
SAN ANTONIO, TEXAS
07/9/2015 2:30:53 PM
KEITH E. HOTTLE
Clerk
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391 So.2d 962 (1980)
Brian A. SMITH
v.
NEW ORLEANS PUBLIC SERVICE, INC.
No. 11394.
Court of Appeal of Louisiana, Fourth Circuit.
December 9, 1980.
*963 James Maher, III, New Orleans, for defendant-appellant, New Orleans Public Service, Inc.
Dale C. Wilks, New Orleans, for plaintiff-appellee, Brian A. Smith.
Before BOUTALL, SCHOTT and CHEHARDY, JJ.
BOUTALL, Judge.
This appeal arises from a judgment of the trial court awarding $1600 to the plaintiff for injuries sustained when he was struck by a bus while standing at a bus stop waiting to board the bus.
On February 23, 1978, the plaintiff Brian A. Smith, was standing at a bus stop at the corner of South Claiborne and Nashville Avenues when he was struck from the rear by a bus owned and operated by New Orleans Public Service, Inc. (hereinafter referred to as NOPSI). Smith sustained personal injuries to his left hip and back area. Upon trial of the matter, the lower court awarded judgment in favor of Smith and against NOPSI in the amount of $1600. From this judgment NOPSI has appealed suspensively.
On appeal the only issue before us concerns the liability of NOPSI. The award was not put at issue.
The evidence before us reveals that at approximately 3:38 o'clock in the afternoon on February 23, 1978 Smith was standing at the bus stop at the intersection of South Claiborne and Nashville Avenues waiting to board a bus on his way home from school. Of the four corners of this intersection, Smith was standing at the northwest corner intending to catch the So. Claiborne Avenue bus travelling a westerly direction toward So. Carrollton Ave. Several friends of the plaintiff, as well as 75 to 100 other school *964 students were all waiting to board the bus. Testimony by the plaintiff and others who were at the accident site indicates that the plaintiff was standing on the grassy area between the sidewalk and the curb of the street some 20 to 25 feet from the bus stop post, facing in a westerly direction. Before the So. Claiborne Avenue bus arrives at this particular bus stop it must make a U-turn in the neutral ground of So. Claiborne Ave. some 60 feet from the bus stop. The bus pulled away from the neutral ground area and as it approached the bus stop the plaintiff was struck from the rear by the right side of the bus in the area of the right front headlights. The plaintiff sustained personal injuries to his left hip and back area.
The plaintiff contends that the body of the bus extended over the curb thereby striking him as he stood in the boarding area between the sidewalk and the curb. NOPSI contends that its bus did not extend over the curb as the bus was in a parallel position to the curb and that the plaintiff was pushed or shoved into the oncoming bus.
As a matter of law, the duty owed by a common carrier to its passengers is stringent. It has been described as the highest standard of care, the highest degree of vigilance, care and precaution for the safety of those it undertakes to transport, or the strictest diligence. This duty includes those risks to which passengers are exposed by unsafe conditions in the boarding area. Actionable negligence exists upon the slightest breach of this duty. Green v. Taca International Airlines, 304 So.2d 357 (La.1974); Wise v. Prescott, 244 La. 157, 151 So.2d 356 (La.1963); Vaughn v. New Orleans Public Service, Inc., 314 So.2d 545 (4th Cir. 1975). Passengers waiting to board a bus or other vehicle of common carriage can presume that the boarding space is safe and free from any defects or encroachments by the carrier. Any violation of this boarding space by a common carrier, such as an encroachment in this area resulting in injury to a passenger, establishes a prima facie case against the carrier and imposes on it the burden of showing that it was free from any negligence which caused or contributed to the injury.[1]
The trial court in its reasons for judgment found that the accident occurred in accordance with the description given by the plaintiff as this was supported by the testimony of two credible witnesses and by portions of the testimony of the defendant's expert witness. This finding indicates that the body of the bus extended over the curb, thereby striking the plaintiff who was standing in the space provided for boarding passengers. The trial court further held that the plaintiff was not pushed or shoved into the side of the bus by a third person. These findings are well supported by the evidence in the record. All of the witnesses on behalf of the plaintiff testified in accordance with these findings. Testimony by the defendant's witnesses does not serve to discount the statements made by the plaintiff's witnesses, nor does it serve to support the defendant's theory that the plaintiff was pushed or shoved by a third person into the oncoming bus. The driver of the bus *965 testified that he was looking at the NOPSI superintendent who was directing his movements as he pulled into the bus stop and therefore, was not observing the plaintiff and the other passengers waiting to board the bus. The superintendent could not possibly have seen the plaintiff, although he testified otherwise, as his view was blocked by the 75 to 100 school students standing in the boarding space.
Finally, all of the defendant's witnesses, including the bus driver, the superintendent, and the expert testified that the body of the bus even when parallel to the curb will extend over it a minimum of 6 to 8 inches and may extend as much as 2 feet over the curb if the bus is on an angle. This testimony provides support for the plaintiff's theory that he was struck by the NOPSI bus when it extended over the curb into the passenger boarding space. Based on the foregoing, we hold that the findings of the trial court were not manifestly erroneous. Canter v. Koehring, 283 So.2d 716, 724 (La.1973); Arceneaux v. Domingue, 365 So.2d 1330 (La.1978).
The findings of fact established above support the conclusion that NOPSI breached the duty it owed to the plaintiff as a prospective passenger by not providing him with a safe place within which to board the bus. We further conclude that this breach of duty was the cause of the accident to the plaintiff which thereby establishes negligence on the part of NOPSI. Finally, we hold that NOPSI did not carry its burden of showing that it was free of any negligence which caused or contributed to the injury. Therefore, we are of the opinion that the judgment of the trial court should be affirmed.
A final point for consideration concerns the admittance into evidence of a statement made by one of the plaintiff's witnesses for the purpose of testing the credibility of that witness. The Louisiana jurisprudence clearly recognizes the rule that a prior inconsistent statement of a witness is admissable for impeachment purposes. The admission of the statement is limited to impeachment purposes only and can't be used as evidence of the substantive content of the prior statement. Nami v. Peninsular Fire Insurance Co. 355 So.2d 1036 (4th Cir. 1978); State v. Allien 366 So.2d 1308 (La.1978).
NOPSI contends that the statement made by Roosevelt Weatherspoon was admissable for testing the credibility of this witness. The trial court held that the statement was inadmissable because of the method used to procure the statement. In this particular instance, a representative from NOPSI went to the home of the witness and wrote down a statement according to the statements made by the witness. The witness signed this document. Subsequently, the NOPSI representative typed out the written statement and mailed it to the witness for his signature. Mr. Weatherspoon read the statement, signed it and returned it to the NOPSI representative. At trial, the witness recognized the statement and verified the signature. Under these circumstances we find that the trial judge was in error in not admitting this statement into evidence for purposes of impeachment. Our finding is very similar to the one made by the court in Schexnayder v. Zurich Insurance Co., 257 So.2d 764 (1st Cir. 1972).
Although we conclude that the trial court was in error in not admitting this statement into evidence, we do not find that its admissibility changes any of our findings or our holding. Similarly, our attention is called to a remark made by the trial court that this type of bus can protrude as much as three feet over the curbing to his own knowledge. We disregard this unwarranted remark as not being essential to our holding herein.
AFFIRMED.
NOTES
[1] In view of the stringent duty imposed by a motorist with respect to a pedestrian in a crosswalk, the duty imposed upon a common carrier with respect to a passenger in a boarding area can't be said to be overburdensome or unreasonable. In Baumgartner v. State Farm Mutual Auto Ins. Co., 356 So.2d 400, 404 (La. 1978), the Supreme Court stated:
"[3] It is well settled in our jurisprudence that the first duty of those operating motor vehicles is to keep a sharp lookout ahead to discover the presence of those who might be in danger ...
"[4,5] Our law imposes an additional burden upon motorists approaching a pedestrian crosswalk to use more than ordinary care to see what is ahead; they must expect that people may be crossing and be prepared for that possibility ... * * * `It is logical that the motorist, as against the pedestrian, bears the greater burden of careful lookout and extreme caution at locations provided for the passage of pedestrians; for it is the motorist who has the power, because of the dangerous instrument which he controls, to reduce the status of a pedestrian to that of a statistic in a split second. The pedestrian poses no such threat.'"
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SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
649
CA 11-00331
PRESENT: SCUDDER, P.J., FAHEY, LINDLEY, GREEN, AND GORSKI, JJ.
NIAGARA FALLS WATER BOARD, PLAINTIFF-RESPONDENT,
V MEMORANDUM AND ORDER
CITY OF NIAGARA FALLS, DEFENDANT-APPELLANT.
JAECKLE FLEISCHMANN & MUGEL, LLP, BUFFALO (HEATH J. SZYMCZAK OF
COUNSEL), FOR DEFENDANT-APPELLANT.
HISCOCK & BARCLAY, LLP, BUFFALO (JAMES P. DOMAGALSKI OF COUNSEL), FOR
PLAINTIFF-RESPONDENT.
Appeal from an order of the Supreme Court, Niagara County
(Richard C. Kloch, Sr., A.J.), entered May 5, 2010. The order, among
other things, granted plaintiff’s motion to compel and denied
defendant’s motion for summary judgment.
It is hereby ORDERED that the order so appealed from is
unanimously reversed on the law without costs, defendant’s motion for
summary judgment dismissing the second amended complaint is granted
and plaintiff’s motion to compel discovery is denied.
Memorandum: Plaintiff commenced this action seeking, inter alia,
to recover funds allegedly owed to it pursuant to the terms of
Resolution No. 2003-90 (Resolution), adopted by defendant’s City
Council, and pursuant to an Acquisition Agreement between the parties.
The Acquisition Agreement provided that, inter alia, plaintiff was to
purchase from defendant certain assets, including “all accounts
receivable of [defendant] . . . in connection with its water,
wastewater and stormwater related accounts.” On a prior appeal and
cross appeal, we modified an order granting in part defendant’s pre-
answer motion to dismiss the complaint and plaintiff’s cross motion
seeking leave to amend the complaint (Niagara Falls Water Bd. v City
of Niagara Falls, 64 AD3d 1142). We concluded that Supreme Court
should have denied the motion and granted the cross motion with
respect to the first cause of action, for breach of contract.
Accepting the facts as alleged in the complaint as true and according
plaintiff the benefit of every possible inference (Daley v County of
Erie, 59 AD3d 1087), we agreed with plaintiff that it had alleged a
cognizable breach of contract cause of action (Niagara Falls Water
Bd., 64 AD3d at 1143). We further concluded, however, that the
remaining causes of action were either properly dismissed or should
have been dismissed (id. at 1143-1144). Plaintiff subsequently filed
and served a second amended complaint asserting a nearly identical
-2- 649
CA 11-00331
breach of contract cause of action.
Defendant appeals from an order that, inter alia, denied its
motion for summary judgment dismissing the second amended complaint.
Inasmuch as we are no longer constrained to accept plaintiff’s
allegations as true (cf. CPLR 3211; Daley, 59 AD3d 1087), we reverse.
The Resolution, adopted prior to the date on which defendant assigned
all accounts receivable to plaintiff, approved a grant to be paid from
defendant’s future revenue in satisfaction of the unpaid water bills
of non-party Niagara Falls Memorial Medical Center (Memorial). Even
assuming, arguendo, that the Resolution does not violate the
constitutional prohibition against gifts to private entities (see NY
Const, art VIII, § 1), we conclude that there is nothing in the
Acquisition Agreement that requires defendant to pay all or part of
Memorial’s unpaid water bills. We reject plaintiff’s contention that
the Resolution created an encumbrance to the transfer of assets and
accounts receivable required by the Acquisition Agreement. Indeed,
there appears to be nothing in either the Acquisition Agreement or the
Resolution that would prohibit plaintiff from seeking payment from
Memorial for any unpaid water bills. Further, plaintiff failed to
establish, beyond mere speculation, that further discovery was
necessary (see generally CPLR 3212 [f]; Heritage Hills Socy., Ltd. v
Heritage Dev. Group, Inc., 56 AD3d 426, 427).
In view of our determination, plaintiff’s motion to compel
defendant to reply to its discovery demands is denied as academic.
Entered: June 17, 2011 Patricia L. Morgan
Clerk of the Court
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118 Wis.2d 236 (1984)
346 N.W.2d 771
Dorothy ENRIGHT, as Special Administrator of the Estate of Heath Enright, Heath Enright, Renee Enright, Joseph Enright and Joseph Enright, Jr., Plaintiffs-Appellants-Petitioners,[]
v.
BOARD OF SCHOOL DIRECTORS OF THE CITY OF MILWAUKEE; Diane Clark and Wausau Insurance Companies, Defendants-Respondents,
Peggy KENNER, President; Dr. Lee F. McMurrin, Superintendent; and Mr. John J. Peterburs, Secretary Business Manager, Defendants.
No. 82-2158.
Supreme Court of Wisconsin.
Argued March 28, 1984.
Decided April 24, 1984.
*237 For the plaintiffs-appellants-petitioners there were briefs by Robert C. Angermeier and Angermeier & Rogers, Milwaukee, and oral argument by Robert C. Angermeier.
For the defendants-respondents there was a brief by C. Donald Straub, Milwaukee, and oral argument by Mr. Straub.
Amicus curiae brief was filed by William H. Lynch, Milwaukee, for the Wisconsin Civil Liberties Union Foundation, Inc.
STEINMETZ, J.
The issue in this case is whether negligence on the part of an employee of the Board of School Directors of the City of Milwaukee gives rise to a 42 U.S.C. sec. 1983 action for the death of a child attending a Milwaukee public school. There are other issues related to the negligence issue and they will be discussed in the opinion.
This case involves a civil action which alleges common law negligence and deprivation of civil rights. In response to the third amended complaint, the defendants filed a motion to dismiss both the state negligence action and the federal civil rights action. The trial court, the Milwaukee county circuit court, Honorable Laurence C. Gram, Jr., issued an oral decision on August 30, 1982, dismissing the common law negligence action on public policy grounds. On October 22, 1982, the trial court issued a memorandum decision dismissing the federal civil rights claim. The plaintiffs appealed both decisions.
The court of appeals, in a published decision, reinstated the common law negligence action, but upheld the *238 dismissal of the civil rights action. Enright v. Milwaukee Sch. Directors Bd., 114 Wis. 2d 124, 338 N.W.2d 114 (Ct. App. 1983). The defendants have not cross-petitioned for review of the reinstatement of the common law negligence action.
The facts describe a tragic death of a seven year old boy. Virginia Burgardt lives across the street from the Hampton Elementary School in the city of Milwaukee. On September 14, 1979, at approximately 10:00 a.m., she observed a white male in his early twenties, later identified as Thomas White, standing near the playground at the Hampton School watching children who were playing during recess. The white male continued to watch the children at recess and repeatedly looked around, apparently to determine if anyone was watching him.
At approximately 11:00 a.m. the same day, Cynthia Winquist was at the Hampton Elementary School "tot-lot" with her two year old son. She observed the adult white male watching the other children who were at recess on the playground at the time. Cynthia Winquist became suspicious of the man and later told the police that at the time the man was observing the children on the playground he appeared to be "snickering" to himself. After the children returned to the school, leaving Cynthia Winquist and her young child alone, she became increasingly concerned about her own safety as the yet unidentified white male began staring at her and continued to "snicker." Cynthia Winquist observed an electrical cord hanging out of the adult white male's trouser pocket. Upon seeing this she grabbed her child and left the tot-lot.
Virginia Burgardt observed the episode between Cynthia Winquist, her child, and the unidentified adult white male. She then telephoned the principal's office at the Hampton Elementary School. The telephone was answered by the secretary on duty, Diane Clark. Virginia Burgardt advised the secretary of the man outside the *239 school near the playground acting in a suspicious and unusual manner. Diane Clark told Virginia Burgardt that she would inform the principal, Mr. Dakich. Mrs. Burgardt returned to her front porch, watching the individual. The man stayed around the school area for a period of time.
Another neighbor, Nathlyn Voegtline, also observed the unidentified adult white male leaning on the playground fence gazing into the playground area at a time when there were no children on the playground. This was approximately 11:30 a.m. Both Mrs. Burgardt and Mrs. Voegtline commented to one another about the man's presence after Mrs. Burgardt had telephoned the principal's office.
Diane Clark, the school secretary, acknowledged receiving the phone call from Mrs. Burgardt. She later told her supervisor that she had taken the message but "set it aside" and it "completely slipped her mind." Just after lunch, Diane Clark learned that a student had been killed or injured near the school. On receiving this information she tied the earlier phone call from the neighbor to the death or injury. It was at this time that she brought the phone call to the principal's attention.
On September 14, 1979, Heath Enright was a second grader at the Hampton Elementary School. He left the school at 12:00 p.m. that day to go home for lunch. At approximately 1:00, Robert Miller and his wife were driving west on Fairmont Avenue approximately one block from the Hampton Elementary School. They observed a young child lying on the grass between the sidewalk and the curb. Mr. Miller went to assist and found the lifeless body of Heath Enright. Robert Miller confronted an adult white male standing nearby in connection with the discovery of Heath Enright's body. The adult white male, later identified as Thomas White, admitted to the Millers that he had strangled Heath Enright with a piece of wire and that he had taken the *240 wire back to his home and returned to the scene. After the police arrived, White took police officers to the basement of his house and identified a black electrical wire on the floor as the one used to strangle Heath Enright.
At the time of Heath Enright's death, Captain Robert Proulx was the captain of the fourth district of the Milwaukee Police Department, the district in which the Hampton Elementary School is located. In the record there is an affidavit of Attorney Robert Angermeier, the plaintiffs' attorney, which sets forth what Captain Proulx allegedly would have stated at trial. Captain Proulx allegedly would have testified that complaints regarding strangers on or near the schoolgrounds in his district are always received with high priority. Captain Proulx would have further testified that had the fourth district received the complaint regarding this suspicious person on or near the Hampton School grounds, officers would have responded and questioned the person in order to determine whether he had any legitimate business at or near the school. The officers normally would have checked at the school throughout the day in order to determine whether the suspicious person had returned to the area surrounding the school. Further, he would have testified that the responding officers would have had the option to arrest White for the violation of a city of Milwaukee loitering ordinance which specifically prohibits loitering near or on school grounds, Ordinance 106-31(d) which forbids the following conduct:
"Loiterers in or about any school or public place at or near which children or students attend or normally congregate. As used in this subsection `loiter' means to delay, to linger, or to idle in or about any said school or public place without a lawful purpose for being present."
Additionally, Captain Proulx would have testified that had circumstances warranted, the investigating officers *241 would have been authorized to take White into custody for psychiatric evaluation. See sec. 51.15 (1), Stats.[1]
*242 Heath Enright was survived by his twin sister, Renee Enright, his brother, Joseph Enright, and his parents, Joseph Enright and Dorothy Enright. An action was commenced on behalf of the estate and the surviving family. Court I of the complaint alleges a wrongful death action under state law, sec. 895.04, Stats.[2] Count II alleges a civil rights violation wherein Renee Enright, Joseph Enright, and Heath's parents allege that they were deprived of the love and companionship of their brother and child due to the unjustified and arbitrary conduct of a government agency.
The court of appeals concluded that because Wisconsin's tort remedy provided a "satisfactory means of redress," the Enrights did not suffer a deprivation without due process in connection with the death of Heath Enright. The court of appeals relied on Parratt v. Taylor, 451 U.S. 527 (1981), in rejecting the Enrights' sec. 1983 claim. The Parratt case dealt with procedural due process and not substantive due process; however, the majority did not make the distinction in its holding.
Plaintiffs rely on 42 U.S.C. sec. 1983 which provides:
"Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State of Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress."
*243 As we held in Terry v. Kolski, 78 Wis. 2d 475, 486, 254 N.W.2d 704 (1977):
"We are satisfied that the provision of the federal law now appearing in the United States Code as 42 U.S.C. sec. 1983 is Revised Statute sec. 1979, affirmatively enacted by the codification of 1874. The statute now codified as 42 U.S.C. sec. 1983 indeed had its origin in the laws of the United States as a portion of the Civil Rights Act passed on April 9, 1866, as 14 Stats. 27."
Current consideration of sec. 1983 has its genesis in Monroe v. Pape, 365 U.S. 167 (1961). Monroe involved a search of a Chicago premises by Chicago police without a search warrant. The city of Chicago moved to dismiss the complaint on the ground that it was not liable under the Civil Rights Acts. That motion to dismiss was granted and the ruling was affirmed by the United States Supreme Court by the following language: "For we are of the opinion that Congress did not undertake to bring municipal corporations within the ambit of sec. 1979." Id. at 187. The opinion in Monroe was written by Justice William O. Douglas. There is dicta in Monroe which frequently has been considered by the courts of the United States and the issues created therein still are not totally resolved by the United States Supreme Court. In some instances the final resolution of those issues has been avoided by that Court. The first dicta of Monroe dealt with available state relief. The Court stated: "It is no answer that the State has a law which if enforced would give relief. The federal remedy is supplementary to the state remedy, and the latter need not be first sought and refused before the federal one is invoked." Id. at 183.
In Monroe, the Court affirmed its definition of "under color of law" that it had decided in United States v. Classic, 313 U.S. 299 (1941), Screws v. United States, 325 U.S. 91 (1945) and Williams v. United States, 341 U.S. 97 (1951). That definition "of under color" of *244 state law was stated in Monroe as follows: "`Misuse of power, possessed by virtue of state law and made possible only because the wrongdoer is clothed with the authority of state law, is action "under color of" state law.'" 365 U.S. at 184. Those who reason that more than negligence is required for a sec. 1983 action look to this language for support of their position. The recitation of "misuse of power" is not consistent with merely a negligent act.
While referring to the Screws facts and the Monroe facts, the court in Monroe added the following dicta:
"In the Screws case we dealt with a statute that imposed criminal penalties for acts `wilfully' done. We construed that word in its setting to mean the doing of an act with `a specific intent to deprive a person of a federal right.' 325 U.S., at 103. We do not think that gloss should be placed on sec. 1979 which we have here. The word `wilfully' does not appear in sec. 1979. Moreover, sec. 1979 provides a civil remedy, while in the Screws case we dealt with a criminal law challenged on the ground of vagueness. Section 1979 should be read against the background of tort liability that makes a man responsible for the natural consequences of his actions." Id. at 187.
Since that dicta, the Court has several times considered the issue of whether negligent acts alone by governmental agents are enough to allow a cause of action for deprivation of constitutional rights under sec. 1983. The final resolution of the negligence issue as a basis for sec. 1983 actions is for the United States Supreme Court since sec. 1983 is federal tort law and that Court must determine whether intentional or unintentional conduct by governmental personnel is necessary for a violation of sec. 1983. Proper tort liability actions under sec. 1983 may be brought in Wisconsin state courts since the decision in Terry v. Kolski, 78 Wis. 2d at 496-97.
Monroe was decided in 1961 and its rule that governmental units were not liable in sec. 1983 actions lasted until 1978 when it was rejected in the case of Monell v. *245 New York City Dept. of Social Services, 436 U.S. 658, 663 (1978), where the Court held:
"[W]e indicated in Mt. Healthy City Board of Education v. Doyle, 429 U.S. 274, 279 (1977), last Term that the question presented here was open and would be decided `another day.' That other day has come and we now overrule Monroe v. Pape, supra, insofar as it holds that local governments are wholly immune from suit under sec. 1983."
The holding of Monell is at 690-91 where Monroe was selectively overruled but the language also was informative that negligence alone was not sufficient to hold governments liable under sec. 1983. It reads as follows:
"Our analysis of the legislative history of the Civil Rights Act of 1871 compels the conclusion that Congress did intend municipalities and other local government units to be included among those persons to whom sec. 1983 applies. Local governing bodies, therefore, can be sued directly under sec. 1983 for monetary, declaratory, or injunctive relief where, as here, the action that is alleged to be unconstitutional implements or executes a policy statement, ordinance, regulation, or decision officially adopted and promulgated by that body's officers. Moreover, although the touchstone of the sec. 1983 action against a government body is an allegation that official policy is responsible for a deprivation of rights protected by the Constitution, local governments, like every other sec. 1983 `person,' by the very terms of the statute, may be sued for constitutional deprivations visited pursuant to governmental `custom' even though such a custom has not received formal approval through the body's official decisionmaking channels. Mr. Justice Harlan, writing for the Court, said in Adickes v. S.H. Kress & Co., 398 U.S. 144, 167-168 (1970): `Congress included customs and usages [in sec. 1983] because of the persistent and widespread discriminatory practices of state officials . . . . Although not authorized by written law, such practices of state officials could well be so permanent and well settled as to constitute a "custom or usage" with the force of law.'
*246 "On the other hand, the language of sec. 1983, read against the background of the same legislative history, compels the conclusion that Congress did not intend municipalities to be held liable unless action pursuant to official municipal policy of some nature caused a constitutional tort. In particular, we conclude that a municipality cannot be held liable solely because it employs a tortfeasoror, in other words, a municipality cannot be held liable under sec. 1983 on a respondeat superior theory." (Emphasis added.)
The Court concluded as follows:
"We conclude, therefore, that a local government may not be sued under sec. 1983 for an injury inflicted solely by its employees or agents. Instead, it is when execution of a government's policy or custom, whether made by its lawmakers or by those whose edicts or acts may fairly be said to represent official policy, inflicts the injury that the government as an entity is responsible under sec. 1983. Since this case unquestionably involves official policy as the moving force of the constitutional violation found by the District Court, see supra, at 660-662, and n. 2, we must reverse the judgment below. In so doing, we have no occasion to address, and do not address, what the full contours of municipal liability under sec. 1983 may be. We have attempted only to sketch so much of the sec. 1983 cause of action against a local government as is apparent from the history of the 1871 Act and our prior cases, and we expressly leave further development of this action to another day." Id. at 694-95. (Emphasis added.)
The foregoing language of Monell is not consistent with holding governmental corporations liable under sec. 1983 for negligent acts of employees.
Martinez v. California, 444 U.S. 277 (1980), involved a suit under sec. 1983 for the death of a 15 year old girl caused by a parolee. The court acknowledged the parole authorities were fully informed about the murderer's history of mental disorder and his previous commitment to a state mental hospital with a recommendation that he not be paroled, but nevertheless, he was paroled five *247 years later. The parole authorities knew of his propensities and the likelihood that he would commit another violent crime. Five months after his release he tortured and killed the appellants' child. The Court stated: "We assume, as the complaint alleges, that appellees knew, or should have known, that the release of Thomas created a clear and present danger that such an incident would occur. Their action is characterized not only as negligent, but also as reckless, willful, wanton and malicious." Id. at 280. (Emphasis added.) Still, the Court upheld a California statute giving immunity to parole officials and held:
"But even if one characterizes the immunity defense as a statutory deprivation, it would remain true that the State's interest in fashioning its own rules of tort law is paramount to any discernible federal interest, except perhaps an interest in protecting the individual citizen from state action that is wholly arbitrary or irrational." Id. at 282.
The parole board had not even followed certain "requisite formalities" in its release of Thomas. In spite of this conduct of the parole board, alleged to have been not merely negligent but reckless, the court upheld the immunity statute as having "a rational relationship between the state's purposes and the statute." Id. at 282.
In Martinez the Court stated: "Although a sec. 1983 claim has been described as `a species of tort liability,' Imbler v. Pachtman, 424 U.S. 409, 417, it is perfectly clear that not every injury in which a state official has played some part is actionable under that statute." 444 U.S. at 285.
The Court explained that the girl's death was too remote a consequence of the parole officers' action to hold them responsible under the federal civil rights law. In Martinez, a new aberrant ingredient of analyzing sec. 1983 actions appeared and that was one of remoteness of result from the state officers' actions which sounds *248 like a public policy basis of decision as distinguished from the other issues of a sec. 1983 action. Significantly, the court cited Palsgraf v. Long Island R. Co., 248 N.Y. 339, 162 N.E. 99 (1928), a landmark case regarding tort law.
Parratt v. Taylor, 451 U.S. 527, involved an inmate at the Nebraska Penal and Correctional Complex who ordered by mail certain hobby materials valued at $23.50. The hobby materials were lost and the inmate brought suit under 42 U.S.C. sec. 1983 to recover their value. The inmate claimed his property was negligently lost by prison officials in violation of his rights under the fourteenth amendment to the Constitution. More specifically, he claimed that he had been deprived of property without due process of law. The district court ruled that negligent actions by state officials can be a basis for an action under 42 U.S.C. sec. 1983. The Supreme Court stated:
"While we have twice granted certiorari in cases to decide whether mere negligence will support a claim for relief under sec. 1983, see Procunier v. Navarette, 434 U.S. 555 (1978), and Baker v. McCollan, 443 U.S. 137 (1979), we have in each of those cases found it unnecessary to decide the issue. . . .
"These two decisions, however, have not aided the various Courts of Appeals and District Courts in their struggle to determine the correct manner in which to analyze claims such as the present one which allege facts that are commonly thought to state a claim for a common-law tort normally dealt with by state courts, but instead are couched in terms of a constitutional deprivation and relief is sought under sec. 1983. The diversity in approaches is legion. See, e.g., Williams v. Kelley, 624 F.2d 695 (CA5 1980); Beard v. Mitchell, 604 F.2d 485 (CA7 1979); Fulton Market Cold Storage Co. v. Cullerton, 582 F.2d 1071 (CA7 1978); O'Grady v. Montpelier, 573 F.2d 747 (CA2 1978); Bonner v. Coughlin, 517 F.2d 1311 (CA7 1975), modified en banc, 545 F.2d 565 (1976); Hampton v. Holmesburg Prison Officials, 546 F.2d 1077 *249 (CA3 1976); Jones v. Marshall, 528 F.2d 132 (CA2 1975); Diamond v. Thompson, 523 F.2d 1201 (CA5 1975); Kimbrough v. O'Neil, 523 F.2d 1057 (CA7 1975); Carter v. Estelle, 519 F.2d 1136 (CA5 1975); Pitts v. Griffin, 518 F.2d 72 (CA8 1975); Russell v. Bodner, 489 F.2d 280 (CA3 1973); Johnson v. Glick, 481 F.2d 1028 (CA2 1973); McCray v. Maryland, 456 F.2d 1 (CA4 1972); Carter v. Carlson, 144 U.S. App. D.C. 388, 447 F.2d 358 (1971); Madison v. Manter, 441 F.2d 537 (CA1 1971); Howard v. Swenson, 426 F.2d 277 (CA8 1970); Whirl v. Kern, 407 F.2d 781 (CA5 1968); and Striker v. Pancher, 317 F.2d 780 (CA6 1963). We, therefore, once more put our shoulder to the wheel hoping to be of greater assistance to courts confronting such a fact situation than it appears we have been in the past.
"Nothing in the language of a sec. 1983 or its legislative history limits the statute solely to intentional deprivations of constitutional rights. In Baker v. McCollan, supra, we suggested that simply because a wrong was negligently as opposed to intentionally committed did not foreclose the possibility that such action could be brought under sec. 1983. We explained:
"'[T]he question whether an allegation of simple negligence is sufficient to state a cause of action under sec. 1983 is more elusive than it appear at first blush. It may well not be susceptible of a uniform answer across the entire spectrum of conceivable constitutional violations which might be the subject of a sec. 1983 action.' 443 U.S., at 139-40.
"Section 1983, unlike its criminal counterpart, 18 U.S.C. sec. 242, has never been found by this Court to contain a state-of-mind requirement. The Court recognized as much in Monroe v. Pape, 365 U.S. 167 (1961), when we explained after extensively reviewing the legislative history of sec. 1983, that
"'[i]t is abundantly clear that one reason the legislation was passed was to afford a federal right in federal courts because, by reason of prejudice, passion, neglect, intolerance or otherwise, state laws might not be enforced and the claims of citizens to the enjoyment of rights, privileges and immunities guaranteed by the Four-teenth *250 Amendment might be denied by state agencies.' Id., at 180.
"In distinguishing the criminal counterpart which had earlier been at issue in Screws v. United States, 325 U.S. 91 (1945), the Monroe Court stated:
"`In the Screws case we dealt with a statute that imposed criminal penalties for acts "willfully" done. We construed that word in its setting to mean the doing of an act with "a specific intent to deprive a person of a federal right." 325 U.S., at 103. We do not think that gloss should be put on [sec. 1983] which we have here. The word "willfully" does not appear in [sec. 1983]. Moreover, [sec. 1983] provides a civil remedy, while in the Screws case we dealt with a criminal law challenged on the grounds of vagueness. [Section 1983] should be read against the background of tort liability that makes a man responsible for the natural consequences of his actions.' 365 U.S., at 187.
"Both Baker v. McCollan and Monroe v. Pape suggest that sec. 1983 affords a `civil remedy' for deprivations of federally protected rights caused by persons acting under color of state law without any express requirement of a particular state of mind. Accordingly, in any sec. 1983 action the initial inquiry must focus on whether the two essential elements to a sec. 1983 action are present: (1) whether the conduct complained of was committed by a person acting under color of state law; and (2) whether this conduct deprived a person of rights, privileges, or immunities secured by the Constitution or laws of the United States." 451 U.S. at 532-33. (Emphasis added.)
Parratt dealt with the state negligently taking the inmate's property. The Court went on to state:
"Unquestionably, respondent's claim satisfies three prerequisites of a valid due process claim: the petitioners acted under color of state law; the hobby kit falls within the definition of property; and the alleged loss, even though negligently caused, amounted to a deprivation. Standing alone, however, these three elements do not establish a violation of the Fourteenth Amendment. Nothing in that Amendment protects against all deprivations *251 of life, liberty, or property by the State. The Fourteenth Amendment protects only against deprivations `without due process of law.' Baker v. McCollan, 443 U.S., at 145. Our inquiry therefore must focus on whether the respondent has suffered a deprivation of property without due process of law. In particular, we must decide whether the tort remedies which the State of Nebraska provides as a means of redress for property deprivations satisfy the requirements of procedural due process." Id. at 536-37. (Emphasis added.)
The Court concluded:
"Application of the principles recited above to this case leads us to conclude the respondent has not alleged a violation of the Due Process Clause of the Fourteenth Amendment. Although he has been deprived of property under color of state law, the deprivation did not occur as a result of some established state procedure." Id. at 543. (Emphasis added.)
The Parratt majority rejected the argument that the state did not adequately protect the inmate's interests because the procedural method of redress provides only for an action against the state as opposed to its individual employees. It contains no provisions for punitive damages, and there is no right to a trial by jury. Although the state remedies may not provide the respondent with all the relief which may have been available if he could have proceeded under sec. 1983, that does not mean that the state remedies are not adequate to satisfy the requirements of due process. Parratt, 451 U.S. at 544. The remedies provided could have fully compensated the respondent for the property loss he had suffered, and the Court held that they are sufficient to satisfy the requirements of due process.
To say the least, Parratt is confusing. The majority does state negligence may be enough for a sec. 1983 action and yet it found the prison authorities, even though they violated prison rules regarding the prisoner's property, *252 which seems to be negligence, had not violated due process since the state provided an alternative remedy which was sufficient to satisfy due process requirements, even though that remedy would only repay the prisoner for the value of his hobby materials. Also, the state action of deprivation did not occur as a result of some established procedure.
The Court went on to state that even though negligent action by the government qualifies as a 1983 action, the Court will still look to whether a state remedy satisfies due process. The Court stated:
"Our decision today is fully consistent with our prior cases. To accept respondent's argument that the conduct of the state officials in this case constituted a violation of the Fourteenth Amendment would almost necessarily result in turning every alleged injury which may have been inflicted by a state official acting under `color of law' into a violation of the Fourteenth Amendment cognizable under sec. 1983. It is hard to perceive any logical stopping place to such a line of reasoning. Presumably, under this rationale any party who is involved in nothing more than an automobile accident with a state official could allege a constitutional violation under sec. 1983. Such reasoning `would make of the Fourteenth Amendment a font of tort law to be superimposed upon whatever systems may already be administered by the States.' Paul v. Davis, 424 U.S. 693, 701 (1976). We do not think that the drafters of the Fourteenth Amendment intended the Amendment to play such a role in our society." Id. at 544.
The result of Parratt was to reverse the district court and dismiss the sec. 1983 action. The rationale of Parratt is confusing, which is obvious from a concurring opinion written by Justice Blackmun and joined by Justice White, a concurring opinion written by Justice Powell and a concurring opinion in part and dissenting in part written by Justice Marshall.
Justice Blackmun and Justice White limited the majority opinion to property values and rights only and *253 said: "I do not read the Court's opinion as applicable to a case concerning deprivation of life or liberty." Id. at 545. The majority did not apply a limit in its opinion to property value and rights only.
Justice Powell wrote: "Unlike the Court, I do not believe that such negligent acts by state officials constitute a deprivation of property within the meaning of the Fourteenth Amendment, regardless of whatever subsequent procedure a State may or may not provide. I therefore concur only in the result." Id. at 546. In his analysis Justice Powell wrote:
"First, the Court passes over a threshold question whether a negligent act by a state official that results in loss of or damage to property constitutes a deprivation of property for due process purposes. . . .
"The central question in this case is whether unintentional but negligent acts by state officials, causing respondent's loss of property, are actionable under the Due Process Clause. In my view, this question requires the Court to determine whether intent is an essential element of a due process claim, just as we have done in cases applying the Equal Protection Clause and the Eighth Amendment's prohibition of `cruel and unusual punishment.' The intent question cannot be given 'a uniform answer across the entire spectrum of conceivable constitutional violations which might be the subject of a sec. 1983 action,' Baker v. McCollan, 443 U.S. 137, 139-40 (1979). Rather, we must give close attention to the nature of the particular constitutional violation asserted, in determining whether intent is a necessary element of such a violation.
". . . .
"A `deprivation' connotes an intentional act denying something to someone, or, at the very least, a deliberate decision not to act to prevent a loss. The most reasonable interpretation of the Fourteenth Amendment would limit due process claims to such active deprivations. This is the view adopted by an overwhelming number of lower courts, which have rejected due process claims premised on negligent acts without inquiring into the existence or sufficiency of the subsequent procedures provided by the States. In addition, such a rule would avoid trivializing *254 the right of action provided in sec. 1983. That provision was enacted to deter real abuses by state officials in the exercise of governmental powers. It would make no sense to open the federal courts to lawsuits where there has been no affirmative abuse of power, merely a negligent deed by one who happens to be acting under color of state law." Id. at 547-49. (Emphasis added.)
