text
stringlengths 1
1.21M
| meta
dict |
|---|---|
809 F.Supp. 846 (1992)
Robert H. HUTCHCRAFT, Petitioner,
v.
Raymond ROBERTS, et al., Respondents.
No. 91-3134-DES.
United States District Court, D. Kansas.
December 29, 1992.
*847 David J. Gottlieb, University of Kansas School of Law, Lawrence, KS, for petitioner.
Kyle G. Smith, Kansas Bureau of Investigation, Topeka, KS, for respondents.
MEMORANDUM AND ORDER
SAFFELS, Senior District Judge.
This matter comes before the court on petition for writ of habeas corpus filed pursuant to 28 U.S.C. § 2254. Petitioner, an inmate at the Lansing Correctional Facility, Lansing, Kansas, was convicted in 1985, of one count of rape, two counts of aggravated sodomy, and five counts of indecent liberties with a child. Petitioner was sentenced to three concurrent terms of thirty (30) years to life and four concurrent terms of five (5) to twenty (20) years to be served consecutive to the 30 years to-life terms.
On direct appeal to the Kansas Supreme Court, petitioner's conviction was affirmed. 242 Kan. 55, 744 P.2d 849.
In this action, petitioner challenges his conviction and claims: (1) his Sixth Amendment right of confrontation was violated when hearsay evidence was admitted without a finding that the declarant was unavailable to testify at trial and because the testimony admitted did not bear an adequate indicia of reliability; and (2) the trial judge failed to make the requisite finding that the child witness was unavailable to testify at trial.
Having reviewed the record in this matter, the court makes the following findings and order.
Factual Background
Petitioner was convicted of rape, two counts of aggravated sodomy and five counts of indecent liberties with a child against his step-grandchildren. Petitioner and the children's grandmother, Dorothy, are divorced. Four felony charges stemmed from incidents with a 16 year old, mentally retarded girl, Candy Schreiner. The remaining counts of indecent liberties stemmed from incidents with 17 year old Michelle Schreiner, Angel Stone, Milissa Newbury and Ginger Hiles. Petitioner was acquitted of charges stemming from a incident with Jerry Newberry.
All of the victims testified at trial with the exception of Candy Schreiner. At the preliminary hearing conducted on August 15, 1985, Judge David Lamar made a finding that Candy was not qualified to testify at the hearing and her out-of court statement to a police officer would be admitted as evidence at trial because:
"by her own articulation, that she doesn't know what the truth means, at least this time she's saying that. She's been consistent concerning that she doesn't know what a lie means. I think *848 we've even tried the approach what it means not to tell the truth and found the same results. She will be disqualified as a witness as to capacity to determine ... (the remainder of the discussion is inaudible due to rerecording of the tape)."
The journal entry memorializing the hearing was not filed until November 8, 1985; was not presented to defense counsel for approval; and does not reflect the court's concern about Candy's ability to tell the truth. The journal entry, utilizing the statutory child hearsay provisions of K.S.A. 60-460(dd), states that the trial court found that Candy's out-of-court statement to a police officer was "apparently reliable" and that it was "not induced by the use of threats or promises."
Petitioner tried twice to have the admission of these statements reconsidered, but failed. In addition Trial Judge Cordell Meeks, after in camera hearings, allowed Candy's out of court statements to social services case worker, Kathy McIntosh, and clinical social worker, Bonnie Benson admitted.
Petitioner, who argues he was never allowed to confront the witness against him, Candy Schreiner, was convicted by a jury on all counts concerning his conduct with Candy. On October 27, 1987, the Kansas Supreme Court affirmed petitioner's conviction. This action was commenced on May 2, 1991.
Discussion
This court reviews the trial court's conclusions of law de novo. Martin v. Kaiser, 907 F.2d 931, 933 (10th Cir. 1990). The right of confrontation is a question of law to be determined by the federal habeas court. Haggins v. Warden, Fort Pillow State Farm, 715 F.2d 1050, 1055 (6th Cir.1983), cert. denied, 464 U.S. 1071, 104 S.Ct. 980, 79 L.Ed.2d 217 (1984).
Petitioner argues that he was denied his right, guaranteed by the Sixth Amendment to the Constitution, to confront the witnesses against him when out-of-court statements by Candy Schreiner to a police officer, a social services caseworker, and a social worker were admitted at trial. In addition, petitioner claims that the trial judge, not the judge at the preliminary hearing, must make the determination that the witness is unavailable.
The Confrontation Clause of the Sixth Amendment provides: "In all criminal prosecutions, the accused shall enjoy the right ... to be confronted by witnesses against him." The Clause operates in two ways when determining the admissibility of hearsay statements. Ohio v. Roberts, 448 U.S. 56, 100 S.Ct. 2531, 65 L.Ed.2d 597 (1980). First the Sixth Amendment establishes a rule of necessity, the prosecution must either produce the declarant of a statement it wishes to use against the defendant, or demonstrate the unavailability of the declarant. Id. at 72, 100 S.Ct. at 2542. Second, once the witness is shown to be unavailable, the statement is admissible only if it bears an adequate indicia of reliability. Id. at 65, 100 S.Ct. at 2539. Reliability may be inferred if the statement falls within a firmly rooted hearsay exception such as an excited utterance. If the statement does not fall within such a category, it is not admissible unless there is a showing of particularized guarantee of trustworthiness. Id. at 66, 100 S.Ct. at 2539.
In Idaho v. Wright, 497 U.S. 805, 110 S.Ct. 3139, 111 L.Ed.2d 638 (1990), the Court considered whether the admission, at trial, of out-of-court statements by a child to an examining physician violated the defendant's right to confront the witnesses against him. All parties agreed that the 3½ year old child was incapable of communicating with the jury and was, therefore, unavailable to testify within the meaning of the Confrontation Clause. The second question under Roberts is whether the prosecution, which is the proponent of the evidence presumptively barred by the hearsay rule and the Confrontation Clause, has carried its burden proving that the incriminating evidence bears an adequate indicia of reliability to withstand scrutiny under the Clause. Id. at 816, 110 S.Ct. at 3147.
Relying on Roberts, the Court noted that the indicia of reliability could be met in two circumstances: (1) if the hearsay statement falls within a firmly rooted *849 hearsay exception or (2) if the statement is supported by particularized guarantees of trustworthiness. See White v. Illinois, ___ U.S. ___, 112 S.Ct. 736, 116 L.Ed.2d 848 (1992) (hearsay statements of nontestifying child admissible if they constitute spontaneous utterances or statements made in obtaining medical treatment). In Wright, the child's out-of-court statements did not fall within a firmly rooted hearsay exception and were, thus, presumptively unreliable and inadmissible for Confrontation Clause purposes. Id. at 818, 110 S.Ct. at 3148. This presumption may be overcome if it can be shown that the statements bear particularized guarantees of trustworthiness. Unless an affirmative reason, arising from the circumstances in which the statements were made, provides the basis for rebutting the presumption that a hearsay statement is not worthy of reliance at trial, the Confrontation Clause requires the out-of-court statement be excluded. Id. at 821, 110 S.Ct. at 3150. The particularized guarantees of trustworthiness required for admission of a hearsay statement under the Confrontation Clause must be gleaned from the totality of the circumstances that surround the making of the statement and that render the declarant particularly worthy of belief. Id. at 819, 110 S.Ct. at 3148. Evidence possessing particularized guarantees of trustworthiness must be at least as reliable as evidence admitted under a firmly rooted hearsay exception, that is the evidence admitted must be so trustworthy that adversarial testing would add little to its reliability. Id. at 820-21, 110 S.Ct. at 3149. "If the declarant's truthfulness is so clear from the surrounding circumstances that the test of cross-examination would be of marginal utility, then the hearsay rule does not bar admission of the statement at trial." Id. at 820, 110 S.Ct. at 3149.
The Court declined to state a specific test to determine whether particularized guarantees of trustworthiness are present. It did, however, articulate a number of factors which evaluate whether the hearsay statements by a child witness in a sexual abuse case are reliable. These include: spontaneity and consistent repetition; the mental state of the declarant; the use of terminology unexpected of a child of similar age; and lack of motive to fabricate. Id. at 821-22, 110 S.Ct. at 3150. These factors are not exclusive and are subject to the underlying principle that the ultimate question is whether the declarant was particularly likely to be telling the truth at the time the statement was made. Id.
Turning to the facts of this case, the court first notes that although the judge at the preliminary hearing found the declarant unavailable to testify, that finding was based, at least in part, on the fact that Candy Schreiner was incapable of distinguishing between the truth and a lie. Petitioner argues that the trial judge, at trial, must make the determination of unavailability. The Kansas Supreme Court, on appeal, held, that any judge assigned to any portion of a pending case is, for that purpose a trial judge within the meaning of the statute. K.S.A. 60-460(dd).
A state court's interpretation of state law is not subject to review by this court in habeas proceedings. Mills v. Collins, 924 F.2d 89, 92 (5th Cir.1991). The court accepts the Kansas Supreme Court's determination that a judge at any stage of the proceedings in a pending case is a trial judge within the meaning of the statute. The court also notes that while Roberts, supra, appears to require the government to show that a declarant is unavailable before testimony may be entered, later cases have indicated this may not always be true. See U.S. v. Inadi, 475 U.S. 387, 398, 106 S.Ct. 1121, 1127-28, 89 L.Ed.2d 390 (1986) (showing of unavailability not required before statements of co-conspirators are admitted); White, supra (the unavailability rule does not apply to evidence falling under hearsay exceptions for spontaneous declarations and statements made in the course of medical treatment); Manocchio v. Moran, 919 F.2d 770, 775-76 (1st Cir.1990), cert. denied ___ U.S. ___, 111 S.Ct. 1695, 114 L.Ed.2d 89 (1991) (the rule does not apply to the introduction of business records).
This court's decision, however, does not depend upon a determination that Candy was unavailable. Wright 497 U.S. at 813-14, *850 110 S.Ct. at 3145. This court must determine whether Candy's statements are supported by a showing of particularized guarantee of trustworthiness when the statements were made. In making that determination, the court notes that the judge at the preliminary hearing made a finding that Candy could not distinguish between the truth and a lie. If Candy was untrustworthy to testify at trial, it would be difficult to make the argument that her out-of-court statements somehow bore the indicia of reliability.
Candy's statements were not spontaneous, but rather the result of questions which were, at times, admittedly leading. In at least two of the interviews, Candy's older sister was with her to offer Candy support. The sister, at least once, asked the interviewer to ask Candy about a particular event. The sister also helped Candy determine specific dates concerning events and even asked Candy questions and then helped her answer. Candy also learned to use the term penis from this interview with the police officer.
Candy's mental state must also be considered in the search for particularized guarantees of trustworthiness. Candy was a 16 year old trainable mentally retarded girl with the learning capability of a 5 year old. However, Candy's mother testified that Candy was a typical teenager, with interests in boys and records. Candy's teacher testified that Candy was very popular and even normal boys in school thought she was very cute. Candy's mental condition must be considered when analyzing her ability to recall events that occurred years before and which were only revealed with significant prompting and then articulated in general monosyllabic answers.
The record clearly reveals that Candy had contact with members of the opposite sex at school and even had a boyfriend. There was evidence that interviewers supplied her with correct terminology during the course of her interviews which included the use of anatomically correct dolls. It is not clear that Candy displayed knowledge of sexual terms which were outside the sphere of her experience.
Finally, this case offers clear evidence that there may have been a motive to fabricate events. Petitioner and his wife, the grandmother of Candy and all the other children, were having marital difficulties and eventually did divorce. There was testimony at trial that some of the children were angry with petitioner about the divorce. There was also testimony that petitioner's ex-wife was extremely bitter and had threatened to put petitioner back where she found him in prison. Such acrimonious behavior is not uncommon during divorces and could spawn resentment and anger among the children toward petitioner, their step-grandfather.
From this record, the court is unable to conclude that there was a particularized guarantee of trustworthiness attached to Candy's out-of-court statements which would allow their admission at trial. In addition, the court is troubled by the apparent finding at the preliminary hearing that Candy was unable to discern truth from falsehood.
Because the judge at the preliminary hearing made no finding that Candy's out-of-court statements contained particularized guarantees of trustworthiness, the court concludes petitioner's constitutional right to confront the witness against him was violated.
The court notes that the Kansas Supreme Court, in a case strikingly similar to petitioner's, recently reversed the convictions of two defendants where out-of-court statements were erroneously admitted at trial. In State v. Bratt, 250 Kan. 264, 824 P.2d 983 (1992), the child witness testified prior to the preliminary hearing and the district magistrate determined the child was not unavailable. The child then testified at the preliminary hearing. Prior to trial, the state again sought to have the child declared unavailable and to introduce his testimony at the preliminary hearing and testimony of other witnesses concerning the child's out-of-court statements to them. The child was found to be unavailable and the out-of-court statements were admitted. Under the statute, the judge found the child's statements "were apparently *851 reliable, were not induced or made falsely by the use of threats or promises, and were admissible as an exception to the hearsay rule under K.S.A.1990 Supp. 60-460(dd)." Id. 824 P.2d at 988.
Analyzing the case under Idaho v. Wright, the Kansas Supreme Court found the introduction of the statements violated the Confrontation Clause. The court also held that the child's statements and actions while using anatomically correct dolls were also hearsay and that the admission of the same was violative of the Clause. "The trial court failed to make the particularized findings required by the Confrontation Clause of the Sixth Amendment as set out by ... Wright for admission of hearsay under K.S.A.1990 Supp. 60-460(dd)." Id. 824 P.2d at 990.
This court finds the holding applicable to petitioner's case. Petitioner's case is even more egregious than Bratt. In this case a judge by his own words found Candy unable to distinguish between truth and falsehood. If, as Bratt holds, a trial judge who merely quotes the language of the statute has not made the particularized findings required by the Confrontation Clause, a trial judge who finds, in part, that a witness does not know fact from fiction has certainly failed to provide the petitioner with the protections guaranteed under the Confrontation Clause. This court cannot find that Candy's truthfulness was so clear from the surrounding circumstances that the test of cross-examination would have been of marginal utility.
IT IS THEREFORE BY THE COURT ORDERED that the petition for writ of habeas corpus is granted. Petitioner must be retried on the four charges relevant to Candy Schreiner within one hundred and twenty days or be released under these sentences. This order has no effect upon petitioner's conviction and sentences on the remaining charges.
| {
"pile_set_name": "FreeLaw"
} |
919 F.2d 23
James CHANDLER, Jr., Petitioner-Appellee,v.Robert J. BARNCASTLE, Warden, et al., Respondents-Appellants.
No. 90-1047.
United States Court of Appeals,Fifth Circuit.
Dec. 11, 1990.
Robert L. Webster, Asst. U.S. Atty., Marvin Collins, U.S. Atty., Dallas, Tex., for Barncastle, et al.
Danny D. Burns, Ft. Worth, Tex., for James Chandler, Jr.
James J. Chandler, Jr., Seagoville, Tex., pro se.
Appeal from the United States District Court for the Northern District of Texas.
Before WISDOM, GARWOOD, and JOLLY, Circuit Judges.
WISDOM, Circuit Judge:
1
The United States appeals from an order of the United States District Court for the Northern District of Texas granting appellee James Chandler, Jr.'s petition for habeas corpus under 28 U.S.C. Sec. 2241. The district court held that a parole violator warrant issued by the United States Parole Commission against Chandler had been validly executed and that no special circumstances existed which would authorize the Parole Commission to withdraw the violator warrant. We follow McConnell v. Martin, 896 F.2d 441 (10th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 167, 112 L.Ed.2d 131 (1990), and hold that the attempted execution of the parole violator warrant was contrary to its terms and unauthorized, and therefore it was invalid. Consequently, the Parole Commission had the authority to release Chandler from the custody of the warrant, have the warrant replaced as a detainer against him, and suspend the running of his parole violator term. We REVERSE.
FACTUAL BACKGROUND
2
On October 18, 1979, James Chandler Jr. was paroled from a fifteen year sentence, later reduced to twelve years, for the distribution of heroin and for conspiracy to distribute heroin.
3
On June 29, 1982, the Parole Commission issued a parole violator warrant for Chandler. The warrant application alleged that Chandler had repeatedly tested positive for drugs, had failed to participate in a drug aftercare program, and had committed two thefts, with which he had been charged in criminal court in Johnson County, Texas. The statement of the theft charge on the warrant application noted that Chandler was incarcerated in the Johnson County Jail in Cleburne, Texas.
4
The Parole Commission issued the warrant to the United States Marshal for the Northern District of Texas with a memorandum to the marshal dated June 29, 1982 containing the following instruction:
5
Please assume custody as soon as possible or when located. NOTE: if the parolee is already in the custody of federal or state authorities, do not execute this warrant. Place a detainer and notify the Commission for further instructions. Also, if a criminal arrest warrant has been issued for this parolee, execution of such criminal warrant shall take precedence and the Parole Commission is to be notified before its warrant may be executed.1
6
The United States Marshals Service in Dallas, Texas placed the violator warrant as a detainer with the Office of the Johnson County Sheriff on July 6, 1982.
7
On July 7, 1982, the Parole Commission issued a supplemental warrant application, charging Chandler with two thefts that occurred on or about June 11, 1982. On August 9, 1982, Chandler was sentenced to a two to eight year term in the Texas Department of Corrections by the District Court for Johnson County, Texas. The court ordered that this sentence run concurrent with federal parole time.
8
The next day, August 10, 1982, the Parole Commission's regional office was informed that the United States Marshals Service had executed the parole violator warrant on August 9, 1982 and that Chandler was in federal custody. The regional office was not informed of the new state conviction until August 26, 1982.
9
Chandler was in federal custody almost a month before federal officials realized that the warrant should have been filed as a detainer rather than executed. Chandler was returned on September 2, 1982 to state officials to complete his state sentence.2 The Marshals Service "unexecuted" the warrant by marking through it. A supplement to the original warrant noting Chandler's new conviction and sentence from the state of Texas was filed as a detainer with state officials on September 17, 1982.
10
Chandler received a parole revocation hearing on January 7, 1985. The Parole Commission decided to revoke his parole, and refused to credit any of the time spent on parole. The Commission also decided that the unexpired portion of Chandler's federal sentence should recommence on the date of Chandler's release from state custody or parole from the state sentence, whichever was the earlier, and agreed to parole him after service of 34 months.
11
Upon his release from state custody, Chandler was taken into federal custody to begin serving the remainder of his federal sentence.
12
On January 25, 1989, Chandler petitioned for a writ of habeas corpus in the United States District Court of the Northern District of Texas. Chandler argued that the federal sentence began running upon execution of the parole violator warrant in August 1982 and that he should receive credit for that time served. The district court adopted the findings, conclusions, and recommendations of the magistrate and ordered that Chandler's sentence be recalculated with the finding that the federal sentence commenced running without interruption from the date of the execution of the parole violator warrant. Respondents appealed that judgment to this court.