Justice Powell interpreted the majority's opinion as not concerned with whether negligent acts supply the right of action under sec. 1983 since in the majority's view such remedies as provided by the states for negligent acts would satisfy procedural due process and relegate cases of official negligence to non-federal forums. He would have adopted "the view that negligent official acts do not provide any basis for inquiries by federal courts into the existence, or procedural adequacy, of applicable state tort remedies." Id. at 551-52. This is not the majority view.
Justice Marshall stated: "I join the opinion of the Court insofar as it holds that negligent conduct by persons acting under color of state law may be actionable under 42 U.S.C. sec. 1983." Id. at 554-55. He agreed further as follows: "I also agree with the majority that in cases involving claims of negligent deprivation of property without due process of law, the availability of an adequate postdeprivation cause of action for damages under state law may preclude a finding of a violation of the Fourteenth Amendment." Id. at 555.
Justice Marshall would have found there was not an adequate state law remedy available to the inmate in this case. He would have required the state prison officials to inform the prisoner who claimed he was aggrieved by official action about remedies available under state law. Since they did not advise the prisoner accordingly, he would have affirmed the court of appeals. Id. at 556.
*255 The concurring justices agreed with the result of Justice Rehnquist's majority opinion but were unable to persuade the majority that their beliefs as to the law should be stated in the reasoning of the Court. Therefore, the holding of Parratt is not restricted to property right denials and negligent conduct by officials can serve as a basis for a sec. 1983 claim; however, if the local unit of government or state has provided a tort remedy as a means of redress for the deprivation of constitutional rights, that "satisfies the requirements of procedural due process." Also, the result of the action of governmental officials might not be a deprivation caused by the official. Martinez, 444 U.S. at 285.
As the Wisconsin court of appeals stated in its decision in this case:
"What redress or remedy the courts can provide to the parents of a murdered child for their loss can be but a paltry shadow of what was actually lost. Courts can neither restore the lost life nor order the clock to move back to a happier time. No one could challenge that the Enrights have suffered a grievous loss. Yet, the only remedy, poor as it may be, afforded under law is money damages. As such, the remedy afforded under state law is no more nor less adequate as recompense for loss than that afforded under sec. 1983. The Enrights have a common law negligence claim, a claim that we herein reinstate. Due process is therefore not denied them." 114 Wis. 2d at 129.
The common law negligence claim referred to by the court of appeals is not further identified but references must have been to the statutory remedy of sec. 895.04, Stats., the wrongful death action.
[1]
If the United States Supreme Court truly had been interested in clarifying the law for other courts, it would have been more direct not to allow mere negligence as a ground for a sec. 1983 action. Instead, in negligence *256 pleadings for a sec. 1983 action, courts must now determine whether any governmental unit provides redress that satisfies the requirements of procedural due process. The Court in Parratt did not distinguish between substantive due process and procedural due process injuries.
The plaintiffs argue that they should be able to bring a sec. 1983 action since the limit of damages under the Wisconsin remedy is restricted as follows:
(1) To a limit of $25,000 for loss of society and companionship under sec. 895.04 (4), Stats.[3]
(2) A negligence action will not recognize the claims of the brothers and sisters for their loss of Heath.
(3) Due to the facts of the case, the parents' damages can be no greater than that provided for loss of society and companionship of Heath.
[2]
The United States Supreme Court ruled in Parratt that although the state remedies may not provide all the relief which may have been available if the party could have proceeded under sec. 1983, this does not mean that the state remedies are inadequate to satisfy the requirements of due process. Parratt, 415 U.S. at 544.
[3]
The plaintiffs argue that they are entitled to damages as a result of Heath's death for the deprivation of constitutional rights, since the parent-child relationship is protected by the constitution and its deprivation may be redressed under sec. 1983 and also the existence of a constitutionally protected associational interest between siblings. We decline to decide those issues, since the dispositive *257 issue of the due process claim is satisfied by the remedy available for redress in Wisconsin, and, therefore, a disposition of the other issues in this case is not necessary and only would be advisory.
By the Court.The decision of the court of appeals is affirmed.
NOTES
[] Motion for reconsideration denied, with costs, June 5, 1984.
[1] Sec. 51.15, Stats., provides:
"51.15 Emergency detention. (1) BASIS FOR DETENTION. (a) A law enforcement officer or other person authorized to take a child into custody under ch. 48 may take an individual into custody if the officer or person has cause to believe that such individual is mentally ill, drug dependent or developmentally disabled, and that the individual evidences:
"1. A substantial probability of physical harm to himself or herself as manifested by evidence of recent threats of or attempts at suicide or serious bodily harm;
"2. A substantial probability of physical harm to other persons as manifested by evidence of recent homicidal or other violent behavior on his or her part, or by evidence that others are placed in reasonable fear of violent behavior and serious physical harm to them, as evidenced by a recent overt act, attempt or threat to do serious physical harm on his or her part;
"3. A substantial probability of physical impairment or injury to himself or herself due to impaired judgment, as manifested by evidence of a recent act or omission. The probability of physical impairment or injury is not substantial under this subdivision if reasonable provision for the individual's protection is available in the community or, in the case of a minor, if the individual is appropriate for services or placement under s. 48.13(4) or (11);
"4. Behavior manifested by a recent act or omission that, due to mental illness or drug dependency, he or she is unable to satisfy basic needs for nourishment, medical care, shelter or safety without prompt and adequate treatment so that a substantial probability exists that death, serious physical injury, serious physical debilitation or serious physical disease will imminently ensue unless the individual receives prompt and adequate treatment for this mental illness or drug dependency. No substantial probability of harm under this subdivision exists if reasonable provision for the individual's treatment and protection is available in the community, if the individual can receive protective placement under s. 55.06, or, in the case of a minor, if the individual is appropriate for services or placement under s. 48.13 (4) or (11). The individual's status as a minor does not automatically establish a substantial probability of death, serious physical injury, serious physical debilitation or serious disease under this subdivision. "(b) The officer's or person's belief shall be based on a specific recent overt act, attempt or threat to act or omission made by the individual and observed by or reliably reported to the officer or person."
[2] Sec. 895.04(1), Stats., provides:
"895.04 Plaintiff in wrongful death action. (1) An action for wrongful death may be brought by the personal representative of the deceased person or by the person to whom the amount recovered belongs."
[3] Sec. 895.04(4), Stats., provides:
"(4) Judgment for damages for pecuniary injury from wrongful death may be awarded to any person entitled to bring a wrongful death action. Additional damages not to exceed $25,000 for loss of society and companionship may be awarded to the spouse or unemancipated or dependent children, or parents of the deceased."
| {
"pile_set_name": "FreeLaw"
} |
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
MARQUISE HAYNES, )
)
Appellant, )
)
v. ) Case No. 2D17-3010
)
STATE OF FLORIDA, )
)
Appellee. )
)
Opinion filed February 22, 2019.
Appeal from the Circuit Court for Pinellas
County; Philip Federico, Judge.
Howard L. Dimmig, II, Public Defender, and
Richard P. Albertine, Jr., Assistant Public
Defender, Bartow, for Appellant.
Ashley Moody, Attorney
General, Tallahassee, for Appellee.
PER CURIAM.
Affirmed.
KELLY, VILLANTI, and BLACK, JJ., Concur.
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J-S21026-19
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
BOBBY YOUNG :
:
Appellant : No. 2034 EDA 2018
Appeal from the PCRA Order Entered May 29, 2018
In the Court of Common Pleas of Philadelphia County Criminal Division at
No(s): CP-51-CR-1008162-1997,
CP-51-CR-1008312-1997
BEFORE: STABILE, J., MURRAY, J., and FORD ELLIOTT, P.J.E.
MEMORANDUM BY MURRAY, J.: FILED JULY 03, 2019
Bobby Young (Appellant) appeals pro se from the order dismissing his
petition for writ of habeas corpus. For the reasons that follow, we quash this
appeal.
On June 4, 1998, at the docket numbers listed above, a jury found
Appellant guilty of three counts each of robbery of a motor vehicle, robbery,
possession of an instrument of crime, and criminal conspiracy. On October
23, 1998, the trial court sentenced Appellant to an aggregate term 12½ to 25
years of incarceration.
This Court affirmed Appellant’s judgment of sentence on May 1, 2000,
see Commonwealth v. Young, 759 A.2d 27 (Pa. Super. May 1, 2000)
(unpublished memorandum), and our Supreme Court denied his petition for
allowance of appeal on October 2, 2000. Appellant pursued no further
J-S21026-19
appeals. Thus, his judgment of sentence became on January 2, 2001. 1 See
42 Pa.C.S.A. § 9545(b)(3) (stating that a judgment of sentence becomes final
at the conclusion of direct review or the expiration of the time for seeking the
review); U.S.Sup.Ct.R. 13 (providing that “[a] petition for a writ of certiorari
seeking review of a judgment of a lower state court that is subject to
discretionary review by the state court of last resort is timely when it is filed
with the Clerk within 90 days after entry of the order denying discretionary
review”).
In the interim, Appellant filed several unsuccessful petitions pursuant to
the Post Conviction Relief Act (PCRA), 42 Pa.C.S.A. §§ 9541-9546. On April
13, 2017, Appellant filed a petition for writ of hapeas corpus in which he
challenged the legality of his sentence. The trial court properly treated the
hapeas petition as an untimely serial PCRA petition. See Commonwealth v.
West, 938 A.2d 1034, 1043 (Pa. 2007) (stating that “the PCRA subsumes all
forms of collateral relief, including habeas corpus, to the extent a remedy is
available under such enactment”). On March 19, 2018, the PCRA court issued
notice of its intent to dismiss Appellant’s PCRA petition pursuant to
Pennsylvania Rule of Criminal Procedure 907. On May 29, 2018, the PCRA
____________________________________________
1 Ninety days, or December 31, 2000, was a Sunday, and the following day,
January 1, 2001, was a legal holiday. See 1 Pa.C.S.A. § 1908 (“Whenever
the last day of any such period shall fall on Saturday or Sunday, or on any
day made a legal holiday by the laws of this Commonwealth or of the United
States, such day shall be omitted from the computation.”).
-2-
J-S21026-19
court formally dismissed Appellant’s PCRA petition as untimely because
Appellant filed his petition well over one year after his judgment of sentence
became final and he did not plead or prove one of the timeliness exceptions.
See 42 Pa.C.S.A. § 9545(b). The order dismissing Appellant’s PCRA petition
listed both docket numbers that are the subject of this appeal.
Prior to discussing the merits of Appellant’s underlying claim, we must
first address several procedural defects present in this appeal. On September
18, 2018, this Court issued a rule to show cause directing Appellant to explain
why we should not quash the appeal based on our Supreme Court’s decision
in Commonwealth v. Walker, 185 A.3d 969 (Pa. 2018) (holding that “where
a single order resolves issues arising on more than one docket, separate
notices of appeal must be filed for each of those cases”), and because
Appellant did not file his notice of appeal within 30 days of the date of the
order dismissing his PCRA petition. See Order – Rule to Show Cause, 9/18/18.
Appellant’s response to the rule to show cause, which was largely nonsensical,
failed to address these two procedural issues. See Response to Rule to Show
Cause, 12/6/18. By order dated February 1, 2019, this Court discharged the
rule to show cause and referred these issues to the merits panel. We address
each procedural defect in turn.
We begin with the procedural defect relating to Walker. The Official
Note to Rule 341 of the Pennsylvania Rules of Appellate Procedure provides,
in relevant part:
-3-
J-S21026-19
Where, however, one or more orders resolves issues arising on
more than one docket or relating to more than one judgment,
separate notices of appeals must be filed. Commonwealth v.
C.M.K., 932 A.2d 111, 113 & n.3 (Pa. Super. 2007) (quashing
appeal taken by single notice of appeal from order on remand for
consideration under Pa.R.Crim.P. 607 of two persons' judgments
of sentence).
Pa.R.A.P. 341, Official Note. Until recently, it was common practice for courts
of this Commonwealth to allow appeals to proceed, even if they failed to
conform with Rule 341. See, e.g., In the Interest of P.S., 158 A.3d 643,
648 (Pa. Super. 2017) (noting common practice to allow appeals to proceed
if the issues involved are nearly identical, no objection has been raised, and
the period for appeal has expired).
In Commonwealth v. Walker, 185 A.3d 969 (Pa. 2018), however, our
Supreme Court held – unequivocally – that “prospectively, where a single
order resolves issues arising on more than one docket, separate notices of
appeal must be filed for each case.” Id. at 971 (emphasis added). The
Supreme Court observed that the Official Note to Rule 341 of the Pennsylvania
Rules of Appellate Procedure “provides a bright-line mandatory instruction to
practitioners to file separate notices of appeal,” and accordingly, determined
that “the failure to do so requires the appellate court to quash the
appeal.” Id. at 976-77 (emphasis added). Because this mandate was
contrary to decades of case law, the Supreme Court specified that the
requirement would apply only to appeals filed after June 1, 2018, the date
Walker was filed. Id.
-4-
J-S21026-19
Instantly, we must apply Walker because Appellant’s notice appeal,
which he dated June 29, 2018, was filed after the Walker decision. There is
no dispute that Appellant only filed one notice of appeal, despite the fact this
case involves two docket numbers. Our Supreme Court mandates that
Appellant was to file a separate notice of appeal for each lower court docket
number. Because Appellant did not do so, and consistent with Walker, we
are constrained to quash the appeal.
We also note that Appellant’s appeal is untimely. “Except as otherwise
prescribed by this rule, the notice of appeal required by Rule 902 (manner of
taking appeal) shall be filed within 30 days after the entry of the order from
which the appeal is taken.” Pa.R.A.P. 903(a). As this Court has emphasized:
Time limitations for taking appeals are strictly construed and
cannot be extended as a matter of grace. . . . Absent
extraordinary circumstances, this Court has no jurisdiction to
entertain an untimely appeal.
Commonwealth v. Burks, 102 A.3d 497, 500 (Pa. Super. 2014) (citations
omitted). Importantly, with respect to incarcerated pro se litigants, “the
prisoner mailbox rule provides that a pro se prisoner’s document is deemed
filed on the date he delivers it to prison authorities for mailing.”
Commonwealth v. Chambers, 35 A.3d 34, 38 (Pa. Super. 2011).
Here, as in Burks, there are no extraordinary circumstances. The PCRA
court dismissed Appellant’s PCRA petition on May 29, 2018. Under Rule
903(a), Appellant had 30 days, or until June 28, 2018, to file his notice of
appeal. Although we are unable to ascertain precisely when Appellant
-5-
J-S21026-19
“delivered his notice of appeal to prison authorities for mailing,” Appellant
dated the notice of appeal June 29, 2018, and it was postmarked July 2, 2018,
leading us to conclude that the appeal was untimely.
Accordingly, because this appeal does not conform with Walker or Rule
903(a), we are compelled to quash.
Appeal quashed.
Judge Stabile joins the memorandum.
P.J.E. Ford Elliott concurs in the result.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/3/19
-6-
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73 U.S. 748 (____)
6 Wall. 748
RAILROAD COMPANIES
v.
CHAMBERLAIN.
Supreme Court of United States.
*750 Mr. Cushing, for the appellant in the first case; Messrs. Cary and Carlisle, contra.
Mr. Justice NELSON delivered the opinion of the court
We think that the court erred in dismissing the cross-bill. It was filed for the purpose of enforcing the judgment, which was in the Circuit Court, and could be filed in no other court, and was but ancillary to and dependent upon the original suit an appropriate proceeding for the purpose of obtaining satisfaction. The lease was in the nature of a mortgage, and held only as collateral security, and followed the judgment.[*]
The decree in the first suit must be affirmed, and that in the second reversed, and the cause remitted to the court below to enter a decree
IN CONFORMITY WITH THIS OPINION.
NOTES
[*] Freeman v. Howe et al., 24 Howard, 451.
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113 P.3d 1 (2005)
Troy LANCASTER, a married man, Respondent,
v.
Harold PERRY and Jane Doe Perry, husband and wife, and the marital community comprised thereof, Appellants.
No. 54028-9-I.
Court of Appeals of Washington, Division 1.
April 4, 2005.
Publication Ordered June 1, 2005.
Bradley D. Westphal, Mark E. Mills, Seattle, WA, for Appellant.
Michael R. Caryl, Attorney at Law, Seattle, WA, for Respondent.
COLEMAN, J.
¶ 1 Under King County Local Rule (KCLR) 26(f), witnesses not timely disclosed may not testify at trial, absent a showing of good cause. Here, the defendant failed to disclose his expert witness and did not show good cause for this failure. Moreover, the defendant did not move for a CR 35 examination of the plaintiff until after the disclosure deadlines had passed and the trial court entered an order excluding any undisclosed witnesses. Finding no abuse of discretion, we affirm.
FACTS
¶ 2 Troy Lancaster sustained injuries when he was involved in a rear-end automobile accident with Harold Perry. Lancaster sued Perry for his injuries. Perry conceded liability and that Lancaster's injuries were the result of the accident. In Plaintiff's First Set of Interrogatories, Lancaster requested the identification of any expert witnesses. In response, Perry objected to the question, stating, "Defendant will identify experts pursuant to the Local Rules." The trial court set the primary witness disclosure deadline for September 8, 2003, rebuttal witness disclosure deadline for October 20, 2003, discovery cut-off date for December 22, 2003, and trial for February 9, 2004. On September 4, 2003, Perry filed his disclosure of primary witnesses, stating, "Defendants will call those healthcare professionals who will conduct a CR 35 Examination of the Plaintiff. This CR 35 Examination has not been scheduled at this time and, accordingly, Defendants cannot identify those professionals who may conduct the examination."
¶ 3 On October 20, 2003, the rebuttal witness disclosure deadline, Perry made the following statement:
Defendants will call those healthcare professionals who will conduct a CR 35 Examination of the Plaintiff. This CR 35 Examination has not been scheduled at *2 this time and, accordingly, Defendants cannot identify those professionals who may conduct the examination. However it is likely the CR 35 examination will be conducted by either Dr. Robert Price or Dr. Patrick Baze or Dr. Larry Gorman.
The parties attended a mediation on November 10, 2003, but did not settle. Two days later, Lancaster filed a Motion to Exclude Undisclosed Expert and Fact Witnesses, arguing that Perry had not complied with KCLR 26 and CR 26(b)(4). At this point, Perry had not yet requested a CR 35 examination. In response to this motion, Perry argued that he had complied with the local rules and identified dates in which Dr. Robert Price was available to conduct the CR 35 examination. On November 26, 2004, the trial court entered an order striking Perry's "undisclosed" witnesses. The court specifically found that Perry's actions were "done intentionally and/or for tactical advantage." Additionally, the trial court found that no just cause under KCLR 26(e) existed to allow any undisclosed witnesses to testify. The court noted, "KCLR 26 needs to be taken more seriously."
¶ 4 On December 4, 2003, Perry moved for reconsideration of the trial court's order striking his witness and for the first time sought an order compelling Lancaster's attendance at a CR 35 examination. The trial court denied Perry's motion. The case proceeded to trial before a jury, where Perry was not allowed to present expert testimony. The jury awarded a verdict for Lancaster, and the trial court entered a judgment on the verdict against Perry. Perry moved for a new trial. The trial court denied Perry's motion. Perry appeals.
STANDARD OF REVIEW
¶ 5 We review a trial court's decision to exclude a witness for an abuse of discretion. Burnet v. Spokane Ambulance, 131 Wash.2d 484, 494, 933 P.2d 1036 (1997). This "`determination should not be distributed on appeal except on a clear showing of abuse of discretion, that is, discretion manifestly unreasonable, or exercised on untenable grounds, or for untenable reasons.'" Burnet, 131 Wash.2d at 494, 933 P.2d 1036 (quoting Associated Mortgage Investors v. G.P. Kent Constr. Co., 15 Wash.App. 223, 229, 548 P.2d 558 (1976)).
ANALYSIS
¶ 6 Perry argues that the trial court erred in determining that he failed to comply with the rules of discovery. Perry argues that he properly and timely disclosed his expert witness. Under King County Local Rules, parties must disclose primary and rebuttal witnesses according to the case management schedule set for the case. KCLR 26(b). These disclosures "shall include ... [n]ame, address, and phone number." KCLR 26(b)(3)(A). Additionally, for expert witnesses, the disclosure must include a "summary of the expert's opinions and the basis therefor and a brief description of the expert's qualifications." KCLR 26(b)(3)(C). Here, Perry stated in his primary witness disclosure, "Defendants will call those healthcare professionals who will conduct a CR 35 Examination of the Plaintiff. This CR 35 Examination has not been scheduled at this time and, accordingly, Defendants cannot identify those professionals who may conduct the examination." Additionally, in his rebuttal disclosure, Perry stated,
Defendants will call those healthcare professionals who will conduct a CR 35 Examination of the Plaintiff. This CR 35 Examination has not been scheduled at this time and, accordingly, Defendants cannot identify those professionals who may conduct the examination. However it is likely the CR 35 examination will be conducted by either Dr. Robert Price or Dr. Patrick Baze or Dr. Larry Gorman.
Perry argues that these disclosures were sufficient to satisfy the spirit of KCLR 26 and therefore he complied with the discovery rules. Lancaster, on the other hand, argues that these disclosures do not comply with the discovery rules. According to the official comment, "[KCLR 26] sets a minimum level of disclosure that will be required in all cases, even if one or more parties have not formally requested such disclosure in written discovery." It is clear that Perry's disclosures did not meet the minimum requirements of the rules.
*3 ¶ 7 Under King County Local Rules, "Any person not disclosed in compliance with this rule may not be called to testify at trial, unless the Court orders otherwise for good cause and subject to such conditions [a]s justice requires." KCLR 26(f). Lancaster argues that under this rule, the presumptive sanction for failing to disclose a witness is exclusion and that Burnet does not apply. Perry, on the other hand, argues that the trial court was required to follow the standard set forth in Burnet before excluding the witness's testimony.
¶ 8 In Burnet, a medical malpractice case, the trial court determined that the plaintiffs had not sufficiently pleaded or given notice to the defendants of their claim of negligent credentialing and issued an order stating: "`[N]o claim of corporate negligence regarding credentialing is at issue in this litigation and there shall be no further discovery ... on that issue.'" Burnet, 131 Wash.2d at 491, 933 P.2d 1036. Division Three concluded that the issue of negligent credentialing was properly pleaded, but determined that the trial court properly excluded the testimony because the plaintiffs did not comply with the trial court's discovery order. The Supreme Court reversed, holding that the trial court abused its discretion in removing the claim of negligent credentialing from the case because the trial court did not find that plaintiff's discovery violation was willful and that the sanction of excluding the entire claim was too harsh. Subsequent cases have read Burnet to require that before evidence is excluded for a discovery violation under CR 37, the trial court must (1) find that the party's violation was willful, (2) find that the violation substantially prejudiced the opposing party, and (3) consider, on the record, whether lesser sanctions would sufficiently address the violation.
¶ 9 Burnet does not apply here. In Burnet, the name of the specific witness was known. Here, Perry failed to even name his expert witness. Perry points out that he gave the names of three possible witnesses in his rebuttal witness disclosure. This, however, is not helpful. If the specific witness is identified, the opposing party may at least seek to depose the witness. Here, no CR 35 examination, which would serve as the basis for the expert's testimony, had even been requested or ordered, let alone conducted. Because the unspecified expert witness would not know the substance of his testimony, having not conducted a CR 35 examination, Lancaster would not be able to obtain any useful information through a deposition.
¶ 10 More importantly, Perry did not have the right to call this witness absent court order. CR 35[1] is not self-executing; in order to conduct a CR 35 examination a party must obtain the agreement of opposing counsel or must obtain a court order. Perry argues that most CR 35 examinations are conducted by agreement of the parties and, thus, a court order is not necessary. That may be so, but without an agreement, a court order is necessary. And in order to obtain a court order, the party seeking the CR 35 examination must show that it is entitled to conduct the examination. There is no evidence here that Perry sought an agreement to conduct a CR 35 examination. Thus, in order to go forward with the examination, Perry needed a court order. In spite of a clear request to disclose the name of his expert witness, Perry did not move to conduct a CR 35 examination until after the witness disclosure dates passed and the trial court granted Lancaster's motion to prevent Perry from calling an expert witness. Perry argues that his request for a CR 35 examination was timely because it was made before the discovery cut-off date. The purpose of the case management schedule and disclosure deadlines is to have an orderly process by which a case can proceed. Requiring *4 parties to disclose witnesses allows the opposing party time to prepare for trial and conduct the necessary discovery in a timely fashion. Allowing disclosures to be made in the manner suggested by Perry, in the absence of good cause that is not present here, would frustrate the purpose of the scheduling rules. Under the circumstances, the trial court did not abuse its discretion in excluding Perry's witness.[2]
¶ 11 Affirmed.
WE CONCUR: GROSSE and SCHINDLER, JJ.
NOTES
[1] Under CR 35:
"When the mental or physical condition (including the blood group) of a party, or of a person in the custody or under the legal control of a party, is in controversy, the court in which the action is pending may order the party to submit to a physical examination by a physician, or mental examination by a physician or psychologist or to produce for examination the person in the party's custody or legal control. The order may be made only on motion for good cause shown and upon notice to the person to be examined and to all parties and shall specify the time, place, manner, conditions, and scope of the examination and the person or persons by whom it is to be made."
[2] While it would have been preferable for the trial court to analyze, on the record, the prejudice that would ensue if Perry were allowed to conduct an untimely CR 35 examination and present the examiner's testimony and the suitability of lesser sanctions, the trial court was within its discretion in excluding Perry's witness.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-1873
FAROUKH BAMFORD,
Petitioner,
v.
MICHAEL B. MUKASEY, Attorney General,
Respondent.
On Petition for Review of an Order of the Board of Immigration
Appeals. (A98-647-665)
Submitted: March 19, 2008 Decided: April 2, 2008
Before WILKINSON and MICHAEL, Circuit Judges, and WILKINS, Senior
Circuit Judge.
Petition denied by unpublished per curiam opinion.
Adedayo O. Idowu, IDOWU & ASSOCIATES, Silver Spring, Maryland, for
Petitioner. Jeffrey S. Bucholtz, Acting Assistant Attorney
General, Daniel E. Goldman, Senior Litigation Counsel, Song E.
Park, Office of Immigration Litigation, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C., for Respondent.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Faroukh Bamford, a native and citizen of Ghana, petitions
for review of an order of the Board of Immigration Appeals
(“Board”) dismissing his appeal from the immigration judge’s order
denying his motion for a continuance and finding him removable.
An immigration judge “may grant a continuance for good
cause shown.” 8 C.F.R. § 1003.29 (2007). We review the denial of
a motion for a continuance for abuse of discretion. Lendo v.
Gonzales, 493 F.3d 439, 441 (4th Cir. 2007); Onyeme v. INS, 146
F.3d 227, 231 (4th Cir. 1998). The court “must uphold the IJ’s
denial of a continuance ‘unless it was made without a rational
explanation, it inexplicably departed from established policies, or
it rested on an impermissible basis, e.g., invidious discrimination
against a particular race or group.’” Lendo, 493 F.3d at 441
(quoting Onyeme, 146 F.3d at 231).
Because the immigration judge was without jurisdiction to
consider Bamford’s application for adjustment of status, we find no
abuse of discretion in denying the motion for a continuance.
Accordingly, we deny the petition for review. 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.
PETITION DENIED
- 2 -
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Acosta v Vidal (2014 NY Slip Op 05025)
Acosta v Vidal
2014 NY Slip Op 05025
Decided on July 3, 2014
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 July 3, 2014Gonzalez, P.J., Acosta, DeGrasse, Freedman, Richter, JJ.
12956 301721/09
[*1] Oneysie Acosta, Plaintiff-Appellant,
vJuan Carlos Vidal, et al., Defendants-Respondents.
Law Offices of Larry Hallock, PC, Maspeth (Mary J. Joseph of counsel), for appellant.
Richard T. Lau & Associates, Jericho (Marcella Gerbasi Crewe of counsel), for Juan Carlos Vidal, respondent.
Law Offices of Karen L. Lawrence, Tarrytown (David Holmes of counsel), for Kilopatie Dwhaj, respondent.
Judgment, Supreme Court, Bronx County (Betty Owen Stinson, J.), entered December 18, 2012, dismissing the complaint, and bringing up for review an order, same court and Justice,
entered November 9, 2012, which granted defendants' motions for summary judgment dismissing the complaint alleging serious injuries under Insurance Law § 5102(d), unanimously affirmed, without costs.
Defendants met their initial burden of establishing that plaintiff did not sustain serious injuries to her left shoulder, neck and back as a result of the accident by submitting the affirmed report of an orthopedic surgeon who opined that her injuries had been resolved through treatment, and found that she had normal range of motion in all parts. Defendants also submitted the postoperative report of plaintiff's treating orthopedic surgeon, which reported that plaintiff did not have a labroid tear in the shoulder, but had impingement, and that subacromial decompression had been performed.
In opposition, plaintiff failed to raise an issue of material fact. Although her orthopedic surgeon averred that plaintiff had quantified limitations in range of motion of the spine and left shoulder shortly after the accident and upon recent examination, he failed to address the conflicting findings made by plaintiff's physical therapist of normal range of motion in all parts one week after the accident (see Thomas v City of New York, 99 AD3d 580 [1st Dept 2012], lv denied 22 NY3d 857 [2013]; Jno-Baptiste v Buckley, 82 AD3d 578 [1st Dept 2011]). The physical therapy records showed that plaintiff's neck and back continued to have full range of motion at two subsequent appointments, while the left shoulder had limitations attributable to the surgical procedure, which improved within a month. Minor limitations are insufficient to support a serious injury claim (see Rickert v Diaz, 112 AD3d 451 [1st Dept 2013]).
In addition, the surgeon's report of a post-surgical examination found that plaintiff had a negative impingement sign, indicating the condition had been repaired.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: JULY 3, 2014
DEPUTY CLERK
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569 S.W.2d 715 (1978)
BOB'S READY TO WEAR, INC., a Kentucky Corporation, Morris Glen Parman and Jack Edward Parman, Appellants,
v.
Drew C. WEAVER and wife, Betty Jane Weaver, Appellees.
Court of Appeals of Kentucky.
August 11, 1978.
*716 J. Milton Luker, London, for appellants.
Robert L. Milby, Joe T. Roberts, London, for appellees.
Before HOGGE, PARK and WHITE, JJ.
PARK, Judge.
This litigation is the result of the construction of a chain link fence along a portion of the common boundary line between owners of commercial property. The plaintiffs-appellants (the Parmans) are the owners of Bob's Ready to Wear Store located on Main Street within the city of London. The defendants-appellees, Drew and Betty Jane Weaver, own and operate a restaurant on a lot adjacent to Bob's Store. In addition, the Weavers own a lot at the rear of Bob's Store and the Weaver restaurant. This lot *717 is rented to the city as a municipal parking lot. The Weavers constructed a chain link fence which prevented any access between the parking lot and an entrance at the rear of Bob's Store.
The Parmans filed an action in the Laurel Circuit Court seeking an injunction requiring the removal of the fence and enjoining the Weavers from any further interference with access between Bob's Store and the parking lot. The Parmans asserted that they owned an easement by prescription, implication or equitable estoppel. Following a trial before the court, judgment was entered denying the injunction and dismissing the complaint. The Parmans appeal.
I
The facts in this case are not in dispute and can be understood by reference to the following diagram:
The property in question was originally part of a commercial block owned by the Eversole family. This block was bounded by Main Street on the east, Sixth Street on the north and Broad Street on the west. The Weaver family had conducted a restaurant in the building (A, B, H, G) at the corner of Main and Sixth Streets since 1940. Beginning in 1953, the Parmans had operated Bob's Store, a retail clothing business, in a building (G, I, K, J) adjacent to the Weaver restaurant fronting on Main Street. Immediately to the rear of the restaurant and store was a vacant lot extending along Sixth Street to Broad Street. In 1965, the Eversole family leased the lot to the city of London. The city installed parking meters, and the city has operated the property (C, N, M, L) as a municipal parking lot.
In 1971, the Weavers and the Parmans purchased from the Eversole family the buildings presently occupied by the respective parties. In addition to the property previously occupied by Bob's Store, the Parmans purchased a portion of the building which had been a part of the Weaver Restaurant (D, E, H, G). The building originally occupied as Bob's Store extended back from Main Street approximately 100 feet. The building originally occupied by the Weavers extended back a distance of only 80 feet. In order to make the rear property lines (C, F, I, L) straight, the conveyance from the Eversole family to the Parmans included a small paved lot (E, F, I, H) approximately 20 feet square at the rear of that portion of the building that had previously been released to the Weavers. A similar paved area (B, C, F, E) approximately 20 feet square was included in the conveyance from the Eversole family to the Weavers.
At the time of the conveyances by the Eversole family in 1971, there were no *718 physical barriers between the paved parking lot leased to the city and the paved area at the rear of Bob's Store and the Weaver restaurant. Shortly after acquiring title to their respective buildings, the Parmans and the Weavers both made significant structural and decorative improvements to the rear entrances of their respective buildings. The Parmans installed display windows and a new door (point X) which opened onto the 20 foot plot acquired with the building by the deed from the Eversole family.
The municipal parking lot was used by customers as a means of access to the rear entrances to Bob's Store and to the Weaver's restaurant. In addition, trucks used the parking lot as a means of access to the rear of Bob's Store for the purpose of making deliveries or picking up refuse. In 1976, the Eversole family conveyed the parking lot property to the Weavers. The city continues to maintain a municipal parking lot on the property, but only as a tenant from month to month. Following their purchase of the parking lot property in 1976, the Weavers closed off the rear entrance to Bob's Store by erecting a chain link fence (E, F, I) along the two open sides of the 20 foot plot at the rear of their building. At the present time, the only functional purpose of the fence is to block access between Bob's Store and the municipal parking lot.
II
The Parmans claim a right of access over the parking lot property under the theory that an easement of access was acquired by prescription. The trial court correctly rejected this contention. The Parmans argue that for a period of forty years they and their predecessors in the location have used the parking lot to gain access to the back entrance to their business establishment. The only evidence relating to the period of time prior to the Parmans' tenancy beginning in 1953 was that of a prior tenant, Ernest Kidd. Kidd was not in privity with the owners of Bob's Ready to Wear. Therefore, the Parmans cannot tack the period of Kidd's occupancy for purposes of making up a prescriptive period. 2 American Law of Property § 8.59 (1952); Griffith v. Dicken, 34 Ky. (4 Dana) 561 (1856).
More important, the evidence demonstrates that the use by the occupant of the Parman portion of the building was with the permission of rather than adverse to the rights of the Eversoles. The lot in question has been at all times open to the public. Prior to leasing the property to the city, the Eversoles permitted its use as a parking lot and taxi stand, evidently for the benefit of its commercial tenants in the adjacent building. Since 1955 the city has operated the lot expressly for the benefit of the general public. Use of semi-public property which has been designedly left open and unenclosed is generally regarded as permissive and not adverse to the interest of its owner. See the cases cited in the Annotation, 46 A.L.R.2d 1140 at 1157 (1956). The trial court did not err in concluding that the Parmans had not acquired an easement by prescription.
III
The Parmans also argue that an easement by implication resulted from the sale of the Bob's Store building by the Eversole family to the Parmans in 1971. When finding an easement by implication, courts in effect infer an unarticulated intention by the owner of property that a particular use of one portion of the property for the benefit of another portion be continued although one or both segments of the whole are conveyed away. Necessarily, the use sought to be imposed upon the servient tract for the benefit of the dominant tract must have been initiated when both tracts were the property of a common owner. Once common ownership is established and the particular use is found to have been initiated prior to severance, the determination whether the creation of an easement was intended will depend upon a number of factors. 2 American Law of Property § 8.31 (A. J. Casner, ed. 1952).[1]*719 Until 1971, the Eversoles owned the property occupied by the commercial building fronting on Main Street and the adjacent property to the rear which was used as a parking lot. During the entire period of their ownership prior to the severance of the commercially improved portion of the property, the Eversoles permitted free access from the parking lot to the rear exits of the building. Therefore, the Parmans have satisfied the two threshold prerequisites to a finding of an implied easement.
Among the factors bearing upon the intention of the grantor and grantee are the following: (1) whether the claimant is the grantor or the grantee of the dominant tract; (2) the extent of necessity of the easement to the claimant; (3) whether reciprocal benefits accrue to both the grantor and grantee; (4) the manner in which the land was used prior to conveyance; and (5) whether the prior use was or might have been known to the parties to the present litigation. Knight v. Shell, 313 Ky. 852, 233 S.W.2d 973 (1950); 5 Restatement of the Law of Property § 476 (1944); Note, Implied Easements of Necessity Contrasted with those Based on Quasi-Easements, 40 Ky.L.J. 324 (1952).
Courts imply an easement more readily in favor of a grantee than a grantor. The Parmans claim an easement by implication as grantees from the Eversole heirs, the original owners of all the property. For many years prior to the 1971 conveyance, the parking lot had been openly and continuously used as a means of access to the rear entrances of the buildings fronting on Main Street. While they were tenants of the Eversole heirs, the Weavers had enjoyed free access to the rear entrance of their business across the parking lot. Following the 1971 sales, both the Weavers and the Parmans continued to use the parking lot as a means of access to the rear of their buildings. One of the Eversole heirs testified that she specifically advised the Weavers prior to the 1976 sale of the lot that the Parmans had a right of access to and from the parking lot. All of these factors favor finding an easement by implication in favor of the Parmans.
When the question of necessity is considered, the facts are less clear. The main entrance to Bob's Store is from Main Street, the main thoroughfare in the city. Recently, the Parmans have opened an entrance leading to Fifth Street through other property. There is no showing of absolute necessity for access to the parking lot. However, absolute necessity is not required. The fact that the Parmans have other access to their store is not an automatic bar to their claim to an easement by implication to the parking lot. Irvine v. McCreary, 108 Ky. 495, 56 S.W. 966 (1900). All that is required is that the easement be "reasonably necessary." Knight v. Shell, supra, 313 Ky. 852, 233 S.W.2d at 975. Without access to the parking lot which opened on Broad and Sixth Streets, the recently developed rear entrance to Bob's Store becomes landlocked. The 20 foot plot at the rear of Bob's Store becomes virtually useless if the Weavers are permitted to cut off all access to the parking lot. The trial judge specifically found that the Parmans had suffered and would in the future suffer monetary damages from the maintenance of the chain link fence.
The last factor to be considered is whether reciprocal benefits accrue to both the grantor and the grantee if an easement is implied as a part of the 1971 conveyance from the Eversole heirs to the Parmans. The benefit to the Parmans is obvious if customers may use the rear entrance to Bob's Store only a few feet from the parking lot. Access to the public parking lot at the rear of the building can only have enhanced the purchase price paid by the Parmans to the Eversoles. In turn, Bob's Store would attract customers to the parking lot thereby enhancing the value of that property. Unfortunately, an easement by implication would be of mutual benefit to grantors and grantees only so long as a public parking lot was maintained on the property to the rear of Bob's Store. The existence of an easement from Broad Street across the lot to the rear of Bob's Store would be an extremely heavy burden impeding any future *720 development of this valuable city property.
Giving consideration to the relative nature of the necessity for an easement of access to the parking lot and the possible future burden to the Weavers, we conclude that the evidence was not so overwhelming as to require the trial judge to find that an easement by implication existed. Balancing the interest of both parties, we conclude that the trial judge did not err in refusing to adjudge the Parmans an easement by implication.
IV
The Parmans assert that the Weavers are estopped to sever access between the rear entrance of Bob's Store and the municipal parking lot by construction of the chain link fence. Not having an easement for access across the parking lot to the rear of the Bob's Store, the Parmans had only a license to use the parking lot. As a general rule, a license is revocable at the will of the owner of the property subject to the license. However, an owner may be estopped to revoke the license when, with the knowledge of the owner, the licensee makes valuable improvements in reliance upon the continued existence of the license. Holbrook v. Taylor, Ky., 532 S.W.2d 763 (1976).
Following the purchase of their building in 1971, the Parmans made valuable improvements to the rear entrance to Bob's Store. These improvements were made with the knowledge of both the Eversole heirs and the Weavers. The only purpose for the new rear entrance was as a means of access to and from the municipal parking lot. The value of the improvements would be destroyed if access to the parking lot were blocked. The city of London continues to maintain a municipal parking lot on the property leased from the Weavers. The only purpose of the chain link fence is to revoke the Parmans' license by obstructing access to the parking lot. There is detriment to the Parmans and no benefit to the Weavers. Under these circumstances, we conclude that the Weavers are estopped to revoke the Parmans' license for access between the rear entrance to Bob's Store and the parking lot.
Even if the Weavers are estopped to revoke the Parmans' license across the parking lot, it does not follow that the Parmans have, in effect, an unlimited easement of access across that tract. The duration of a license may be limited even though the licensor is estopped to revoke the license:
Since the estoppel to terminate a license arises out of action taken in reliance upon representations as to duration of the license, the extent of the estoppel is measured, in part at least, by the extent of the action taken. The fact that a licensor is estopped to revoke or terminate a license altogether does not necessarily mean that the license constitutes an irrevocable privilege in accordance with its terms. It means that it is irrevocable to the extent necessary to prevent the licensee from being unfairly deprived of the fruits of expenditures made by him. It may still be possible to terminate at will some though not all of the privileges created by the license.
Restatement of the Law of Property § 519, Comment g. (1944). The improvements made by the Parmans to the rear entrance to Bob's Store were substantial. Nevertheless, the expenditures were not so substantial that the Parmans were entitled to assume that the property subject to the license would be maintained as a public parking lot forever.
We conclude that the Parmans could reasonably rely upon the continuation of the license only so long as the property was maintained as a public parking lot. Clearly, the Parmans have no right to compel the Weavers to maintain the property as a public parking lot. When a landowner grants a license for a limited purpose, licenses which are irrevocable because of estoppel should not be extended beyond their original purpose to additional uses. Smallwood v. Diz, Ky., 245 S.W.2d 439 (1952). In this case, the primary purpose of the license is a means of access between Bob's Store and *721 the municipal parking lot. If the Weaver property should cease to be used as a parking lot open to members of the public, then the Parmans' license should also cease. In this way, the improvements made by the Parmans in reliance upon the existence of the license may be balanced against the right of the Weavers to devote their property to a more profitable use. Of course, any decision on the part of the Weavers to terminate the use of the property as a public parking lot must be made in good faith and not merely for the purpose of denying the Parmans their rights established by this litigation. Wilson v. Irwin, 144 Ky. 311, 138 S.W. 373 (1911).
V
The judgment of the circuit court is reversed with directions to enter a judgment enjoining the Weavers from obstructing or interfering with access between the rear entrance of Bob's Ready to Wear Store and the parking lot property owned by the Weavers, for so long as the Weavers' property shall be maintained as a parking lot open to the public.
ALL CONCUR.
NOTES
[1] The term "easement by implication" includes both easements of necessity and so-called quasi-easements.
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710 F.2d 528
UNITED STATES of America, Plaintiff-Appellee,v.Daniel Jackson TALBERT, Defendant-Appellant.
No. 81-1582.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted May 3, 1982.Decided July 12, 1983.
Julia Barash, Asst. U.S. Atty., Los Angeles, Cal., for plaintiff-appellee.
Richard D. Burda, Los Angeles, Cal., for defendant-appellant.
Appeal from the United States District Court for the Central District of California.
Before ELY, SCHROEDER, and NORRIS, Circuit Judges.
PER CURIAM:
1
Talbert appeals from his conviction of first degree murder after a jury trial. Talbert's principal claim on appeal is that the evidence produced against him at trial was insufficient to sustain his conviction. Because we conclude that the evidence was sufficient to support the jury's verdict of guilt, the conviction must be affirmed.
FACTS
A. Background
2
On August 4, 1980, the body of Paul Nornes was discovered in an abandoned bowling alley on the grounds of the Brentwood Veterans Administration Psychiatric Hospital in Los Angeles, California. The coroner determined that Nornes had died from severe head injuries apparently inflicted during a beating. On April 21, 1981, Talbert was indicted for the murder of Nornes on a government reservation in violation of 18 U.S.C. Sec. 1111 (1964).1 After a five-day trial followed by five days of deliberation, the jury returned a verdict of guilty. The district court denied both Talbert's motion for judgment of acquittal made after conclusion of the government's case, and his renewed motion for judgment of acquittal made after return of the verdict. On September 14, 1981, Talbert was sentenced to life imprisonment.
B. Relationship of Nornes and Talbert
3
Nornes and Talbert were patients at the Brentwood psychiatric facility during overlapping time periods in 1980. Nornes was discharged from the facility on July 17, 1980, Talbert on July 16, 1980.2 After his discharge, Nornes continued to reside on the hospital grounds without official consent. Sometime before his death, Nornes took up residence in a bowling ball storage room located inside the abandoned bowling alley building. After his discharge, Talbert continued to regularly frequent the patients' gathering places on hospital grounds.
4
Nornes supported himself by selling marijuana to the psychiatric patients who resided at the hospital. Talbert was among those known to have dealings with Nornes. While Nornes made no secret of his marijuana transactions and was generally known to have money and marijuana with him, he was secretive about where he lived. Talbert had helped Nornes carry a mattress to the storage room and was therefore one of the few who knew that Nornes lived in the abandoned bowling alley.
5
One witness testified that he overheard appellant and Nornes plan a "ripoff" of a "marijuana plantation" in the San Bernardino mountains. Another witness testified that he heard appellant say, apparently as a joke, that he would not mind "bumping Nornes on the head to get his marijuana."
6
One week before Nornes' death, several witnesses observed his taking $650 from his money belt and giving it to Talbert; Talbert was to use the money to make a marijuana purchase for Nornes. On Friday, August 1, Talbert was seen on the grounds looking for Nornes. He told two witnesses that he was looking for Nornes to pay back the money he had stolen from him (presumably the $650). Talbert reportedly said, "I am going to pay him back as soon as I get my hands on him."
C. The Murder Scenario
7
Nornes' body was discovered in the bowling ball room by a hospital employee at approximately 3:00 p.m. on Monday, August 4th. Nornes was found face down on the floor, his feet and legs resting on a mattress, his body clad only in a tee shirt. Nornes' money belt lay open and empty on the mattress. A bowling pin stood on the floor three feet from the body. Expert testimony revealed that the pin was the kind of instrument that caused Nornes' fatal head injuries. Blood stains found on the pin were identified as being of the same type as Nornes' blood. Further, Talbert's right thumbprint was discovered on the neck of the bowling pin, positioned so as to have enabled him to grip the pin by its throat and turn it upside down as a club. No other bowling pins were found in the storage room, although similar pins were discovered seventy-five feet away in the adjacent bowling alley portion of the building.
8
The coroner testified that Nornes died sometime during the twenty-four hour period beginning at 6:30 a.m. on Sunday, August 3rd, and ending at 6:30 a.m. on Monday, August 4th. Talbert offered alibi evidence that he was out of town during part of this time. Rebuttal evidence established that Talbert's timetable left approximately two to four hours unaccounted for on the day of August 3rd during which Talbert was probably in the Los Angeles area and could have come to the Brentwood vicinity. The evidence also showed that Talbert was concerned about money.
ANALYSIS
9
A defendant is entitled to a judgment of acquittal if the evidence produced against him is insufficient to sustain a conviction. Fed.R.Crim.P. 29(a). We review the evidence produced against Talbert in the light most favorable to the government to determine whether substantial relevant evidence was produced from which the jury could reasonably have found Talbert guilty beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 318-19, 99 S.Ct. 2781, 2788-89, 61 L.Ed.2d 560 (1979); United States v. Miller, 688 F.2d 652, 663 (9th Cir.1982). Circumstantial evidence is sufficient to sustain a conviction, and the government's evidence need not exclude every reasonable hypothesis consistent with innocence. Miller, supra, 688 F.2d at 663, citing United States v. Federico, 658 F.2d 1337, 1343 (9th Cir.1981).
10
The appellant argues that the circumstantial evidence produced against him does not permit a rational inference of guilt. He seeks to characterize this case as one in which the only evidence supporting the jury's verdict is the thumbprint on the murder weapon.
11
The defendant's thumbprint on what was almost certainly the murder weapon is, of course, highly incriminating. This court has held that fingerprint evidence, if sufficiently probative, may by itself support a conviction. See United States v. Crenshaw, 698 F.2d 1060, 1064 (9th Cir.1983); United States v. Scott, 452 F.2d 660, 662 (9th Cir.1971). Appellant argues, however, that the fingerprint evidence is not sufficient in this case because the government did not prove that the imprint could only have been made at the time of the crime. Appellant was one of the few who knew where Nornes lived, and he had access to the room. The thumbprint might have been placed on the bowling pin, appellant suggests, when he helped Nornes move his mattress into the bowling ball storage room, or at some other time prior to the murder. Appellant relies on cases such as Borum v. United States, 380 F.2d 595 (D.C.Cir.1967) and People v. Donahue, 50 Ill.App.3d 392, 8 Ill.Dec. 472, 365 N.E.2d 710 (1977), in which courts have held that fingerprint evidence at the scene of the crime will not alone support a conviction if there is a reasonable possibility that the prints could have been placed there innocently.
12
The difficulty with appellant's position, however, is that the evidence here indicates that it was extremely unlikely that appellant had innocently touched the bowling pin at an earlier time. Although there were over one hundred bowling pins in the building, they were not stored in or near the storage room where Nornes slept. Instead, they were stored seventy-five feet away in a separate area of the building. Witnesses who examined the other bowling pins after Nornes' death testified that they were dirty and dusty and appeared undisturbed. Further, there was no evidence that Nornes kept a pin in his room. One witness testified that on August 2, the day before Nornes' death, he was looking for Nornes to buy some marijuana. He peered into Nornes' room through a window and saw neither Nornes nor the bowling pin.
13
From the evidence, the jury reasonably could have concluded that there was never a bowling pin in Nornes' room until the time of the murder. It is theoretically possible that at some time prior to the murder, appellant wandered near the bowling pins, seventy-five feet from Nornes' room, and by coincidence innocently touched the one pin out of the hundred that the murderer would later pick up and use as his murder weapon. That theoretical possibility, however, could have been rejected by a reasonable jury as too remote.
14
Furthermore, this is not a "fingerprints only" case. Appellant knew the victim and the jury reasonably could have concluded that the two men had a history of drug transactions. Appellant knew that Nornes kept large sums of money in his money belt. The jury heard testimony concerning appellant's "joke" that he would not mind "bumping Nornes on the head" as well as his ambiguous remark later that he would "pay Nornes back when [he] got [his] hands on him." Finally, appellant's alibi defense failed to account for a two-to-four hour period in the late afternoon and evening of August 3, when he was almost certainly in Los Angeles and could have gone to the hospital grounds and killed Nornes.
15
Thus, this case is wholly unlike those cases in which only fingerprint evidence links a defendant to the crime. For example, in Borum, supra, upon which appellant heavily relies, the only evidence supporting the defendant's conviction for housebreaking was testimony that his fingerprints were found on the glass jars from which the victim's coin collection was stolen. The D.C. Circuit reversed, because an expert had testified that the prints could have been two years old and because there was no evidence to support the inference that the prints were left during the commission of the crime. As other circuit courts have stated, the holding in Borum and its progeny only is applicable in situations where there is no additional circumstantial evidence linking the defendant to the crime. See United States v. Harris, 530 F.2d 576, 579 (4th Cir.1976); United States v. Roustio, 455 F.2d 366, 370 (7th Cir.1972); United States v. Scarpellino, 431 F.2d 475, 478 (8th Cir.1970). We therefore conclude that the district court properly denied the defendant's motion for judgment of acquittal at the conclusion of all evidence.
16
We also conclude that the evidence was sufficient to support the jury's finding of premeditation and that the district court therefore properly denied the defendant's motion for judgment of acquittal made after return of the verdict. If the jury determined that the killer picked up the murder weapon and carried it back seventy-five feet to Nornes' room, its finding of premeditation was justified. See Hemphill v. United States, 402 F.2d 187, 189-91 (D.C.Cir.1968) (time to walk up stairs consistent with finding that killing was product of deliberation, when motive was shown).
17
Affirmed.
ELY, Circuit Judge, dissenting:
18
I respectfully dissent.
19
I am convinced that no rational trier of fact could have found Talbert guilty beyond a reasonable doubt on the evidence adduced at his trial. The only significant evidence produced against Talbert was his thumbprint on the bowling pin. The principle is universally established, however, that convictions obtained through fingerprint evidence will be upheld only if the Government produced either evidence that the print could have been impressed only during the commission of the offense,1 or separate evidence of guilt.2 Contrary to the majority's assertions, neither of these corroborative circumstances are apparent in the record before us.
20
First, the Government failed to establish that Talbert's print was impressed during the commission of the crime. There was no evidence tending to show that Talbert lacked prior access to the bowling pin. Compare Borum, 380 F.2d at 597, with Stevenson v. United States, 380 F.2d 590, 594 (D.C.Cir.1967). To the contrary, there was undisputed evidence that Talbert had prior access. Moreover, there was no affirmative evidence tending to show that Talbert actually touched the pin at the time of the offense: The Government failed to place Talbert at or near the veterans' facility during the relevant time period. Rather, the evidence tended to place Talbert at a Los Angeles bus station approximately twenty miles from the hospital.
21
The fingerprint expert who testified at Talbert's trial was unable to lend support to the speculative inference that Talbert grasped the pin at the time of the murder. The expert could not determine how long Talbert's print had been implanted on the pin. The expert also asserted that a second print, placed on top of Talbert's, would not have obscured Talbert's print and that it was possible to touch the pin without leaving a print at all. Although the expert detected no latent prints over Talbert's, neither did he detect identifiable prints on Nornes' personal effects.
22
Finally, the apparent unlikelihood of both Talbert and the killer grasping the same pin fails to supply the necessary corroboration to establish that Talbert touched the pin at the time of the murder. The only inquiry required by either precedent or logic is whether Talbert could have touched the bowling pin on a prior occasion. Hiet v. United States, 365 F.2d 504, 505 (D.C.Cir.1966). The likelihood of the killer grasping the same pin is a matter of statistical probability and we simply do not possess sufficient information on the basis of the record before us to evaluate the odds. Perhaps the bowling pin in question lay apart from the others, perhaps it obstructed a pathway. The likelihood of the killer touching the same pin would be much greater if Talbert had previously touched many of the pins. Yet, the record is clear that only a few of the pins were tested for prints, although the pins laying in the gutters had little or no dust on them.3 Moreover, the pin may already have been in Nornes' room when Talbert or the killer touched it. The witness who testified at trial that he did not see a bowling pin in Nornes' room the day before the murder also did not see any bowling balls in the room. Nornes' room was used, however, to store bowling balls and it contained several racks of balls when the witness peered through the window. Logic demands that we abstain from reliance on unestablished, unsupported, statistical "evidence" when reviewing the strength of the Government's case.
23
Second, the Government failed to establish separate evidence of guilt to corroborate the defective fingerprint evidence. The majority disagrees, citing Talbert's marijuana transactions with Nornes, Talbert's knowledge that Nornes carried large sums of money with him, Talbert's presence in Los Angeles during the time period in which Nornes was killed, Talbert's "threatening" comments, and the fact that Talbert's thumbprint was on the neck of the bowling pin. Upon scrutiny, the weakness of this so called corroborative evidence is appalling.
24
Nothing in Talbert's and Nornes' relationship suggested a murderous inclination on Talbert's part. The only conceivable significance of their marijuana transactions was that from Nornes' public transfer of cash to Talbert for the purchase of marijuana, accomplished in the presence of approximately sixteen psychiatric patients, Talbert and others learned that Nornes carried large sums of money with him in his money belt. Yet, there was no evidence that Talbert had any particular need for money.4 During Talbert's two-day visit to Santa Barbara, beginning on Saturday, August 2nd, he paid cash in advance for a motel room with a one hundred dollar bill. On a previous trip to Santa Barbara, beginning on July 28th, it appeared to the motel manager that Talbert was carrying "a couple of hundred dollars" with him. On Talbert's August 2nd visit, the manager offered Talbert a job which Talbert declined explaining that he was expecting a disability check soon. Finally, Talbert had been looking for Nornes on August 1st to repay the approximately $650 that he had taken from Nornes to make a marijuana purchase that was never completed.
25
The majority's reliance on the fact that Talbert was in Los Angeles during a portion of the time period in which Nornes was killed is difficult to comprehend. That Talbert was in Los Angeles and, therefore, may have had an opportunity to kill Nornes lends no support to the conclusion that Talbert actually committed the act of killing Nornes. United States v. Hoke, 610 F.2d 678, 679 (9th Cir.1980) (A defendant's failure to establish an alibi does not constitute evidence of guilt). In fact, the evidence concerning Talbert's whereabouts on Sunday, August 3rd, is more exculpatory than neutral. In order for Talbert to have killed Nornes, Talbert would have had to travel from a downtown Los Angeles bus station twenty miles to the veterans' hospital and then return to the bus station within approximately three hours. In so doing, however, Talbert would have had no assurance that he would find Nornes if he made the trip. Nornes was a vagrant of whose immediate whereabouts Talbert could have no advance knowledge.
26
Talbert's so called "threatening" comments, viewed in the contexts in which they were spoken, fail to evince the hostile intent with which the majority seeks to infuse them. Talbert's intentions when he stated that he wanted to return Nornes' money "as soon as [he] could get [his] hands on him" were obviously benign. Although a jury may draw reasonable inferences from the facts presented, I find it inconceivable that a jury could reasonably draw an inference that Talbert intended a threat with this language. Talbert's stated purpose in looking for Nornes was completely innocent and his colloquial wording extremely commonplace. Moreover, Talbert's statement that he wouldn't mind bumping Nornes on the head for his marijuana, uttered approximately one month before Nornes was killed, was made facetiously in the context of a friendly discussion about going downtown, "getting high" and seeing a movie. Talbert's words, spoken in jest, are hardly sinister enough to corroborate the otherwise inadequate evidence of Talbert's culpability.
27
Finally, the fact that Talbert's thumbprint was found on the neck of the bowling pin is virtually irrelevant: For nearly any conceivable purpose, the neck of a bowling pin is the obvious place by which to grasp and move it.
28
In view of the unconscionable weakness of the Government's case against Talbert, I think it indisputable that the jury inferred that Talbert committed the act of killing Nornes from the circumstantial evidence of Talbert's thumbprint on the bowling pin. This court has held that "[w]hile inferences from facts that have been established by circumstantial evidence may be sufficient to sustain a verdict of guilt, mere suspicion or speculation cannot be the basis for the creation of logical inferences." United States v. Thomas, 453 F.2d 141, 143 (9th Cir.1971), cert. denied, 405 U.S. 1041, 92 S.Ct. 1312, 31 L.Ed.2d 581 (1972). In order to infer from the thumbprint that Talbert killed Nornes, the jury must also have concluded that Talbert placed his thumbprint on the bowling pin during the commission of the offense. This conclusion lacks foundation in any direct or circumstantial evidence produced at trial and must, therefore, be based on mere speculation.
29
The logic of the Borum opinion, in rejecting a conviction based on such an unsupported inference, is sound. Prior to the majority's opinion in the case before us, no federal court has rendered a decision inconsistent with Borum.5 In Borum, a reasonable doubt as to the defendant's guilt rested on the hypothesis that sometime, somewhere, the defendant touched the jars that contained or that were to contain the victim's private coin collection. There was no evidence in Borum that the victim knew the defendant or had ever invited the defendant into his home. In contrast, the record below establishes that Talbert had been invited into Nornes' shelter and might innocently have touched any of the objects therein.
30
To sustain Talbert's conviction is to adopt the outrageous and unprecedented position that someone may be convicted of a crime simply because his fingerprint was found at the scene, and despite evidence that he could have impressed the fingerprint at a time other than during the commission of the crime. This outcome exposes the innocent to a tremendous threat of false accusation. Fingerprint evidence ought not be subject to the intolerable abuses possible, and actual, under the majority's view. I am hopeful that, as precedent, the majority's opinion will be confined to the facts of this case and will not be used in abuse of the logical weight to be accorded fingerprint evidence in future cases.
1
This section provides, inter alia:
(a) Murder is the unlawful killing of a human being with malice aforethought. Every murder perpetrated by poison, lying in wait, or any other kind of willful, deliberate, malicious, and premeditated killing; or committed in the perpetration of, or attempt to perpetrate, any arson, rape, burglary, or robbery; or perpetrated from a premeditated design unlawfully and maliciously to effect the death of any human being other than him who is killed, is murder in the first degree.
Any other murder is murder in the second degree.
2
Nornes had entered the psychiatric facility as an in-patient on March 3, 1980. He previously had been admitted for two months commencing August 29, 1979. Talbert had entered the facility on March 16, 1980
1
See, e.g., United States v. Lonsdale, 577 F.2d 923, 924-25 (5th Cir.1978); United States v. Corso, 439 F.2d 956, 957 (4th Cir.1971); United States v. Collon, 426 F.2d 939, 941 (6th Cir.1970). See generally Annot. 28 A.L.R. 140-52 (Later Case Service 1981)
2
See, e.g., United States v. Durham, 512 F.2d 1281, 1289 (5th Cir.), cert. denied, 425 U.S. 871, 96 S.Ct. 137, 46 L.Ed.2d 102 (1975); United States v. Roustio, 455 F.2d 366, 370 (7th Cir.1972); United States v. Scarpellino, 431 F.2d 475, 478 (8th Cir.1970). See generally Annot., 28 A.L.R. 140-52 (Later Case Service 1981)
The majority misleadingly states that "[t]his court has held that fingerprint evidence, if sufficiently probative, may by itself support a conviction," citing United States v. Crenshaw, 698 F.2d 1060 (9th Cir.1983), and United States v. Scott, 452 F.2d 660 (9th Cir.1971). These are the only two cases in which this court has previously addressed the adequacy of fingerprint evidence to sustain a conviction. In each case, there was both separate evidence of guilt and evidence that the prints had been impressed during the commission of the crime. Crenshaw, 698 F.2d at 1064; Scott, 452 F.2d at 662. Perhaps in using the qualification "if sufficiently probative," the majority intends to preserve the universally established rule requiring corroboration of fingerprint evidence. Nevertheless, the majority's language is ambiguous and may be subject to erroneous application in future cases. I wish, therefore, to set the record straight: In no prior case has this court held that fingerprint evidence, standing alone, may be sufficient to sustain a conviction.
In Crenshaw, three co-defendants appealed robbery convictions. One of the defendants, Gordon, argued that the District Court erred in admitting certain identification evidence against him and that some of the prosecutor's statements made at trial were prejudicial to him. The evidence produced against Gordon at trial was substantial: (1) He left three fingerprints, known to have been left by one of the robbers, at the scene; (2) two bank employees, each twice, selected his picture from a photo line-up; (3) he carried a concealed weapon matching the description of one of the weapons used in the robbery; and (4) he occupied a hotel room with the other two robbers after the theft. Although this court found no error in connection with Gordon's prosecution, the opinion erroneously and unnecessarily adds that "[t]his court has held that fingerprint evidence alone is sufficient to convict," 698 F.2d at 1064, citing Scott.
In Scott, the defendant was convicted of theft from a federal savings and loan association. The evidence produced against him at trial consisted of his fingerprint on a packet of checks identified as having been stolen on the relevant night, and his fingerprints found on a battery inside a flashlight left at the scene of the crime. This court affirmed the defendant's conviction. In so doing, this court distinguished the "fingerprint only" cases on the grounds that
[h]ere, the flashlight was identified as having been left at the Association during the crime. The identification of the defendant's fingerprints upon one battery inside the flashlight might well have been insufficient circumstantial evidence to survive a motion for acquittal. But when that evidence is combined with positive fingerprint evidence upon the Association's stolen check and its stolen traveler's checks, the ring of circumstantial evidence tightens around the defendant. 452 F.2d at 662 (emphasis added).
Clearly, neither Crenshaw nor Scott held that fingerprint evidence, standing alone, may be sufficient to convict. Any contrary language in either opinion is pure dictum.
3
The majority cites testimony that the bowling pins were dusty. The witness actually testified, more specifically, that the numerous pins in the gutters were essentially free of dust while the pins in the racks were dusty and appeared undisturbed
4
The majority's statement that Talbert had a particular need for money is virtually unfounded. The only basis in the record for this assertion is from the fact that he telephoned his parents asking whether his disability check had arrived. The supposition that Talbert had a special need for money is clearly outweighed by evidence to the contrary
5
My research disclosed that only the jurisdiction of Kentucky has adopted a contrary rule. Mason v. Commonwealth, 357 S.W.2d 667, 668 (Ky.1962)
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206 F.2d 229
INDUSTRIAL TRUST CO.v.COMMISSIONER OF INTERNAL REVENUE.
No. 4701.
United States Court of Appeals, First Circuit.
July 7, 1953.
Stuart H. Tucker, Providence, R. I. (Hinckley, Allen, Salisbury & Parsons, Providence, R. I., on the brief), for petitioner.
Cecelia H. Goetz, Sp. Asst. to the Atty. Gen. (H. Brian Holland, Asst. Atty. Gen., and Ellis N. Slack and Helen Goodner Sp. Assts. to the Atty. Gen., on the brief), for respondent.
Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.
HARTIGAN, Circuit Judge.
1
This is a petition under 26 U.S.C. §§ 1141, 1142, for review of a decision by the Tax Court entered on June 18, 1952, determining a deficiency of $55,561.94 against the taxpayer for the year 1943, based on the disallowance of a claimed deduction of $324,698.41 for a secured debt contracted in 1929 which allegedly became totally worthless upon final liquidation of the collateral in 1943. The petitioner, Industrial Trust Company, a Rhode Island banking corporation, contends that the Tax Court erred in holding that the taxpayer became owner of the security prior to 1943.
2
On January 2, 1929, the taxpayer loaned $850,000 to Dutee W. Flint Oil Co., Inc., (hereinafter referred to as Flint Co.), also a Rhode Island corporation, taking a demand note secured by the delivery of 23,583 shares of common stock of Standard Oil Company of New York as collateral. Standard Oil Company merged and reorganized over a number of years until ultimately the original pledged stock was represented by an equal number of shares of Socony-Vacuum Oil Company, Inc. but this is not significant. The note* authorized public or private sale of the collateral upon default, without notice, and purchase by the holder of the note. This collateral had a market value of over a million dollars at the time of the loan, but during 1929 this value declined substantially. Sometime in 1930 Flint Co. ceased to do business and, upon winding up its affairs, proved to be insolvent. The taxpayer never received any payments of principal, and interest on the note was continuously in default from October, 1929. Interest payments were credited on the note from time to time by means of the dividends paid on the pledged stock, which were delivered to the bank by Dutee W. Flint until April 6, 1932, and which, after that date, were collected through the nominee of the bank.
3
On April 6, 1932, with the consent of the pledgor Flint Co., the pledgee bank transferred the pledged stock to its nominee, Rowe & Co., a partnership consisting of certain employees of the bank's trust department. The bank records show that Rowe & Co. held the stock in decreasing amounts, in the name of "D. W. Flint Oil Company, Inc., loan department safekeeping account, dividends to loan department," until March 19, 1943. There was testimony that this partnership was used solely to hold securities and other properties received by the bank as fiduciary, in order to facilitate sale. A trust account was maintained for the stock and the taxpayer's trust department accounted to the taxpayer's loan department which credited interest with dividends received and turned over by Rowe & Co.
4
On November 20, 1933, the existence of Flint Co. was terminated under the laws of Rhode Island and by the end of that year, the pledged stock was worth less than $400,000. The taxpayer charged off, and took as a 1933 deduction for a partially worthless bad debt, the amount of $125,000 on the $850,000 loan. Subsequently, in 1934, the Federal Reserve Examiner disapproved this partial charge-off and required the taxpayer to charge off on its books the excess of the loan above the market value of the stock. The taxpayer took no deduction for this additional charge-off in its 1934 tax return.
5
On October 24, 1936, the bank commenced liquidation of the pledged stock, under direction of the taxpayer's president, who tried to time sales with market conditions. Proceeds from sales were credited against the loan by the loan department.
6
In 1940, the loan stood on the taxpayer's books at $143,756.83, which was still more than the value of the remaining collateral, so pursuant to instructions of the Federal Reserve Examiner, the bank charged off $49,256.83, deducting this amount in its 1940 tax return. On November 14, 1942, the Federal Reserve Examiner directed the bank to transfer the stock to its investment portfolio and after selling another 3,000 shares, the remaining balance of 9,000 shares was transferred on March 19, 1943, from the taxpayer's trust department to its investment portfolio. At this time, the bank credited the loan with the market value of the 9,000 shares and closed out the Flint Co. account in the trust department and the loan department.
7
Upon the completion of this transaction, the bank claimed as a bad debt deduction the balance on the original amount of the loan remaining after subtracting the proceeds from sales of the collateral between 1936 and 1943 and previous bad debt deductions taken in the tax returns of 1933 and 1940. These two previous deductions for partial worthlessness totalled $174,256.83 and sales of the security realized a total of $351,044.76, leaving a balance of $324,698.41 owed to the bank on the demand note. The Tax Court held substantially that this balance was not deductible in 1943 because the conduct of the taxpayer bank, despite complete records to the contrary, showed a dominion over the collateral which was more consistent with ownership than with a debtor-creditor relationship prior to 1943.
8
The taxpayer contends that this was erroneous, in view of our holding in a somewhat similar situation, in Old Colony Trust Associates v. Hassett, 1 Cir., 1945, 150 F.2d 179. In that case on July 26, 1932, the taxpayer bank loaned a large sum of money to a practically insolvent Boston bank, taking a demand note secured by collateral which had a market value substantially less than the amount of the loan. The taxpayer carried the collateral on its books as pledgee and shortly after the loan was made, the debtor bank ceased to do business and transferred all of its assets, including its right of redemption on the pledged stock, to a new bank which was organized to take over its business. This new bank assumed all the obligations of the debtor bank except the note. Therefore in 1934 the taxpayer bank commenced to sell the pledged stock. When the last sale of the stock was made in 1936, the taxpayer claimed a bad debt deduction, which the Commissioner disallowed. The district court upheld the Commissioner. We reversed, holding that the transaction was a loan, not a sale, as the Commissioner contended, and therefore that the bad debt deduction on the secured loan was properly taken on the final sale of the security.
9
In the Old Colony case, the disputed legal effect of the transaction rested primarily on the conduct of the parties at the inception of their dealings with each other, but here we are concerned with the conduct of an acknowledged creditor which the Tax Court held to have become owner of its collateral in less than the fourteen years that it was reflected on the books as collateral. As was pointed out in Old Colony, supra, 150 F.2d at page 182, bank records are only evidential, so although the taxpayer's records in this case clearly indicate that it did not foreclose the security or become owner prior to 1943, that is not conclusive. If other circumstances contradict the bank records, the finding of the Tax Court may be affirmed.
10
The contradictory circumstances relied upon by the Tax Court are: (1) the simple means of foreclosure, or, in the words of the Tax Court, "The taxpayer creditor could acquire ownership of the pledged property with a minimum of formality," (2) the taxpayer's failure to identify anyone as holder of the right of redemption; (3) the treatment of dividends and proceeds from sale of the security, viz., direct payment of the dividends to the taxpayer's nominee to which the stock was transferred in 1934 and the failure to secure permission for receipt of the dividends or sale of the security, or to render an accounting, which was customary fiduciary procedure for the taxpayer.
11
The first point mentioned by the Tax Court is no support for an inference that the taxpayer was the owner of the pledged stock prior to 1943. In effect, the opinion of the Tax Court equates power to foreclose with an act of foreclosure, which is clearly erroneous. The degree of formality required by the terms of a pledge in order to foreclose it, does not affect the continuing existence of the pledge after default. Liberal foreclosure powers do not make default synonymous with foreclosure. Some act of foreclosure by the pledgee is necessary, usually a sale, in order to acquire title to the pledge. Thomas v. Waters, 1944, 350 Pa. 214, 38 A.2d 237; Jones v. Costlow, 1944, 349 Pa. 136, 36 A.2d 460; Moss Industries v. Irving Metal Co., 1948, 142 N.J.Eq. 704, 61 A.2d 159; Jennings v. Wyzanski, 1905, 188 Mass. 285, 74 N.E. 347. We are not aware of any section of the Internal Revenue Code or any Regulation that indicates otherwise. In the absence of any reason to the contrary, we prefer a certain and uniform tax rule making ownership and its incidents dependent on an act of foreclosure by the pledgee rather than a tax rule subject to the uncertainties and confusion of making ownership of a pledge dependent upon the "degree of formality" provided for its foreclosure.
12
With regard to the fact that there was no known holder of the right of redemption on the Flint Co. note in this case, it is urged by the government that this sufficiently distinguishes the Old Colony case to justify a different result. When Flint Co. went out of existence in 1933, under the governing Rhode Island law the right of redemption passed to its stockholders, subject to the claims of the corporate creditors. DiPrete v. Vallone, 1946, 72 R.I. 137, 48 A.2d 250. Since the right of redemption remained outstanding under the applicable law, the justification for the Tax Court's finding that the pledgee became the owner prior to 1943 must derive from the taxpayer's failure to show who held the right or from the slight likelihood that anyone would ever exercise the right. Neither of these reasons is an adequate justification. Surely the existence of a right is not negatived by the fact that its holder is unknown. And once a taxpayer has shown a defeasible title, it is not incumbent upon him to show who holds the power of defeasance. Accord Marcus Boyd, 1945, 14 T.C.M. 303; Spencer v. Commissioner, 1930, 21 B.T.A. 859. As to the slight chance that the right of redemption would ever be exercised, that is true in every case involving a bad debt, so if the reasoning of the Tax Court is correct, almost every secured bad debt would have to be liquidated and deducted immediately after default, contrary to the clear intent of the law, which allows deductions for both partially worthless bad debts and totally worthless bad debts, with final sale of the security fixing the time for the total loss. 26 U.S. C. § 23(k) (1946); U.S.Treas.Reg. 111, § 29.23(k)-1, 3, 26 CFR § 29.23(k)-1, 3; Old Colony Trust Associates v. Hassett, supra.
13
The only remaining support for the finding of the Tax Court is the conduct of the petitioner taxpayer during the fourteen years that the Flint Co. loan was carried on its books. The event most indicative of ownership was the transfer of the collateral to the taxpayer's nominee, Rowe & Co., in 1932. However, there is uncontradicted evidence that the pledgor consented to this transfer and that this was a customary practice of the taxpayer designed to facilitate disposition of pledged property in the event of the pledgor's death. Under such circumstances, the transfer alone cannot be held to alter the bank's position as pledgee, especially in view of the bank records. Even where the pledgor's consent was not obtained, such a transfer has been held to be consistent with a continuance of the pledge. Moore v. Waterbury Tool Co., 1938, 124 Conn. 201, 199 A. 97, 116 A.L.R. 564; Manufacturers Trust Co. v. Chris. Schroeder & Son, 1937, 224 Wis. 580, 271 N.W. 915, rehearing denied 273 N.W. 231. See Jones v. Costlow, supra. The record before us does not support the inference that the petitioner's transfer to Rowe & Co. in 1932 was an act inconsistent with the pledge.
14
The other conduct of the petitioner referred to in the Tax Court opinion seems to us to be equally consonant with the reasonable and prudent behavior of an institutional pledgee. We think it is erroneous to say that the petitioner treated the dividends received on the pledged stock as its own property. Rowe & Co. simply turned over all the dividends to the loan department to be applied in payment of the defaulted interest. It seems even more erroneous to draw an inference of ownership from the fact that the dividends were so applied and the security was gradually disposed of without obtaining permission from anyone and without rendering an accounting to anyone. The petitioner proceeded strictly in accordance with the terms of the note, which specifically dispenses with the requirement of any notice. No more than this should be demanded of the petitioner, especially when the duties of notice and accounting sought to be imposed here seem to involve a rather difficult search. Furthermore, the petitioner's practice of rendering annual accountings on all fiduciary accounts is not pertinent to the treatment of a bad debt because bad debts are obviously not sufficiently frequent or in the ordinary course of business, where customary practice should be expected or could be determined. The record does not disclose any departure from customary practice and even if it did, the unusual nature of the situation in this case might well warrant such a departure.
15
Thus we think there is no basis for the Tax Court's finding that the petitioner became owner of the collateral on the Flint Co. loan prior to 1943. The records of the petitioner are complete, unambiguous and entirely consistent with its asserted position of pledgee. We perceive no circumstances which would justify an inference contrary to the clear import of these records.
16
It is urged by the Commissioner that even though the Tax Court is clearly erroneous in its finding of fact, still the decision may be affirmed on the alternative ground that as a matter of law the taxpayer cannot split between two taxable years its right to deduct as a bad debt the amount by which the loan exceeded the value of the securities pledged for its payment. We do not agree with this contention.
17
The taxpayer was fully within its rights in taking deductions in 1933 and 1940 for a partially worthless bad debt based on the excess of the debt over the fair market value of the collateral and then in 1943, upon final sale of the collateral, taking a third deduction for a totally worthless bad debt. This is not an instance of splitting a deduction; it is an instance of taking two different deductions, for different types of loss, both deductions being clearly authorized.