DISCUSSION
A. JURISDICTION
13
We consider first the challenge to the jurisdiction of this Court. The issue arises whether appellants' Notice of Appeal was sufficient under Torres v. Oakland Scavenger Co., 487 U.S. 312, 317-18, 108 S.Ct. 2405, 2409, 101 L.Ed.2d 285 (1988).
14
The notice of appeal was styled "Robert J. Barncastle, Warden, et al." The body of the notice then stated "Federal Defendants hereby appeal."
15
Federal Rule of Appellate Procedure 3(c) provides that the notice of appeal "shall specify the party or parties taking the appeal." In Torres v. Oakland Scavenger Co., the United States Supreme Court held that the phrase "et al." does not provide the required notice of appeal to the opposing parties or to the court, because this designation does not identify all appealing parties.
16
The Fifth Circuit has followed Torres but has recognized certain limited exceptions to its rule. In Pope v. Mississippi Real Estate Commission, 872 F.2d 127, 129 (5th Cir.1989), the Fifth Circuit held that the use of "et al." is sufficient in the limited context of a two-party action where one of the parties is named, since "et al." can refer only to the one unnamed party. Here, as in Pope, there were only two parties who could be appealing this lawsuit--Robert Barncastle, the warden of the Federal Corrections Institute at Seagoville and the United States Parole Commission. Under Pope, this designation suffices to identify all appealing parties.
17
B. VALIDITY OF EXECUTION OF PAROLE VIOLATOR WARRANT
18
Under the Parole Commission and Reorganization Act of 1976, 18 U.S.C. Secs. 4201-4218 (1976)3 the Parole Commission's parole violator warrants are to be executed as follows:
19
Any officer of any Federal penal or correctional institution, or any Federal officer authorized to serve criminal process within the United States, to whom a warrant issued under this section is delivered, shall execute such warrant by taking such parolee and returning him to the custody of the regional commissioner, or to the custody of the Attorney General, if the Commission shall so direct.
20
The instruction accompanying the parole violator warrant of June 29, 1982 for Chandler specifically directed the Marshal not to execute the violator warrant if the parolee was already in state custody. Chandler was in state custody. The marshal either ignored or did not notice the Commission's instruction, because he took Chandler into federal custody and completed the return on the warrant indicating that he had executed it. Consequently, the attempted execution of the warrant by the United States Marshal on August 9, 1982 was not in compliance with the Commission's specific directions.
21
The Tenth Circuit recently addressed an almost identical set of facts in McConnell v. Martin, 896 F.2d 441 (10th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 167, 112 L.Ed.2d 131 (1990). In McConnell, an instruction appeared on the back of a parole violator warrant directing the United States Marshal not to execute the warrant if the subject was in custody on Federal, State, or Local charges, unless otherwise ordered by the Parole Commission. Directions on an accompanying form required the marshal to place a detainer warrant and to assume custody when the subject was released. The marshal attempted to execute the warrant when McConnell was in federal custody on other charges.
22
The Court of Appeals for the Tenth Circuit found that "any attempt to execute a parole violator warrant in contravention of its terms is invalid." McConnell, 896 F.2d at 446, citing United States v. Cox, 475 F.2d 837 (9th Cir.1973) and Henrique v. United States Marshal, 476 F.Supp. 618, 626 (N.D.Cal.1979). The Court stated that "the Parole Commission alone has the power to choose whether to order that a parole violator warrant be executed or be filed as a detainer. This power to choose would be substantially impaired if a United States Marshal could frustrate it by executing a parole violator warrant that the Commission had directed was not to be executed." Id. at 446. The Court concluded that since the original parole violator warrant was not validly executed, the Commission had the authority to withdraw it and file a new warrant as a detainer after McConnell had been convicted and sentenced on other charges. The Court upheld the Parole Commission's decision to revoke parole and recommence McConnell's original sentence from the date of his release or parole from his second conviction, rather than from the date the improperly executed warrant was filed.
23
In reaching its decision in McConnell, the Tenth Circuit relied in part on United States v. Cox, 475 F.2d 837 (9th Cir.1973). In Cox a parole violator warrant was issued with attached instructions directing the marshal to hold the warrant in abeyance and inform the Parole Board if the charge did not result in a conviction. The instruction letter was lost, and the marshal arrested Cox. The Ninth Circuit found that since the instruction letter had directed that the warrant be held in abeyance, the warrant was invalid for purposes of Cox's arrest. See Cox, 475 F.2d at 841. See also McConnell, 896 F.2d at 445.
24
Chandler attempts to distinguish McConnell in that the instruction for the parole violator warrant in McConnell specifically directed the marshal to place the violator warrant as a detainer, whereas the instruction here was simply not to execute the warrant if Chandler was already in the custody of state or federal officials. This Court now holds that the absence of an instruction as to what the marshal should do with the warrant if the parolee was in the custody of state prison officials was not so ambiguous that the marshal cannot be held to have invalidly executed the warrant. Given the warrant's clear prohibition against execution if the parolee was in state custody, the marshal should at least have obtained further direction from the Commission. At any rate, the execution of the warrant was not in compliance with the direction of the Commission as required by 18 U.S.C. Sec. 4213(d).
25
Chandler contends that his case is analogous to Still v. United States Marshal, 780 F.2d 848 (10th Cir.1985) in which the Tenth Circuit held that once a parole warrant is validly executed, it cannot be withdrawn without exceptional circumstances. Still is in direct conflict with Franklin v. Fenton, 642 F.2d 760 (3rd Cir.1980) and Thigpen v. U.S. Parole Commission, 707 F.2d 973 (7th Cir.1983) which have held that the Parole Commission may withdraw a previously executed parole violator warrant and reexecute it at a later date. We see no need to address this conflict to resolve Chandler's case. The Tenth Circuit in McConnell expressly distinguished Still stating that the warrant had been validly executed in Still and therefore could not be withdrawn, unlike McConnell, involving a warrant issued contrary to the Commission's specific instructions which was invalidly executed and could therefore be withdrawn.
26
Finally, Chandler attempts to distinguish McConnell from his case in that, in McConnell, the Commission withdrew its original warrant and issued a second one after the marshal's mistaken execution. In Chandler's case, the Commission released Chandler from the custody of the warrant and had the same warrant replaced as a detainer. Chandler contends that this action was not sufficient to constitute a withdrawal of the warrant. This difference is not significant. See Thigpen v. U.S. Parole Commission in which the Court of Appeals for the Seventh Circuit stated that "the withdrawal and reissuance of the old warrant instead of the issuance of an identical new warrant is surely an inconsequential difference of form...." 707 F.2d at 977.
CONCLUSION
27
This Court follows the Tenth Circuit decision in McConnell v. Martin in holding that a parole violator warrant is not validly executed if the attempted execution is contrary to the Parole Commission's instructions, and a warrant that was never validly executed can be withdrawn. The warrant for Chandler was not validly executed on August 9, 1982 in that the specific directions on the warrant stated that it should not be executed if the parolee was in state custody. Consequently, the Parole Commission had the authority to release Mr. Chandler from the custody of the warrant, have the warrant replaced as a detainer against him, and suspend the running of his parole violator term. Because the Parole Commission acted within its authority, the district court's order granting habeas corpus relief is REVERSED.
1
This memorandum of instruction on the warrant given to the Marshal Service was not part of the record before the district court. The government submitted a Motion to Expand the Record to include this document as part of the record on appeal. This document should have been included in the original record, but we admit it for purposes of completeness of the record on appeal. The district judge was aware of the content of this instruction; this was unquestionably the basis for his finding that the Marshal had improperly executed the warrant
2
The time Chandler spent in federal prison was credited to his Texas Department of Corrections Sentence. This Court, however, realizes that the allowance of credit was a discretionary action on the part of the state. We express concern as to the possibility, implicated by our holding today, of persons who are held in federal custody under an invalidly executed warrant being credited with no time to either their state or federal sentences. We believe that persons in such situations do have recourse against the government but that the remedy for this injustice lies outside of the statute governing the Parole Commission
3
Pub.L. 98-473, Title II, Sec. 218(a)(5), Oct. 12, 1984, 98 Stat. 2027, repealed sections 4201 to 4218 of the Act, effective Nov. 1, 1986. However, these sections remain applicable for five years to persons who committed offenses prior to the effective date
| {
"pile_set_name": "FreeLaw"
} |
810 F.2d 307
258 U.S.App.D.C. 188
Kellyv.Brinker
86-5092
United States Court of Appeals,District of Columbia Circuit.
2/12/87
1
D.C.D.C.
2
AFFIRMED *
| {
"pile_set_name": "FreeLaw"
} |
5 N.Y.3d 768 (2005)
PEOPLE v. RUIZ (MICHAEL)
Court of Appeals of the State of New York.
June 28, 2005.
Application in criminal cases for leave to appeal denied. (Graffeo, J.).
| {
"pile_set_name": "FreeLaw"
} |
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-01-00303-CR
Daniel Rodriquez Ortiz, Appellant
v.
The State of Texas, Appellee
FROM THE DISTRICT COURT OF RUNNELS COUNTY, 119TH JUDICIAL DISTRICT
NO. 4770, HONORABLE BEN WOODWARD, JUDGE PRESIDING
In November 2000, appellant Daniel Rodriguez Ortiz pleaded guilty to the felony
offense of retaliation, see Tex. Pen. Code Ann. ' 36.06 (West Supp. 2002), enhanced with two prior
felony convictions. As part of his plea agreement, the district court deferred adjudication of guilt and
placed appellant on community supervision for ten years. In May 2001, after a hearing on the State=s
motion to revoke, the court revoked appellant=s supervision, adjudicated him guilty, and imposed a
sentence of imprisonment for twenty-five years.