18
The Commissioner says that the taxpayer knew that the debt was entirely worthless when the Flint Co. went out of existence in 1933. Yet it is undisputed that the right of redemption remained outstanding and that a total loss on a secured debt, when the debtor is insolvent, is sustained for tax purposes when the security is wholly liquidated. Fletcher v. Commissioner, 1930, 20 B.T.A. 1234; Kessler Oil & Gas Co. v. Commissioner, 1940, 41 B.T.A. 31; Marcus Boyd, supra; Old Colony Trust Associates v. Hassett, supra. Respondent urges that since a totally worthless bad debt must be fully deducted in the year that worthlessness is established, then we should hold that a partially worthless bad debt must be deducted to the full extent of the difference between the loan and the market value of the collateral. As stated by petitioner, "the contention of the respondent is merely that the amount which was claimed as a bad debt deduction by the petitioner in 1943 should have been taken as a deduction in 1933, and, notwithstanding that it was not so taken in 1933, the deduction is not allowable in 1943."
19
This is contrary to the code, to the regulations, and to the nature of a partial loss. The respondent even admits that "clearly in such cases considerable latitude and discretion must be accorded the taxpayer in determining the amount of the debt which has become uncollectible during any year." Since this is so, in view of market fluctuations, we cannot say that the precise amount of the partial worthlessness on this bad debt was clearly ascertainable in 1933 or that it was unreasonable for the taxpayer to think in 1933 that there might be a considerable rise in the market value of the pledged stock which would reduce the amount of the bad debt loss.
20
With the exception of a 1942 amendment which was discarded in favor of the original wording in a 1943 retroactive amendment, the statute relating to partial bad debt deductions applicable to the years from 1933 to date, provides in part: "* * * and when satisfied that a debt is recoverable only in part, the Commissioner may allow such debt, in an amount not in excess of the part charged off within the taxable year, as a deduction. * * *" 26 U.S.C. § 23(k) (1946). The pertinent regulation provides in part: "* * * Before a taxpayer may deduct a debt in part, he must be able to demonstrate to the satisfaction of the Commissioner the amount thereof which is uncollectible and the part thereof which was charged off. If a debt becomes wholly worthless during the taxable year, the amount thereof which has not been allowed as a deduction for any prior taxable year shall be allowed as a deduction for the taxable year. * * *" U.S.Treas.Reg. 111, § 29.23(k)-1(b). This language is clear enough to dispose of the respondent's contention that a greater partial bad debt deduction should have been taken in 1933. The petitioner deducted the amount charged off; it could not deduct any more.
21
The petitioner was entitled to postpone any deduction for partial worthlessness until final liquidation when it deducted total worthlessness and the charge-off required by the Federal Reserve Examiner in 1934 did not affect the petitioner's right to treat its loss in this manner. See U.S.Treas. Reg. 111, § 29.23(k)-1(c); First Nat. Bank of Fort Worth v. Com'r of Int. Revenue, 5 Cir., 1944, 140 F.2d 938. We perceive no reason for disallowance of the deduction for total worthlessness in this case.
22
The decision of the Tax Court is reversed and the case is remanded to that court for further proceedings in accordance with this opinion.
Notes:
*
The note provides in part:
"* * * with authority to sell the same, or any part thereof, or any collaterals substituted for or added to the above, without notice, either at public or private sale or otherwise, at the option of the holder or holders hereof on the non-performance of this promise, the holder or holders applying the net proceeds to the payment of this note * * * and it is hereby agreed that the holder or holders of this note, or any person in his or their behalf, may purchase at any such sale discharged from any right of redemption."
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Matter of Chon-Michael S. (Shanice A.) (2019 NY Slip Op 03685)
Matter of Chon-Michael S. (Shanice A.)
2019 NY Slip Op 03685
Decided on May 9, 2019
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 May 9, 2019
Friedman, J.P., Renwick, Kapnick, Kahn, Oing, JJ.
9282
[*1]In re Chon-Michael S., etc., A Dependent Child Under the Age of Eighteen Years, etc., Shanice A., Respondent-Appellant, The New York Foundling Hospital, Petitioner-Respondent.
Geoffrey P. Berman, Larchmont, for appellant.
The New York Foundling Hospital Adoption and Legal Services, Long Island City (Daniel Gartenstein of counsel), for respondent.
Karen Freedman, Lawyers for Children, Inc., New York (Shirim Nothenberg of counsel), attorney for the child.
Order, Family Court, New York County (Emily Olshanksy, J.), entered on or about March 29, 2018, which, inter alia, upon a finding of permanent neglect, terminated respondent mother's parental rights to the subject child, and committed custody and guardianship of the child to petitioner agency and the Commissioner of the Administration for Children's Services for the purpose of adoption, unanimously affirmed, without costs.
Clear and convincing evidence supports the finding that the mother permanently neglected the child by failing to plan for his future, despite the agency's diligent efforts to encourage and strengthen the parental relationship (see Social Services Law § 384-b[7][a]). The mother failed to comply with the services the agency provided, including mental health treatment, anger management, random drug testing, and scheduled visitation. The agency attempted to maintain frequent contact with the mother to ensure her participation in the services and facilitate visitation, but she failed to cooperate, as she was unreachable or unresponsive, and repeatedly missed scheduled visits (see Matter of De'Lyn D.W. [Liza Carmen T.], 150 AD3d 599 [1st Dept 2017]; Matter of Imani Elizabeth W., 56 AD3d 318 [1st Dept 2008]).
A preponderance of the evidence supports the determination that termination of the mother's parental rights is in the best interest of the child (see Matter of Star Leslie W., 63 NY2d 136, 147 [1984]). The child is well-cared for in his foster home and his foster parent wishes to adopt him. Moreover, the mother has failed to take any steps toward reunification, and she has not set forth a feasible plan to care for the child (see e.g. Matter of Deime Zechariah Luke M. [Sharon Tiffany M.], 112 AD3d 535, 536-537 [1st Dept 2013], lv denied 22 NY3d 863 [2014]).
The court's denial of the mother's request, through counsel, for an adjournment of the dispositional hearing was a provident exercise of discretion. The mother routinely failed to appear at visitations with the child and at meetings connected to the proceedings. She also [*2]arrived 30 minutes late to a fact-finding hearing and did not appear when the hearing was continued (see Matter of Naethael Makai A. [Adwoa A.], 135 AD3d 438, 439 [1st Dept 2016]).
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: MAY 9, 2019
CLERK
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540 U.S. 876
GIESBERGv.DRETKE, DIRECTOR, TEXAS DEPARTMENT OF CRIMINAL JUSTICE, CORRECTIONAL INSTITUTIONS DIVISION.
No. 03-68.
Supreme Court of United States.
October 6, 2003.
1
Appeal from the C. A. 5th Cir.
2
Certiorari denied.
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89 Ariz. 244 (1961)
360 P.2d 1024
Marvin R. McGEE, Petitioner,
v.
SAN MANUEL COPPER CORPORATION, Respondent Employer, and INDUSTRIAL COMMISSION OF ARIZONA, Insurance Carrier, Respondents.
No. 6902.
Supreme Court of Arizona.
April 12, 1961.
Finn & Knudsen, Phoenix, formerly Finn, Gorey & Ely, Phoenix, for petitioner.
Guynn, Twitty & Sievwright, by John F. Mills, Phoenix, for respondent Employer.
James D. Lester, Phoenix, for respondent Industrial Commission.
UDALL, Justice.
The petitioner was employed in the mining operations of the San Manuel Corporation, respondent herein, on the 15th day of October 1956. He continued his employment *245 until June 13, 1958. On October 14, 1958, the petitioner filed a claim with the Industrial Commission of Arizona in which he asserted that on April 25, 1957 (nearly 18 months prior to the filing of this claim), while working in the regular course of his employment, he sustained a severe muscle strain that caused a hernia to develop in the right inguinal, scrotal area. The evidence shows that the petitioner informed his wife, who was a registered nurse, of the alleged injury the same day that it occurred and she told him that it was a rupture; that on April 29, 1957 he purchased a truss which he says that he used for a period of time. However, the petitioner did not inform the mining company of his alleged injury, his excuse being that he was afraid to let them know for fear he would lose his job and that he was heavily involved in debt.
On October 22, 1958, the Commission entered an award of noncompensable claim for the reason:
"That applicant failed to file Workmen's Claim for Compensation within one (1) year after the date upon which the injury occurred, or the right thereto accrued as provided by A.R.S. Section 23-1061, 1956, (d)."
On rehearing the Commission heard all the evidence and affirmed the previous finding and award on the basis that they were supported by competent evidence.
A.R.S. § 23-1061, subd. D, provides:
"No application for compensation shall be valid or claim thereunder enforceable unless filed within one year after the day upon which the injury occurred or the right thereto accrued."
We have made clear that this one year limitation on filing of claims begins to run not from the date of the accident but from the date the results of the injury become manifest. Hartford Accident, etc. Co. v. Industrial Commission, 43 Ariz. 50, 29 P.2d 142; Inspiration Consolidated Copper Company v. Smith, 78 Ariz. 355, 280 P.2d 273. The determination of when the result of the injury became manifest is exclusively the province of the Commission as the trier of fact and not for this court. Ocean Accident & Guaranty Corporation v. Industrial Commission, 32 Ariz. 54, 255 P. 598; Cole v. Town of Miami, 52 Ariz. 488, 83 P.2d 997; Kennecott Copper Corp. v. Industrial Commission, 62 Ariz. 516, 158 P.2d 887; Martin v. Industrial Commission, 75 Ariz. 403, 257 P.2d 596. This court is limited in its review to a determination of whether or not there is evidence in the record which would justify the finding of the Commission. See, e.g., Muchmore v. Industrial Commission, 81 *246 Ariz. 345, 306 P.2d 272; Parnau v. Industrial Commission, 87 Ariz. 361, 351 P.2d 643.
In this case the Commission found that the claim was not timely filed. On rehearing, petitioner, who was assisted by counsel, presented extensive evidence on the issue of when the result of the injury became manifest. Having heard and weighed all this evidence the Commission concluded that the evidence supported its original finding. We agree that the Commission had before it sufficient evidence to justify a finding that the result of the injury was manifest more than one year before the filing of the instant claim. Petitioner testified on his own behalf that the day the injury occurred (approximately 18 months before he filed his claim) his wife, a registered nurse, informed him that his injury would require surgery. He admitted needing a truss and that he did not report the injury to his employer because he did not want to lose any working time which would be compensable at a lower rate than full working pay. These facts alone are sufficient to justify the determination of the Commission. The decision of the Commission being thus justified by the evidence we cannot disturb it on appeal and must therefore affirm the award.
STRUCKMEYER, C.J., BERNSTEIN, V.C.J., and JENNINGS and LOCKWOOD, JJ., concur.
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746 F.2d 1482
U.S.v.MC Sparin (Carl Wayne)
NO. 84-1282
United States Court of Appeals,Seventh Circuit.
OCT 03, 1984
1
Appeal From: C.D.Ill.
2
AFFIRMED.
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459 S.E.2d 838 (1995)
Joe Henry WEATHERS, Petitioner,
v.
STATE of South Carolina, Respondent.
No. 24271.
Supreme Court of South Carolina.
Submitted May 16, 1995.
Decided July 3, 1995.
Rehearing Denied August 9, 1995.
Deputy Chief Atty. Joseph L. Savitz, III, S.C. Office of Appellate Defense, Columbia, for petitioner.
Atty. Gen. T. Travis Medlock, Deputy Atty. Gen. J. Emory Smith, Jr., and Asst. Attys. Gen. Teresa Nesbitt Cosby and Teresa A. Knox, Columbia, for respondent.
*839 PER CURIAM:
Petitioner pled guilty to obtaining a controlled substance by forgery, conspiracy to obtain a controlled substance by forgery, attempt to obtain a controlled substance by fraud and obtaining a controlled substance by fraud. No direct appeal was taken. After a hearing, the post-conviction relief (PCR) judge granted petitioner a review of any direct appeal issues, ordered a new trial on the charge of obtaining a controlled substance by fraud, and denied the remaining allegations of the PCR application. We grant the petition for a writ of certiorari, affirm the order of the PCR judge, and affirm petitioner's convictions.
According to petitioner's PCR testimony, counsel never informed him of his right to a direct appeal. However, he testified that he asked counsel to file an appeal for him several days after he began his incarceration. Counsel testified at the PCR hearing that she did not inform petitioner of his right to appeal from the guilty plea and that petitioner never asked her to appeal the matter. The PCR judge, after holding that there is no requirement that a defendant be informed of the right to a direct appeal absent extraordinary circumstances, went on to find that, in this case, petitioner did not knowingly and intelligently waive his right to a direct appeal. Although it is not clear from the order, the PCR judge apparently found petitioner's testimony that he had inquired about an appeal to be credible and, therefore, found an extraordinary circumstance which would require counsel to inform petitioner of his appellate rights.
This Court has never addressed the issue of whether a defendant must be advised of the right to appeal following a guilty plea. We now adopt the holding of the majority of courts that, absent extraordinary circumstances, there is no constitutional requirement that a defendant be informed of the right to a direct appeal from a guilty plea. See Laycock v. New Mexico, 880 F.2d 1184 (10th Cir.1989); Marrow v. United States, 772 F.2d 525 (9th Cir.1985); Davis v. Wainwright, 462 F.2d 1354 (5th Cir.1972); Carey v. Leverette, 605 F.2d 745 (4th Cir.), cert. denied, 444 U.S. 983, 100 S.Ct. 488, 62 L.Ed.2d 411 (1979); Farrington v. North Carolina, 391 F.Supp. 714 (M.D.N.C.1975); Younger v. Cox, 323 F.Supp. 412 (W.D.Va. 1971). The bare assertion that a defendant was not advised of appellate rights is insufficient to grant relief. Instead, there must be proof that extraordinary circumstances exist such that the defendant should have been advised of the right to appeal. Younger v. Cox, supra. One extraordinary circumstances which would require counsel to advise a defendant of the right to appeal from a guilty plea would arise when the defendant inquires about an appeal. Laycock v. New Mexico, supra; Marrow v. United States, supra.
We have reviewed the record of the PCR hearing and find evidence to support the PCR judge's finding that petitioner requested an appeal, but was not advised of his appellate rights. McCray v. State, ___ S.C. ___, 455 S.E.2d 686 (Sup.Ct.1995) (Davis Adv. Sh. No. 5 at 10) (this Court must affirm the rulings of the PCR judge if there is any evidence to support the decision). Accordingly, we grant the petition for a writ of certiorari and proceed with a review of petitioner's direct appeal issues pursuant to White v. State, 263 S.C. 110, 208 S.E.2d 35 (1974).
As his direct appeal issue, petitioner alleges that the trial court did not have subject matter jurisdiction because the indictments were stamped "grand jury presentment waived" after petitioner signed them. On their face, the indictments appear proper. Absent evidence to the contrary, the regularity and legality of proceedings in general sessions court is presumed. Pringle v. State, 287 S.C. 409, 339 S.E.2d 127 (1986); State v. Jones, 211 S.C. 319, 45 S.E.2d 29 (1947). Since the record does not reveal any irregularity in stamping the indictments, we must presume that the trial court did have subject matter jurisdiction.
*840 In addition, this issue was raised at the PCR hearing. After reviewing the evidence presented at the hearing, the PCR judge found that the testimony showed that the indictments were stamped prior to petitioner signing them. The evidence supports this decision and there has been no challenge to the finding in the petition for a writ of certiorari. We, therefore, affirm petitioner's convictions and sentences.
AFFIRMED.
FINNEY, C.J., not participating.
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52 F.3d 319
U.S.v.Porter Stewart
NO. 93-5785
United States Court of Appeals,Third Circuit.
Mar 24, 1995
Appeal From: D.N.J., No. 92-cr-00068-2,
Ackerman, J.
1
AFFIRMED.
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243 F.2d 393
113 U.S.P.Q. 242
UNILECTRIC, Inc., by change of name from United Mfg. andService Co., Plaintiff-Appellant,v.HOLWIN CORPORATION, Defendant-Appellee.
No. 11906.
United States Court of Appeals Seventh Circuit.
April 18, 1957.Rehearing Denied May 16, 1957.
1
Ira Milton Jones, Milwaukee, Wis., Frank H. Marks, Chicago, Ill., Lederer, Livingston, Kahn & Adsit, Chicago, Ill., of counsel, for appellant.
2
James R. McKnight, Chicago, Ill., for appellee.
3
Before FINNEGAN and LINDLEY, Circuit Judges, and WHAM, District Judge.
4
WHAM, District Judge.
5
On February 1, 1949 United States Patent No. 2,460,636 for an electric light socket for refrigerator panels which is self-sealing upon installation was issued by the United States Patent Office to Charles M. Holloway, president of the defendant-appellee, Holwin Corporation, hereinafter referred to as 'Holwin', to which corporation he assigned the patent. Plaintiff-appellant, United Mfg. and Service Co., now, by change of name, Unilectric, Inc., hereinafter referred to as 'United', was a manufacturer of a self-sealing refrigerator light socket similar to the patented socket which Holwin claimed to be an infringement of the patented socket. To settle the controversy on July 20, 1949, United entered into a written, non-exclusive license agreement with Holwin by the terms of which United for a consideration of $500 paid to Holwin was given the right to manufacture and sell to a single customer, namely Seeger Refrigerator Co. of Evansville, Indiana, self-sealing electric light sockets within the scope of the Holloway patent on a royalty basis of one cent per socket. The agreement recited that Holwin was the sole and lawful owner of the patent in question. Holwin reserved the right to make, use and sell and to license others to make, use and sell electric light sockets made in accordance with the patent. The license agreement further provided that the royalties should be paid quarterly and that plaintiff should keep books on the manufacture and sale of such sockets and make the books available to defendant and its representatives.
6
Under said license agreement plaintiff manufacturered, sold to Seeger Refrigerator Co., and paid royalties to defendant on a large number of such self-sealing light sockets, admittedly made in accordance with the patent, up to and including September 16, 1949. In the meantime it devised a self-sealing socket which it referred to as its 'contemporary socket' and which it contended was, as constructed, outside the patent and the license agreement. On September 16, 1949 United ceased making and selling the socket it had manufactured and sold prior to that date and thereafter exclusively manufactured and sold its so-called contemporary socket to Seeger Refrigerator Co. United refused to pay royalties upon the contemporary sockets manufactured and sold to Seeger Refrigerator Co. subsequent to September 16, 1949, claiming that such sockets were not made in accordance with the patent and were not covered by the license agreement.
7
Thereupon Holwin protested to plaintiff and wrote plaintiff's customer, Seeger Refrigerator Co., and Seeger's customer, Sears Roebuck & Co., informing each of the license agreement with United, that royalties had not been paid by United on the sockets manufactured and sold after September 16, that such sockets infringed the Holloway patent, and expressed the hope that such infringements would cease. To Sears, Roebuck & Co. the letter by Holwin's counsel stated, 'Otherwise, we shall be forced to file suit for patent infringement seeking an injunction and profits and damages arising from such infringement after the date of this letter.'
8
Plaintiff, on December 16, 1949, commenced this action, praying for a declaratory judgment that its contemporary sockets do not infringe but are outside the scope of the Holloway patent, that each and every claim of the patent is invalid and void, and seeking damages, costs, expenses and attorney's fee. Before answer filed plaintiff amended its complaint alleging further that defendant Holwin had procured the license agreement from plaintiff by fraud in that Holwin then knew that the patent was invalid and void, that Holloway had procured the patent from the United States Patent Office by misrepresentation and fraud in that he knew he was not the inventor of the subject matter of the patent and that the socket claimed had been invented by a person other than himself and had been in public use and on sale in the United States for more than one year prior to the date of Holloway's application for the patent; also that the affidavit of S. R. Loughman, secretary-treasurer of Holwin, filed in the Patent Office to make special the prosecution of the application for Letters Patent contained false and misleading statements which were willfully and deliberately contrived and intended to deceive the Commissioner of Patents into believing that Holwin was not then in production of sockets of the type covered by the application which was not true. Plaintiff prayed for a decree holding the license agreement void ab initio by reason of fraud and for recovery of the royalties paid thereunder with damages for cost of designing and tooling for production of its contemporary sockets.
9
Defendant in its answer to the amended complaint denied that plaintiff's contemporary sockets were outside the scope of the Holloway patent and of the license agreement; denied that the claims of the patent were invalid and void and denied all allegations of fraud on its part before the Patent Office and in the procurement of the license agreement. With its answer Holwin filed its counterclaim for judgment under the license agreement for unpaid royalties on all sockets manufactured by United subsequent to September 16, 1949 to date of judgment and for mandatory order of injunction requiring payment of such royalties in the future; also for damages, accounting and attorney's fees.
10
Plaintiff moved to dismiss the counterclaim on the ground that Holwin had repudiated and terminated the license agreement by the above-mentioned letters to plaintiff's customer, Seeger Refrigerator Co., and to Sears, Roebuck & Co. charging infringement and threatening suit for infringement and damages. The district court granted the motion, dismissed the counterclaim and defendant Holwin appealed. After hearing, this court reversed the order dismissing the counterclaim and, in effect, reinstated the counterclaim holding that the license agreement was not terminated by said letters from Holwin to Seeger and Sears but continued to be valid and in effect; also that the plaintiff as a licensee could not lawfully be heard to deny the validity of the patent. United Mfg. & Service Co. v. Holwin Corp., 7 Cir., 187 F.2d 902. See also Automatic Radio Mfg. Co. v. Hazeltine Research, Inc., 339 U.S. 827, 70 S.Ct. 894, 94 L.Ed. 1312; United States v. Harvey Steel Co., 196 U.S. 310, 25 S.Ct. 240, 49 L.Ed. 492.
11
Plaintiff thereupon filed its reply to the counterclaim admitting it had paid no royalties under the license agreement on sockets manufactured after September 16, 1949 but alleging that since that date it had manufactured and sold only its contemporary socket which did not infringe and had made no sockets which did infringe the patent or fall within the scope of the license agreement; also alleging that the license agreement was void ab initio by reason of fraud used in the procurement of the patent and fraud in the inducement of the license agreement as alleged in the amendment to the complaint. At the trial counsel for defendant announced that defendant would rely on Claim 3 only of the patent.
12
The ultimate issues before the district court were: (1) Did plaintiff's contemporary sockets which it manufactured and sold after September 16, 1949 fall within the license agreement by infringing Claim 3 of the patent? (2) Was the patent void ab initio by reason of fraud before the Patent Office in its procurement, and, if so, was the license agreement likewise void and unenforceable by reason of such fraud? (3) What should be the scope of the order to be entered?The district court had before it the opinion of the United States Court of Appeals for the Seventh Circuit to the effect that the license agreement continued in effect after Holwin's letters to Seeger and Sears; also stating the principles that as long as the license agreement continues in effect the licensee is estopped to deny the validity of the patent and the licensor cannot sue for infringement but is limited to enforcement of his rights and remedies under the license agreement. United Mfg. & Service Co. v. Holwin Corp., supra, citing Harshberger v. Tarrson, 7 Cir., 184 F.2d 628, 629.
13
In the trial the district court attempted to hold plaintiff to the rule in producing its evidence that as a licensee it could not attack the validity of the patent. The court admitted evidence, however, offered to show that the claims of the patent were limited in scope by prior art and by the file wrapper history of the patent. The district court refused to permit certain discovery procedure and refused to admit certain depositions and exhibits offered by plaintiff for the stated purpose of showing fraud in the procurement of the patent by showing the state of prior art known to defendant for more than a year prior to the date of the application, holding that such evidence constituted nothing more than a further attack upon the validity of the patent and for that reason was improper and inadmissible.
14
At the conclusion of the trial the court sustained all objections to evidence not theretofore ruled upon, dismissed the complaint as amended and awarded Holwin a judgment on its counterclaim for unpaid royalties on the contemporary socket manufactured by plaintiff after September 16, 1949, plus a mandatory injunction order for payment of future royalties; referred the cause to a special master in chancery for an accounting and determination of the amount of the judgment and interest and the damages suffered by defendant by reason of plaintiff's non-payment of royalties; and awarded costs and disbursements.
15
Plaintiff appealed from the judgment and filed a supersedeas bond in the agreed amount of $25,000.
16
Plaintiff-appellant contends that the district court erred: (1) In enjoining plaintiff against future breaches of the provisions of the license agreement and in awarding special damages and an accounting. (2) In failing to find that plaintiff's contemporary socket is outside of the scope of Claim 3 of the Holloway patent and the coverage of the license agreement. (3) In failing to find that defendant is estopped by the file history of the Holloway patent from asserting for its claims a scope broad enough to read on plaintiff's contemporary socket. (4) In denying the plaintiff the right to prosecute its cause of action for avoidance of the license agreement by showing fraud in the procurement of the patent. (5) In granting attorney's fees to defendant.
17
More briefly, the defendant-appellee states the contested issues on this appeal as follows: (1) Does appellant's socket in evidence come within the terms of Claim 3 of appellee's patent 2,460,636 and thus within the license agreement between the parties? (2) May appellant, a licensee, attack the validity of appellee's patent on which it is licensed under a claim of fraud?
18
Considering first No. 1 of appellant's specifications of error we have concluded that the district court erred in awarding defendant mandatory injunction order requiring the licensee to pay subsequent and future royalties and otherwise comply with the terms of the license after the date of the judgment. The suit for royalties under the counterclaim is a suit on a contract. The licensor has an adequate remedy at law for the recovery of any royalties that are due and unpaid and will have such remedy for all royalties that may subsequently become due under the contract. This is not an infringement suit with right to seek an injunction and accounting. Since defendant has an adequate remedy at law, it is not entitled to equitable relief. Thomas v. Council Bluffs Canning Co., 8 Cir., 92 F. 422; Washburn & Moen Mfg. Co. v. Freeman Wire Co., C.C., 41 F. 410; Babbot v. Tewksbury, C.C., 46 F. 86; Mayflower Industries v. Thor Corporation, 3 Cir., 182 F.2d 800; Rule 53(b) and Rule 65(d), Fed.Rules Civ.Proc., 28 U.S.C.A.; Clark v. Lindemann & Hoverson Co., 7 Cir., 88 F.2d 59.
19
United's specification of error No. 2 and appellee's stated issue No. 1 present this question: 'Did the district court err in failing to find that plaintiff's contemporary socket is outside the scope of the Holloway patent and the license agreement?' We leave for later consideration United's contention that the file history of the patent estops defendant from rightfully claiming that plaintiff's contemporary sockets read on Claim 3 of the patent. Claim No. 3 of the patent, being the only claim here in issue is set forth in the margin.1
20
As will be seen, Claim 3 provides for an electric light socket for refrigerator panels having a flexible housing and a groove that can easily be fitted into a non-circular opening in the panel or removed therefrom, without need of a tool, and by means of a continuous flange with plurality of flanges oppositely disposed and spaced from the continuous flange forming the groove and holding the socket in position in the non-circular opening and forming a moisture proof seal.
21
The socket manufactured by United under the license from Holwin had a continuous flange opposed by a plurality of flanges as described in Claim 3 of the patent and was admittedly infringing. United manufactured and sold its said infringing socket and paid royalties thereon under the license until September 16, 1949 when it ceased manufacturing the admittedly infringing socket and began manufacturing and selling its contemporary socket which it claimed did not infringe and refused to pay further royalties.
22
The difference between the patented socket and plaintiff's contemporary socket is that the latter has two continuous, uninterrupted flanges spaced apart, oppositely disposed and forming a groove which flanges grip the edges of the non-circular opening in the refrigerator panel forming a moisture proof seal instead of one continuous flange with oppositely disposed plurality of flanges performing the same function.
23
The credible testimony of expert witnesses and a study of the two sockets show that the simple substitution in the contemporary socket of one continuous flange oppositely disposed to the continuous flange as shown in the patent, in lieu of a plurality of oppositely disposed flanges as called for in Claim 3, falls clearly within the scope of Claim 3 under the doctrine of equivalents and fails to avoid infringement of Claim 3. Mid-Continent Inv. Co. v. Mercoid Corporation, 7 Cir., 133 F.2d 803, 807; Sutherland Paper Co. v. Auburn Carton Corporation, 7 Cir., 118 F.2d 862, 864. The second continuous flange oppositely disposed to the first continuous flange performs precisely the same function in the same way as the oppositely disposed plurality of flanges in the socket of the Holloway patent. There is no difference in their operation or in the results they accomplish. The district court found (143 F.Supp. 494): 'Plaintiff's contemporary socket is the equivalent in construction, function, operation and result of plaintiff's socket * * *.' This finding is adequately supported by the evidence and the district court did not err in finding, passing for the moment the effect, if any, of prior art, that the contemporary socket is within the scope of the Holloway patent.
24
The court admitted evidence of the state of the prior art at the time the application for the patent was filed by Holloway to determine whether the scope of the patent was limited thereby in any way pertinent to this lawsuit. Upon consideration of this evidence the court made its finding as follows: 'During the trial of this action plaintiff introduced evidence of prior art which was considered solely on the question of limiting the claims of the defendant's patent aforesaid. Consideration of the prior art did not indicate that defendant's claims were so limited as to exclude the contemporary socket of plaintiff.'
25
Upon examination of the same evidence we are of opinion that the district court was correct in this finding. The disclosures of the prior art failed to anticipate the practical and successful Holloway socket covered by the patent which provides a flexible body with a groove and flanges that may easily be inserted or removed from the non-circular opening in the panel without tools and when inserted cannot be turned in the panel and at the same time forms a moisture proof seal. Its commercial success as shown by the evidence and the facts that United's sockets are imitative are excellent proofs of its useful advance in the art and its patentable novelty. Ric-Wil Co. v. E. B. Kaiser Co., 7 Cir., 179 F.2d 401, 404; Sandy MacGregor Co. v. Vaco Grip Co., 6 Cir., 2 F.2d 655, 656; Charles Peckat Mfg. Co. v. Jacobs, 7 Cir., 178 F.2d 794, 801.
26
An examination of cancelled Claim 4 shows that it was general in character and from all that appears it was cancelled voluntarily for the reason that it added nothing of value to the other claims. We see nothing in the file history of the Holloway patent that either compelled the cancellation of Claim 4 to avoid prior art or estops defendant from claiming its right to a reasonable range of equivalents under Claim 3. The applicable rule is stated in 69 C.J.S., Patents, § 212, p. 725, as follows: 'The voluntary cancellation of a claim in an application for a patent does not create an estoppel, affecting the construction or scope of other claims as allowed.' The district court adopted as a conclusion of law: 'There is no file wrapper estoppel limiting the scope of Claim No. 3 of defendant's patent aforesaid.' We agree with the conclusion of the district court.
27
The next issue is whether a licensee may resist a suit for royalties under a license agreement on the ground that the patent was void ab initio and unenforceable by reason of fraud in the procurement of the patent and, if so, is fraud in the procurement of the patent shown either by the evidence admitted or that excluded by the trial court. Was United deprived of a right to show fraud by the court's denial of discovery?
28
Assuming for the purpose of this case, on the authority of Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 64 S.Ct. 997, 84 L.Ed. 1250, though in that case there was clear and deliberate fraud upon the court as well as upon the Patent Office, that such a defense may be open to a licensee if willful fraud in procurement be clearly proven, we have examined the record to ascertain whether the evidence admitted by the trial court or that tendered by the plaintiff but excluded was such as to show fraud in the procurement of the patent. Such examination discloses nothing in the admitted evidence that tends to show fraud in procurement. The offer of proof rejected by the trial court (consisting of the excluded Warren depositions and offer of proof) had to do with the state of the prior art allegedly known to Holloway before he filed the application for the patent and to S. R. Loughman who filed the affidavit to make the application special. The excluded evidence might well have been considered admissible had invalidity been in issue. But it was not and for that reason the depositions were inadmissible unless they also showed fraud in procurement. Automatic Radio Mfg. Co. v. Hazeltine Research Inc., supra; United Mfg. & Service Co. v. Holwin Corp., supra.
29
The above conclusion appellant does not dispute but it earnestly contends that the depositions and other excluded evidence do show fraud in the procurement of the patent and for that reason the trial court erred by excluding them from the evidence. With this contention we do not agree. The depositions relate to several socket devices some of which are of long years standing, experimental in nature and never put into production. Those shown to have been put into production of which there is evidence that Holloway had knowledge before he filed his application for the patent in suit or of which there is evidence that S. R. Loughman, secretary-treasurer of Holwin, had knowledge before he filed the affidavit in support of the petition to make special the Holloway application, are not sufficiently similar to the patented socket to make failure to disclose them to the Patent Office amount to fraud or to have the appearance of fraud. We conclude that the excluded depositions, the offer of proof and efforts toward discovery failed to show fraud in the procurement of the patent on the part of either Holloway or Loughman. Had the district court admitted the depositions and all other excluded evidence the proof would have been insufficient, as a matter of law, to sustain a finding that fraud was exercised by either Holloway or Loughman in the procurement of the patent. All such proof had the appearance of attacking the validity of the patent and this was not permissible. It fails to appear, except as a matter of argument, that the affidavit of Loughman had anything to do with the actual procurement of the patent. It went only to the time when the application would be considered.
30
Plaintiff-appellant, in its brief says: 'Happily, decisions on the question here involved (effect of fraud in procurement on rights of licensee) are rare. * * *' That is quite true and the decisions appellant cites are distinguishable by their facts from the case before the court. Illustrative is the Hazel-Atlas case upon which appellant so strongly relies. That case involved a false affidavit obtained by bribery clearly proven which affected both the procurement of the patent and also the judgment of the United States Court of Appeals before its falseness was discovered. In Katzinger Co. v. Chicago Metallic Mfg. Co., 329 U.S. 394, 67 S.Ct. 416, 91 L.Ed. 374, the license agreement obliged the licensee to sell at prices fixed by the licensor which provision was illegal and unenforceable unless within the protection of a lawful patent. In such situation the case turned on the proof of fraud in the procurement of the patent and such fraud was clearly proven. See also MacGregor v. Westinghouse Electric & Mfg. Co., 329 U.S. 402, 67 S.Ct. 421, 424, 91 L.Ed. 380.
31
Appellant's defense to Holwin's counterclaim for royalties that Holwin cannot succeed because it comes into court with unclean hands by reason of misrepresentation and fraud before the Patent Office must fail for want of proof as indicated by what has already been said in this opinion.
32
Counsel for appellant protests vigorously against and seeks reversal of the order entered by the district court assessing attorney's fees and reasonable expenses against appellant in connection with appellant's determined and repeated efforts under the rules for discovery. Appellant says his insistent efforts were for the purpose of securing evidence to prove fraud in the procurement of the patent. Counsel for the appellee insisted that the discovery was directed toward showing the invalidity of the patent which a licensee was not permitted to show. The court said: 'The court finds that plaintiff's request for admissions and the questions asked on adverse examination are substantially the same as the interrogatories which this Court previously held need not be answered on the ground that they constituted an attack upon the validity of defendant's patent, in violation of the opinion and mandate of the Court of Appeals herein, and the Court therefore finds that plaintiff's motion to compel answers to such questions should be denied and that said motion was made without substantial justification, * * *.' The court then sustained defendant's objections to plaintiff's request for admissions and denied plaintiff's motion to compel answers to questions asked on adverse examination and ordered the plaintiff and its attorney to pay to the defendant the amount of defendant's reasonable expenses incurred in opposing said motion, including reasonable attorney's fees, the amount thereof to be determined by agreement of the parties or by the court. The record further shows that the amount of such reasonable expenses and attorney's fees was agreed upon between the parties and paid by the plaintiff. In appellant's brief relating to this phase of the case appears the language: 'In a final attempt to obtain evidence on the fraud issue and at the same time frankly reveal its hand to defendant, plaintiff filed a series of requests for admissions.' It would appear from this language and from all that appears in the record that plaintiff sought to procure the evidence of fraud more or less by indirection so as not to 'reveal its hand' and that the court may have had little or no opportunity by guidance of counsel to realize that the evidence was offered for the purpose of proving fraud rather than invalidity. As indicated heretofore in this opinion, the evidence which was excluded appeared to bear much more strongly on the invalidity of the patent than it did on any possible fraud in the procurement of the patent. Without clear understanding of counsel's purpose and position the court undoubtedly had reason to be perplexed by the insistent conduct of counsel in the discovery proceedings contrary to the court's repeated rulings and to feel that the imposition of attorney's fees and expenses was justified and necessary in order to uphold the authority and dignity of the court. We find that under the circumstances of the case this action of the court was not reversible error.
33
From the foregoing we conclude that the district court did not err in dismissing plaintiff-appellant's complaint as amended and did not err in finding for the defendant-appellee on its counterclaim and in awarding judgment to Holwin with interest and costs.
34
In those respects the judgment of the district court is affirmed.
35
In so far as the district court granted Holwin equitable relief including mandatory injunction against United for payments of future royalties and compliance with the provisions of the license agreement subsequent to the date of the judgment it was it error and must be reversed.
36
There seems at this time to be no need for a special master or an accounting since finding the amount of royalties due with interest seems to present but a simple factual question. Should difficulty arise and an accounting by a master later appear to be necessary such order may become proper.
37
The case is affirmed in part and reversed in part as indicated above and remanded to the district court for further proceedings not inconsistent with this opinion.
1
'An electric light socket for refrigerator panels comprising an outer flexible housing having a hollow interior with a front opening adapted to receive an electric light bulb, means for connecting said socket to a suitable source of electrical supply, a continuous flange extending around the outside of said housing to form a non-circular shape, a plurality of shorter flanges extending partially around the side of said housing and spaced slightly from said continuous flange on a corresponding line, said socket adapted to be installed without the use of tools in a single non-circular opening in a refrigerator panel corresponding in shape to the shape of said housing between said flanges, so that said flanges grip the edges of the opening and hold the edges in the space between said continuous flange and said shorter flanges, so that said socket may not be accidentally turned and said continuous flange contacts the face of the refrigerator panel around the entire circumference of the opening to provide a moisture proof seal around said opening.'
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16 Ill. App.3d 139 (1973)
305 N.E.2d 647
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
GENE DRUNGOLE, Defendant-Appellant.
No. 58957.
Illinois Appellate Court First District (1st Division).
December 3, 1973.
*140 Paul Bradley, Deputy Defender, of Chicago (Martin Carlson, Assistant Appellate Defender, of counsel), for appellant.
Bernard Carey, State's Attorney, of Chicago (Kenneth L. Gillis and Sharon Hope Grossman, Assistant State's Attorneys, of counsel), for the People.
Abstract of Decision.
Judgment affirmed; cause remanded.
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A NOTE: This order is nonprecedential
United States Court of Appea|s for the Federa| Circult
2010-3020
HAROLD HALL,
Petitioner,
V.
OFFlCE OF PERSONNEi_ lVlANAGElVlENT,
Respondent.
Petition for review of the |V|erit Systems Protection Board in
ATO831090280-1-1 _
ON lVlOT|ON
Before lVl|CHEL, Chief Judge, SCHALL and L|NN, Circult Judges.
PER CURlAl\/l.
0 R D E R
The Office of Personnel l\./lanagement (OP|Vl) moves to waive the requirements
of Fed. Cir. R. 27(f) and to dismiss l-iarold Hall’s petition from the lVlerit Systems
Protection Board decision in AT083‘lO90280-l-‘l for lack of jurisdiction Hall moves for
leave to proceed in forma pauperis and to stay proceedings.
Hall filed an appeal challenging OPl\/l`s reconsideration decision that found Hall
ineligible for survivor annuity benefits based on the federal service of his spouse Hall
married his spouse after she retired The Board determined that because Ha||’s spouse
had not filed a written election for a survivor annuity within two years of their marriage,
Hall was not entitled to benefits on that ground However, the Board remanded the
case to OPlV| to determine whether Hall might be entitled to benefits if he and his
spouse were married pursuant to common law at the time of his spouse’s retirement.
_OPM argues that the court lacks jurisdiction over Hall’s appeal because the
Board remanded Hal|’s case to OPM for further adjudication and thus any appeal is
premature. § 28 U.S.C. § 1295(a)(9) (this court has jurisdiction over a petition for
review of a "fina| order or final decision of the Merit Systems Protection Board").
Because Hall seeks review of the Board's remand order, which is not a final order or
decision, the petition for review is premature. See Weed v. Socia|___Sec. Admin., 571
F.3d 1359, 1362 (Fed. Cir. 2009) ("a remand . . . [is] not a final order or final decision
for purposes of § 1295(a)(9)"). Thus, we grant the motion to dismiss. if the Board
issues an adverse final decision in this case at a later date, Hall may thereafter seek
review of that decision, if appropriate.
Accordingly,
lT |S ORDERED THAT:
(1) OPM’s motions are granted The appeal is dismissed
(2) Each side shall bear its own costs
(3) Hall's motions are denied as moot.
FOR THE COURT
DEC 1 6 ilgs[__Jan Horbaly wm jj
Date Jan Horbaly
Clerk
cc: Haro|d Hall
MichaelGoodman,Esq. ` F'ILE
U-S. couRr or AP
ma FEnERAL cifEf:fiirF0R
s20
|SSUED AS A MANDATE: 1 6 mic 16 2009
n"WW JAN HORBALY
CLERK
2010-3020 2
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80 F.2d 849 (1936)
In re ADOLF GOBEL, Inc.
GENERAL AMERICAN TANK CAR CORPORATION
v.
ADOLF GOBEL, Inc., et al.
No. 244.
Circuit Court of Appeals, Second Circuit.
January 6, 1936.
*850 Root, Clark, Buckner & Ballantine, of New York City, and Rosenthal, Hamill & Wormser, of Chicago, Ill. (Arthur A. Ballantine, of New York City, Lessing Rosenthal, of Chicago, Ill., and Henry J. Friendly, of New York City, of counsel), for appellant.
Gleason, McLanahan, Merritt & Ingraham, of New York City (Henry A. Ingraham and Franklin P. Ferguson, both of New York City, of counsel), for Adolf Gobel, Inc., and Jacob E. Decker & Sons.
Davis, Polk, Wardwell, Gardiner & Reed, of New York City (Ralph M. Carson and Warren E. Hoagland, both of New York City, of counsel), for noteholders committee.
Laughlin, Gerard, Bowers & Halpin, of New York City (Spotswood D. Bowers and Francis S. Quinn, both of New York City, of counsel), for Corn Exchange Bank & Trust Co.
Before MANTON, L. HAND, and CHASE, Circuit Judges.
MANTON, Circuit Judge.
The order appealed from restrained appellant from prosecuting an action in the Superior Court, Cook county, Ill., against Jacob E. Decker & Sons, an Iowa corporation, the common stock of which was subsequently all owned by Adolf Gobel, Inc., the debtor in this bankruptcy proceeding under section 77B, as amended, 11 U.S.C.A. § 207. The debtor did not own its preferred stock or outstanding bonds. The order decreed void an attachment issued in the action in Illinois and directed the appellant to vacate the same; it ordered the several judges of that court and its clerks to dissolve the attachment and set aside the summons issued, and restrained and enjoined the appellant from taking any proceedings to enforce its claim against the Decker corporation for breach of contract except in the District Court of the United States for the Eastern District of New York. The debtor was engaged in the meat packing business, and the Decker corporation was engaged in the business of slaughtering, packing, and processing cattle. The Decker corporation stock, so owned by the debtor, was pledged with the Corn Exchange Bank, as security for Gobel's 6½ per cent. collateral notes. The preferred stock of the Decker corporation outstanding amounted to $981,850 par value. The Decker corporation, in business since 1901, was independently managed before and after the debtor's acquisition of the common *851 stock. It had creditors other than the bondholders. Solvent and doing a profitable business, it was in no way involved in the debtor's proceeding for reorganization.
In 1931 the Decker corporation had sold refrigerator and tank cars to the appellant. As an inducement to this purchase, the Decker corporation as lessee, with appellant as lessor, had made a contract not expiring until 1941 for the lease of some cars. These leases are claimed by the appellant to be worth over a half a million dollars.
September 6, 1935, the debtor filed a petition for an order authorizing it and the Corn Exchange Bank to vote the common stock of the Decker corporation in favor of a sale of substantially all the physical assets and inventories of the Decker corporation to Armour & Co., pursuant to an agreement of sale of August 15, 1935. One provision of the contract of sale was that the Armour Company should not assume the obligation of the Decker corporation's car lease with the appellant. The closing date of this sale was to be October 4, 1935, and, on October 2, 1935, leave was granted to vote the stock in favor of the sale. The order also authorized the Corn Exchange Bank "to receive as depository the net proceeds arising from the sale to Armour and from other assets of Decker (after providing for the indebtedness and liabilities of Decker and for the redemption of the preferred stock of Decker, all in accordance with said contract), said proceeds to be held in a special account and distributed by said Corn Exchange Bank Trust Company only upon order of this court and after one day's notice to all of the attorneys above mentioned who appeared at the hearings held herein on September 24 and 26, 1925." The order further provided that all funds received by the bank, as trustee, in respect of the Decker stock pledged to it, be distributed by it to the holders of the notes outstanding under the indenture, in accordance with the terms thereof, and in accordance with the further orders of the court. October 2, 1935, the Decker corporation notified appellant it would no longer use the cars. October 3, 1935, appellant petitioned the District Court for an order to make effective provision for the establishment by the Decker corporation of a fund sufficient to pay such damages as appellant might establish in an action to be brought by it. The application was denied. October 4, 1935, the appellant's action was started in Cook county, Ill., for $540,000 damages for breach of the car lease incident to the sale of Decker's assets. This action was begun by the issuance of a summons and a writ of attachment which was served upon Armour and others as garnishees. The District Court thereafter granted the order appealed from. It not only restrained and enjoined the appellant from prosecuting the Illinois action, but directed it to vacate the attachment issued in the action, and restrained and enjoined it from taking any proceedings to enforce its claims other than in the court below, and undertook to decree the attachment and the proceedings thereunder to be null and void and to direct the Superior Court of Cook county, Ill., to vacate the attachment and to restrain and enjoin the sheriff of Cook county, Ill., from enforcing it.
The appellant's suit against the Decker corporation was in no theory of the law a suit against Gobel, Inc., the debtor. The corporations were entirely separate in organization and corporate structure, each having its own bondholders, stockholders, and directors. Ownership of the common stock, by the debtor, did not make it the owner of the Decker assets. Klein v. Board of Tax Supervisors, 282 U.S. 19, 24, 51 S.Ct. 15, 75 L.Ed. 140, 73 A.L.R. 679; Rhode Island Hospital Trust Co. v. Doughton, 270 U.S. 69, 81, 46 S.Ct. 256, 70 L.Ed. 475, 43 A.L.R. 1374.
The contract of purchase by Armour did not involve a sale of the common stock of the Decker corporation, but the assets of that corporation. The Armour Company agreed to purchase the property described in the contract. The purchase price was payable to the Decker corporation, not to the debtor. No covenant of the contract by the Armour Company ran to the benefit of the debtor. The debtor did promise indemnity against undisclosed liabilities of the Decker corporation, and the contract was not to be effective until the majority of the stockholders of the debtor assented to it and until the District Court approved the contract and authorized the debtor or the bank to vote the pledged stock of the Decker corporation in favor of the sale. That the debtor, as a stockholder, might ultimately benefit from the consummation of the sale of the Decker corporation's assets, did not make the contract one for the debtor's benefit such as would permit it to enforce Armour's liability thereunder. Beveridge v. N. Y. Elevated R. R. Co., 112 N.Y. 1, 19 N.E. 489, 2 L.R.A. 648; Sample v. Louisiana *852 Oil Refining Corp., 162 La. 941, 111 So. 336; Amer. Law Institute, Restatement of the Law of Contracts, § 147.
The court below erroneously considered that it had the power to issue an injunction enjoining prosecution of the Illinois action. It was not authorized by any of the express provisions of the law. Section 265 of the Judicial Code, 28 U.S.C. Title 28, § 379, 28 U.S.C.A. § 379, provides that the writ of injunction shall not be granted by any court of the United States to stay proceedings in any court of a state, except in cases where such injunction may be authorized in relation to proceedings in bankruptcy. Section 11a of the Bankruptcy Act, 11 U.S.C.A. § 29 (a), authorizes a stay of "a suit which is founded upon a claim from which a discharge would be a release, and which is pending against a person at the time of the filing of a petition against him." This section had no application to the action brought in Illinois in which the debtor was not a party. Subdivision (c) (10) of section 77B of the Bankruptcy Act, 11 U.S. C.A. § 207 (c) (10), provides that, in addition to the provisions of section 11 for a stay of pending suits against a debtor, the court "may enjoin or stay the commencement or continuation of suits against the debtor until after final decree; and may, upon notice and for cause shown, enjoin or stay the commencement or continuance of any judicial proceeding to enforce any lien upon the estate until after final decree."
This section has no application in the instant case, for it is plain that the suit was not against this debtor nor was it a judicial proceeding to enforce any lien upon its estate. The assets of the Decker corporation were involved, not the Decker stock, which was part of the debtor's estate. The appellant made no claim to the Decker stock; there was no attempt to impress a lien upon it. Subdivision (15) of section 2 of the Bankruptcy Act, 11 U.S.C.A. § 11 (15), empowers the court to "make such orders, issue such process, and enter such judgments in addition to those specifically provided for as may be necessary for the enforcement of the provisions of this Act [title]."
This section does not authorize enjoining a creditor of a solvent and wholly independent subsidiary from prosecuting an action at law in the state court merely because its common stock is held by the debtor in reorganization proceedings. In ordinary proceedings in bankruptcy, subdivision (15) of section 2 confers the power to enjoin the prosecution of an action in a state court only when the action interferes with property which is in the actual or constructive possession of the bankrupt at the date of the filing of the petition. Cf. Taubel-Scott-Kitzmiller Co. v. Fox, 264 U. S. 426, 44 S.Ct. 396, 68 L.Ed. 770; In re Worrall, 79 F.(2d) 88 (C.C.A.2); In re Greenlie-Halliday Co., 57 F.(2d) 173 (C. C.A.2). In Re Weston, 68 F.(2d) 913, 98 A.L.R. 319 (C.C.A.2), the bankrupt was the owner of a claim against the state of New York for construction of a public improvement. We held that, since the claim was within the constructive possession of the bankruptcy court when the petition was filed, that court might properly enjoin proceedings in the state court for enforcement of liens upon a claim filed subsequent to bankruptcy. But mere financial interest of a bankrupt estate in the outcome of litigation pending in the state courts does not authorize the issuance of an injunction against such prosecution. In re Worrall, 79 F.(2d) 88 (C.C.A.2); In re Horton, 102 F. 986 (C.C.A.8).
We have held that subdivision (a) of section 77B, 11 U.S.C.A. § 207 (a), providing that the court upon approval of a petition "shall * * * have exclusive jurisdiction of the debtor and its property wherever located," authorized the bankruptcy court in such a proceeding to enjoin, not only actions interfering with the property of the debtor which was within the actual or constructive possession of the debtor on the date of the approval of the petition, but also actions interfering with property of the debtor not in such possession, the continued prosecution of which would prevent or impede reorganization. In re Prudence-Bonds Corp. (C.C.A.) 77 F.(2d) 328. This difference between the power of the court in ordinary bankruptcy proceedings and in proceedings under section 77B does not hinder this appellant, for here the property involved in the Illinois action was not only in no sense in the debtor's possession, but it was not the debtor's property. It was the property of the Decker corporation. As we said in Re Prudence Bonds Corp., 75 F. (2d) 262, 263: "Congress did not intend the bankruptcy court in proceedings under section 77B [11 U.S.C.A. § 207] to take over all litigation between the debtor and third persons." Nothing in section 77B therefore granted to the court the power it exercised in this injunction.
The argument that section 77B has for its object reorganization, and grants to the *853 court power to enjoin any action in the state court which renders reorganization more difficult, is also without merit. The power granted to issue such injunctions "as may be necessary for the enforcement of the provisions of this act" is limited to cases in which the property of the bankrupt is directly affected. This limitation consistently imposed by the bankruptcy courts is also applicable to proceedings under section 77B. Though facility in reorganization is desirable, it is not the sole consideration. Cf. In re Lake's Laundry, 79 F.(2d) 326 (C.C.A.2). It is merely a basis for the exercise of jurisdiction in cases where jurisdiction exists. But in no way was the property of the Decker corporation under the administration of the District Court. No insolvency petition had been filed by or against the Decker corporation; no order had been issued enjoining or restraining the creditors of the Decker corporation from taking any course they might deem advisable for the collection of their debts; at no time had the Decker corporation filed a petition in the District Court under the provisions of section 77B. It was solvent and not in a position to do so.
In the proceedings had, in which counsel for the appellant participated in the application to intervene, they in no way submitted appellant to the court's jurisdiction. An oral stipulation made in open court would be valid; usually it is entered on the clerk's minutes and is made without reserve. Here there is printed a colloquy between the court and counsel, but no final stipulation submitted the appellant to the jurisdiction of the court below. Before we will hold that there has been such a submission, it must appear that the appellant has taken a definite legal position by submitting to the jurisdiction. We have heretofore been critical of, and have refused to consider, colloquy of counsel as part of the record, such as is submitted here for our consideration. Stenographic reproduction of all argument in the court as part of the record will not be regarded by us as constituting any part of the record on appeal, which we must consider. The practice that has prevailed of asking us to find admissions made in colloquies of counsel extending over many printed pages may no longer be expected to be fruitful of results. In re National Public Service Corp., 68 F.(2d) 859, 861 (C.C.A.2); In re Syracuse Stutz Co., Inc., 55 F.(2d) 914, 917 (C.C.A.2).
The order appealed from is reversed.
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Cite as 2013 Ark. 460
SUPREME COURT OF ARKANSAS
No. CV-13-185
LES MARLOW, BROOKS “CHIP” Opinion Delivered November 14, 2013
MEADOWS, CARY MARLOW, CHAD
MARLOW, and LEIGH CARSON APPEAL FROM THE PULASKI
APPELLANTS COUNTY CIRCUIT COURT
[NO. CV-08-2078]
V.
HONORABLE JAMES LEON
JOHNSON, JUDGE
UNITED SYSTEMS OF ARKANSAS,
INC. and GLENN PETKOVSEK AFFIRMED; COURT OF APPEALS
APPELLEES OPINION VACATED.
PAUL E. DANIELSON, Associate Justice
Appellants Les Marlow, Brooks “Chip” Meadows, Cary Marlow, Chad Marlow, and
Leigh Carson appeal an order of the Pulaski County Circuit Court granting appellee Glenn
Petkovsek’s motion for attorney’s fees and costs.1 Petkovsek was granted $164,758.90 for his
defense in the lawsuit initiated by appellants. Appellants originally appealed the circuit
court’s order to our court of appeals, which affirmed. See Marlow v. United Sys. of Arkansas,
Inc., 2013 Ark. App. 100. Appellants then petitioned for review, which this court granted.
When we grant a petition for review, we consider the appeal as though it had originally been
filed in this court. See Orr v. Hudson, 2010 Ark. 484, 374 S.W.3d 686. Appellants present
two points on appeal. They first argue that Petkovsek is not a prevailing party because the
1
Appellee United Systems of Arkansas, Inc., also requested fees and costs; however,
the order granted fees and costs only to Petkovsek.
Cite as 2013 Ark. 460
breach-of-contract claim was against appellee United Systems of Arkansas, not Petkovsek.
Secondly, they argue that the award of attorney’s fees should be reversed because attorney’s
fees and costs are not available to a prevailing party in a wrongful-discharge case. We find
no error and affirm.
The pertinent facts are these. In 2008, Les Marlow filed a complaint against Glenn
Petkovsek and United Systems of Arkansas, Inc., for breach of contract and breach of the
duties of good faith and fair dealing implied within that contract. Additionally, each
appellant filed a claim of wrongful termination in violation of public policy against Petkovsek
and United Systems. Various counterclaims were filed against appellants, including breach
of contract, breach of fiduciary duty, and conversion.
The jury entered verdicts in favor of United Systems on its claims, but awarded zero
damages. The jury found that the plaintiffs failed to prove their claims and entered defense
verdicts for Petkovsek and United Systems. Subsequently, United Systems and Petkovsek
filed a motion for attorney’s fees and costs. Upon considering the motion and after holding
a hearing on the same, the circuit court found that both were entitled to fees and costs;
however, the circuit court ultimately awarded them only to Petkovsek. Appellants now
appeal that award.
For their first point on appeal, the appellants assert that the circuit court erred in
finding that Petkovsek was a prevailing party because he was “irrelevant” both to the breach-
of-contract claim and to the claim of wrongful discharge against public policy. Unfortunately,
this is the exact opposite of what they claimed in circuit court. These appellants specifically
2
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named Glenn Petkovsek as a defendant in their complaint and asserted the following:
Defendant, Glenn Petkovsek, breached the contract USOA had with Mr. Marlow.
....
Defendants’ termination of Plaintiff Les Marlow breached the implied covenant of
good faith and fair dealing . . . .
....
Defendants breached the written contract . . . .
....
The acts of the Defendants in terminating the Plaintiffs . . . constitute wrongful
discharge.
....
The acts of the Defendants ... constitute the tort of outrage . . . .
....
Defendants’ conduct proximately caused damage to the Plaintiffs . . . .
....
As a proximate result of Defendants’ actions, Plaintiffs have suffered . . . .
....
As a proximate result of Defendants’ actions, the Defendants should be assessed
punitive damages . . . .
However, once a jury of twelve found these claims had no merit and specifically determined
that Petkovsek could not be held individually liable, appellants want to argue that Petkovsek
was irrelevant to their claims. More importantly, they want to argue that because he was
irrelevant to their claims, the circuit court erred in finding that he was a prevailing party.
We will not reverse the circuit court on this point for two reasons. First, the
appellants are limited by the scope and nature of the arguments and objections presented at
trial. See Boellner v. Clinical Study Ctrs., LLC, 2011 Ark. 83, 378 S.W.3d 745. Furthermore,
it is well settled in Arkansas that, under the doctrine of invited error, an appellant may not
complain of an erroneous action on appeal if he or she induced the action. See Riley v. State
Farm Mut. Auto. Ins. Co., 2011 Ark. 256, 381 S.W.3d 840 (citing Daniels v. Cravens, 297 Ark.
3
Cite as 2013 Ark. 460
388, 390, 761 S.W.2d 942, 943 (1988)).2
Appellants additionally argue that attorney’s fees and costs are not available to a
prevailing party in a wrongful-discharge against public-policy case. We disagree.
It is undisputed in the instant case that appellants were at-will employees. This court
has held that an at-will employee has a cause of action for wrongful discharge if they were
fired in violation of well-established public policy of the state. See Sterling Drug, Inc. v.
Oxford, 294 Ark. 239, 743 S.W.2d 380 (1988). This very cause of action was asserted against
the appellees in addition to a claim for breach of contract. Appellees were forced to defend
the lawsuit and ultimately prevailed.
In Sterling, supra, we also determined that this cause of action would sound exclusively
in contract.3 Arkansas Code Annotated section 16-22-308 (Repl. 1999) allows for attorney’s
fees to be awarded in a breach-of-contract case. Because we have held that when an
employee brings a wrongful-discharge action in violation of public policy there is an
exclusive contract cause of action, attorneys fees may be properly awarded in this type of case
at the circuit court’s discretion pursuant to section 16-22-308. The circuit court in the
instant case awarded such fees, and no argument is presented that the amount of fees awarded
was unreasonable.
2
In light of this precedent, we fail to understand Justice Hart’s declaration in her
dissent that it is error for the court not to give “due consideration” to this argument.
3
The dissenting opinions’ aversion to this court’s holding in Sterling is evident;
however, that issue is not now before us. We will not ignore the well-established doctrine
of stare decisis.
4
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For all the above-stated reasons, we affirm the circuit court’s award.
Affirmed; Court of Appeals opinion vacated.
BAKER, HART, and HOOFMAN, JJ., dissent.
JOSEPHINE LINKER HART, Justice, dissenting. This is a case of first impression,
as we have never held that a defendant, or a plaintiff, is entitled to attorney’s fees in a cause
of action for wrongful discharge if the employee is fired in violation of a well-established
public policy of the state. In consideration of this issue, the majority observes that attorney’s
fees may be awarded in a breach-of-contract case. Ark. Code Ann. § 16-22-308 (Repl. 1999).
The majority cites Sterling Drug, Inc. v. Oxford, 294 Ark. 239, 743 S.W.2d 380 (1988), and
concludes, without analysis, that because it is a cause of action that sounds in contract,
appellees are entitled to attorney’s fees.
When an employee’s contract of employment is for an indefinite term, either party
may terminate the relationship without cause or at will. Id. at 245, 743 S.W.2d at 383. An
at-will employee has a cause of action for wrongful discharge if he or she is fired in violation
of a well-established public policy of the state. Id. at 249, 743 S.W.2d at 385. The
public-policy exception, however, is a limited exception to the employment-at-will doctrine
and is not meant to protect merely private or proprietary interests. Tripcony v. Ark. Sch. for the
Deaf, 2012 Ark. 188, at 9, 403 S.W.3d 559, 563. A public-policy-discharge action is
essentially predicated on the breach of an implied provision that an employer will not
discharge an employee for an act done in the public interest. Sterling Drug, 294 Ark. at 249,
743 S.W.2d at 385.
5
Cite as 2013 Ark. 460
Other than with respect to appellant Les Marlow, there is no contract of employment
at issue in this case, as it involves claims of wrongful discharge of at-will employees. Rather,
this claim is based on an implied contract, or quasi contract. Contracts implied in law, or quasi
contracts, are legal fictions, created by the law to do justice, and they do not rest upon the
express or implied assent of the parties. Dews v. Halliburton Indus., Inc., 288 Ark. 532, 536, 708
S.W.2d 67, 69 (1986). Courts of foreign jurisdictions have allowed the recovery of attorney’s
fees by applying the legal fictions of implied contract and quasi contract, but this has “never
been allowed in Arkansas.” See Med. Liab. Mut. Ins. Co. v. Alan Curtis Enter., Inc., 373 Ark.
525, 527, 285 S.W.3d 233, 235 (2008). Given that these wrongful-discharge claims are
implied-contract actions, appellees are not entitled to attorney’s fees. See, e.g., Friends of
Children, Inc. v. Marcus, 46 Ark. App. 57, 63, 876 S.W.2d 603, 606 (1994).
Heretofore, Arkansas law in this area has been consistently applied to deny attorney’s
fees when the cause of action is based on a legal fiction of implied contract or quasi contract.
The action for wrongful discharge is based on an implied contract or quasi contract, that is,
a legal fiction prohibiting employers from firing employees for acts protected by public policy.
We have never awarded attorney’s fees under section 16-22-308 when the contract is a legal
fiction. Had the General Assembly wanted attorney’s fees to be awarded based on legal
fictions, it would have amended the statute to so reflect.
Further, the majority also errs in failing to give due consideration to appellants’
argument that Petkovsek was not the prevailing party. This court has recognized that the
prevailing party is determined by analyzing each cause of action and its subsequent outcome.
6
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Harrill & Sutter, P.L.L.C. v. Kosin, 2012 Ark. 385, ___ S.W.3d ___. Ultimately, the prevailing
party is determined by who comes out “on top” at the end of the case. Id. The proper
perspective requires looking at the case as a whole to determine whether there was a
prevailing party and who that party is. Id.
Here, appellants sued not only for wrongful termination, but also for the tort of
outrage. Petkovsek counterclaimed for fraud, breach of fiduciary duty, unjust enrichment, and
conversion—all causes of action that did not sound in contract. When one looks at the case
as a whole, it was much more of a tort case than a contract action. Attorney’s fees are not
recoverable in tort cases. Carter v. Cline, 2013 Ark. 398, ___ S.W.3d ___. Further, with both
of the parties walking away empty-handed, I cannot say that the trial court did not abuse its
discretion when it awarded attorney’s fees.
BAKER, J., joins in this dissent.
CLIFF HOOFMAN, Justice, dissenting. I must respectfully dissent from the
majority’s decision to affirm the award of attorney’s fees to Petkovsek. While this court held
in Sterling Drug, Inc. v. Oxford, 294 Ark. 239, 743 S.W.2d 380 (1988), that a cause of action
for wrongful discharge sounds in contract, not tort, attorney’s fees were not at issue in that
case. I disagree that a claim based solely on an implied contract, such as a wrongful-discharge
claim, falls within the ambit of Ark. Code Ann. § 16-22-308 (Repl. 1999) in the absence of
express language to that effect by the General Assembly. See Pettus v. McDonald, 343 Ark.
507, 36 S.W.3d 745 (2001) (stating that an implied-in-law contract is not even a contract at
all, but an obligation imposed by law to do justice). Thus, I would reverse the circuit court’s
7
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award of fees.
BAKER and HART, JJ., join this dissenting opinion.
Brian G. Brooks, Attorney at Law, PLLC, by: Brian G. Brooks; and
The Brad Hendricks Law Firm, by: Lloyd W. “Tré” Kitchens, for appellants.
Newland & Associates, PLLC, by: Joel F. Hoover and Elizabeth C. Abney, for appellees.
8
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9 Cal.Rptr.3d 336 (2004)
115 Cal.App.4th 461
James CHAFFEE, Plaintiff and Appellant,
v.
SAN FRANCISCO LIBRARY COMMISSION et al., Defendants and Respondents.
No. A102550.
Court of Appeal, First District, Division Two.
January 29, 2004.
*337 Robert J. Moskowitz, for Appellant.
Dennis J. Herrera, City Attorney, Wayne K. Snodgrass, Rafal Ofierski, K. Scott Dickey, Deputy City Attorneys, for Respondents.
RUVOLO, J.
I.
INTRODUCTION
Appellant James Chaffee appeals from a judgment granting respondents' motion for summary judgment. We disagree with appellant that the Ralph M. Brown Act (Gov.Code, § 54950 et seq.)[1] (the Brown Act) and the San Francisco Sunshine Ordinance *338 of 1999 (S.F.Admin.Code, ch. 67) (the Sunshine Ordinance) require that a general public comment[2] period be provided at each session of a continued public meeting held to consider a single published agenda. Accordingly, we affirm.
II.
FACTS AND PROCEDURAL HISTORY
On May 16, 2002, the San Francisco Library Commission (Library Commission) held its regularly scheduled meeting.[3] Commissioners Bautista, Chin, Higueras, and Steiman were present. The agenda for the May 16th meeting was posted on May 12, 2002, and included the following items: (1) Approval of the April 18, 2002 Minutes (Action); (2) Bond Program Manager's Report (Discussion); (3) Art Enrichment Program (Action); (4) Design Excellence Program (Discussion); (5) Site Acquisition: Portola Branch (Action); (6) Library 2002/2003 Budget Update (Action); (7) Public Comment (Discussion); and (8) Adjournment (Action). The agenda also noted that public comment would be taken before or during the Library Commission's consideration of each agenda item. During the May 16th session, President Higueras announced that due to the potential loss of quorum by 5:30 p.m. that day, he would reorder the taking up of agenda items.[4] The commission announced the three agenda items to be considered that day (agenda items (1), (3), and (5)), and proceeded to hear public comment on each item. President Higueras then announced that, as the commission was losing its quorum, the remaining business of the meeting would be continued to Tuesday, May 21, 2002. The meeting was adjourned at 5:27 p.m.
On May 17, 2002, the Library Commission issued the notice and the agenda for the continued portion of the May 16th meeting, and posted both at the door of the main library's Koret Auditorium, where the second session of the continued meeting would be held. The agenda for the continued May 16th meeting only listed the remaining items not heard at the first and in the new order as announced by President Higueras on May 16th: (1) Bond Program Manager's Report (Discussion); (2) Design Excellence Program (Discussion); (3) Library 2002/ 2003 Budget Update (Action); (4) Public Comment (Discussion); and (5) Adjournment (Action). Also on May 17, 2002, appellant filed a complaint seeking injunctive and declaratory relief against the commission and commissioners Higueras, Steiman, Chin, and Bautista alleging that the parties violated the Brown Act and the Sunshine Ordinance. Appellant sought a permanent injunction requiring the Library Commission and its members to provide for public comment at all meetings, and declaratory relief stating that the Brown Act and the Sunshine Ordinance require general public comment at all regular meetings. Appellant also filed an ex parte application for a temporary restraining order on May 20, 2002, which the trial court denied.
At the continued meeting on Tuesday, May 21, 2002, the same commissioners present at the May 16th meeting heard the *339 remaining agenda items. At this session public comment was allowed on each remaining agenda item, and a general public comment period was also held at the conclusion of meeting, but before adjournment.
Appellant filed a motion for preliminary injunction on July 26, 2002, which the trial court denied. Thereafter, respondents filed a summary judgment motion, which was granted. This timely appeal followed.
III.
DISCUSSION
Appellant argues that the Brown Act and the Sunshine Ordinance require that members of the public be given an opportunity to comment generally on matters within the jurisdiction of a legislative body at each session of that body's public meetings, in addition to being allowed comment on specific agenda items. Hence, appellant claims respondents violated both statutes when the Library Commission adjourned and continued its May 16, 2002 meeting without giving him an opportunity to make general public comment. This is so, he argues, notwithstanding that he was allowed to make comments on every agenda item taken up at the May 16th meeting, in addition to being allowed to comment on the remaining agenda items, and to make general public comments, at the continued May 21st meeting session.
On appeal from a grant of summary judgment, we exercise our independent judgment in determining whether there are triable issues of material fact and whether the moving party is entitled to judgment as a matter of law. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334-335, 100 Cal.Rptr.2d 352, 8 P.3d 1089.) Summary judgment is properly granted if there is no question of fact and the issues raised by the pleadings may be decided as a matter of law. (Code Civ. Proc., § 437c, subd. (c); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843, 107 Cal.Rptr.2d 841, 24 P.3d 493 (Aguilar).) In moving for summary judgment, a defendant may show that one or more elements of the cause of action cannot be established by the plaintiff or that there is a complete defense to the cause of action. (Code Civ. Proc., § 437c, subd. (o)(2); Aguilar, supra, 25 Cal.4th at p. 849, 107 Cal.Rptr.2d 841, 24 P.3d 493.) Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. (Ibid.) The plaintiff may not rely upon the mere allegations or denials of his pleadings to show that a triable issue of material fact exists but instead, must set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto. (Ibid.)
The moving party must support the motion with evidence including affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice must or may be taken. (Code Civ. Proc., § 437c, subd. (b); Aguilar, supra, 25 Cal.4th at p. 843, 107 Cal.Rptr.2d 841, 24 P.3d 493.) Similarly, any adverse party may oppose the motion and "`where appropriate,'" may present evidence including affidavits, declarations, admissions to interrogatories, depositions, and matters of which judicial notice must or may be taken. (Ibid.) In ruling on the motion, the court must consider all of the evidence and all of the inferences reasonably drawn therefrom (Code Civ. Proc., § 437c, subd. (c); Aguilar, supra, 25 Cal.4th at p. 843, 107 Cal.Rptr.2d 841, 24 P.3d 493), and view such evidence and inferences in the light most favorable to *340 the opposing party. (Aguilar, supra, at p. 843, 107 Cal.Rptr.2d 841, 24 P.3d 493.)
Appellant makes no reference in his brief to any material disputed issue of fact in this case.[5] Therefore, our independent review of the summary judgment turns solely on an interpretation of the law. More specifically, we are called upon to interpret sections 54950 et seq. and San Francisco Administrative Code chapter 67 as applied to the May 16th and May 21st Library Commission meetings, and determine whether general public comment is required at both the original and the continued session of those assemblies.
Section 54954.3, subdivision (a) provides in pertinent part, "[e]very agenda for regular meetings shall provide an opportunity for members of the public to directly address the legislative body on any item of interest to the public ... that is within the subject matter jurisdiction of the legislative body...." Similarly, San Francisco Administrative Code section 67.15, subdivision (a) provides, "[e]very agenda for regular meetings shall provide an opportunity for members of the public to directly address a policy body on items of interest to the public that are within policy body's subject matter jurisdiction...."
Appellant urges us to interpret these laws to mean that there must be general public comment allowed at every session when a public body meets, in addition to allowing comment on specific agenda items. Appellant argues that because a continued meeting is a separate and regular meeting under sections 54952.2, subdivision (a), and 54955, and respondents failed to provide for a general public comment period at both "meetings," respondents violated both the Brown Act and the Sunshine Ordinance.[6] We disagree.
In determining the meaning of a statute, we are guided by settled principles of statutory interpretation. "The fundamental purpose of statutory construction is to ascertain the intent of the lawmakers so as to effectuate the purpose of the law. [Citations.]" (People v. Pieters (1991) 52 Cal.3d 894, 898, 276 Cal.Rptr. 918, 802 P.2d 420 (Pieters).) To determine this intent, we begin by examining the words of the statute. (Ibid.) We must follow the construction that "comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute, and avoid an interpretation that would lead to absurd consequences." (People v. Jenkins (1995) 10 Cal.4th 234, 246, 40 Cal. *341 Rptr. 2d 903, 893 P.2d 1224.) Further, we must read every statute," `with reference to the entire scheme of law of which it is part so that the whole may be harmonized and retain effectiveness.'" (Pieters, supra, 52 Cal.3d at p. 899, 276 Cal.Rptr. 918, 802 P.2d 420, quoting Clean Air Constituency v. California State Air Resources Bd. (1974) 11 Cal.3d 801, 814, 114 Cal.Rptr. 577, 523 P.2d 617.)
Here, the words of both public meeting statutes are clear: "[e]very agenda for regular meetings shall provide an opportunity for members of the public to directly address a legislative body on any item of interest to the public ... that is within the subject matter jurisdiction of the legislative body...." (§ 54954.3, subd. (a), italics added; see S.F. Admin. Code, § 67.15, subd. (a).) The Library Commission provided for general public comment during the second day of its two-day meeting held to consider a single agenda. Thus, the commission fully complied with the plain meaning requirements of both section 54954.3 and San Francisco Administrative Code section 67.15.
If we were to accept appellant's interpretation of the statute requiring general public comment at every session or "meeting" of a public body, and not for every "agenda," we would render the Legislature's use of the word "agenda" mere surplusage. (See Agnew v. State Bd. of Equalization (1999) 21 Cal.4th 310, 330, 87 Cal.Rptr.2d 423, 981 P.2d 52 ["[S]ignificance must be given to every word in pursuing the legislative purpose, and the court should avoid a construction that makes some words surplusage"].)
In addition, construing section 54954.3 and San Francisco Administrative Code section 67.15 to require a single general public comment period where a public body meets in multiple sessions to consider its agenda is fully consonant with the plain meaning of the applicable open government statutes and avoids absurd results. The Brown Act's statement of intent provides: "In enacting this chapter, the Legislature finds and declares that the public commissions, boards and councils and the other public agencies in this State exist to aid in the conduct of the people's business. It is the intent of the law that their actions be taken openly and that their deliberations be conducted openly. [¶] The people of this State do not yield their sovereignty to the agencies which serve them. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created." (§ 54950.) The Brown Act is intended to ensure the public's right to attend public agency meetings to facilitate public participation in all phases of local government decisionmaking, and to curb misuse of the democratic process by secret legislation of public bodies. (International Longshoremen's & Warehousemen's Union v. Los Angeles Export Terminal, Inc. (1999) 69 Cal.App.4th 287, 293, 81 Cal.Rptr.2d 456.)
When the Brown Act and the Sunshine Ordinance are read in their entirety, we conclude that the lawmaking bodies clearly contemplated circumstances in which continuances and multiple sessions of meetings to consider a published agenda would be required, and thus they mandated that a single general public comment period be provided per agenda, in addition to public comment on each agenda item as it is taken up by the body. For example, section 54955.1 allows for any hearing by a legislative body of a local agency to be continued in the manner set forth in section 54955. Section 54955 provides that less than a quorum may adjourn from time *342 to time and a copy of the order or notice of adjournment shall be conspicuously posted on or near the door of the place where the meeting was held within 24 hours after the time of the adjournment. In addition, section 54954.2, subdivision (b)(3) mandates that action on continued agenda items must occur within five calendar days of the meeting at which the continuance is called. Similarly, San Francisco Administrative Code section 67.15, subdivision (e) states that continuances shall be announced at beginning of meeting, or soon thereafter, while section 67.7, subdivision (e)(2) prevents policy bodies from taking action on items not appearing on posted agenda if less than two-thirds of members are present.
The Library Commission fully adhered to the language of these enactments and the Legislature's intent embedded in the statutes by hearing public comment on every agenda item taken up at the May 16th meeting. When the commission then lost its quorum, and in accordance with sections 54955, 54955.1, and 54954.2, subdivision (b)(3) and San Francisco Administrative Code sections 67.15, subdivision (e), and 67.7, subdivision (e)(2), the meeting on the May 16th agenda was continued for a period not to exceed the prescribed five-day limit with notice of the continued hearing time and date posted on the door of the meeting place within 24 hours. Further, the commission provided public comment on every remaining agenda item at the session held on May 21st, including providing for general public comment. Thus, the Library Commission did all that was required under both the plain meaning of pertinent provisions of the Brown Act and the Sunshine Ordinance, and in accordance with the Legislature's purpose in facilitating and providing for public participation in legislative decisionmaking.