Appellant contends the district court failed to properly admonish him of the range of
punishment during his guilty plea. See Tex. Code Crim. Proc. Ann. art. 42.12, ' 5(a) (West Supp.
2002). In his sole point of error, appellant argues that, because the range of punishment for his
offense as enhanced was twenty-five to ninety-nine years instead of the fifteen to ninety-nine year range
as he was admonished, the trial court committed reversible error. Because appellant failed to
demonstrate that he was harmed by the incorrect admonishment, we affirm the judgment. (1)
DISCUSSION
The Code of Criminal Procedure sets forth at article 26.13 the necessary
admonishments that must be given to a criminal defendant in a felony guilty plea. See id. art. 26.13.
The pertinent sections of article 26.13 state:
(1) Prior to accepting a plea of guilty . . . the court shall admonish the defendant
of:
(1) the range of punishment attached to the offense;
*** *** ***
(c) In admonishing the defendant as herein provided, substantial compliance by
the court is sufficient, unless the defendant affirmatively shows that he was
not aware of the consequences of his plea and that he was misled or harmed
by the admonishment of the court.
Id.
Relying on Martinez v. State, 953 S.W.2d 804 (Tex. App.CCorpus Christi 1997),
rev=d, 981 S.W.2d 195 (Tex. Crim. App. 1998), appellant urges that an incorrect admonishment
as to the range of punishment at a guilty plea must necessarily result in the reversal of his
probation revocation. Appellant is correct that the facts of Martinez are similar to this case.
There, the court of appeals reversed Martinez=s conviction, holding that his initial plea of guilty
was not voluntarily made because he was incorrectly admonished as to the maximum range of
punishment for his offense. Id. at 807. Facing a range of two to ten years, Martinez was
mistakenly advised on his written form of the possibility of a life sentence. Id. Thus, the written
admonishment that appellant signed indicated that the punishment to which he was exposed was
Aconfinement in prison for life or for any term of not more than 10 years or less than 2 years.@
Id. at 805. In admonishing Martinez, the trial court inquired as to whether appellant was aware
of the applicable punishment range in his case, but did not iterate the actual range of
imprisonment he faced. Id. at 807.
But appellant=s reliance on Martinez is misplaced because it was reversed by the
court of criminal appeals. See Martinez v. State, 981 S.W.2d 195 (Tex. 1998). There, the court
held that when a record shows that the trial court delivered an incorrect admonishment regarding
the range of punishment, substantial compliance is attained so long as the actual sentence lies
within both the actual and misstated maximum. Id. at 197. Here, the actual sentence imposed falls
within the actual twenty-five to ninety-nine year punishment range and the admonished sentence of
fifteen to ninety-nine years. Thus, appellant must show harm different from the actual sentence
imposed.
Appellant does not assert, nor is there any indication in the record, that he would not
have entered a guilty plea if the minimum length of imprisonment had been twenty-five instead of
fifteen years. Among the consequences of a violation of the conditions of deferred adjudication
supervision is an adjudication of guilt, after which assessment of punishment and imposition of
sentence continue as if adjudication had not been deferred. Tex. Code Crim. Proc. Ann. art. 42.12, '
5(b) (West Supp. 2002). Following the adjudication, then, the court may assess any punishment
within the range applicable to the offense. Robinson v. State, 739 S.W.2d 795, 801 (Tex. Crim. App.
1987); see also Watson v. State, 924 S.W.2d 711, 714 (Tex. Crim. App. 1996) (A[W]hen a prosecutor
recommends deferred adjudication in exchange for a defendant=s plea of guilty or nolo contendere, the
trial judge does not exceed that recommendation if, upon proceeding to an adjudication of guilt, he
later assesses any punishment within the range allowed by law.@). This is true even if the original
guilty plea was made pursuant to a plea agreement. Ditto v. State, 988 S.W.2d 236, 239-40 (Tex. Crim.
App. 1999).
The record at the initial plea of guilty indicates that there may have been some
confusion over the minimum sentence the offense, as enhanced, carried. It was defense counsel who
suggested that the court was mistaken as to the range and that, as an habitual offender, appellant was
exposed to fifteen to ninety-nine years. But appellant does not claim that he did not know he could
receive a minimum of twenty-five years. Nor does he assert that he was more likely to plead guilty to
an offense carrying a minimum sentence of fifteen years than twenty-five. Appellant was sentenced
within the range of punishment as admonished by the trial court. We conclude that the district court
substantially complied with the requirements of article 26.13. (2)
Without a showing that his guilty plea was actually induced by the misinformation,
appellant has not demonstrated harm that would entitle him to reversal. See Brown v. State, 943 S.W.2d
35, 42 (Tex. Crim. App. 1997). The record contains no evidence that tends to show that appellant
was actually harmed or misled in making his initial determination to enter a guilty plea. He merely
argues that the information was incorrectly presented at his initial sentencing hearing.
We conclude that appellant has not demonstrated that he relied on the incorrect
portion of the admonishment in choosing to enter a plea of guilty. We further conclude that the trial
court substantially complied with its admonishment requirements. Appellant=s point of error is
overruled.
CONCLUSION
The judgment of conviction is affirmed.
Jan P. Patterson, Justice
Before Justices Kidd, Yeakel and Patterson
Affirmed
Filed: January 10, 2002
Do Not Publish
1. 1 Arguably, this contention should have been raised in an appeal from the original plea
proceeding. See Manuel v. State, 994 S.W.2d 658, 661-62 (Tex. Crim. App. 1999). The State
does not raise this issue and we do not address it.
2. 2 The court=s docket sheet carried the correct range of punishment. In his closing argument at the
time of sentencing, the prosecutor stated: AIn the Court granting the deferred adjudication last year, I
believe the Defendant realized that if he didn=t follow the terms of the probation he was looking at a
minimum of 25 if he was revoked.@ Defense counsel then responded that the court had two options:
AOne option is to go ahead and sentence him to 25 to 99 or life. Option number two would be to, on
the Court=s own motion, to place him back on a deferred adjudication.@ While there is no indication
that appellant saw the correct range on the docket sheet, there is nothing in the record to indicate
appellant was misled at the time of sentencing following his revocation. Appellant made no request to
withdraw his plea at the time of the revocation hearing, nor did he file a motion for new trial. See Tex.
R. App. P. 33.1(a).
| {
"pile_set_name": "FreeLaw"
} |
Case: 11-60051 Document: 00511901113 Page: 1 Date Filed: 06/27/2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 27, 2012
No. 11-60051
Lyle W. Cayce
Clerk
DERRICK BROWN, also known as Derrick Latory Brown,
Petitioner - Appellee
v.
CHRISTOPHER B. EPPS, COMMISSIONER, MISSISSIPPI DEPARTMENT OF
CORRECTIONS; ATTORNEY GENERAL OF THE STATE OF MISSISSIPPI,
Respondents - Appellants
Appeal from the United States District Court
for the Northern District of Mississippi
Before HIGGINBOTHAM, GARZA, and CLEMENT, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
A government informant set up a controlled drug deal with two
unidentified men. Their conversations were recorded and admitted into evidence
at the petitioner’s trial in state court. He was convicted. The Mississippi
Supreme Court upheld the conviction, concluding that the conversations were
not hearsay and did not violate the petitioner’s rights under the Confrontation
Clause. Subsequently, the petitioner successfully pursued collateral relief in
federal district court. We hold that the unidentified men’s recorded statements
were not testimonial, and therefore their admission did not violate the
Confrontation Clause. We reverse.
Case: 11-60051 Document: 00511901113 Page: 2 Date Filed: 06/27/2012
No. 11-60051
I.
On November 3, 2003, Antonio Echols, a confidential informant, contacted
the Panola County Narcotics Task Force (“Task Force”) Commander about
buying crack cocaine from Elmer “Little Fudge” Armstrong. Echols had already
spoken with Armstrong, who had put him on a three-way conference call with
two unidentified individuals. The drug deal was to take place at the Wal-Mart
in Senatobia, Mississippi.
At the Commander’s direction, Echols went to the Task Force office and
called the unidentified individuals to finalize the drug deal. The call was
recorded. The unidentified individuals told Echols that they had only two ounces
of crack cocaine to sell, which Echols agreed to buy. Echols was then searched,
wired, given $1,600 to use in the controlled buy, and dropped off at the
Wal-Mart. Echols waited in the Wal-Mart parking lot for approximately two
hours. While waiting, he made four phone calls to the unidentified individuals
to inquire as to their whereabouts, to decide how specifically they should meet,
and to specify what form of cocaine he wanted to purchase. Although the
unidentified individuals initially told Echols that they were coming in a blue
Monte Carlo, that changed to a white Delta 88. The Task Force recorded the
phone conversations through Echols’s body wire.
Law enforcement officers providing surveillance and security for the
controlled buy observed a white Delta 88 make its way to the Wal-Mart parking
lot. The petitioner, Derrick Brown, was the driver. Echols got into the back seat
of the car and handed the passenger, Derrick Black, $1,600 in exchange for a
plastic baggie. Law enforcement officers descended on the car and arrested
Brown and Black. The Mississippi Crime Laboratory confirmed that the plastic
baggie contained 1.53 ounces of crack cocaine.