Therefore, we conclude that respondents were entitled to judgment as a matter of law.
IV.
DISPOSITION
The judgment is affirmed.
We concur: HAERLE, Acting P.J., and LAMBDEN, J.
NOTES
[1] Unless otherwise indicated, further statutory references are to the Government Code.
[2] For simplicity, we will refer to the type of additional public comment at issue in this appeal as "general public comment."
[3] Respondents' request for judicial notice of meeting minutes, which was taken under submission pursuant to this court's order dated October 1, 2003, is hereby granted.
[4] President Higueras reordered the taking of agenda items as follows: (2) was changed to (4), (3) to (2), (4) to (5), (5) to (3), followed by items (6) through (8) in the original posted order.
[5] Although appellant disputes whether the Library Commission's choice of the order with which to proceed with agenda items at the May 16th meeting was not really the "most pressing" in appellant's statement of disputed facts, we find that this "disputed" fact is not material to the cause of action for relief because neither the Brown Act nor the Sunshine Ordinance requires that agenda items be put in any specific order. (See § 54950 et seq.; see also S.F. Admin. Code, ch. 67.) Further, appellant's only other "disputed" fact relevant to this appeal is that "[t]he adjournment of defendant library commission on May 16, 2002 was not unexpected or due to any emergency or situation beyond the commission's control." Again, this point is not material because there is no requirement in either the Brown Act or the Sunshine Ordinance necessitating such conditions for adjournment and continuance. (See § 54950 et seq.; see also S.F. Admin. Code, ch. 67.)
[6] Although appellant contends that "the actions of defendants violated the law by refusing to allow public comment that is mandated by both ... the `Brown Act' ... and ... the `Sunshine Ordinance,'" appellant fails to provide us with any argument relating to how respondents have violated the Sunshine Ordinance. Nevertheless, because of the textual similarity of the two public meeting statutes, we will also address any potential Sunshine Ordinance violations.
| {
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} |
IN THE SUPREME COURT OF TEXAS
IN THE SUPREME COURT OF TEXAS
════════════
No. 05-0916
════════════
Pleasant Glade Assembly of
God, Reverend Lloyd A. McCutchen,
Rod Linzay, Holly Linzay,
Sandra Smith,
Becky Bickel, and Paul
Patterson, Petitioners,
v.
Laura Schubert,
Respondent
════════════════════════════════════════════════════
On Petition for Review from the
Court of Appeals for the Second District of
Texas
════════════════════════════════════════════════════
Argued April 12,
2007
Justice Green filed a dissenting
opinion.
Because the
fundamental principles of Texas common law do not conflict with the Free
Exercise Clause, courts can and should decide cases like this according to
neutral principles of tort law. See Employment Div., Dep’t of Human
Res. v. Smith, 494 U.S. 872, 876–90 (1990); Jones v. Wolf, 443 U.S.
595, 602–06 (1979). If a plaintiff’s case can be made without relying on
religious doctrine, the defendant must be required to respond in kind.[1]
Though not always a simple task for courts, “the promise of nonentanglement and
neutrality inherent in the neutral-principles approach more than compensates for
what will be occasional problems in application.” Jones, 443 U.S. at 604.
In contrast, today’s decision ignores the rule that “courts must not presume to
determine the place of a particular belief in a religion or the plausibility of
a religious claim,” Smith, 494 U.S. at 887, replacing it with a far more
dangerous practice: a judicial attempt to “balance against the importance of
general laws the significance of religious practice,” id. at 889 n.5.
“The First Amendment’s protection of religious liberty does not require this.”
Id. at 889. The trial court heeded these admonishments, but the Court
today does not. For these reasons, and for those expressed by the Chief Justice,
I respectfully dissent.
_________________________
PAUL W. GREEN
JUSTICE
OPINION
DELIVERED: June 27, 2008
[1]
This case is not about sanctioning voluntary religious practices. If Schubert
had consented to the church’s actions, the consent—under our familiar, neutral
principles of tort law—would have completely defeated her claims. See
Tex. Penal Code § 22.01(a)
(assault elements); Wal-Mart
Stores, Inc. v. Rodriguez, 92 S.W.3d 502, 506 (Tex. 2002) (false
imprisonment elements); Restatement
(Second) of Torts § 892A (1979) (effect of consent); cf. Tex.
Bank & Trust Co. v. Moore, 595 S.W.2d 502, 508 (Tex. 1980) (consent as a
matter of law). The jury, however, found that Schubert had not consented, and
Pleasant Glade does not challenge that conclusion. When faced with an otherwise
valid tort claim, Pleasant Glade’s religious motivation is not a defense.
See Smith, 494 U.S. at 876–90. | {
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} |
609 F.3d 512 (2010)
John D. ROMANO, Stanley J. Morrill, Richard V. Patrick, Plaintiffs-Appellants,
v.
Michael J. KAZACOS, Morgan Stanley & Co., Incorporated, Defendants-Appellees.
William D. Lawton, Gerald G. Miller, Jr., Plaintiffs-Appellants,
v.
David Isabella, Morgan Stanley & Co., Incorporated, Defendants-Appellees.
Docket Nos. 08-6187-cv, 08-6190-cv.
United States Court of Appeals, Second Circuit.
Argued: September 11, 2009.
Decided: June 29, 2010.
*514 Robert J. Pearl, Pearl Malarney Smith, P.C., Pittsford, NY, for Plaintiffs-Appellants William D. Lawton, Gerald G. Miller, Jr., John D. Romano, Stanley J. Morrill, and Richard V. Patrick.
Richard A. McGuirk, Nixon Peabody LLP, Rochester, NY, for Defendants-Appellees David Isabella, Michael J. Kazacos, and Morgan Stanley & Co. Incorporated.
*515 Before B.D. PARKER, WESLEY, Circuit Judges, RESTANI, Judge.[*]
BARRINGTON D. PARKER, Circuit Judge:
The Securities Litigation Uniform Standards Act of 1998 ("SLUSA") precludes plaintiffs from filing certain class actions in state courts that allege fraud in connection with the purchase or sale of nationally traded securities. 15 U.S.C. § 78bb(f)(1). Plaintiffs-appellants in these consolidated appeals, who are Xerox and Kodak retirees, filed class action complaints in New York State Supreme Court, which purported to raise state law claims. They alleged that employees of Morgan Stanley & Co., Inc. misrepresented that if appellants were to retire early, their investment savings would be sufficient to support them through retirement. If SLUSA applies, appellants are precluded from bringing the actions in state court and defendants are entitled to remove them to federal court, where they are subject to dismissal. 15 U.S.C. § 78bb(f)(1). Defendants-appellees removed the actions to the United States District Court for the Western District of New York (Larimer, J.), where appellants moved to remand the cases and defendants moved to dismiss them. After affording appellants an opportunity to amend their complaints to state federal claims, an opportunity appellants declined, the District Court denied the motions to remand and dismissed the actions. We find that SLUSA's preclusion provision applies and, therefore, we affirm.
I. BACKGROUND
A. Lawton and Miller
The following facts are taken from appellants' amended complaints unless otherwise noted. Appellants William D. Lawton and Gerald G. Miller, Jr. were both longtime employees of Xerox. Xerox employees who were eligible for retirement could elect to receive either lifetime monthly retirement benefits or a one-time lump sum retirement benefit. Appellee David Isabella was a Senior Vice-President of Morgan Stanley, a "retirement specialist," and a former Xerox employee. At various times between 1994 and 2001, Lawton and Miller consulted with Isabella about retirement. Lawton and Miller allege that during these meetings, Isabella provided retirement but not investment advice, performed various calculations, and advised them that they had sufficient savings to retire early and comfortably. Specifically, Lawton and Miller allege that Isabella advised them that if they could live on annual withdrawals of approximately ten percent of their retirement savings, they could retire early without exhausting their savings' principal, a concept appellants refer to as the "retirement income premise." Lawton and Miller further allege that they elected early retirement in reliance on Isabella's advice, leaving behind job security and substantial benefits. Both elected to take a lump sum retirement benefit, which they invested, about eighteen months after they first met with Isabella, in various securities through Morgan Stanley. Subsequently, the value of their portfolios dropped precipitously, resulting in substantially reduced monthly withdrawals and significant financial hardship.
Lawton and Miller filed (and subsequently amended) a putative class action against Isabella and Morgan Stanley. The amended complaint asserted various state *516 law causes of action, including negligence, breach of fiduciary duty, negligent misrepresentation, and breach of contract, as well as an unfair and deceptive trade practices claim under Section 349 of the New York General Business Law. N.Y. Gen. Bus. L. § 349 (McKinney 2010). The amended complaint defined the putative class as Xerox employees who received similar retirement advice from Isabella and alleged that the putative class's size was between 100 to 300 or more persons. Morgan Stanley and Isabella, relying on SLUSA, removed the case to federal court, and moved to dismiss. Lawton and Miller cross-moved to remand on the ground that they had not asserted federal claims.
B. Romano, Morrill, and Patrick
The companion case involving Kodak employees presents a roughly similar picture. Kodak employees who reach retirement are eligible to receive retirement benefits in the form of either a fixed monthly annuity or a one-time lump sum benefit. Employees who elect to retire early forfeit their employment, job benefits, and annual salary. Appellants John D. Romano, Stanley J. Morrill, and Richard V. Patrick (the "Romano appellants") are former longtime Kodak employees who, in connection with their retirement planning, consulted with Michael J. Kazacos, a Senior Vice President, financial consultant, and retirement specialist at Morgan Stanley.
According to the Romano appellants' amended complaint, Kazacos represented that he was an expert on Kodak's retirement benefits and, starting in 1990, hosted free seminars offering retirement advice. The Romano appellants allege that, during these seminars as well as during individual appointments, Kazacos advised them that they had sufficient assets to retire and encouraged them to retire early and take lump sum retirement benefits. The Romano appellants insist that, during these meetings, Kazacos gave no investment advice and did not mention or recommend specific investment vehicles or asset allocation strategies. The Romano appellants each elected to retire early and take a lump sum retirement benefit, which they placed with Morgan Stanley for investment. As was the case with Lawton and Miller, the Romano appellants' retirement accounts suffered "disastrous" declines in value, allegedly because Kazacos's retirement advice was inappropriate and "had a significant probability of failure." Because of this drop in value, the Romano appellants allege that their incomes and standards of living have fallen markedly. Also, a number of class members allege that they have been required to leave retirement and seek new employment.
The Romano appellants filed (and subsequently amended) a putative class action against Morgan Stanley and Kazacos in New York State Supreme Court alleging common law claims of negligence, breach of fiduciary duty, negligent misrepresentation, breach of contract, and violations of Section 349 of New York's General Business Law, and seeking as damages lost wages and lost employment benefits. The amended complaint defined the class as "persons who were Kodak employees and who received from the Defendants retirement advice, projections of income, and representations as to sustainable retirement income distributions from their retirement savings that were material to the Plaintiffs" and describes the class as including 100 persons to 1000 persons "or more." Morgan Stanley removed the action to federal court, where it was consolidated with the Lawton action, and moved to dismiss pursuant to SLUSA and Rule 12(b)(6). At the same time, appellants moved to remand for lack of federal jurisdiction.
*517 C. Proceedings Below
While considering defendants' motions to dismiss and appellants' motions to remand, the District Court concluded that it could "look beyond the face of the complaint" to determine whether SLUSA applies. Upon doing so, the District Court ruled that appellants' state law actions were "based on misrepresentations or omissions of material facts" since the "foundation of the retirement and financial planning services centered upon certain misrepresentations and certain concealments." The District Court also ruled that although "plaintiffs say [their] claims are about bad retirement advice and tax planning," and despite a lapse in time between defendants' alleged fraud and appellants' purchases of covered securities, defendants' alleged misconduct "coincided" with appellants' securities purchases under Merrill Lynch, Fenner & Smith Inc. v. Dabit, 547 U.S. 71, 85, 126 S.Ct. 1503, 164 L.Ed.2d 179 (2006). On this basis, the District Court denied the motions to remand, held that SLUSA preempted both actions, and dismissed them. These appeals followed. We review de novo both the District Court's denial of appellants' motions to remand and its grant of defendants' motions to dismiss for failure to state a claim under Rule 12(b)(6). Pac. Capital Bank, N.A. v. Connecticut, 542 F.3d 341, 351 (2d Cir.2008); Ortiz v. McBride, 380 F.3d 649, 653 (2d Cir.2004).
II. DISCUSSION
Congress enacted § 10(b) of the Securities Exchange Act of 1934 to make it unlawful for "any person ... [t]o use or employ, in connection with the purchase or sale of any security ... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe." 15 U.S.C. § 78j(b). Pursuant to § 10(b), the SEC promulgated Rule 10b-5, which makes it unlawful
for any person ... [t]o employ any device, scheme, or artifice to defraud, [t]o make any untrue statement of a material fact or to omit to state a material fact ... or [t]o engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
17 C.F.R. § 240.10b-5. Private rights of action are, of course, available to enforce Rule 10b-5. See Dabit, 547 U.S. at 79, 126 S.Ct. 1503. In 1995, in response to perceived abuses of the class-action vehicle in Rule 10b-5 litigation, Congress passed the Private Securities Litigation Reform Act (the "PSLRA"). 15 U.S.C. §§ 77z-1, 78u-4. The PSLRA established uniform standards for class actions alleging securities fraud, including more stringent pleading requirements for certain securities fraud class actions brought in federal courts. See Spielman v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 332 F.3d 116, 122-23 (2d Cir.2003).
After the PLSRA's enactment, plaintiffs began circumventing its restrictions by filing federal securities fraud class actions in state court, where they could assert many of the same causes of action while avoiding the PSLRA's requirements, which apply in federal court. Lander v. Hartford Life & Annuity Ins. Co., 251 F.3d 101, 107, 108 (2d Cir.2001); see also Spielman, 332 F.3d at 123. In an effort to curb these perceived, new abuses, Congress enacted SLUSA in 1998.[1] Under SLUSA, "covered *518 class actions" involving "covered securities" that are filed in state court, invoke state law, and allege securities fraud are removable to federal court, where they are to be dismissed. 15 U.S.C. § 78bb(f)(1). Specifically, SLUSA provides that
[n]o covered class action based upon the statutory or common law of any State or subdivision thereof may be maintained in any State or Federal court by any private party alleging (A) a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security; or (B) that the defendant used or employed any manipulative or deceptive device or contrivance in connection with the purchase or sale of a covered security.
15 U.S.C. § 78bb(f)(1). A "covered security" is a security "traded nationally and listed on a regulated national exchange." 15 U.S.C. § 78bb(f)(2). A "covered class action" is a single lawsuit in which damages are sought on behalf of more than fifty persons. 15 U.S.C. § 78bb(f)(2).
In order to remove successfully a securities fraud class action to federal court and compel its dismissal, a defendant must show that the state action (1) is a "covered" class action (2) based on state statutory or common law that (3) alleges that defendants made a "misrepresentation or omission of a material fact" or "used or employed any manipulative device or contrivance in connection with the purchase or sale" (4) of a covered security. 15 U.S.C. § 78bb(f). The parties agree that the underlying lawsuits involve covered class actions. However, appellants contend that their amended complaints do not allege misrepresentations or omissions of material fact in connection with the purchase or sale of covered securities, placing prongs (3) and (4) in dispute.
A. Master of the Complaint
Appellants initially contend that the District Court impermissibly looked beyond the face of the amended complaints, which make no reference to the federal securities laws, when it found that SLUSA applied. Appellants maintain that, under the "master of the complaint" rule, they are "free to avoid federal jurisdiction by pleading only state claims even where a federal claim is also available." Marcus v. AT&T Corp., 138 F.3d 46, 52 (2d Cir.1998). Since jurisdiction "may not be sustained on a theory that the plaintiff has not advanced," Merrell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 809 n. 6, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986), appellants contend that they are entitled to avoid SLUSA by not asserting federal claims in state proceedings.
Appellants are incorrect. Whether federal courts have federal question jurisdiction over an action is typically governed by the "well-pleaded complaint" rule, pursuant to which federal question jurisdiction exists only if "plaintiff's statement of his own cause of action shows that it is based" on federal law. Vaden v. Discover Bank, ___ U.S. ___, ___, 129 S.Ct. 1262, 1275, 173 L.Ed.2d 206 (2009); Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). Under the well-pleaded complaint rule, then, plaintiff is the master of his complaint and is free to avoid federal jurisdiction by "pleading only state claims even where a federal claim is also available." Marcus, 138 F.3d at 52. However, there exists a corollary to the well-pleaded complaint *519 rulethe "artful pleading" rule pursuant to which plaintiff cannot avoid removal by declining to plead "necessary federal questions." Rivet v. Regions Bank, 522 U.S. 470, 475, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998). If the artful pleading rule applies, courts look beyond the face of an "artfully pled" complaint to determine whether plaintiff has "cloth[ed] a federal law claim in state garb" by pleading state law claims that actually arise under federal law. Travelers Indem. Co. v. Sarkisian, 794 F.2d 754, 758 (2d Cir.1986). If such is the case, the reviewing court will "uphold removal even though no federal question appears on the face of the complaint." Rivet, 522 U.S. at 475, 118 S.Ct. 921.
The artful pleading rule applies when Congress has either (1) so completely preempted, or entirely substituted, a federal law cause of action for a state one that plaintiff cannot avoid removal by declining to plead "necessary federal questions," id., or (2) expressly provided for the removal of particular actions asserting state law claims in state court, see Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003) (explaining the Price-Anderson Act, 42 U.S.C. § 2014(hh), presents an exception to the well-pleaded complaint rule because it "expressly provides for removal of [tort actions arising out of nuclear accidents] brought in state court even when they assert only state-law claims"). Application of the first prong is a bit tricky because SLUSA is a statute of preclusion, rather than preemption.[2] But its effect is the same: where plaintiffs proceed as a class of fifty or more, state law securities claims are no longer available to them and federal law, which compels the dismissal of those claims, controls. Application of the second prong is straightforward. Since SLUSA expressly provides for the removal of covered class actions, it falls under the "removal" exception to the well-pleaded complaint rule. 15 U.S.C. § 78bb(f)(1). Consequently, we are free to look beyond the face of the amended complaints to determine whether they allege securities fraud in connection with the purchase or sale of covered securities. See Rowinski v. Salomon Smith Barney Inc., 398 F.3d 294, 298 (3d Cir.2005) ("No matter how an action is pleaded, if it is a covered class action involving a covered security, removal is proper.") (quotations and alterations omitted); see also Segal v. Fifth Third Bank, N.A., 581 F.3d 305, 310 (6th Cir. *520 2009) ("Courts may look tothey must look tothe substance of a complaint's allegations in applying SLUSA. Otherwise, SLUSA enforcement would reduce to a formalistic search through the pages of the complaint for magic words ... and nothing more.").
B. Covered Securities
The amended complaints do not acknowledge that appellants invested in covered securities.[3] However, in support of their notice of removal, defendants introduced account statements establishing that appellants deposited their retirement savings into Morgan Stanley IRA accounts, where covered securities were purchased on their behalf: mutual funds in the case of the Romano appellants and mutual funds and listed securities or securities authorized for listing in the case of the Lawton appellants.
When deciding a motion to dismiss pursuant to Rule 12(b)(6), courts focus primarily on the allegations in the complaint. See Chambers v. Time Warner, 282 F.3d 147, 152 (2002).[4] However, if subject matter jurisdiction is contested, courts are permitted to look to materials outside the pleadings. See Rule 12(b)(1); Land v. Dollar, 330 U.S. 731, 735 n. 4, 67 S.Ct. 1009, 91 L.Ed. 1209 (1947); see also St. Paul Fire & Marine Ins. Co. v. Universal Builders Supply, 409 F.3d 73, 80-81 (2d Cir.2005); Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000). Such materials can include documents appended to a notice of removal or a motion to remand that convey information essential to the court's jurisdictional analysis. See, e.g., Davenport v. Procter & Gamble Mfg. Co., 241 F.2d 511, 514 (2d Cir.1957) (looking to information contained in affidavits submitted in support of a motion to remand to determine removability); see also Oglesby v. RCA Corp., 752 F.2d 272, 278 (7th Cir. 1985) (holding it was proper for the district court to look to a motion to remand and removal petition to determine removability).
Under SLUSA, removal jurisdiction is "restricted to precluded actions[. Therefore,] a motion to remand claiming the action is not precluded must be seen as posing a jurisdictional issue." Kircher v. Putnam Funds Trust, 547 U.S. 633, 643-44, 126 S.Ct. 2145, 165 L.Ed.2d 92 (2006). Thus, where a district court's removal jurisdiction under SLUSA is challenged, it must first determine whether it has subject matter jurisdiction over plaintiffs' claims. See Dabit, 395 F.3d at 36 n. 8 (citing Spielman, 332 F.3d at 133) (Newman, *521 J., concurring). To answer that question, it must determine whether plaintiffs actually allege misrepresentations or omissions of material fact "in connection with the purchase or sale of a covered security." 15 U.S.C. § 78bb(f)(1), (2). Here, the Morgan Stanley account statements were before the District Court in the remand litigation and were used to determine that the euphemistic "investments" referred to throughout the amended complaints were, in fact, "covered securities." The District Court was entitled to look beyond the four corners of appellants' amended complaints because determining whether the cases were properly removed under SLUSA is essentially a jurisdictional question. See In re Lord Abbett Mut. Funds Fee Litig., 553 F.3d 248, 254 (3d Cir.2009).
C. Misrepresentations or Omissions of Material Fact
The amended complaints alleged at various places that defendants made misrepresentations and omissions of material fact. For example, defendants are alleged to have made "uniform misrepresentations" to appellants about whether they could afford to retire early without depleting their investment accounts, and to have "misrepresented or concealed material facts that they knew, or should have known, would show that their pre-retirement communications with Plaintiffs had been false, incorrect, or misleading." The amended complaints further alleged that defendants made omissions by "fail[ing] to disclose material information which, under the circumstances, should have been disclosed to the plaintiffs" and communicated "inaccurate, incomplete or erroneous information to Plaintiffs concerning the consequences of retirement and the feasibility of early retirement from secure positions of employment." As for materiality, appellants allege that the misrepresentations "would have been material to a reasonable person under these circumstances" and were "material to the Plaintiffs as reasonable persons, and their decisions to retire and to accept lump sum distributions of their pension funds."
D. In Connection with the Purchase or Sale of Covered Securities
We next consider the more difficult question of whether, under SLUSA, the amended complaints alleged misrepresentations and omissions in connection with the purchase or sale of covered securities. In Merrill Lynch, Fenner & Smith, Inc. v. Dabit, the Supreme Court considered this issue and looked to its prior interpretations of § 10(b) and Rule 10b-5 because the "in connection with" language is the same as in SLUSA. See 547 U.S. at 85-87, 126 S.Ct. 1503. In SEC v. Zandford, decided prior to Dabit, the Supreme Court concluded that § 10(b)'s "in connection with" requirement is met where a fraudulent scheme and a purchase or sale of securities "coincide." 535 U.S. 813, 822, 122 S.Ct. 1899, 153 L.Ed.2d 1 (2002); see also United States v. O'Hagan, 521 U.S. 642, 656, 117 S.Ct. 2199, 138 L.Ed.2d 724 (1997) (determining that the "in connection with" element was satisfied because "the securities transaction and the breach of duty [ ] coincide"). Much the same, the Dabit Court ruled that defendant's alleged fraud must "coincide" with plaintiff's purchase or sale of covered securities to meet SLUSA's "in connection with" requirement. 547 U.S. at 85, 126 S.Ct. 1503.
The "coincide" requirement is broad in scope, id. at 86, 126 S.Ct. 1503, and courts have used various terms to describe it.[5]*522 In our opinion in Dabit v. Merrill Lynch, Pierce, Fenner & Smith, Inc., which the Supreme Court overruled on other grounds, we considered the "coincide" requirement articulated in Zandford and concluded that SLUSA's "in connection with" standard is met where plaintiff's claims "turn on injuries caused by acting on misleading investment advice"that is, where plaintiff's claims "necessarily allege," "necessarily involve," or "rest on" the purchase or sale of securities. Dabit v. Merrill Lynch, Fenner & Smith, Inc., 395 F.3d 25, 48, 50 (2d Cir.2005) (citing Zandford, 535 U.S. at 820, 825, 122 S.Ct. 1899), overruled by 547 U.S. 71, 126 S.Ct. 1503, 164 L.Ed.2d 179. We have also found that the more exacting "induced" standard satisfies § 10(b)'s "in connection with" requirement. See, e.g., Press v. Chem. Invest. Servs. Corp., 166 F.3d 529, 537 (2d Cir.1999) ("The Second Circuit has broadly construed the phrase `in connection with,' ... mandat[ing] only that the act complained of somehow induced the purchaser to purchase the security at issue.") (emphasis added); United States v. Ostrander, 999 F.2d 27, 32-33 (2d Cir. 1993) ("Any payment to a portfolio manager intended to induce the purchase of a firm's securities on behalf of an investment company easily qualifies as a `fraudulent, deceptive or manipulative' act `in connection with' the investment company's acquisition of securities.") (emphasis added). As discussed below, we conclude that the misrepresentations and omissions in question induced securities transactions, and that the claims we are considering "necessarily involve" and "necessarily rest on" them. See Dabit v. 395 F.3d 25, 48, 50.
Appellants maintain that the connectivity required by Dabit is absent for a number of reasons. They note that they specifically aver that they do not bring claims for violation of state or federal securities laws and that their amended complaints contain no allegations relating to defendants' investment of appellants' retirement funds. Rather, appellants contend that they assert only "garden variety" state negligence and breach of fiduciary duty claims that "do not relate to the value of any given security" and exclusively concern matters such as financial and retirement planning and tax advice, all of which are divorceable from appellants' ultimate purchase of securities.
Appellants also point out that they seek "only employment damages" and do not "seek any damages which relate to the performance of any investments they may *523 have made" with defendants. Thus, appellants urge, their eventual purchases and sales of securities are "too far" removed from defendants' alleged negligence and misrepresentations to trigger SLUSA preemption.
Appellants' contentions are misplaced because the task of determining whether SLUSA applies is not limited simply to an examination of the relevant pleadings. If that were so, the statute could be avoided merely by consciously omitting references to securities or to the federal securities law. SLUSA requires our attention to both the pleadings and the realities underlying the claims. In any event, defendants, focusing on the pleadings, contend that the amended complaints are "replete" with allegations concerning securities investments. For example, defendants point out that Lawton asserts that he attended a seminar where, "[w]ithout mentioning or recommending any specific security or other asset allocation strategy, Isabella assured the Plaintiffs that the future returns on their retirement assets would be sufficient to sustain their retirement income for the rest of their lives." (emphasis added). Lawton also contends that he planned to "live off the assets [of his investment plan] and leave the pension proceeds for Defendants to invest without substantial risk of depletion by periodic withdrawals."
The Romano appellants' amended complaint, defendants point out, alleges that Kazacos marketed himself as advising "clients retiring from companies and primarily investing their lump sum portfolios" and assured appellants that "future returns on their retirement assets" would sustain them through their retirement. Defendants point out that the amended complaints allege that Romano "retired and placed approximately $170,000 ... with Defendants for investment" and that, after the "bear market from 2000-2003," "Defendants affirmatively assured ... Plaintiffs that their retirement income remained secure for their lifetimes. In so saying, Defendants misrepresented or concealed material facts they knew, or should have known...." Both complaints allege that defendants told them that they could
base his/her retirement and financial plan on, and justifiably rely upon, secure income each year in the amount of approximately 10% on the client's retirement plan accumulations and cash-out values at that time for the expected lifetime of the client, enabling the client to receive regular income sufficient to maintain the client's lifestyle and retirement and financial goals without significant risk of depletion of principal.
We agree with defendants that these allegations satisfy SLUSA's "in connection with" requirement because appellants, in essence, assert that defendants fraudulently induced them to invest in securities with the expectation of achieving future returns that were not realized. In reaching this conclusion, we bear in mind that we must give a broad construction to the "in connection with" requirement. As the Supreme Court has observed, "[t]he presumption that Congress envisioned a broad construction follows not only from ordinary principles of statutory construction but also from the particular concerns that culminated in SLUSA's enactment." Dabit, 547 U.S. at 86, 126 S.Ct. 1503. Though appellants contend that they seek only "employment damages," the amended complaints are inconsistent with this characterization. Lawton and Miller's amended complaint alleges that "plaintiffs suffered no measurable damage until the point in time when their expectations were actually not met, and they were then forced to either reduce their retirement income, or return to the workforce and seek employment, *524 or accept the total depletion of their retirement savings." (emphasis added). Romano's amended complaint includes similar language. Even though appellants attempt to recharacterize their investment losses as "employment damages" rather than portfolio losses, it is apparent to us that the injury complained of resulted from the diminution in value of appellants' investment accounts.
Finally, citing affidavits appended to their motions to remand, appellants emphasize that they did not invest in any covered securities for up to eighteen months after defendants advised them of the retirement income premise. We are not persuaded that the lapse of any particular amount of time necessarily defeats the "in connection with" requirement, though it does complicate the analysis.
Dabit, we note, does not pivot on temporal limitations. 547 U.S. at 86-87, 126 S.Ct. 1503. Rather, the Dabit Court focused on the broad scope of SLUSA's "in connection with" requirement to construct a flexible standard for determining whether SLUSA applies to a particular class action. Id. This flexible approach comports with Zandford, which requires that the phrase "in connection with" be construed "not technically and restrictively but flexibly to effectuate its remedial purposes." Zandford, 535 U.S. at 819, 122 S.Ct. 1899. Therefore, we decline to find that the passage of eighteen months between the alleged fraud and the purchase or sale of securities necessarily defeats SLUSA's "in connection with" requirement. We are persuaded that the time that lapsed is not determinative here because, as defendants argue, "this was a string of events that were all intertwined." See SEC v. Pirate Investor LLC, 580 F.3d 233, 245 (4th Cir.2009) ("The `in connection with' test is satisfied when the proscribed conduct and the sale are part of the same fraudulent scheme.") (alterations omitted) (citing Alley v. Miramon, 614 F.2d 1372, 1378 n. 11 (5th Cir.1980)).
And so, at the end of the day, this is a case where defendants' alleged misrepresentations induced appellants to retire early, receive lump sum benefits, and invest their retirement savings with defendants, where the savings were used to purchase covered securities. When the securities plummeted in value, appellants sued to be made whole. Because both the misconduct complained of, and the harm incurred, rests on and arises from securities transactions, SLUSA applies.
III. CONCLUSION
The judgments of the District Court are affirmed.
NOTES
[*] The Honorable Jane A. Restani, Chief Judge of the United States Court of International Trade, sitting by designation.
[1] SLUSA amends both the Securities Act of 1933 and the Securities Exchange Act of 1934. The 1933 amendments are codified at 15 U.S.C. § 78p, and the 1934 Act amendments, which are substantially similar, are codified at 15 U.S.C. § 78bb(f). For ease of reference, we cite the 1934 codification only.
[2] In Spielman v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 332 F.3d 116, 123 (2d Cir. 2003), we ruled that SLUSA completely preempts the field of certain types of securities class actions and therefore constitutes an exception to the well-pleaded complaint rule. In keeping with this rule, the District Court considered the substance of appellants' amended complaints and concluded that appellants alleged fraud in connection with the purchase or sale of covered securities. However, subsequent to our decision in Spielman, the Supreme Court ruled that SLUSA is a preclusion, and not a preemption, statute. Kircher v. Putnam Funds Trust, 547 U.S. 633, 637 n. 1, 126 S.Ct. 2145, 165 L.Ed.2d 92 (2006). SLUSA does not displace state law with federal law. Id. Rather, SLUSA renders nonactionable state claims brought by plaintiffs as part of a covered class action because such claims cannot be litigated in state court or in federal court. See id.
Furthermore, under SLUSA, plaintiffs can still bring state law claims alleging fraud in connection with transactions in covered securities in state court so long as they pursue their claims individually or as part of a class numbering fifty or less. See id. Therefore, rather than preempting state law claims, SLUSA precludes plaintiffs from bringing certain state law claims as part of a covered action. See id.; Proctor v. Vishay Intertech. Inc., 584 F.3d 1208, 1219-20 (9th Cir.2009) (finding that SLUSA, as a preclusion defense, does not fall under "the complete preemption exception to § 1331's well-pleaded complaint rule").
[3] SLUSA defines "covered securities" as securities that satisfy the standards set forth in the Securities Act of 1933. 15 U.S.C. § 78bb(f)(5)(E). Under § 18(b) of the Securities Act of 1933, a covered security is one that is "listed, or authorized for listing, on [the national exchanges]" or that is "issued by an investment company that is registered, or that has filed a registration statement, under the Investment Company Act of 1940." 15 U.S.C. § 77r(b).
[4] In Dabit v. Merrill Lynch, Pierce, Fenner & Smith, 395 F.3d 25, 29 (2d Cir.2005), overruled by 547 U.S. 71, 126 S.Ct. 1503, 164 L.Ed.2d 179 (2006), we stated that we are to "assume [the] truth [of the allegations raised in plaintiffs' complaints], as we must upon review of a dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6)." In Dabit, the parties did not dispute any factual issues essential to this Court's analysis under SLUSA and it was therefore unnecessary to look beyond the pleadings. See Dabit, 395 F.3d at 34. In contrast, here, appellants do not concede, on the record, that they purchased or sold covered securities. Therefore, it is necessary to look beyond the amended complaints to determine whether, under SLUSA, jurisdiction over appellants' suits lies with the federal courts. See Land v. Dollar, 330 U.S. 731, 735 n. 4, 67 S.Ct. 1009, 91 L.Ed. 1209 (1947).
[5] The Sixth Circuit has found the "coincide" requirement satisfied where plaintiff's allegations "depend" upon transactions in securities. See Segal v. Fifth Third Bank, N.A., 581 F.3d 305, 310 (6th Cir.2009). The Seventh Circuit has determined that the "coincide" requirement requires plaintiff to allege fraud "involving" covered securities, noting that a simple "but for" relationship between an alleged fraud and the purchase or sale of securities is insufficient. Gavin v. AT & T Corp., 464 F.3d 634, 639 (7th Cir.2006) (finding that under a "but for" standard, "SLUSA would apply to a class action by shareholders who suffered paper cuts when they opened the letters informing them of their rights [to tender their stock] under the merger"); see also Chem. Bank v. Arthur Andersen & Co., 726 F.2d 930, 942 (2d Cir. 1984) (finding "but for" causation does not satisfy § 10(b)'s "in connection with" requirement). The Eighth Circuit has concluded that "coincide" is less stringent than a standard requiring that defendant's non-disclosure "relate" to plaintiff's decision to purchase a security. Siepel v. Bank of Am., N.A., 526 F.3d 1122, 1127 (8th Cir.2008). The Ninth Circuit has probed whether defendant's alleged misrepresentations and omissions "are more than tangentially related" to plaintiff's purchase of covered securities. Madden v. Cowen & Co., 576 F.3d 957, 966 (9th Cir.2009). The Eleventh Circuit has found the "in connection with" requirement is satisfied where defendant's fraud "induced" plaintiff to transact in covered securities. Instituto De Prevision Militar v. Merrill Lynch, 546 F.3d 1340, 1349-50 (11th Cir.2008).
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394 N.E.2d 144 (1979)
James Robert NORRIS, Appellant,
v.
STATE of Indiana, Appellee.
No. 378S47.
Supreme Court of Indiana.
September 19, 1979.
Rehearing Denied November 15, 1979.
*146 Frank E. Spencer, Indianapolis, for appellant.
Theodore L. Sendak, Atty. Gen., Philip R. Blowers, Deputy Atty. Gen., Indianapolis, for appellee.
PIVARNIK, Justice.
Appellant James R. Norris was convicted by a jury in the Rush Circuit Court on March 23, 1976, of theft, Ind. Code (Burns 1975) § 35-17-5-3, and of being a habitual criminal, Ind. Code (Burns 1975) § 35-8-8-1. *147 He received an indeterminate sentence of one to ten years on the theft count and a life sentence on the habitual criminal count.
Appellant raises nine issues for our consideration, concerning:
(1) whether the trial court erred in overruling defendant's motion for examination by a psychiatrist of his own choosing;
(2) whether the trial court erred in overruling defendant's written motion to dismiss Count II of the information, the habitual criminal charge;
(3) whether the trial court erred in overruling defendant's oral motion to dismiss Count II;
(4) whether the trial court erred in permitting testimony concerning fingerprints taken from defendant during the trial;
(5) whether the trial court erred in permitting the State to amend Count II to conform to the evidence;
(6) whether the trial court erred in overruling defendant's motion for a directed verdict at the close of the State's evidence;
(7) whether the habitual criminal statute is unconstitutional;
(8) whether appellant was denied due process by the filing of the habitual criminal charge; and
(9) whether there is sufficient evidence to support the habitual criminal conviction. In addition, we shall raise, sua sponte, an issue concerning the sentencing of appellant.
I.
Appellant was examined by two psychiatrists appointed by the trial court. He thereafter requested permission to retain, at the State's expense, a psychiatrist of his own choosing. It appears from the record that appellant filed a plea of temporary insanity, which he withdrew after the trial court refused to allow him to retain, at State expense, a psychiatrist of his own choosing. He now argues that, if he had had the assistance of his own psychiatrist, he either would not have been forced to withdraw his temporary insanity plea, or might not have filed this plea. This argument is without merit.
Under Ind. Code (Burns 1975) § 35-5-2-2, psychiatrists are appointed by the court to examine the defendant and to testify at trial. Therefore, the trial court's refusal to allow appellant to retain his own expert did not, per se, force appellant to withdraw his temporary insanity defense. Furthermore, our courts have previously held that this statute does not require the court to appoint psychiatrists of a defendant's choosing. Murphy v. State, (1976) 265 Ind. 116, 123, 352 N.E.2d 479, 484; Bimbow v. State, (1974) 161 Ind. App. 338, 348, 315 N.E.2d 738, 744. Appellant has made no showing of any prejudice resulting from the court's denial of additional experts for the preparation of his defense. See Roberts v. State, (1978) Ind., 373 N.E.2d 1103. There is thus no error here.
II.
Appellant next argues that the trial court erred in overruling his written motion to dismiss Count II, the habitual criminal charge. This motion was filed prior to trial, and alleged that the addition of Count II to the original information was contrary to Ind. Code (Burns 1975) § 35-3.1-1-5(e). That subsection provides:
Notwithstanding any other provision in this section, an indictment or information shall not be amended in any respect which changes the theory or theories of the prosecution as originally stated, or changes the identity of the crime charged; nor may any indictment or information be amended after arraignment for the purpose of curing a failure to charge or state a crime or legal insufficiency of the factual allegations.