In subsequent proceedings, neither Echols nor any of the law enforcement
officers identified the individuals with whom Echols spoke on the phone. The
audiotape recordings and transcripts of Echols’s phone conversations were
2
Case: 11-60051 Document: 00511901113 Page: 3 Date Filed: 06/27/2012
No. 11-60051
admitted into evidence at Brown’s trial in Mississippi state court with that
caveat. Ultimately, a jury found Brown guilty of the sale of cocaine as an aider
and abettor.
On direct appeal, Brown argued that the recordings and transcripts of
Echols’s phone conversations prior to the drug deal constituted hearsay and that
the trial court’s erroneous admission of this evidence prejudiced his defense and
violated his federal and state constitutional rights to confront adverse
witnesses.1 The intermediate appeals court concluded that the taped phone
conversations constituted hearsay and that admitting them substantially
prejudiced Brown, justifying a new trial.2 It did not reach the question of
whether admitting the taped phone conversations violated Brown’s federal and
state rights of confrontation.3
The Mississippi Supreme Court reversed, reinstating the trial court’s
judgment.4 It held that the unidentified individuals’ statements in the taped
phone conversations did not constitute hearsay under state law because they
were not offered to prove the truth of the matter asserted.5 It also held that the
trial court’s admission of the taped phone conversations did not violate Brown’s
federal and state constitutional rights to confront and cross-examine adverse
witnesses.6
After an unsuccessful attempt at state habeas alleging ineffective
assistance of counsel and insufficiency of the evidence, Brown filed the instant
1
Brown v. State, 969 So. 2d 891, 892, 894, 897 (Miss. Ct. App. 2007), rev’d, 969 So. 2d
855 (Miss. 2007) (en banc).
2
Id. at 898-99.
3
Id. at 899.
4
Brown, 969 So. 2d at 857.
5
Id. at 861-62.
6
Id. at 862-64.
3
Case: 11-60051 Document: 00511901113 Page: 4 Date Filed: 06/27/2012
No. 11-60051
§ 2254 petition arguing again that the evidence was insufficient to support his
conviction and also that the trial court’s admission of the taped phone
conversations violated his Sixth Amendment rights of confrontation and cross-
examination. The district court rejected Brown’s claim that the evidence was
insufficient to support his conviction,7 but it found Brown’s Confrontation Clause
argument persuasive.8 The district court determined that the taped phone
conversations were “clearly hearsay” and “clearly testimonial” because they were
presented to prove the “gist” of the conversations and to corroborate various
witnesses’ testimony, and also because Brown was denied an opportunity to
confront and cross-examine the unidentified individuals on the recordings.9 As
a result, the district court granted Brown’s § 2254 petition in part, vacated the
state trial court’s judgment, and ordered that Brown be released from custody,
including probation, unless the State were to initiate a new trial within 120
days.10 The State filed a timely notice of appeal, and the district court granted
a stay of its judgment pending appeal.11
II.
In an appeal from a district court’s grant of habeas relief, we review issues
of law de novo and factual findings for clear error.12 Mixed questions of law and
7
Brown v. Epps, 758 F. Supp. 2d 347, 354-56 (N.D. Miss. 2010). Brown does not appeal
the sufficiency ruling.
8
Id. at 356-61.
9
Id. at 357-58.
10
Id. at 361-62. Brown was initially sentenced to 15 years in prison, with 6 years
suspended pending his future good behavior. He was released on parole on February 12, 2009,
and remains under the supervision of the Mississippi Department of Corrections until his
sentence expires on October 18, 2015.
11
A certificate of appealability is not required because a representative of Mississippi
is appealing the district court’s grant of habeas relief. See FED. R. APP. P. 22(b)(3); DiLosa v.
Cain, 279 F.3d 259, 262 n.1 (5th Cir. 2002).
12
Fratta v. Quarterman, 536 F.3d 485, 499 (5th Cir. 2008).
4
Case: 11-60051 Document: 00511901113 Page: 5 Date Filed: 06/27/2012
No. 11-60051
fact, such as whether a defendant’s Confrontation Clause rights were violated,
are reviewed de novo “by independently applying the law to the facts found by
the district court, as long as the district court’s factual findings are not clearly
erroneous.”13
A federal court may not grant a petitioner habeas relief on a claim that
was adjudicated on the merits by the state court unless the state court decision
was (1) “contrary to, or involved an unreasonable application of, clearly
established Federal law, as determined by the Supreme Court,” or (2) “was based
on an unreasonable determination of the facts in light of the evidence presented
in the State court proceeding.”14 The state court’s factual findings are presumed
correct unless the petitioner rebuts those findings with clear and convincing
evidence.15
“‘A state court’s decision is contrary to clearly established federal law if it
applies a rule that contradicts the governing law set forth in Supreme Court
cases,’ or if the state court ‘decide[s] a case differently than the United States
Supreme Court previously decided a case on a set of nearly identical facts.’”16 A
state court’s decision is an unreasonable application of clearly established
federal law “if it ‘correctly identifies the governing legal rule but applies it
unreasonably to the facts of a particular prisoner’s case.’”17 An unreasonable
application of clearly established federal law “is different from a merely incorrect
or erroneous application; the state court decision must be an objectively
13
Id.
14
28 U.S.C. § 2254(d). Section 2254(d)(2) is not implicated here.
15
Id. § 2254(e)(1).
16
Jones v. Cain, 600 F.3d 527, 535 (5th Cir. 2010) (alteration in original) (citations
omitted) (quoting Fields v. Thaler, 588 F.3d 270, 273 (5th Cir. 2009), and Taylor v. Cain, 545
F.3d 327, 334 (5th Cir. 2008)).
17
Gregory v. Thaler, 601 F.3d 347, 352 (5th Cir. 2010) (quoting Penry v. Johnson, 532
U.S. 782, 792 (2001)).
5
Case: 11-60051 Document: 00511901113 Page: 6 Date Filed: 06/27/2012
No. 11-60051
unreasonable application.”18 To obtain relief under § 2254, the petitioner “must
show that the state court’s ruling on the claim being presented in federal court
was so lacking in justification that there was an error well understood and
comprehended in existing law beyond any possibility for fairminded
disagreement.”19
III.
The only question before us is whether the unidentified individuals’
statements in the recorded conversations setting up the drug deal are
testimonial under the Supreme Court’s Confrontation Clause jurisprudence.20
The Confrontation Clause of the Sixth Amendment states that “[i]n all criminal
prosecutions, the accused shall enjoy the right . . . to be confronted with the
18
Rogers v. Quarterman, 555 F.3d 483, 489 (5th Cir. 2009).
19
Harrington v. Richter, 131 S. Ct. 770, 786-87 (2011).
20
The scope of our review bears some explanation, as there are several issues in this
case we need not address. First, we do not decide whether the statements were hearsay. Only
testimonial hearsay implicates the Confrontation Clause. Davis v. Washington, 547 U.S. 813,
823-24 (2006). We conclude that the statements here were nontestimonial, so there is no need
for us to decide whether they were hearsay.
Second, we need not decide whether a confidential informant’s actions are essentially
actions of the police for purposes of Confrontation Clause analysis. Cf. Davis, 547 U.S. at 823
n.2 (assuming without deciding that the actions of 911 operators are “acts of the police”). The
answer to that question does not affect our conclusion that the statements here were
nontestimonial.
Third, Brown does not argue that admitting the conversations was so fundamentally
unfair that it violated his constitutional due process rights, and so we do not address that
question. See Pemberton v. Collins, 991 F.2d 1218, 1226 (5th Cir. 1993) (“A state court’s
evidentiary ruling presents a cognizable habeas claim only if it runs afoul of a specific
constitutional right or renders the trial fundamentally unfair.”); cf. Montana v. Egelhoff, 518
U.S. 37, 53 (1996) (plurality opinion) (“[E]rroneous evidentiary rulings can, in combination,
rise to the level of a due process violation.”); Duton v. Evans, 400 U.S. 74, 96-97 (1970)
(Harlan, J., concurring in result) (“[T]he Fifth and Fourteenth Amendments’ commands that
federal and state trials, respectively, must be conducted in accordance with due process of law”
are the “standard[s]” by which to “test federal and state rules of evidence.”).
Finally, see infra note 37 explaining why our focus is on the unidentified individuals’
statements rather than Echols’s.
6
Case: 11-60051 Document: 00511901113 Page: 7 Date Filed: 06/27/2012
No. 11-60051
witnesses against him.”21 In Crawford v. Washington,22 the Supreme Court held
that this right is violated when the prosecution introduces “testimonial
statements of a witness who did not appear at trial unless he was unavailable
to testify, and the defendant had a prior opportunity for cross-examination.”23
Because Crawford was decided prior to Brown’s 2005 trial, its rule applies.24
Only testimonial statements “cause the declarant to be a ‘witness’ within
the meaning of the Confrontation Clause.”25 “[A] statement that is not
testimonial cannot violate the Confrontation Clause.”26 The Crawford Court
described a testimonial statement as “‘[a] solemn declaration or affirmation
made for the purpose of establishing or proving some fact,’”27 a description which
includes “‘statements that were made under circumstances which would lead an
objective witness reasonably to believe that the statement would be available for
use at a later trial.’”28 The Court declined “to spell out a comprehensive
definition of ‘testimonial’” but noted that “at a minimum” it includes “prior
testimony at a preliminary hearing, before a grand jury, or at a former trial; and
21
U.S. CONST. amend. VI.
22
541 U.S. 36 (2004).
23
Id. at 53-54.
24
Cf. Fratta, 536 F.3d at 490 (citing Whorton v. Bockting, 549 U.S. 406 (2007)) (holding
that Crawford does not apply retroactively to cases whose direct appeal became final before
Crawford was decided).
25
Davis, 547 U.S. at 821.
26
United States v. Vasquez, 234 F. App’x 310, 313 (5th Cir. 2007) (unpublished) (per
curiam); accord Davis, 547 U.S. at 823-24 (answering the question “whether the Confrontation
Clause applies only to testimonial hearsay” in the affirmative because “[a] limitation so clearly
reflected in the text of the constitutional provision must fairly be said to mark out not merely
its ‘core,’ but its perimeter”).
27
541 U.S. at 51 (alteration in original) (quoting 2 NOAH WEBSTER, AN AMERICAN
DICTIONARY OF THE ENGLISH LANGUAGE (1828)).
28
Id. at 52 (quoting Brief for National Ass’n of Criminal Defense Lawyers et al. as
Amici Curiae at 3, Crawford, 541 U.S. 36 (No. 02-9410)).
7
Case: 11-60051 Document: 00511901113 Page: 8 Date Filed: 06/27/2012
No. 11-60051
. . . police interrogations.”29 The Court subsequently clarified that a statement
is not testimonial if it is procured for the primary purpose of allowing police to
assist in an ongoing emergency or if it is procured under other circumstances
where the primary purpose is not to create an out-of-court substitute for trial
testimony.30 In determining whether such circumstances exist, courts consider
whether the individual “was speaking about events as they were actually
happening, rather than ‘describ[ing] past events’”; whether the statements
enabled police to resolve an ongoing emergency; and whether the statements
were made in a formal setting.31 The Court has emphasized that “[a]n objective
analysis of the circumstances of an encounter and the statements and actions of
the parties to it provides the most accurate assessment of the ‘primary purpose
of the interrogation.’”32
No controlling authority specifies whether an unidentified declarant’s
statements to an undercover officer or confidential informant prior to an arrest
are testimonial, but persuasive authorities all point in the same direction. In
Davis, the Supreme Court observed in dicta that statements made unwittingly
to a government informant were “clearly nontestimonial.”33 In an unpublished
decision, United States v. Vasquez, this Court relied on the Supreme Court’s
observation in Davis to conclude that an unindicted coconspirator’s statements
made unwittingly to an undercover officer were not testimonial because there
was nothing in the record to suggest that the coconspirator was aware that his
29
Id. at 68.
30
See Michigan v. Bryant, 131 S. Ct. 1143, 1155 (2011) (citing Davis, 547 U.S. at 822).
31
Davis, 547 U.S. at 827 (alteration in original) (quoting Lilly v. Virginia, 527 U.S. 116,
137 (1999) (plurality opinion)); see id. at 826-28.
32
Bryant, 131 S. Ct. at 1156; see also Williams v. Illinois, No. 10-8505, slip op. at 31
(U.S. June 18, 2012) (plurality opinion) (discussing the objective “primary purpose” test).
33
547 U.S. at 825 (citing Bourjaily v. United States, 483 U.S. 171, 181-84 (1987)).
Crawford also cites Bourjaily with some approval. 541 U.S. at 58.
8
Case: 11-60051 Document: 00511901113 Page: 9 Date Filed: 06/27/2012
No. 11-60051
conversations were being recorded.34 Likewise, relying on Crawford, Davis, and
Vasquez, several district courts in this Circuit have held that statements
unknowingly made to an undercover officer, confidential informant, or
cooperating witness are not testimonial in nature because the statements “are
not made under circumstances which would lead an objective witness to
reasonably believe that the statements would be available for later use at
trial.”35 Many other Circuits have come to the same conclusion, and none
disagree.36 In sum, courts that have addressed similar questions would probably
agree that the phone conversations in this case were nontestimonial.37
34
234 F. App’x at 314.
35
United States v. Brown, No. 10-100-BAJ-SCR, 2011 WL 576901, at *5 (M.D. La. Feb.
9, 2011); see also United States v. Gilmore, No. 10-00200-02, 2012 WL 1577242, at *1 (W.D.
La. May 3, 2012); United States v. Ngari, No. 10-60-JJB, 2011 WL 5196538, at *7 (M.D. La.
Oct. 31, 2011); United States v. Stevens, 778 F. Supp. 2d 683, 691 (W.D. La. 2011); Laurent v.
Tanner, No. 10-1175, 2010 WL 5141871, at *19-20 (E.D. La. Nov. 4, 2010) (magistrate judge’s
report and recommendation), approved and adopted, 2010 WL 5151613 (E.D. La. Dec. 8, 2010).
36
See United States v. Dale, 614 F.3d 942, 956 (8th Cir. 2010); United States v. Smalls,
605 F.3d 765, 778 (10th Cir. 2010); United States v. Johnson, 581 F.3d 320, 325 (6th Cir. 2009);
United States v. Watson, 525 F.3d 583, 589 (7th Cir. 2008); United States v. Udeozor, 515 F.3d
260, 269-70 (4th Cir. 2008); United States v. Underwood, 446 F.3d 1340, 1347-48 (11th Cir.
2006); United States v. Hendricks, 395 F.3d 173, 182-84 (3d Cir. 2005); United States v. Saget,
377 F.3d 223, 229-30 (2d Cir. 2004).
37
In determining whether statements in a recorded conversation involving a
confidential informant are testimonial, some courts have drawn a distinction between the
informant’s statements and the unwitting target’s statements. Compare, e.g., United States
v. Gaytan, 649 F.3d 573, 579 (7th Cir. 2011) (finding an informant’s recorded statements
setting up a drug bust to be testimonial), with United States v. Tolliver, 454 F.3d 660, 665 (7th
Cir. 2006) (finding the taped statements of a sting operation’s target to be nontestimonial).
See generally Hendricks, 395 F.3d at 182 & n.9 (finding “some appeal” in treating a
confidential informant’s statements as testimonial). In this case, Brown’s focus is on the
unidentified individuals rather than Echols, as Echols appeared as a witness at trial.
Accordingly, we need not address the distinction. We note, however, that even if Echols had
not appeared at trial, his statements might have been admissible to put the unidentified
individuals’ statements into context and to make them intelligible to the jury. See Gaytan, 649
F.3d at 579-80; United States v. Moore, 365 F. App’x 800, 802 (9th Cir. 2010) (unpublished
memorandum opinion); Tolliver, 454 F.3d at 666; Hendricks, 395 F.3d at 184.
9
Case: 11-60051 Document: 00511901113 Page: 10 Date Filed: 06/27/2012
No. 11-60051
That is no coincidence: the convergence results from the straightforward
application of Crawford and its progeny. Even if the Supreme Court has not
comprehensively demarcated “testimonial statements,” every indicator that the
Court has ascribed to them do not apply to the statements at issue here. The
conversations did not consist of solemn declarations made for the purpose of
establishing some fact.38 Rather, the exchange was casual, often profane, and
served the purpose of selling cocaine. Nor were the unidentified individuals’
statements made under circumstances that would lead an objective witness
reasonably to believe that they would be available for use at a later trial.39 To
the contrary, the statements were furthering a criminal enterprise; a future trial
was the last thing the declarants were anticipating. Moreover, they were
unaware that their conversations were being preserved, so they could not have
predicted that their statements might subsequently become “available” at trial.40
The unidentified individuals’ statements were obviously not “prior testimony at
a preliminary hearing, before a grand jury, or at a former trial.”41 They also
were not part of a formal interrogation about past events—the conversations
were informal cell-phone exchanges about future plans—and their primary
purpose was not to create an out-of-court substitute for trial testimony.42
Applying to this case an image from Justice Scalia’s majority opinion in Davis,
“[n]o ‘witness’ goes into court to proclaim” that he will sell you crack cocaine in
38
See Crawford, 541 U.S. at 51.
39
See id. at 52.
40
See Watson, 525 F.3d at 589; Tolliver, 454 F.3d at 665; Underwood, 446 F.3d at 1347
(“Had [the defendant] known that [the confidential informant] was a confidential informant,
it is clear that he never would have spoken to her in the first place.”).
41
Crawford, 541 U.S. at 68.
42
See Davis, 547 U.S. at 822, 826-27; see also Bryant, 131 S. Ct. at 1155.
10
Case: 11-60051 Document: 00511901113 Page: 11 Date Filed: 06/27/2012
No. 11-60051
a Wal-Mart parking lot.43 An “objective analysis” would conclude that the
“primary purpose” of the unidentified individuals’ statements was to arrange the
drug deal.44 Their purpose was “not to create a record for trial and thus is not
within the scope of the [Confrontation] Clause.”45 We conclude that the
statements were nontestimonial.
Because we so conclude, it is apparent that the Mississippi Supreme
Court’s Sixth Amendment ruling was not “contrary to” or “an unreasonable
application of clearly established Federal law, as determined by the Supreme
Court.”46 Brown has established no basis for granting federal habeas relief.
IV.
The judgment of the district court is REVERSED.
43
Davis, 547 U.S. at 828.
44
Bryant, 131 S. Ct. at 1156-57.
45
Id. at 1155.
46
28 U.S.C. 2254(d)(1).
11
| {
"pile_set_name": "FreeLaw"
} |
In the United States Court of Federal Claims
No. 14-251 C
(Filed December 2, 2015)
UNPUBLISHED
**********************
BISHOP HILL ENERGY LLC, *
* Anti-Assignment Act, 31 U.S.C.
Plaintiff, * § 3727 (2012); Attempted
* Assignment of Claim to Parent
v. * Corporation When Subsidiary Is
* Sold to Third Party.