Appellant contends that adding the habitual criminal count to the information changed the theory of the prosecution or the identity of the crime charged.
The habitual criminal statute, however, does not establish a separate crime; it merely provides for the imposition of a greater sentence for the crime charged. Eldridge v. State, (1977) 266 Ind. 134, 361 *148 N.E.2d 155, cert. denied (1977) 434 U.S. 928, 98 S.Ct. 412, 54 L.Ed.2d 287. This Court has held, under facts very similar to those presented here, that amending the information to include a count under the habitual criminal statute is not error, so long as the defendant has adequate time to prepare his defense and his substantial rights are not otherwise harmed. Howard v. State, (1978) Ind., 377 N.E.2d 628, 629, cert. denied (1978) 439 U.S. 1049, 99 S.Ct. 727, 58 L.Ed.2d 708. See Highsaw v. State, (1978) Ind., 381 N.E.2d 470, 471. We find no error as to this issue.
III.
Appellant orally moved to dismiss Count II of the information immediately prior to the trial of this charge. In this motion he raised new alleged grounds for dismissing Count II. The trial court found that appellant had not complied with Ind.R. Crim.P. 3, which requires a written memorandum specifically describing the defects of which the movant complains. Appellant's earlier, written motion to dismiss properly contained this memorandum. However, the written motion and memorandum did not raise the issues he attempted to raise later in the oral motion. Under Rule 3, "[t]he party so filing such [written] motion shall be deemed to have waived his right thereafter to question the indictment or affidavit on any ground not so specified in the memorandum." The trial court therefore held that, by failing to include these grounds in his initial written motion to dismiss, he had waived this issue. Rule 3 was designed to prevent the repeated filing of motions to dismiss which raise new grounds each time. The trial court, therefore, was correct in overruling appellant's motion on this basis.
IV.
Appellant claims the trial court erred in admitting testimony from a police officer regarding fingerprints taken from appellant. Norris' fingerprints were taken during the trial, outside the presence of the jury and appellant's counsel. It is also apparent, however, that the objection to this evidence was withdrawn by the defendant. Record at 388. Therefore, appellant has waived this alleged error, unless he can show that failure to consider the issue would deny him fundamental due process. Blow v. State, (1978) Ind., 372 N.E.2d 1166, 1167; Bell v. State, (1977) Ind., 366 N.E.2d 1156, 1160. Taking appellant's prints without his counsel being present violated none of his constitutional rights. Frances v. State, (1974) 262 Ind. 353, 357, 316 N.E.2d 364, 366; Hollars v. State, (1972) 259 Ind. 229, 232, 286 N.E.2d 166, 168. See Schmerber v. California, (1966) 384 U.S. 757, 86 S.Ct. 1826, 16 L.Ed.2d 908. Cf. Adams v. State, (1973) 260 Ind. 663, 299 N.E.2d 834, cert. denied (1974) 415 U.S. 935, 94 S.Ct. 1452, 39 L.Ed.2d 494.
V.
Appellant next alleges the trial court erred in allowing the State to amend Count II to conform to the evidence. After the State presented its evidence relating to the habitual criminal charge, the prosecutor moved to amend the date of one of the prior convictions listed in the information to conform to the documentary evidence presented. We think the court properly allowed the amendment.
The statute relating to the amending of an information, Ind. Code (Burns 1975) § 35-3.1-1-5, states in part:
(a) An ... information . . may be amended on motion by the prosecutor at any time because of any immaterial defect, including:
.....
(9) Any other defect which does not prejudice the substantial rights of the defendant.
.....
The amendment in question did not relate to a material element of the status charged in Count II, and appellant has not shown how curing the discrepancy affected his defense or prejudiced his substantial rights. Buchanan v. State (1975) 263 Ind. 360, 332 N.E.2d 213; Hilligoss v. State, (1970) 253 *149 Ind. 443, 255 N.E.2d 101; Herman v. State, (1965) 247 Ind. 7, 210 N.E.2d 249. See Howard v. State, supra; Johnson v. State, (1972) 258 Ind. 383, 281 N.E.2d 473. The trial court did not err in permitting the amendment.
VI.
Appellant next claims the trial court erred in overruling his motion for a directed verdict at the close of the State's evidence. He argues that there was no showing: (1) that he was convicted twice of felonies within the common law meaning of "felony"; (2) of what constitutes a felony in Texas; and (3) that he was the individual convicted in Texas. Appellant's contentions are without merit.
It is settled that overruling a motion for a directed verdict is error only if there is a total lack of evidence on some essential issue or where the only inference which may be drawn from the evidence is in favor of the accused. Blow v. State, (1978) Ind., 372 N.E.2d 1166, 1167. See Mendez v. State, (1977) Ind., 367 N.E.2d 1081, 1084. The habitual criminal statute, Ind. Code (Burns 1975) § 35-8-8-1, speaks in terms of one who has been "twice convicted, sentenced and imprisoned in some penal institution, for felony... ." This Court has held that the word "felony" no longer has its common law meaning, and that "felony" must be interpreted in light of Ind. Code (Burns 1975) § 35-1-1-1, which states: "All crimes and public offenses which may be punished with imprisonment in the state prison shall be denominated felonies... ." See Kelley v. State, (1933) 204 Ind. 612, 624, 185 N.E. 453, 458. Therefore, the State was not required to show two prior felony convictions which fit within the common law meaning of "felony." See Kelley v. State, supra.
Appellant also claims there was no evidence as to what constituted a felony in Texas. However, page four of State's Exhibit eighteen, which a "Judgment" from the Criminal District Court of Harris County, Texas, recites in part:
"The Court ... found the Defendant guilty of the offense of unlawfully injuring property, a felony. .. .
It is therefore considered, ordered and adjudged by the Court that the Defendant is guilty of the offense of unlawfully injuring property, a felony... ."
Record at 381. We think, therefore, that there was more than sufficient evidence on this question to justify the trial court in overruling appellant's motion for a directed verdict.
Appellant also contends there was no showing that he was the individual who was convicted in Texas. Bearing in mind the applicable standard of review, we think appellant is mistaken. State's Exhibit eighteen is a set of documents from the Texas Department of Corrections. It includes, inter alia, pictures of appellant, a copy of a judgment finding "James R. Norris" guilty of unlawfully injuring property, a copy of the sentence appellant received, and a form showing appellant's fingerprints. Both of these last two documents also bear appellant's signature. In addition, State's Exhibit nineteen is a portion of the transcript made at appellant's bond reduction hearing, in which he acknowledged the conviction referred to in State's Exhibit eighteen. Appellant has failed to show that the only inference which may be drawn from the evidence is in his favor, or that there was a total lack of evidence on some essential element. Blow v. State, supra. The trial court properly overruled the motion for a directed verdict.
VII.
Appellant next challenges the constitutionality of the habitual criminal statute. The statute under which appellant was sentenced provided for a mandatory life sentence. Appellant claims that, as applied, this mandatory life sentence constitutes cruel and unusual punishment, in contravention of the Eighth Amendment to the United States Constitution. He also argues that the sentence is a penalty which is disproportionate to the nature of the offense, and therefore in violation of article *150 one, section sixteen of the Indiana Constitution.
This Court recently settled the Eighth Amendment issue in McMahan v. State, (1978) Ind., 382 N.E.2d 154. Finding that the habitual criminal statute does not impose cruel and unusual punishment, we stated:
"We do not agree with appellant's position that a life sentence is excessive when imposed after a defendant's third felony conviction, regardless of whether or not such felonies involved violence."
Id. 382 N.E.2d at 157. In Hawkins v. State, (1978) Ind., 378 N.E.2d 819, we noted the general Eighth Amendment standards:
"The Eighth Amendment to the United States Constitution bans punishments which are either `barbaric' or excessive in relation to the crime committed. Coker v. Georgia, (1977) 433 U.S. 584, 97 S.Ct. 2861, 53 L.Ed.2d 982. A punishment is excessive and unconstitutional if it (1) makes no measurable contribution to acceptable goals of punishment such that it constitutes nothing more than purposeless and needless imposition of pain and suffering; or (2) is grossly out of proportion to the severity of the crime. Gregg v. Georgia, (1976) 428 U.S. 153, 96 S.Ct. 2909, 49 L.Ed.2d 859."
Id. at 820-21 (emphasis added). Thus, under Gregg v. Georgia, supra, and Hawkins v. State, supra, one of the applicable Eighth Amendment tests demands proportionality between the punishment and the crime. Article one, section sixteen of the Indiana Constitution also requires penalties which are proportional to the nature of the offense. We think the standards to be applied under this provision should be the same as the second test under Eighth Amendment analysis. We can see no reason for creating a greater or lesser standard under article one, section sixteen when its language is so similar to the relevant Eighth Amendment standard.
With respect to the habitual criminal statute, this Court has recognized that its purpose is to more severely penalize those persons whom prior sanction have failed to deter from committing felonies. Bernard v. State, (1967) 248 Ind. 688, 694, 230 N.E.2d 536, 540. "The punishment is harsh because the offender is a habitual criminal." Id. While Norris' sentence was imposed on only the theft conviction, it was imposed because he previously had been twice convicted of felonies. Thus, given the reasoning behind the imposition of the life sentence, we cannot say that this sentence is grossly out of proportion to the severity of the crime. McMahan, supra; Hawkins, supra. We hold that the sentence imposed on appellant did not run afoul of either the Eighth Amendment to the United States Constitution or article one, section sixteen of the Indiana Constitution.
VIII.
Appellant also argues that the filing of the habitual criminal charge in this case was a vindictive move by the prosecutor and therefore in contravention of the Fourteenth Amendment's guarantee of due process of law. Appellant claims the prosecutor filed this charge only after appellant insisted on pleading not guilty to the theft charge, in an attempt to coerce appellant into foregoing his right to a trial. This Court disposed of a similar argument in McMahan v. State, (1978) Ind., 382 N.E.2d 154. In the present case, just as in McMahan, the habitual criminal count charged appellant with an offense for which he was properly subject to prosecution before the failure of the plea negotiations. In addition, given that the habitual criminal charge was based on appellant's prior convictions, he surely was aware that this charge might be brought. Record at 42A-42-I. "Thus, the prosecutor's conduct was simply a justifiable exploitation of legitimate bargaining leverage." Id. at 156. See Brodenkircher v. Hayes, (1978) 434 U.S. 357, 98 S.Ct. 663, 54 L.Ed.2d 604. The filing of the habitual criminal charge did not deny appellant due process.
IX.
Appellant next argues there was insufficient evidence to convict him of *151 being a habitual criminal. In examining whether there was sufficient evidence to support a conviction, we will not weigh the evidence. We will look only to that evidence which supports the verdict and the logical inferences to be drawn therefrom. If there is substantial evidence to establish each essential element, the verdict will not be disturbed. Brewer v. State, (1979) Ind., 390 N.E.2d 648, 653; Taggart v. State, (1979) Ind., 390 N.E.2d 657, 659. Having this standard in mind, it is apparent that appellant's contention is without merit.
As noted above, State's Exhibit eighteen contained a great deal of evidence relating to appellant's conviction in Harris County, Texas for unlawfully injury property. State's Exhibit twenty is a commitment form, from Fayette County, Indiana, committing appellant to one year imprisonment for theft. State's Exhibit ten is a document from the Fayette Circuit Court reflecting the arraignment, guilty plea, and sentencing of appellant on this theft charge. In addition, State's Exhibit nineteen is a copy of a portion of the transcript of appellant's bond reduction hearing. This exhibit was admitted without objection from appellant's counsel, and reflects appellant's acknowledgement of both of the convictions referred to above. Clearly there was sufficient evidence from which the jury could have found beyond a reasonable doubt that appellant had been twice convicted, sentenced and imprisoned for felonies. We find no error with respect to this issue.
We note, sua sponte, that appellant was improperly sentenced. He received a one to ten year sentence for the theft conviction and a life sentence under the habitual criminal statute. However, under this statute, "`[t]he life sentence is ... properly imposed as an alternative sentence for the instant crime [theft]. Therefore, appellant should have been sentenced to life imprisonment for the crime of [theft], he having been found to be a habitual criminal.'" Jones v. State, (1977) Ind., 369 N.E.2d 418, 421-22, quoting Eldridge v. State, (1977) 266 Ind. 134, 139-40, 361 N.E.2d 155, 159, cert. denied (1977) 434 U.S. 928, 98 S.Ct. 412, 54 L.Ed.2d 287. Therefore, this cause is remanded to the trial court with instructions to vacate the one to ten year sentence imposed on the theft conviction and correct the sentence accordingly. The judgment of the trial court is affirmed in all other respects.
All Justices concur.
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________
No. 17-1911
________________
UNITED STATES OF AMERICA;
v.
ANDREW CARR,
Appellant
________________
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Criminal Action No. 2-15-cr-00455-001)
District Judge: Honorable Eduardo C. Robreno
________________
Submitted Under Third Circuit L.A.R. 34.1(a)
September 24, 2019
Before: McKEE, AMBRO, and ROTH, Circuit Judges
(Opinion filed: January 30, 2020)
________________
OPINION*
________________
AMBRO, Circuit Judge
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
Andy Carr is a skilled martial artist and a member of the Warlocks motorcycle
gang. He is also a methamphetamine addict who relapsed after decades of sobriety. He
eventually fell in with Philadelphia-area dealer Andre Trombetta. Months later the
Government charged him with conspiracy to distribute methamphetamine, in violation of
21 U.S.C. § 846, and with two counts of possession with intent to distribute, in violation
of 21 U.S.C. § 841.
At trial, the Government presented testimony from several witnesses. The gist of
the Government’s case was this: As a martial artist who often wore his Warlocks jacket,
Carr cut an imposing figure, so Trombetta enlisted him as his “enforcer.” Carr would
accompany Trombetta on business, and, in exchange for collecting debts from
Trombetta’s customers, Carr received free meth. (There was also testimony that
Trombetta gave Carr a puppy.) Carr testified in his own defense and denied the charges.
Even though Trombetta openly referred to him as the “muscle” on their almost-daily
outings together, Carr maintained that it was all a joke; he was lousy at the job and no
one took him seriously.
The jury returned a mixed verdict. It convicted Carr of conspiracy, acquitted him
on one of the counts for possession with intent to distribute, and hung on the other count
(which the Government then dismissed). At sentencing, the District Court rejected a
downward adjustment for Carr’s minor role in the conspiracy, and it added an
“obstruction-of-justice” enhancement based on what it found to be Carr’s perjury on the
witness stand.
2
On appeal, Carr challenges (1) the sufficiency of the evidence against him, (2) the
District Court’s “mitigating role” sentencing ruling, and (3) the “obstruction-of-justice”
enhancement.
1. Sufficiency of Evidence. To prove a conspiracy under 21 U.S.C. § 846, the
Government must show the conspirators had a shared purpose and agreed to work toward
a common goal. United States v. Iglesias, 535 F.3d 150, 156 (3d Cir. 2008). Here, Carr
concedes that a conspiracy existed around Trombetta. He even concedes he bought meth
from Trombetta, accompanied the kingpin on business, and accepted free meth from him
whenever offered. Carr simply insists the evidence did not show he was part of
Trombetta’s conspiracy.
There was ample evidence from which the jury could have concluded otherwise.
To begin, Trombetta testified that he hired Carr as his debt-collector “because he was a
scary character.” At one time Trombetta said of Carr, “Andy’s going to bust some heads
if they ain’t got the money . . . . Andy’s going to do what he was being paid to do.”
What is more, he testified that Carr agreed to the job of enforcer. No surprise, then, that
Trombetta was open with others about Carr’s role, including telling a customer that Carr
was “collecting his debts now and he was doing a good job at it.” As Trombetta told the
jury, “All the people that I had for bad debts, I would give them to Andy to go see.”
With customer Pat Sordi, Carr resorted to violent threats. After Sordi brandished a
gun during a meeting, Carr told him that “if you ever pull a gun on me, pull a gun out
again around me, man, I’ll break your face.” He also left Sordi a hostile voicemail that
demonstrates his understanding of the conspiracy’s common purpose and goal.
3
Aside from debt collection, there was testimony that Carr accompanied Trombetta
to resupply meth from Trombetta’s wholesaler Romeo D’Aurizio. And Carr was caught
on a wiretap suggesting he was selling meth himself. (To repeat, however, he was not
convicted of possession with intent to distribute.)
Carr’s overall defense is that Trombetta’s statements should be taken seriously,
not literally. Carr acknowledges hearing Trombetta tell Sordi he was Trombetta’s
“muscle,” but claims he “almost laughed” at the notion. In other words, the talk of Carr
being an enforcer was just bluster; no one actually bought it. He was a lousy collector
and never earned his promised 20% commission on debts he collected. In short, he was
simply an amusing diversion for a dealer looking for new ways to collect from his
customers.
But Carr’s participation in the conspiracy hinges on his agreement to join, not on
his skill as a debt-collector. Even a bumbling “enforcer” can join a criminal conspiracy.
And while the jury didn’t have to conclude that Carr joined Trombetta’s conspiracy, there
was ample basis for it to do so. We affirm the District Court on this issue.
2. “Mitigating Role” Adjustment. To determine whether to apply a “mitigating
role” sentencing reduction, a court considers several non-exhaustive factors, including the
defendant’s understanding of the scope of the crime, his participation in planning it, his
decision-making authority, and the benefits he derived from the crime. See U.S.S.C.
§ 3B1.2 cmt. n.3(C). Even a defendant who plays an “indispensable role” could see a
reduced sentence if he “is substantially less culpable than the average participant in the
criminal activity.” Id.
4
Here, the District Court denied a “mitigating role” adjustment based on the
testimony of Trombetta and Sordi that Carr “acted as a collector and enforcer for the drug
conspiracy.” Although the Court did not address each non-exhaustive factor separately,
its review easily passed muster. “At bottom, the sentencing judge need only ‘set forth
enough to satisfy the appellate court that he has considered the parties’ arguments and has
a reasoned basis for exercising his own legal decisionmaking authority.’” Chavez-Meza
v. United States, 138 S. Ct. 1959, 1964 (2018) (quoting Rita v. United States, 551 U.S.
338, 356 (2007)). That was done here.
Finally, the Court did not commit clear error in its analysis of the facts. To be
sure, Carr did not have planning authority and arguably was a lousy enforcer. But he was
an imposing presence, constantly at Trombetta’s side for a period of months, and was
rewarded with free meth. It is hardly clear error to find that his role was not minor.
3. Obstruction-of-Justice Enhancement. U.S.S.G. § 3C1.1 provides for a
sentencing enhancement if the defendant obstructs “the administration of justice.” This
rule specifically applies to perjury by the defendant on the witness stand. See U.S.S.G.
§ 3C1.1 cmt. n.4(B). Of course, “not every accused who testifies at trial and is convicted
will incur an enhanced sentence under § 3C1.1 for committing perjury.” United States v.
Dunnigan, 507 U.S. 87, 95 (1993). But “a defendant’s right to testify does not include a
right to commit perjury.” Id. at 96; see also United States v. Fiorelli, 133 F.3d 218, 221
(3d Cir. 1998) (noting that a “denial of guilt under oath” may “constitute[] perjury” for
purposes of the enhancement).
5
A defendant commits perjury for purposes of the enhancement “if [he] gives false
testimony concerning a material matter with the willful intent to provide false testimony,
rather than as a result of confusion, mistake, or faulty memory.” Dunnigan, 507 U.S. at
94. To apply the enhancement, then, a sentencing court must “make independent
findings necessary to establish a willful impediment to or obstruction of justice.” Id. at
95. “[I]t is preferable for a district court to address each element of the alleged perjury in
a separate and clear finding.” Id. But remand is not appropriate just because the court
“failed to engage in a ritualistic exercise and state the obvious for the record.” Fiorelli,
133 F.3d at 121.
The District Court “credit[ed] the testimony of Trombetta and Sordi regarding [i]
[Carr’s] role as a collector, [ii] the threats [Carr] made to Sordi, and [iii] [Carr’s]
distributions of drugs.” Carr specifically denied each point on the witness stand, but the
Court found that his testimony was false and concerned a material matter. As such, Carr
had obstructed justice by committing perjury.
This was not clear error. Trombetta and Sordi both testified that Carr was
Trombetta’s collector and enforcer, which Carr flatly denied. Trombetta and Sordi also
testified that Carr threatened Sordi, which Carr also denied. And Trombetta testified that
Carr sold his own meth. Carr denied this as well, and even though he was not convicted
of it at trial, the District Court did not clearly err in finding his testimony was false.
* * * * *
In this context, we affirm.
6
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595 F.2d 1228
Diversified Farms, Inc.v.Murphy
No. 77-1301
United States Court of Appeals, Ninth Circuit
3/16/79
1
D.Ariz.
AFFIRMED
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732 F.2d 146
Napierv.Schwieker
83-5477
United States Court of Appeals,Third Circuit.
3/2/84
E.D.Pa.,
Stern, J.
AFFIRMED
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Case: 15-30510 Document: 00513319627 Page: 1 Date Filed: 12/23/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 15-30510
Summary Calendar
United States Court of Appeals
Fifth Circuit
FILED
December 23, 2015
UNITED STATES OF AMERICA,
Lyle W. Cayce
Clerk
Plaintiff-Appellee
v.
MELVIN B. BOUTTE, also known as Mark Bradley,
Defendant-Appellant
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 2:08-CR-70-1
Before KING, CLEMENT, and OWEN, Circuit Judges.
PER CURIAM: *
Melvin B. Boutte, pro se federal prisoner # 13611-035, appeals the
district court’s denial of his motion for a writ of error coram nobis pursuant to
28 U.S.C. § 1651(a). Boutte is serving a 120-month sentence of imprisonment
imposed following his 2009 guilty plea to possession with intent to distribute
cocaine base and carrying a firearm during and in relation to a drug trafficking
crime. According to Boutte, his conduct did not meet the 18 U.S.C. § 924(c)(1)
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 15-30510 Document: 00513319627 Page: 2 Date Filed: 12/23/2015
No. 15-30510
definition of carrying a firearm during and in relation to a drug trafficking
offense because the weapon was not used in furtherance of the drug offense.
Therefore, he contends, the district court violated his constitutional right to
due process by accepting his plea to the charge.
Although the district court did not address its jurisdiction, this court
must consider the basis of the district court’s jurisdiction sua sponte if
necessary. See EEOC v. Agro Distribution, LLC, 555 F.3d 462, 467 (5th Cir.
2009). Boutte was not entitled to relief through a motion for a writ of error
coram nobis because he is still in custody. See United States v. Esogbue, 357
F.3d 532, 534 (5th Cir. 2004). Because he is challenging his federal sentence,
the district court should have construed his motion as a 28 U.S.C. § 2255
motion. See Tolliver v. Dobre, 211 F.3d 876, 877 (5th Cir. 2000). The district
court, however, lacked jurisdiction to do so because Boutte previously filed a
§ 2255 motion, and this court did not authorize the filing of a successive § 2255
motion. See Hooker v. Sivley, 187 F.3d 680, 681-82 (5th Cir. 1999); United
States v. Harris, 388 F. App’x 385, 386 (5th Cir. 2010); 28 U.S.C.
§ 2244(b)(3)(A). Boutte’s appeal is thus “from the denial of a meaningless,
unauthorized motion.” See United States v. Early, 27 F.3d 140, 142 (5th Cir.
1994). Therefore, the district court’s judgment is AFFIRMED on the ground
that the district court lacked jurisdiction over the motion. See Sojourner T v.
Edwards, 974 F.2d 27, 30 (5th Cir. 1992).
2
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54 Mich. App. 398 (1974)
221 N.W.2d 237
DUNLAP
v.
CITY OF SOUTHFIELD
Docket No. 17649.
Michigan Court of Appeals.
Decided July 23, 1974.
*399 Paul J. Lay and Riseman, Lemke & Piotroski, for plaintiffs.
Sigmund A. Beras, for defendant City of Southfield.
Hartman, Beier, Howlett, McConnell & Googasian, for defendant Rembrandt Enterprises, Incorporated.
Dykema, Gossett, Spencer, Goodnow & Trigg (by Laurence D. Connor), for defendant Realty Ventures, Incorporated.
Before: J.H. GILLIS, P.J., and HOLBROOK and DENEWETH,[*] JJ.
DENEWETH, J.
The plaintiffs are Southfield property owners representing a class of residents living in the area of a condominium development proposed by the defendants Realty Ventures and Rembrandt Enterprises (hereinafter referred to as the developers). Plaintiffs' complaint for an order of superintending control against the City of Southfield consisted of five counts. The defendant developers moved for accelerated and summary judgment. The trial court granted the motion, and the plaintiffs appeal.
The asserted grounds on the combined motion for accelerated and summary judgment were that the issues raised in the complaint were barred by *400 a prior judgment, a proper ground for accelerated judgment; and that the complaint failed to state a claim upon which relief could be granted, or to present a genuine issue of material fact, proper grounds for summary judgment. GCR 1963, 116.1(5); 117.2(1), (3). The trial court granted the motion for accelerated judgment, specifying in its order that the plaintiffs' claims were barred by a prior judgment of the court in Harvey Smith v City of Southfield, Oakland County Circuit No. 16937 (1966).
We affirm the decision of the trial court to dismiss the action, but we must broaden the grounds for dismissal. While some of the plaintiffs' claims were barred by the Smith decision, the remaining allegations failed to state a claim upon which relief could be granted. This latter ground was properly pled by the defendant developers, and along with the prior judgment, effectively places the plaintiffs out of court.
The plaintiffs' complaint asked for entry of an order of superintending control and presented five counts which in substance alleged the following:
I. The development of the defendants' property according to their proposed site plan will cause harm to the plaintiffs from traffic congestion, invasion of privacy, and overall detrimental effect; and since the plaintiffs have learned that the City Council will approve the site plan due to threats against council members by the defendant developers, such approval will be arbitrary, capricious, and in abuse of the city's powers.
II. The consent judgment in Smith, supra, which allowed the previous owner of the property now owned by the defendants to build high-rise structures, was void on its face due to lack of jurisdiction over the subject matter and further was a denial of due process.
III. The defendant developers, since they are not qualified to do business in Michigan, are not "persons" *401 within the meaning of the Southfield Zoning Ordinance, and thus have no standing to develop the project or to file a petition for site plan review.
IV. The proposed site plan contains several violations of the Southfield Zoning Ordinance.
V. The consent judgment in Smith, supra, and its allowance of the previous owner to build high-rise structures, does not enure to the benefit of the defendants because of the laches of the previous owner by failing to seasonably develop the property, because it does not run with the land, and because of a subsequent amendment in the zoning ordinance.
Counts II and V represent a collateral attack on the judgment entered in the Smith decision, supra. The general rule summarized in 6 Callaghan's Michigan Pleading & Practice (2d ed), § 42.94, pp 527, 528, supported with citation to Michigan cases, is controlling of the claims asserted in counts II and V:
"It is a well settled rule that a judgment of a court of competent jurisdiction cannot be `collaterally' attacked. If the court had jurisdiction both of the subject matter adjudicated and of those against whom the judgment runs, no one can question its force and effect as terminating the particular litigation and doing so, with finality, as therein stated * * *. It is immaterial that the adjudication was unjust, * * * mistaken, or excessive." (Footnotes omitted.)
This principle applies with as much force to all judgments, irrespective of whether they be consent judgments or those entered after any amount of contentious litigation. Tudryck v Mutch (Appeal of Smyl), 320 Mich 99; 30 NW2d 518 (1948).
The plaintiffs' further claim that the court had no jurisdiction of the subject matter it purportedly litigated by the prior judgment in Smith is totally without merit. This claim is based upon MCLA *402 125.590; MSA 5.2940. The cited statutory provision applies only to appeal of a decision of a municipal authority with regard to a nonconforming use. The defendant developers have properly pointed out that this provision had no application in Smith, which did not invoke any question of a nonconforming use or structure but rather was a direct attack on the constitutionality of ordinance provisions as applied to the subject property.
Any different decision in this case would be extremely unfair in view of all of the circumstances herein existing. Not only has the judgment stood uncontested for seven years, but the surrounding residents of the community, upon whose behalf this action was supposedly brought, have enjoyed the benefits of a seven-acre park obtained from the defendants' predecessors pursuant to the terms of the consent judgment.
It is this Court's opinion that the trial judge's action in granting defendants' motion for an accelerated judgment on the ground that plaintiffs' claims were barred by prior judgment was proper and is affirmed.
Plaintiffs' counts I, III, and IV completely fail to present any claim upon which relief can be granted. All of said counts seek relief in the nature of superintending control. Under GCR 1963, 711.1, an order of superintending control expressly applies to supervisory control over "inferior tribunals". The statutory grant of superintending control to circuit courts gives power over "all inferior courts and tribunals". MCLA 600.615; MSA 27A.615. The inferior tribunals referred to include "administrative agencies which act in judicial or quasi-judicial proceedings". Parshay v Marquette Prison Warden, 30 Mich App 556, 559; 186 NW2d 859, 860 (1971).
Without deciding that a complaint for superintending *403 control was proper in this case, it is obvious that the relief sought by the plaintiffs was the issuance of an injunction prohibiting the city from taking action regarding the proposed site plan. A court will not grant superintending control where no action is taken and there is accordingly no record to review. See Drouillard v City of Roseville, 9 Mich App 239, 243; 156 NW2d 628, 631 (1967). Furthermore, it is well settled that an injunction will not lie upon the mere apprehension of future injury or where the threatened injury is speculative or conjectural. Since the City Council had taken no action on the site plan, any threatened injury or harm due to traffic or invasion of privacy, etc., at that point in time was sheer speculation and conjecture. No decision having been made, the complaint that the site plan violated city zoning ordinances was equally premature. It is not the Court's business to enjoin a city from considering the merits of a proposed site plan, a function squarely within their realm. For these reasons, the counts in question failed to state a claim upon which the injunctive relief pursuant to superintending control could be granted.
The other issues raised on this appeal are without merit. It is also to be noted that the consent judgment by its express terms specifically provides that any future high-rise development must comply with all the applicable provisions of all Southfield ordinances. If in fact upon proper hearing, it becomes apparent that the proposed site plan is in conflict with applicable city ordinances, the City Council is free to deny the proposed site plan or to force the developers to modify it to comply with any such ordinances relating to high-rise development. The Smith judgment, rather than restricting this possibility, mandates ordinance compliance.
Affirmed. No costs, a public question.
All concurred.
NOTES
[*] Circuit judge, sitting on the Court of Appeals by assignment.
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854 F.2d 147
Lawrence MOON, Plaintiff-Appellant,v.Larry PHILLIPS, et al., Defendants-Appellees.
No. 87-1514.
United States Court of Appeals,Seventh Circuit.
Argued Nov. 30, 1987.Decided March 17, 1988.Rehearing and Rehearing In Banc DeniedMay 4, 1988.
Robert C. Angermeier, Angermeier & Rogers, Milwaukee, Wis., for plaintiff-appellant.
Mel S. Johnson, Asst. U.S. Atty., Patricia A. Gorence, U.S. Atty., Milwaukee, Wis., for defendants-appellees.
Before CUMMINGS, WOOD, Jr., and MANION, Circuit Judges.
HARLINGTON WOOD, Jr., Circuit Judge.
1
This appeal involves a complaint that a former federal employee filed against his supervisors. The district court dismissed the complaint because it failed to state a claim upon which relief could be granted. We affirm.
I. FACTUAL BACKGROUND
2
In November, 1985, plaintiff Lawrence Moon, a former employee of the Internal Revenue Service (IRS) in Milwaukee, Wisconsin, filed a complaint against five of his former IRS supervisors, claiming that they had harassed him and caused him to resign. Moon charged that the defendants violated his first amendment right to freedom of speech, and his fifth amendment right to equal protection of his property interest in his federal employment. Additional counts alleged the intentional infliction of emotional distress, defamation of plaintiff's professional reputation, malfeasance in office by the supervisors in not curtailing the improper actions against him, and a final charge that his supervisors failed to fairly evaluate plaintiff's work performance. Plaintiff alleges that his supervisors' actions caused him to resign his IRS position. Plaintiff seeks actual damages in the amount of $850,000, punitive damages in the amount of $900,000, and attorney's fees and costs.
3
The difficulty between plaintiff and his supervisors allegedly resulted from Moon's refusal to prepare a false report concerning an incident in which an unnamed citizen who had lawfully entered the Federal Building in Milwaukee, Wisconsin was harassed and threatened. Moon claims that the alleged harassment occurred when IRS agents attempted to photograph the citizen. Plaintiff alleges that if he had prepared the report of that incident as requested by his supervisors, it would have subjected him to criminal prosecution for submitting a false statement, in violation of 18 U.S.C. Sec. 1001 (1982). As a result of his refusal to report the incident in the manner his supervisors requested, Moon alleges that he was denied a promotion, his work was more closely monitored, and every minor deficiency noted. Plaintiff alleges that he was isolated from working with his colleagues, and that the supervisor prepared a false or misleading annual performance evaluation showing that Moon was deficient in certain areas of his work. Consequently, plaintiff resigned.
4
On September 10, 1986, the district judge, selecting one of the government's theories for dismissal, allowed the defendants' motion to dismiss for failure to state a cause of action, finding that the constitutional allegations had no legal basis. That finding then left Moon's other allegations without federal jurisdictional foundations. Moon's remedy, the district court suggested, was to pursue his grievances in the administrative forum that Congress provided for federal employees to contest adverse personnel actions. Relying on Bush v. Lucas, 462 U.S. 367, 103 S.Ct. 2404, 76 L.Ed.2d 648 (1983) and Gremillion v. Chivatero, 749 F.2d 276 (5th Cir.1985), the district court held that a judicial remedy was foreclosed.
5
Thereafter, on September 10, 1986, plaintiff filed a short pro forma motion for reconsideration, to which was attached an amended complaint. While that motion was under consideration, Moon filed a notice of appeal. This court remanded the appeal to allow the district court the opportunity to consider Moon's motion for reconsideration. Moon had filed the motion for reconsideration more than ten days after the judgment of dismissal had been entered and the motion was therefore untimely. The district court nevertheless treated it as a timely motion under Fed.R.Civ.P. 60. Plaintiff's motion was devoid of explanation, and lacked any citation of authority. The district court considered the motion no more than an unsupported request for reconsideration to which an amended complaint was attached. The amended complaint was merely a restatement and elaboration of Moon's original allegations. The district court therefore denied the motion for reconsideration. This second appeal followed.
II. ANALYSIS
6
The jurisdiction of the federal court is not clearly set forth in the original complaint, except that the first two counts charge constitutional violations, and one of the appended counts is allegedly based on a particular statute of the state of Wisconsin. The amended complaint adds 42 U.S.C. Sec. 1985 as support for some of the claims, but the amended complaint was only an attachment to Moon's untimely motion and is not the one directly involved in this appeal.
7
The district court considered its jurisdiction in light of Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), first cited by Moon in his opposition to the defendants' motion to dismiss. The district court took note that under Bivens the Constitution may support a private cause of action for damages against federal officials, but also noted one of the limitations subsequently set forth in Carlson v. Green, 446 U.S. 14, 100 S.Ct. 1468, 64 L.Ed.2d 15 (1980). That limitation, which may defeat a Bivens action, occurs when the "defendants show that Congress has provided an alternative remedy which it explicitly declared to be a substitute for recovery directly under the Constitution and viewed as equally effective." Id. at 18-19, 100 S.Ct. at 1471-72 (emphasis in original).
8
The district court then followed the development of those legal principles in later cases and applied them to the facts of this case. In Bush v. Lucas, 462 U.S. 367, 103 S.Ct. 2404, 76 L.Ed.2d 648 (1983), Bush was an engineer employed by the National Aeronautics and Space Administration who publicly criticized the space flight center. Bush claimed that he was demoted as a result of that criticism. In addition to pursuing an administrative remedy, Bush filed a state court action under the first amendment against the director of the center seeking damages for his retaliatory demotion. That suit was removed to the federal district court. The district court granted summary judgment for the defendant director. The court of appeals affirmed on the basis that Bush had no constitutional cause of action for damages in view of available administrative remedies. The Supreme Court then granted certiorari. Writing for a unanimous Court, Justice Stevens began the analysis with certain assumptions. First, the Court assumed that Bush's first amendment rights had been violated, and that the administrative remedy would not be as effective as a civil suit in fully compensating Bush for the harm he had allegedly suffered. The Court also noted that Congress had neither provided for nor prohibited the judicial remedy Bush sought to pursue. The Court, however, declined to provide a judicial remedy to supplement the elaborate administrative remedial system, leaving the development of any new remedy to Congress.
9
In Gremillion v. Chivatero, 749 F.2d 276 (5th Cir.1985), a case very similar to this one, the court held that a former employee of the IRS had no cause of action against his supervisor for alleged violations of the first and fifth amendment rights caused by his wrongful discharge. Apparently, Gremillion had criticized his supervisors within the office by questioning their authority and the correctness of their actions. He also claimed that his allegedly unlawful discharge from his job amounted to a taking of his property without just compensation in violation of the fifth amendment. Following Bush and its deference to the existing regulatory scheme, the court found that Gremillion's only recourse was his statutory administrative remedies.
10
Other cases have understandably followed the Bush lead in holding that, subject to narrow exceptions, a federal employee cannot file a suit for damages against his supervisor for an unconstitutional adverse personnel action when Congress has provided an adequate administrative remedy. See, e.g., Palermo v. Rorex, 806 F.2d 1266 (5th Cir.), cert. denied --- U.S. ----, 108 S.Ct. 77, 98 L.Ed.2d 40 (1987); Franks v. Nimmo, 796 F.2d 1230 (10th Cir.1986); Ellis v. United States Postal Service, 784 F.2d 835 (7th Cir.1986); Mason v. Pierce, 774 F.2d 825 (7th Cir.1985); Gleason v. Malcom, 718 F.2d 1044 (11th Cir.1983).
11
Moon argues that Bush and Gremillion are distinguishable because those cases only involved criticism of a supervisor's work performance. According to Moon, however, the underlying cause here is his refusal to commit a crime on behalf of his supervisor by preparing what he perceived to be a false report. To support Moon's characterization that he had been asked to perform a criminal act, he relies primarily on the following statement of one of the supervisors, which he set forth in his amended complaint:
12
I don't care to count the times within the past six months or so, I thought you were being contrary or uncooperative. The arrest-escort [incident] in May was a prime example. I asked you to write the memo describing the event and you, in effect, refused, citing some nebulous reference to an arrest. Even after reciting the law of arrest to you, you demurred.