THE UNITED STATES, *
*
Defendant. *
**********************
John C. Hayes, Jr., Washington, DC, for plaintiff. Alycia A. Ziarno and
Brian P. Donnelly, Washington, DC, of counsel.
Miranda Bureau, United States Department of Justice Tax Division, with
whom were Caroline D. Ciraolo, Acting Assistant Attorney General, David I.
Pincus, Chief, G. Robson Stewart, Assistant Chief, Blaine G. Saito, Trial Attorney,
Washington, DC, for defendant.
________________________
OPINION
________________________
Bush, Senior Judge.
The court has before it Plaintiff’s Motion to Substitute Invenergy Wind
LLC as Plaintiff, filed October 7, 2015. The impetus for the motion is the pending
sale of plaintiff to another corporate entity. Defendant opposes the motion and
proposes a compromise solution where Invenergy Wind LLC would be joined as
an additional plaintiff under Rule 25(c) of the United States Court of Federal
Claims (RCFC), rather than substituted as the sole plaintiff. Because defendant’s
compromise solution avoids a violation of the Anti-Assignment Act, 31 U.S.C.
§ 3727 (2012), and preserves plaintiff’s claim, the court endorses defendant’s
compromise solution. Accordingly, as explained below, plaintiff’s motion must be
denied because the substitution of plaintiff proposed therein is invalid under the
Act.
I. Proposed Assignment of Claim and Substitution of Plaintiff
There is a parent-subsidiary relationship between Invenergy Wind LLC (the
parent, hereinafter “Invenergy Wind”) and Bishop Hill Energy LLC (the
subsidiary and plaintiff in this suit, hereinafter “Bishop Hill”). The relationship
between these entities has been described by plaintiff in three different filings.
First, in a prior discovery dispute, plaintiff described the relationship in this
manner:
From an organizational chart perspective, Bishop Hill is
connected up through eight other entities to Invenergy
Wind LLC (DE).
Pl.’s Mot. of Apr. 7, 2015, at 2. More recently, arguing for substitution of
Invenergy Wind as plaintiff in this suit, plaintiff has provided more detail
regarding this chain of “eight other entities”:
At the time this lawsuit was filed, Bishop Hill was a
direct, wholly owned subsidiary of Bishop Hill Holdings
LLC (“BH Holdings”). One hundred percent of the
active, controlling membership interests in BH Holdings
are owned by Bishop Hill Class B Holdings LLC (“BH
Class B Holdings”), which in turn is an indirect, wholly
owned subsidiary of Invenergy Wind LLC (“Invenergy
Wind”).
Pl.’s Mot. at 2 (footnote omitted). Plaintiff noted, however, that there is another
owner of interests in one of the entities separating Bishop Hill from Invenergy
2
Wind:
Firststar Development LLC (“Firstar”), a subsidiary of
U.S. Bancorp, owns certain passive, non-controlling
membership interests in BH Holdings. Firstar is the tax
equity investor for the Bishop Hill Facility.
Id. at 2 n.1. Finally, in plaintiff’s reply brief regarding its motion to substitute,
after noting that Invenergy Wind is “a parent” of Bishop Hill, Pl.’s Reply at 1,
plaintiff asserts that “Invenergy Wind is selling two wholly owned subsidiaries,
but retaining all rights to pending lawsuits through an assignment agreement,” id.
at 2. Although what plaintiff means by “wholly owned subsidiaries” in its reply
brief is far from clear, plaintiff has adequately identified the nature of the
relationship between Bishop Hill and Invenergy Wind for the purposes of deciding
plaintiff’s motion to substitute Invenergy Wind for Bishop Hill as the sole plaintiff
in this suit.
The next entity referenced in plaintiff’s motion is the proposed purchaser of
Bishop Hill:
Invenergy Wind, through its subsidiaries, has agreed to
sell Bishop Hill to an affiliate of SunEdison, Inc., an
unrelated third party.
Pl.’s Mot. at 2. The affiliate of SunEdison, Inc. which has agreed to purchase
Bishop Hill is identified by plaintiff in its reply brief as “TerraForm IWG
Acquisition Holdings,” or “TerraForm.” Pl.’s Reply at 3. Thus, if the court
understands plaintiff’s upcoming business transaction, the subsidiaries of
Invenergy Wind, which include at least one entity owned in part by Firststar
Development LLC, intend to sell Bishop Hill to TerraForm. Id. As to the nature
of Bishop Hill’s current business, it appears to include a “wind energy facility
[put] into service in 2012.” Pl.’s Mot. at 1.
Rather than attempting to sell all of Bishop Hill’s assets to TerraForm, the
subsidiaries of Invenergy Wind intend to split off and retain the claim presented in
this suit by assigning it to Invenergy Wind:
3
Since this lawsuit was filed, Invenergy Wind, through its
subsidiaries, has agreed to sell Bishop Hill to an affiliate
of SunEdison, Inc., an unrelated third party. As part of
the purchase and sale agreement, Invenergy Wind will
retain ownership of all rights and interests in this lawsuit.
Consequently, Bishop Hill now seeks to substitute
Invenergy Wind, as transferee of Bishop Hill’s interest in
this case, as plaintiff in the lawsuit.
Pl.’s Mot. at 2. Both parties recognize that the assignment of plaintiff’s claim
against the United States implicates the Anti-Assignment Act. The parties
disagree, however, as to whether the substitution of Invenergy Wind for Bishop
Hill as plaintiff would violate the Act.
II. Relevant Statutory Framework
The court begins with the plain text of the Act:
(a) In this section, “assignment” means –
(1) a transfer or assignment of any part of a claim
against the United States Government or of an interest in
the claim; or
(2) the authorization to receive payment for any part of
the claim.
(b) An assignment may be made only after a claim is
allowed, the amount of the claim is decided, and a
warrant for payment of the claim has been issued.
31 U.S.C. § 3727 (emphasis added). Nonetheless, for over one hundred years
courts have interpreted the Act to permit the assignment of claims, even when the
claim has not been litigated to a conclusion, under certain conditions which do not
implicate the hazards which the Act was designed to prevent. Goodman v.
Niblack, 102 U.S. 556, 559-62 (1880). The largest group of judge-made
exceptions to the Act falls under the category of transfers “by operation of law,” a
4
category to which the court now turns.
III. Exceptions to the Act in Caselaw
The Court of Claims has reviewed exemptions from the Act created by
judicial decision:
Despite the broad language of the Act, and the courts’
tendency at an earlier time to read it as an all-inclusive
prohibition, numerous classes of assignments, although
literally within the statutory ambit, have been judicially
exempted from its operation. The largest category of
excised assignments are those which, in one form or
another, occur by operation of law. Various such
assignments which are regularly held to be unaffected by
the Act include the passage of claims to heirs and
devisees, transfers made incident to proceedings in
bankruptcy or receivership, transfers by the succession of
one business entity for another, assignments made by
judicial sale or order, and assignments produced by
operation of the law of subrogation. These classes of
assignments are all thought to be outside the statute’s
scope because none of them threatens the dangers
Congress sought to avoid by enacting the prohibition.
Keydata Corp. v. United States, 504 F.2d 1115, 1118 (Ct. Cl. 1974) (citations
omitted). The court notes that the sale of a subsidiary to an unrelated third party,
and the simultaneous assignment of a legal claim of that subsidiary to a “parent”
company, are not among the identified transfers of claims against the United States
that are exempted from the operation of the Anti-Assignment Act in precedent
binding upon this court. Instead, there is a split in non-binding authority as to
whether such an assignment violates the Act.
In one case, National Australia Bank v. United States, 54 Fed. Cl. 238
(2002), the court determined that certain corporate assignments of claims against
the United States did not violate the Act. Id. at 240 (“The Anti-Assignment Act is
not offended by National Australia Bank choosing to refrain from collapsing its
5
corporate structure and merely retaining the claim [when it sold its subsidiaries]”).
There may have been particular factual circumstances in National Australia Bank
which influenced the court’s analysis of assignments under the Act. For example,
the subsidiaries in National Australia Bank were wholly owned by the parent. 54
Fed. Cl. at 239. Here, in contrast, Bishop Hill’s owners are mixed. See Pl.’s Mot.
at 2 n.1. When multiple owners of a subsidiary are involved, as here, the sale of
the subsidiary is not as straightforward as the scenario outlined in National
Australia Bank. Cf. 54 Fed. Cl. at 240 (noting in that case that the parent
corporation could have “collapsed” its structure to absorb its wholly owned
subsidiaries and their claims against the United States). Thus, National Australia
Bank is factually distinguishable from this case, and the holding in that case is not
necessarily applicable here.
Furthermore, National Australia Bank, a very short opinion, summarizes
precedent pertaining to the Anti-Assignment Act in ways which could be
misconstrued. For example, the court states that when “a claim is transferred to a
different corporation by virtue of a merger or sale, [such] an event . . . does not
trigger the Anti-Assignment Act.” National Australia Bank, 54 Fed. Cl. at 239
(citing Kingan & Co. v. United States, 44 F.2d 447, 451 (Ct. Cl. 1930)). The
holding in Kingan, however, is more narrow in scope than the above-cited
statement in National Australia Bank.
Much of the holding in Kingan is founded upon a discussion of the Act in a
case decided by the United States Supreme Court:
“We cannot believe that Congress intended to
discourage, hinder or obstruct the orderly merger or
consolidation of corporations as the various states might
authorize for the public interest. There is no probability
that the United States could suffer injury in respect of
outstanding claims from such union of interests and
certainly the result would not be more deleterious than
would follow their passing to heirs, devisees, assignees
in bankruptcy, or receivers, all of which changes of
ownership have been declared without the ambit of the
statute. The same principle which required the
exceptions heretofore approved applies here.”