13
Moon correctly asks this court to presume the truth of the allegations in his complaint, along with reasonable inferences flowing from those allegations, viewing them in the light most favorable to Moon. Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir.1985), cert. denied, 475 U.S. 1047, 106 S.Ct. 1265, 89 L.Ed.2d 574 (1986); Doe ex rel. Doe v. St. Joseph's Hospital, 788 F.2d 411, 414 (7th Cir.1986). Nevertheless, we fail to find any factual support or confirmation in that statement for Moon's characterization that his supervisors endeavored to persuade him to commit a criminal act in their behalf and then retaliated when he would not. At most, it evidences disagreements between an employee and his supervisor in the course of their employment.1
14
Moon, relying upon Carlson and Bivens, seeks to bypass Bush on the basis that Congress has not explicitly declared the available administrative remedy to be a substitute for a judicial remedy. Bivens was not a case between a federal employee and his supervisor, but involved a citizen suing federal employees. Therefore, unlike the present case, the Bivens plaintiff had no available administrative remedy. The Carlson Court did suggest that to foreclose a Bivens action, Congress must explicitly close the judicial door. Bush, however, lessens the impact of the Carlson language, although Bush does permit some leeway for an employee's possible cause of action against a supervisor in very limited circumstances. For example, "certain actions by supervisors against federal employees, such as wiretapping, warrantless searches, or uncompensated takings, would not be defined as 'personnel actions' within the statutory scheme." Bush, 462 U.S. at 385 n. 28, 103 S.Ct. at 2415 n. 28. Even viewed in the light most favorable to Moon, the conduct of Moon's supervisors in directing him to file a false or misleading report does not fall within the general nature of the criminal and outrageous conduct exceptions set out in Bush to justify a judicial, rather than an administrative, remedy.
15
Moon also cites Bishop v. Tice, 622 F.2d 349 (8th Cir.1980); Sonntag v. Dooley, 650 F.2d 904 (7th Cir.1981); Egger v. Phillips, 710 F.2d 292 (7th Cir.), cert. denied, 464 U.S. 918, 104 S.Ct. 284, 78 L.Ed.2d 262 (1983); and Williams v. IRS, 745 F.2d 702 (D.C.Cir.1984). We shall examine those cases briefly.
16
In Bishop, a pre-Bush case, a former federal employee sued other employees, charging that the defendants, in violation of his constitutional right to due process, had coerced him into resigning from his position by threatening to bring false criminal charges against him. The Eighth Circuit, anticipating Bush to some extent, held that a Bivens-type action generally would not be permitted when an adequate administrative remedy is available. Nevertheless, the court permitted Bishop to maintain his action because of his particular circumstances. Bishop had alleged that the defendants had interfered with and blocked his access to the civil service remedy, thereby denying him due process. Moon does not make a similar claim, and only argues that the administrative remedy providing for reinstatement and back pay is not as satisfactory to him as would be the monetary damages in excess of a million dollars he seeks through the judicial process.
17
In Sonntag, another pre-Bush decision,2 this court implied a Bivens remedy for a former civil service employee, noting among other things that there was no explicit alternative administrative remedy equally as effective as the implied judicial remedy. The Bush Court, however, declined to create a judicial remedy even in the absence of congressional approval or disapproval of an exclusive remedy, since Congress is better suited to fashion any new remedy. The Court in Bush also recognized that administrative remedies may not be considered as effective and may not compensate the former employee as fully as a judicial remedy could. 462 U.S. at 372-73, 103 S.Ct. at 2408-09. Those factors alone, however, do not permit a court to devise new remedies for federal employees.
18
Egger, another decision from this circuit, considered a Bivens-type suit brought by a former FBI agent. Egger charged that his former supervisors violated his constitutional rights by transferring and subsequently discharging Egger in retaliation for his efforts to expose alleged corruption among FBI personnel. This court permitted his private damage action. The Egger decision, like Sonntag, did not have the benefit of the second and final Supreme Court Bush decision. At the time of Egger, the Fifth Circuit, on remand, had maintained its original position that the plaintiff had not stated a cause of action. The Egger court considered that second decision of the Fifth Circuit to be of "questionable viability, at best," noting that the Supreme Court had granted certiorari for the second time. 710 F.2d at 298 n. 5. As it turned out, however, the Fifth Circuit decision had more validity than this court gave it credit. Nevertheless, Egger is factually distinguishable from the present case because FBI agents are exempt from civil service protection, see 28 U.S.C. Sec. 536 (1982), and thus Egger, unlike Moon, had no alternative administrative remedy.
19
In Williams, the plaintiff, an attorney employed by the IRS, sought judicial relief for his five-day suspension by the IRS which the agent alleged was in violation of his constitutional procedural rights. The court permitted his suit against the agency. The Williams court found that Williams, unlike the plaintiff in Bush, had no access to an administrative adjudication or judicial review because he was an excepted employee. Williams sought no damages, only declaratory and injunctive relief. Williams does not aid Moon's cause since Moon, a covered employee, has available the administrative remedies that Williams did not.
20
Moon's applicable administrative remedy is through the Merit Systems Protection Board, to which Congress granted broad jurisdiction to resolve all contested federal personnel matters. See 5 U.S.C. Secs. 1205, 1208, 5596 (1982). Moon cited cases in which a court of appeals allowed the plaintiff to maintain a Bivens action because the alleged constitutional deprivation was not an adverse personnel action that could be redressed through the Board. Schowengerdt v. General Dynamics Corp., 823 F.2d 1328 (9th Cir.1987); McIntosh v. Weinberger, 810 F.2d 1411 (8th Cir.1987). The scope of the Board's authority, however, does include forced resignations. Covington v. Department of Health & Human Services, 750 F.2d 937 (Fed.Cir.1984); Scharf v. Department of the Air Force, 710 F.2d 1572 (Fed.Cir.1983). As the Gremillion court found, the Board's broad jurisdiction includes an IRS employee, similar to Moon, who can avail himself of his administrative remedy. The administrative decision is judicially reviewable in the United States Court of Appeals in the circuit where the employee resides or is employed. 5 U.S.C. Sec. 7703(a)(1) (1982).3
21
Viewing the particular facts of this case in the context of this brief review of case law, we find no reason for this court to attempt to fashion for Moon a judicial damage remedy. He must be left to his administrative remedies as others in this circuit have been before him. See Ellis v. United States Postal Service, 784 F.2d 835 (7th Cir.1986); Cameron v. IRS, 773 F.2d 126 (7th Cir.1985). Moon would fare no better in other circuits. See Palermo v. Rorex, 806 F.2d 1266 (5th Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 77, 98 L.Ed.2d 40 (1987); Franks v. Nimmo, 796 F.2d 1230 (10th Cir.1986); Gleason v. Malcom, 718 F.2d 1044 (11th Cir.1983).
22
The various constitutional violations of the first and fifth amendments that Moon alleged, supplemented by state and common law charges, do not allow him to bypass the administrative remedies Congress has provided for government employees. Gleason, 718 F.2d at 1048.
23
Nor did the trial court abuse its discretion in denying plaintiff's pro forma motion for reconsideration, timely or untimely, because plaintiff's attached amended complaint did not cure the defects that caused the dismissal of his original complaint. The amended complaint remained a complaint challenging a federal personnel grievance, which must originally be resolved at the administrative level. The district court did not abuse its discretion in these circumstances. Simons v. Gorsuch, 715 F.2d 1248, 1253 (7th Cir.1983).
24
As the district court held, Moon failed to state a claim upon which relief could be granted. We therefore need not consider whether Moon's complaint adequately alleged a constitutional deprivation, or whether the defendants would be shielded by the defense of qualified immunity.
25
AFFIRMED.
1
Apparently the so-called "victim" of the federal employees' alleged unlawful conduct took no offense at whatever occurred
2
In Sonntag, however, this court noted Bush v. Lucas, 598 F.2d 958 (5th Cir.1979). At that time, the judgment had been vacated by the Supreme Court and remanded for reconsideration in light of the Court's intervening decision in Carlson v. Green, 446 U.S. 14, 100 S.Ct. 1468, 64 L.Ed.2d 15 (1980). A week after the Sonntag decision, the Fifth Circuit rendered its decision, thereafter affirmed by the Supreme Court. 647 F.2d 573 (5th Cir.1981), aff'd, 462 U.S. 367, 103 S.Ct. 2404, 76 L.Ed.2d 648 (1983)
3
5 U.S.C. Sec. 7703(a)(1) provides:
Any employee or applicant for employment adversely affected or aggrieved by a final order or decision of the Merit Systems Protection Board may obtain judicial review of the order or decision.
Other sections detail the review procedure.
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Blazejewski v New York City Dept. of Educ. (2016 NY Slip Op 07616)
Blazejewski v New York City Dept. of Educ.
2016 NY Slip Op 07616
Decided on November 16, 2016
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on November 16, 2016
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Judicial Department
CHERYL E. CHAMBERS, J.P.
THOMAS A. DICKERSON
COLLEEN D. DUFFY
FRANCESCA E. CONNOLLY, JJ.
2015-04525
(Index No. 28499/09)
[*1]Stacey Blazejewski, appellant,
vNew York City Department of Education, respondent.
Dell & Dean, PLLC (Mischel & Horn, P.C., New York, NY [Scott T. Horn, Naomi M. Taub, and Arshia Hourizadeh], of counsel), for appellant.
Zachary W. Carter, Corporation Counsel, New York, NY (Fay S. Ng and Ingrid R. Gustafson of counsel), for respondent.
DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals, as limited by her brief, from so much of an order of the Supreme Court, Queens County (Kerrigan, J.), dated January 20, 2015, as granted the defendant's motion for summary judgment dismissing the complaint.
ORDERED that the order is affirmed insofar as appealed from, with costs.
The plaintiff alleges that, on or about July 24, 2008, she was injured when she slipped and fell on water on the vestibule floor of a building owned by the defendant. Thereafter, the plaintiff commenced this action against the defendant. The defendant moved for summary judgment dismissing the complaint, contending that it did not create the alleged hazardous condition or have actual or constructive notice of it. The Supreme Court granted the motion.
A defendant who moves for summary judgment in a slip-and-fall case has the initial burden of making a prima facie showing that it neither created the alleged dangerous condition nor had actual or constructive notice of its existence for a sufficient length of time to discover and remedy it (see Milorava v Lord & Taylor Holdings, LLC, 133 AD3d 724, 725; Jordan v Juncalito Abajo Meat Corp., 131 AD3d 1012; Beceren v Joan Realty, LLC, 124 AD3d 572; Payen v Western Beef Supermarket, 106 AD3d 710). Here, the defendant established its prima facie entitlement to judgment as a matter of law by demonstrating that it did not create the alleged hazardous condition in the vestibule or have actual or constructive notice of it (see Paduano v 686 Forest Ave., LLC, 119 AD3d 845, 845-846; Valentin v Shoprite of Chester, 105 AD3d 1036, 1037). In opposition, the plaintiff failed to submit evidence sufficient to raise a triable issue of fact.
Accordingly, the Supreme Court properly granted the defendant's motion for summary judgment dismissing the complaint.
CHAMBERS, J.P., DICKERSON, DUFFY and CONNOLLY, JJ., concur.
ENTER:
Aprilanne Agostino
Clerk of the Court
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TO BE PUBLISHED IN THE OFFICIAL REPORTS
OFFICE OF THE ATTORNEY GENERAL
State of California
JOHN K. VAN DE KAMP
Attorney General
----------------------------
:
OPINION :
:
of : No. 87-204
:
JOHN K. VAN DE KAMP : MARCH 9, 1988
Attorney General :
:
ANTHONY S. DaVIGO :
Deputy Attorney General :
:
----------------------------------------------------------
THE STATE TEACHERS RETIREMENT SYSTEM has requested an opinion on
the following question:
Should interest earned on the investment of the outstanding balance of warrants
drawn against the State Teachers Retirement Fund be credited to that Fund or to the General Fund?
CONCLUSION
Interest earned on the investment of the outstanding balance of warrants drawn
against the State Teachers Retirement Fund should be credited to that Fund.
ANALYSIS
There are, in the custody of the State Treasurer, certain assets consisting of the
amounts which have been drawn by the State Controller against the Teachers' Retirement Fund
(TRF), the warrants for which have not been presented for payment. The amount of each warrant
drawn on TRF is transferred from that account to the Outstanding Warrants Account until the
warrant is cashed. The balance in this account, consisting of all disbursements remaining uncashed
for a period from one day to four years, is invested daily by the State Treasurer as part of the State's
Pooled Money Investment Account. The present inquiry is whether the interest earned on the
investment of this outstanding warrant balance should be credited to TRF or to the General Fund.
TRF is a special trust fund created and administered solely in the interest of the
members, retirants, and beneficiaries of the State Teachers' Retirement System (STRS).
(§§ 22225.5; 22300.)1 Pertinent provisions of the State Teachers' Retirement Law (§ 22000 et seq.)
are set forth as follows:
"§ 22224.
"The board has exclusive control of the administration of the funds. No
transfers or disbursements of any amount from the funds shall be made except upon
the authorization of the board for the purpose of carrying into effect the provisions
of this part."
"§ 22300.
"There is in the State Treasury a special trust fund to be known as the
Teachers' Retirement Fund.[2] There shall be deposited in that fund the assets of the
system and its predecessors, consisting of employee contributions, employer
contributions, state contributions, appropriations made to it by the Legislature,
income on investments, other interest income, income from fees and penalties,
donations, legacies, bequests made to it and accepted by the board and any other
amounts provided by this part.
"Disbursement of money from the Teachers' Retirement Fund of whatever
nature shall be made upon claims duly audited in the manner prescribed for the
disbursement of other public funds except that notwithstanding the foregoing
disbursements may be made to return funds deposited in the fund in error."
(Emphasis added.)
1
Unidentified statutory citations are to the Education Code.
2
Section 22309 (Stats. 1986, ch. 900, § 1) provides:
"Notwithstanding any other provision of law, the board may retain a bank or
trust company to serve as custodian for safekeeping, delivery, securities
valuation, investment performance reporting, and other services in connection
with investment of the Teachers' Retirement Fund."
2. 87-204
"§ 22301.
"Return on investments shall be collected by the State Treasurer, and together
with any other moneys received for the Teachers' Retirement Fund shall be
immediately deposited to the credit of that fund and reported forthwith to the system.
Money in whatever form received directly by the system shall be deposited forthwith
in the State Treasury to the credit of that fund." (Emphases added.)
Under these provisions of the State Teachers' Retirement Law, as expressly indicated in sections
22300 and 22301, interest earned on investments or other interest income must be immediately
deposited to the credit of TRF.
We next consider a separate and distinct statutory scheme pursuant to which, in 1949,
the centralized State Treasury System was established in order to realize the maximum return
consistent with safe and prudent treasury management. (Stats. 1949, ch. 1534; § 16305 et seq.)
Pertinent provisions of the Government Code are set forth as follows:
Section 16305.2:
"All money in the possession of or collected by any state agency or
department is subject to the provisions of Sections 16305.3 to 16305.7, inclusive, and
is hereafter referred to as state money."
Section 16305.3:
"All state money shall be deposited in trust in the custody of the Treasurer,
. . . All state money deposited in trust in the custody of the Treasurer shall be held
in a trust account or accounts and may be withdrawn only upon the order of the
depositing agency or its disbursing officer. . . ."
Section 16305.5:
"Money in treasury trust accounts shall be deposited, invested and reinvested
in the same manner and to the same extent as if the money in trust accounts were
money in the State Treasury."
Section 16305.7:
"Any increment collected as the result of investment of state money shall be
collected by the State Treasurer and reported by him to the State Controller for credit
to the General Fund in the State Treasury." (Emphases added.)
3. 87-204
From the foregoing it is clear, as expressly set forth in section 16305.7, that any increment collected
by the State Treasurer as the result of investment of state money deposited in trust in his custody
must be credited to the General Fund.3
We are faced with the unequivocal though inconsistent provisions respectively of
Government Code section 16305.7 pertaining to "state money" and sections 22300 and 22301
relating to the retirement fund. We resort to familiar rules of statutory construction. It must first
be recognized that for nearly four decades since its enactment, Government Code section 16305.7
has been understood and administratively applied without regard to sections 22300 and 22301. An
administrative application of the language of a statute is entitled to respect, and unless clearly
erroneous is a significant factor to be considered in the determination of legislative intent. (Klarfeld
v. State of California (1983) 142 Cal.App.3d 541, 548; 67 Ops.Cal.Atty.Gen. 325, 329 (1984).)
Conversely, an administrative interpretation which is erroneous or contrary to law will be
disregarded. (Douglas Aircraft Co. v. Cal. Unemp. Ins. App. Bd. (1960) 180 Cal.App.2d 636, 642.)
On the other hand, the following rules applicable in the event of an ostensible conflict
between two state statutes were summarized in American Friends Service Com. v. Procunier (1973)
33 Cal.App.3d 252, 263, as follows:
"The applicable rule of construction in such an instance has been described
by the Supreme Court in the following manner: '"It is the general rule that where the
general statute standing alone would include the same matter as the special act, and
thus conflict with it, the special act will be considered as an exception to the general
statute whether it was passed before or after such general enactment. Where the
special statute is later it will be regarded as an exception to or qualification of the
prior general one; and where the general act is later the special statute will be
considered as remaining an exception to its terms unless it is repealed in general
words or by necessary implication." (People v. Breyer, 139 Cal.App. 547, 550; Riley
v. Forbes, 193 Cal. 740, 745.)' (In re Williamson (1954) 43 Cal.2d 651, 654.) More
recently the court has expressed the same rule in somewhat different language: 'Also
of importance here is the rule that where the same subject matter is covered by
inconsistent provisions, one of which is special and the other general, the special one,
whether or not enacted first, is an exception to the general statute and controls unless
an intent to the contrary clearly appears.' (Warne v.Harkness (1963) 60 Cal.2d 579,
588; see also Lacy v. Orr (1969) 276 Cal.App.2d 198, 201-202, and cases cited
therein, holding that the general adjudicatory hearing provisions of the
Administrative Procedure Act yield to certain special adjudicatory hearing
procedures of the Vehicle Code relating to drivers' licenses.) A more accurate
'harmonizing' of the two acts results, in our view, from treating the special act as an
exception to the general."
3
The General Fund consists of money received into the treasury and not required by law to be
credited to any other fund. (Gov. Code, § 16300.)
4. 87-204
(And see 66 Ops.Cal.Atty.Gen. 73, 78 (1983).)
Government Code section 16305.7 (enacted by Stats. 1949, ch. 1534, § 8, and never
amended) pertains generally to "state money," i.e., all money possessed or collected by any state
agency. (Gov. Code, § 16305.2.) Section 22300 (enacted by Stats. 1969, ch. 896, § 2; amended by
Stats. 1974, ch. 795, § 4), and section 22301 (enacted by Stats. 1969, ch. 896, § 2; amended by Stats.
1971, ch. 407, § 14, and Stats. 1974, ch. 795, § 9) pertain specifically to the retirement fund. Thus,
sections 22300 and 22301 being later in time and specific, must be viewed as an exception to
Government Code section 16305.7.
Moreover, if the term "state money," consisting of "[a]ll money in the possession of
. . . any state agency" (Gov. Code, § 16305.2), is literally construed, it would include TRF money,
and any interest on the investment of the entire principal, as distinguished from the balance of
outstanding warrants, would be creditable to the General Fund. Hence, the reference in Government
Code section 16305.7 to "[a]ny increment collected as the result of investment of state money" has
never been deemed to include interest on TRF investments. Nor do we perceive any inherent
significance of a warrant being issued against TRF, prior to its presentation for payment. Aside
from the constitutional impediment, which is discussed below, we have not been apprised of any
statutory basis for the transfer of funds from TRF to any other account prior to presentation of the
warrant.
In any event, a constitutional dimension appears which, in our view, is dispositive.
In this regard, the assets of a public pension or retirement system are constitutionally designated as
trust funds for exclusive purposes, and may not be deemed or treated otherwise by statute.
Specifically, California Constitution, article XVI, section 17, provides in pertinent part as follows:
"Notwithstanding provisions to the contrary in this section and Section 6 of
Article XVI, the Legislature may authorize the investment of moneys of any public
pension or retirement system, subject to all of the following:
"(a) The assets of a public pension or retirement system are trust funds and
shall be held for the exclusive purposes of providing benefits to participants in the
pension or retirement system and their beneficiaries and defraying reasonable
expenses of administering the system.
"(b) The fiduciary of the public pension or retirement system shall discharge
his or her duties with respect to the system solely in the interest of, and for the
exclusive purposes of providing benefits to, participants and their beneficiaries,
minimizing employer contributions thereto, and defraying reasonable expenses of
administering the system.
"(c) The fiduciary of the public pension or retirement system shall discharge
his or her duties with respect to the system with the care, skill, prudence, and
5. 87-204
diligence under the circumstances then prevailing that a prudent person acting in a
like capacity and familiar with these matters would use in the conduct of an
enterprise of a like character and with like aims.
"(d) The fiduciary of the public pension or retirement system shall diversify
the investments of the system so as to minimize the risk of loss and to maximize the
rate of return, unless under the circumstances it is clearly prudent not to do so."
Inasmuch as such assets constitute a trust for exclusive purposes, they may not be
appropriated for general fund uses. As stated by the court in Valdes v. Cory (1983) 139 Cal.App.3d
773, 788 - concerning the Public Employees Retirement System:
"Once paid, appropriated employer contributions constitute a trust fund held
solely for the benefit of PERS members and beneficiaries (§ 20200). Income in
excess of interest credited to employee and employer accounts is to be retained in
that trust fund as a reserve against deficiencies. The reserve constitutes an integral
part of that trust fund. (§ 20203.) Consequently, none of the funds within PERS
including those in the reserve against deficiencies, may be appropriated for a general
public purpose unrelated to the benefit of PERS members (Gillum v. Johnson (1936)
7 Cal.2d 744), because funds received into the treasury for special trust purposes are
'in their nature a continuing appropriation for a specific purpose' (p. 758; Daugherty
v. Riley (1934) 1 Cal.2d 298, 308).
"Had the Legislature actually appropriated any of the PERS trust funds for
purposes unrelated to the benefit of PERS members, e.g., to balance the state budget
and avoid a year-end deficit, we would have no difficulty in concluding that such
legislative action modified vested rights of PERS members. (See Sgaglione v.
Levitt, supra, 337 N.E.2d 592; State Teachers' Retirement Board v. Giessel, supra,
106 N.W.2d 301; cf. Whitmire v. City of Eureka (1972) 29 Cal.App.3d 28, 34.)"
Is interest derived from the investment of the outstanding warrant balance an asset
of the trust for purposes of California Constitution, article XVI, section 17, supra? We conclude that
it is. At common law the proceeds of an investment are an accretion or increment to the principal
earning it, and unless lawfully separated therefrom becomes a part thereof. (Pomona City School
Dist. v. Payne (1935) 9 Cal.App.2d 510, 516.) Since proceeds, including interest and dividends,
become part of the principal, they are subject to the same restrictions. (See 65 Ops.Cal.Atty.Gen.
588 (1982).)
In Provident Land Corp. v. Zumwalt (1938) 12 Cal.2d 365, an irrigation district had
acquired certain land to be held "in trust for . . . and set apart to the uses and purposes set forth in
[the California Irrigation District Act]." (Id. at 374.) The court held that while no provision had
been made for the disposition of the proceeds of the land, such proceeds, over and above operating
expenses, remain subject to the trust. (Id. at 376-377.) The court stated in part (id. at 375):
6. 87-204
"Once it is made clear that the lands are held in trust, it necessarily follows
that their proceeds, whether by sale or lease, are likewise subject to the trust. It
would be manifestly absurd to say that although property is held in trust, none of the
benefits of the trust accrue to the beneficiaries, and that none of the rents or profits
of the trust property need be used in furtherance of the trust purposes. On this point,
namely, that the land is trust property, held for the 'uses and purposes' of the act, and
that the proceeds are stamped with the character of the property from which they
flow, the statute, read in the light of elementary principles, leaves no room for
debate."
In City of Long Beach v. Morse (1947) 31 Cal.2d 254, the state had granted to the
city its interest in tidelands within the corporate limits "in trust for the uses and purposes" connected
with the development of the municipal harbor. (Id. at 256-258.) The city proposed to divert certain
revenues derived from the production of oil and gas from the tidelands to the "Public Improvement
Fund" for general municipal purposes unconnected with the grant. (Id. at 255.) It was first noted
that as trustee, the city assumed the same burdens and was subject to the same regulations that
appertain to other trustees. (Id. at 257.) Holding that such revenues from the land could be used
only in furtherance of the trust purpose (id. at 258), the court stated in part (id. at 257-258):
"The city of Long Beach contends that the proceeds from the production of
oil and gas is merely income from the land and as such is not covered by any
provisions of the trust, on the ground that the trust expressly applies only to the
physical uses of the land. Whether the fund should be regarded as part of the corpus
of the trust or merely as a part of the rents and profits of the land, the city as trustee
has no right to devote the proceeds to general municipal improvements unconnected
with the trust purposes. If the proceeds from the sale of oil and gas are regarded as
corpus (see Rest. Trusts, § 238; Bogert, Trusts and Trustees, §§ 789, 828), they must
be used for the purposes set forth in the legislative grants in trust, for the city, as
trustee, clearly has no authority to appropriate the corpus to its own uses contrary to
the terms of the trust. If the proceeds are regarded as income from trust property, the
trustee, in the absence of a legislative provision to the contrary, has no more right to
them than it has to the corpus. (Civ. Code, § 2229 [see now Probate Code, § 16004];
Provident Land Corp. v. Zumwalt, 12 Cal.2d 365, 375; Lamb v. Lamb, 171 Cal. 577,
580-582; Purdy v. Johnson, 174 Cal. 521, 529; see Methodist Benev. Assn. v. Bank
of Sweet Spring, 227 Mo.App. 566, 573 [54 S.W.2d 474, 478]."
Where a trust is constitutionally established for a designated purpose, neither the
principal nor its proceeds may be statutorily diverted. It is concluded, therefore, that interest earned
on the investment of the outstanding balance of warrants drawn against TRF should be credited to
that Fund.
*****
7. 87-204
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Case: 11-50721 Document: 00511849903 Page: 1 Date Filed: 05/09/2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 9, 2012
No. 11-50721
Summary Calendar Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff - Appellee
v.
BERNARDO LACOUR,
Defendant - Appellant
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:10-CR-840-1
Before BARKSDALE, STEWART, and PRADO, Circuit Judges.
PER CURIAM:*
Convicted of wire fraud in South Carolina in 2007 and sentenced to three-
years’ probation, Bernardo Lacour’s supervised release was transferred to the
Western District of Texas in 2010. Shortly thereafter, he was arrested for
violating conditions of his probation by committing another wire-fraud offense
and was subsequently indicted for that offense in cause number 5:10-CR-1067.
Lacour filed a motion for bond pending his revocation hearing as well as a
motion to sever his revocation hearing from his jury trial in cause number 5:10-
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
Case: 11-50721 Document: 00511849903 Page: 2 Date Filed: 05/09/2012
No. 11-50721
CR-1067. The district court denied both motions, with the motion to sever being
denied as moot.
Federal Rule of Criminal Procedure 32.1 governs the revocation or
modification of probation or supervised release, and it states that a magistrate
judge may detain or release a person under 18 U.S.C. § 3143(a) pending further
proceedings. Fed. R. Crim. P. 32.1(a)(6). Section 3143(a) provides that a
defendant who has been convicted “shall” be detained pending sentencing
“unless the judicial officer finds by clear and convincing evidence that the person
is not likely to flee or pose a danger to the safety of any other person or the
community if released”. Appellate review is limited, and the detention order will
be sustained absent clear error. See United States v. Cantu-Salinas, 789 F.2d
1145, 1146 & n.1 (5th Cir. 1986).
The bond denial was appealed to the district court. It found Lacour was a
danger to the community because he continued to commit wire fraud while on
probation. It also found he was a flight risk due to the potentially lengthy prison
sentence, his insubstantial ties to San Antonio, and his numerous business and
personal contacts in other States and abroad. The evidence submitted at the
detention hearing supports the bond denial.
Regarding the motion to sever being denied as moot, Lacour was
effectively given the relief he sought when the district court stated the
revocation matter would not be presented to the jury in cause number 5:10-CR-
1067.
AFFIRMED.
2
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826 F.2d 1071
Unpublished dispositionNOTICE: Federal Circuit Local Rule 47.8(b) states that opinions and orders which are designated as not citable as precedent shall not be employed or cited as precedent. This does not preclude assertion of issues of claim preclusion, issue preclusion, judicial estoppel, law of the case or the like based on a decision of the Court rendered in a nonprecedential opinion or order.Vincent C. TYLER, Petitioner,v.UNITED STATES POSTAL SERVICE, Respondent.
Appeal No. 87-3204
United States Court of Appeals, Federal Circuit.
July 13, 1987.
Before RICH, Circuit Judge, NICHOLS, Senior Circuit Judge, and NIES, Circuit Judge.
PER CURIAM.
DECISION
1
The decision of the Merit Systems Protection Board (board), Docket No. NY07528610373, affirming the United States Postal Service's (USPS) removal of Tyler for absence without leave (AWOL), is affirmed.
OPINION
2
The USPS removed Tyler on one charge of AWOL derived from ten instances of missed tours of duty and five instances of tardiness. The board rejected Tyler's various explanations for these infractions and adopted instead the testimony of Tyler's supervisor, Mr. Waguih 'George' Guirguiss, who stated that Tyler was AWOL and tardy on the relevant dates. Mr. Guirguiss also testified that Tyler's absences interrupted the proper operation of his unit. The board accepted the testimony of Mr. Curry Donar, the Employee Assistance Program counselor who worked with Tyler, that Tyler is an alcoholic, unable to confront his severe drinking problem.
3
The decision of the board sustaining the AWOL charges against Tyler is dependent on credibility determinations. The balancing of testimony at the hearing is within the discretion of the presiding official who heard the testimony and observed the demeanor of the witnesses. Griessenauer v. Department of Energy, 754 F.2d 361, 364 (Fed. Cir. 1985). Tyler presents no evidence whatsoever to suggest that these credibilty determinations are tainted or incorrect in any way, and we therefore accept them.
4
Tyler presents no basis for this court to reverse the board in this case. As the board noted, Tyler's claim of age discrimination is not actionable. Tyler must be at least forty to invoke the age discrimination statute. 29 U.S.C. Sec. 631, 633a. The evidence of record establishes that Tyler was frequently AWOL and often drunk and abusive while at work, resulting in various suspensions and warnings about his conduct. The USPS attempted to accommodate Tyler's problems through counseling. Tyler did not cooperate. Tyler refuses to recognize his difficulties and shows little promise of improvement.
5
An agency may consider an employee's dependability in fashioning a penalty. Removal for AWOL may be the appropriate choice. Washington v. Department of the Army, 813 F.2d 390, 394 (Fed. Cir. 1987). Selection of the penalty is largely committed to the agency, and this court will not disturb the agency's choice unless it is so unreasonable as to be an abuse of discretion. Id.
6
In this case, the evidence of AWOL is clear and shows a consistent pattern of absence. In addition, Tyler was warned about his conduct and counseled. We conclude that the requirements of Douglas v. Veterans Administration, 5 M.S.P.R. 280 (1981) have been met and that the penalty is reasonable. The decision of the board is not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, or not supported by substantial evidence. 5 U.S.C. Sec. 7703(c); Hayes v. Department of the Navy, 727 F.2d 1535, 1537 (Fed. Cir. 1984).
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COURT OF APPEALS OF VIRGINIA
Present: Judges Baker, Willis and Bray
Argued at Norfolk, Virginia
JOSEPH BRITT, III
MEMORANDUM OPINION * BY
v. Record No. 0679-96-1 JUDGE RICHARD S. BRAY
APRIL 15, 1997
COMMONWEALTH OF VIRGINIA
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
Kenneth N. Whitehurst, Jr., Judge
Melinda R. Glaubke (Office of the Public
Defender, on brief), for appellant.
Marla Graff Decker, Assistant Attorney
General (James S. Gilmore, III, Attorney
General, on brief), for appellee.
Joseph Britt, III, (defendant) was convicted by a jury of
five misdemeanor counts of brandishing a firearm and one felony
count of possession of a firearm by a convicted felon, all
arising from the same incident. On appeal, he complains that the
court erroneously denied his motions to sever the misdemeanor and
felony trials and for a mistrial arising from improper closing
argument by the prosecutor. Defendant also challenges the
sufficiency of the evidence to support the felony and two
brandishing convictions. For the reasons that follow, we affirm
the felonious possession conviction, but reverse and remand the
brandishing convictions.
The parties are fully conversant with the record, and this
*
Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
memorandum opinion recites only those facts necessary to a
disposition of the appeal.
MOTION FOR SEVERANCE
Relying upon Johnson v. Commonwealth, 20 Va. App. 49, 455
S.E.2d 261 (1995), defendant first argues that the trial court
abused its discretion in denying his motion for severance, and
the Commonwealth quite correctly concedes on brief that Johnson
requires reversal of defendant's convictions for brandishing a
firearm. However, Johnson does not mandate a reversal of the
conviction for felonious possession of the firearm. See id. at
56-57, 455 S.E.2d at 265.
SUFFICIENCY OF EVIDENCE 1
Under familiar principles of appellate review, we examine
the evidence in the light most favorable to the Commonwealth,
granting to it all reasonable inferences fairly deducible
therefrom. See Traverso v. Commonwealth, 6 Va. App. 172, 176,
366 S.E.2d 719, 721 (1988). The jury's verdict will not be
disturbed unless plainly wrong or without evidence to support it.
See id. The credibility of a witness, the weight accorded the
testimony, and the inferences to be drawn from proven facts are
matters solely for the fact finder's determination. See Long v.
Commonwealth, 8 Va. App. 194, 199, 379 S.E.2d 473, 476 (1989).
1
Because a remand of the brandishing offenses would be
improper if the evidence did not support the challenged
convictions, we must address the sufficiency issue relative to
both the misdemeanors and felony. Gorham v. Commonwealth, 15 Va.
App. 673, 677-78, 426 S.E.2d 493, 495-96 (1993).
- 2 -
Code § 18.2-308.2 makes it unlawful for "any person who has
been convicted of a felony . . . to knowingly and intentionally
possess or transport any firearm." The jury was instructed
accordingly and, further, that a "firearm" is a "device that has
the actual capacity to do serious harm because of its ability to
expel a projectile by the power of an explosion." See Jones v.
Commonwealth, 16 Va. App. 354, 357, 429 S.E.2d 615, 617, aff'd,
17 Va. App. 233, 436 S.E.2d 192 (1993) (en banc).
Circumstantial evidence is sufficient to support a
conviction, provided it excludes every reasonable hypothesis of
innocence. See Cantrell v. Commonwealth, 7 Va. App. 269, 289,
373 S.E.2d 328, 338 (1988). However, "[t]he Commonwealth need
only exclude reasonable hypotheses of innocence that flow from
the evidence, not those that spring from the imagination of the
defendant." Hamilton v. Commonwealth, 16 Va. App. 751, 755, 433
S.E.2d 27, 29 (1993). Whether an alternative hypothesis of
innocence is reasonable is a factual determination, see Cantrell,
7 Va. App. at 290, 373 S.E.2d at 339, and therefore is binding on
appeal unless plainly wrong. See Traverso, 6 Va. App. at 176,
366 S.E.2d at 721.
Here, the record discloses that defendant's sister, Dorian,
excitedly called upon defendant to "give her the gun," prompting
him to rush toward the Mitchell residence, armed with a .44 or
.45 caliber pistol. A "clicking sound" was heard as defendant
loaded a "clip" of ammunition into the weapon, and he yelled
- 3 -
"I'll F[___] all you M[_____] F[___]ers up." Defendant entered
the home, waving the gun about and pointing it at people inside,
and demanded, "Who in the f[___] hit my sister?" Four persons
present during the offenses identified the weapon as a "gray
gun," with a long barrel. From this evidence, the jury properly
concluded that the defendant possessed an actual firearm and
brandished it at those present in the residence.
MISTRIAL
"When a motion for mistrial is made, based upon an allegedly
prejudicial event, the trial court must make an initial factual
determination, in the light of all the circumstances of the case,
whether the defendant's rights are so 'indelibly prejudiced' as
to necessitate a new trial." Spencer v. Commonwealth, 240 Va.
78, 95, 393 S.E.2d 609, 619, cert. denied, 498 U.S. 908 (1990).
"A trial court's ruling will be permitted to stand unless it is
made to appear probable that the party complaining has been
substantially prejudiced by the objectionable remarks or
arguments." Martinez v. Commonwealth, 10 Va. App. 664, 669, 395
S.E.2d 467, 470 (1990), aff'd as modified, 241 Va. 557, 403
S.E.2d 358 (1991). Whether to grant a mistrial rests within the
sound discretion of the trial judge, and "absent a showing of
abuse of discretion, the court's ruling will not be disturbed on
appeal." Cheng v. Commonwealth, 240 Va. 26, 40, 393 S.E.2d 599,
607 (1990).
The prosecutor may properly "'refer to the evidence and fair
- 4 -
inferences from it'" during closing argument to a jury.
Martinez, 10 Va. App. at 672, 395 S.E.2d at 472 (quoting Timmons
v. Commonwealth, 204 Va. 205, 216-17, 129 S.E.2d 697, 705
(1963)). "Whether the words used were prejudicial must be judged
by a review of the totality of the evidence." Fain v.
Commonwealth, 7 Va. App. 626, 629, 376 S.E.2d 539, 541 (1989).
Here, the prosecutor argued to the jury, "Ladies and
[G]entlemen, you have a violent criminal -- a felon before you.
You can see from the conviction order that he's been violent
before. He has the propensity to do so." We acknowledge that
these remarks improperly urged the jury to conclude that
defendant's prior convictions made it more likely that he
possessed a firearm in this instance. However, the court had
instructed the jury earlier "that the fact the defendant was
previously convicted of a felony is not evidence that he
knowingly and intentionally possessed or transported a firearm on
June 13, 1995." Under such circumstances, we do not find that
defendant was so "indelibly prejudiced" that it necessitated a
mistrial.
Accordingly, we reverse and remand the convictions for
brandishing a firearm but affirm the conviction for possession of
a firearm by a convicted felon.
Affirmed in part,
reversed in part,
and remanded.
- 5 -
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Electronically Filed
Intermediate Court of Appeals
CAAP-14-0000517
15-MAY-2017
09:19 AM
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612 F.2d 580
Davidsonv.Jago
No. 79-3499
United States Court of Appeals, Sixth Circuit
12/17/79
N.D.Ohio
AFFIRMED
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