6
44 F.2d at 451 (quoting Seaboard Air Line Ry. v. United States, 256 U.S. 655, 657
(1921)). Kingan thus stands for the proposition that when corporations are
merged or consolidated, the assignment of claims against the United States from
the former entities to the newly-created entities does not offend the Anti-
Assignment Act. In addition, corporate restructuring which cannot be strictly
classified as a merger or a consolidation is also, by analogy, inoffensive under the
Act. See id. (“[C]ertainly Congress did not intend to discourage or obstruct an
orderly reorganization under the laws of the various states any more than it
intended to discourage and obstruct orderly merger or consolidation of
corporations under these laws.”).
It is also important to note that Kingan is not on all fours with the case at
bar. In Kingan, a British company was reformed as an American company, which
later split off its non-American business to a newly-formed British company of its
own creation and control. 44 F.2d at 447-48. A claim against the United States,
held by the old British company, was transferred to the American successor
company as the old British company dissolved, and this transfer was held to not
offend the Anti-Assignment Act. Id. at 451. Because that transaction was more
akin to a testamentary transfer, merger or bankruptcy, the assignment in Kingan
raised no concerns of the type addressed by the Act. Plaintiff’s proposed
substitution, on the other hand, arises from very different facts – instead of a
reborn company with a slightly altered name (changed from Kingan & Co., Ltd. to
Kingan & Co., Inc.), the assignment here involves a sale of assets to a third party
while a parent company simultaneously retains a subsidiary’s legal claim against
the United States.
Not only is the corporate transaction in Kingan entirely different from the
one envisioned by Bishop Hill and Invenergy Wind, the underlying business
context is also markedly distinguishable. In the case of Kingan, the physical asset
involved in the claim against the United States was a packing plant whose
operations triggered disputes over income tax liabilities which later matured into
the plaintiff’s claims. 44 F.2d at 447-48. The packing plant, along with all related
claims and liabilities, was transferred from the old British company to the
American successor. Id. The American successor continued to operate the plant.
Here, in contrast, a third party owner will take over Bishop Hill’s wind energy
facility. Because Kingan approved of an assignment under radically different
7
facts,1 the court cannot endorse plaintiff’s reading of National Australia Bank,
which relied almost exclusively on Kingan for this issue. Further, to the extent
that National Australia Bank may be construed to have extended Kingan beyond
the scope of the precedential holding in that case, the court declines to follow such
a reading of National Australia Bank in this case.
At least one judge of this court has declined to follow National Australia
Bank and its interpretation of the Anti-Assignment Act. Centers v. United States,
71 Fed. Cl. 529 (2006). The court in Centers noted that the facts under review in
that case were basically indistinguishable, in all material aspects, from those in
National Australia Bank. Id. at 535. A corporation, “Centennial,” attempted to
sell a small portion of its assets to a third party, while assigning its claim against
the United States and most of its assets to its sole shareholder, Mr. Centers. Id. at
531. The court ruled that the assignment of the claim against the United States to
Mr. Centers violated the Act:
We think that transfers such as these implicate one, and
perhaps two, of the recognized policies behind the Act.
First, voluntary assignments such as the Centennial-
Centers assignment present the possibility of double
claimants. Indeed, in our case that possibility became
manifest when Centennial sought reimbursement from
[the United States] even after the assignment. That the
subsidiary corporations in National Australia Bank did
not attempt to recover on the assigned claim should not
obscure the fact that the Government was vulnerable to
multiple claimants and double payment. It is the very
possibility of multiple claimants that the Anti-
Assignment Act is intended to prohibit.
Second, these transfers may adversely affect the
availability of defenses and set-offs that the Government
1
/ A similar case is Kawneer Co. v. United States, 100 Ct. Cl. 523, 538-39 (1943), which
held that a corporate parent could consolidate its wholly-owned subsidiary into the parent and
simultaneously assign the subsidiary’s claim against the United States to the parent without
offending the Act.
8
would have had against the assignor. In this case, [the
government] may have lost the ability to raise defenses
and set-offs available vis-à-vis Centennial with respect
to the claim now being advanced by Mr. Centers. Under
the law of assignments, the Government’s defenses in a
suit by Mr. Centers would be limited to those offsets and
counterclaims against Centennial that existed at the time
of the assignment. The Government would lose those
defenses and counterclaims that arose after the
assignment. No such limits exist if Centennial sues on
its retained claim.
Id. at 535 (citations omitted).
Most important, in the court’s view, is the fact that the Centers opinion gave
significant weight to the potential dangers of the assignment in question, and also
noted that corporate sales which split assets from claims against the United States
are not recognized as an exception to the Anti-Assignment Act in precedent
binding on this court. Id. This is a prudent approach and Centers guides the
court’s analysis in this case. Because the sale of Bishop Hill to TerraForm does
not fit within any of the recognized exceptions to the Anti-Assignment Act, under
Centers this fact weighs against plaintiff’s request to substitute Invenergy Wind
for Bishop Hill as plaintiff in this suit. The court now turns to the parties’
arguments regarding the dangers inherent in the assignment proposed by plaintiff
in this case.
IV. Dangers Avoided by Enforcement of the Anti-Assignment Act
It is not necessary to review all of the dangers that the Anti-Assignment Act
is designed to prevent. As in Centers, only two types of dangers are potentially
present here. First, the Act seeks to “prevent possible multiple payment of claims,
to make unnecessary the investigation of alleged assignments, and to enable the
Government to deal only with the original claimant.” United States v. Aetna Cas.
& Sur. Co., 338 U.S. 366, 373 (1949) (Aetna) (citations omitted). Another
purpose is to preserve the government’s defenses, counterclaims and rights to set-
off against the claim. United States v. Shannon, 342 U.S. 288, 291-92 (1952)
(citation omitted). The parties vigorously debate whether these dangers are
9
present in the substitution of plaintiff proposed here.
The court finds that some of these dangers are already demonstrably
present, and others are potentially present. The government has already been
obliged to “investigate the alleged assignment” in order to discern whether the sale
agreement clearly resolves the future ownership of the claim presented in this suit.
See Def.’s Mot. for an Enlargement of Time of Oct. 21, 2015, at 2-3 (detailing
government counsel’s efforts to research the terms of the purchase and sale
agreement underlying the assignment at issue in plaintiff’s motion). The purchase
and sale agreement attached to defendant’s opposition brief includes one hundred
eighty-seven pages, and the business transactions described therein appear to be
quite complex.2 The assignment of plaintiff’s claim envisioned in this corporate
sale does not appear to be nearly as simple as the assignments approved in Kingan
or Kawneer, for example. On these facts, the assignment of plaintiff’s claim to
Invenergy Wind already poses one of the types of dangers addressed by the Act,
i.e., the need for the government to investigate “alleged assignments” of claims
against the United States. Aetna, 338 U.S. at 373.
In addition, according to defendant, “[t]he Purchase Agreement [which
governs the sale of Bishop Hill to TerraForm] says nothing about future
counterclaims that could arise.” Def.’s Opp. at 5. Plaintiff’s reply brief does not
refute defendant’s assertion. It is therefore unclear to the court whether defendant
will “deal only with the original claimant,” i.e., Bishop Hill, or will be obliged to
prosecute any counterclaims against both Bishop Hill, under new ownership, and
Invenergy Wind. This, too, is a danger that the Act seeks to prevent.
As far as the danger of multiple payments is concerned, plaintiff argues that
multiple payments are not a concern here because Bishop Hill will have assigned
its rights under this suit to Invenergy Wind. Pl.’s Reply at 3. In plaintiff’s view,
there is no legitimate possibility that Bishop Hill . . . ,
following the substitution of Invenergy Wind as plaintiff
in this case, will then file [a] separate suit[] against
2
/ The court has not conducted an in-depth review of the documents attached to
defendant’s opposition brief and states no position as to the legal effect of the purchase and sale
agreement’s terms.
10
Treasury. Bishop Hill . . . ha[s] agreed to transfer all
rights in [its] claims to Invenergy Wind in full view of
both Treasury and this Court. It would defy all reason
and common sense for Bishop Hill . . . to then attempt to
bring separate claims following such a public
assignment.
Id. Defendant argues that such assurances do not prevent a subsequent suit from
being filed, which could result in multiple claimants and multiple payments.
Def.’s Opp. at 10-11.
The court must agree with defendant. Although plaintiff insists that it is
only multiple payments that concern courts when considering the Act, Pl.’s Reply
at 3, it is clear that multiple claimants are also a legitimate concern. See, e.g.,
Aetna, 338 U.S. at 373 (stating that the Act “enable[s] the Government to deal
only with the original claimant”); Kingsbury v. United States, 563 F.2d 1019, 1024
(Ct. Cl. 1977) (holding that the Act “protects the Government from responding to
others than [the original claimant], on her claim”). The court considers the danger
of multiple payments and/or multiple claimants to be potentially present in this
proposed assignment as well.
Finally, the court turns to the issue of government counterclaims, defenses
and rights to set-off. Defendant argues that cases of the same type as this one
sometimes involve counterclaims, defenses and rights to set-off, and that the Act
functions to preserve those defenses for the government. Def.’s Opp. at 9-10.
Plaintiff asserts, inaccurately, that there is no binding precedent which holds that
the preservation of counterclaims and defenses is a purpose of the
Anti-Assignment Act. Pl.’s Reply at 7. The Court of Claims in Kingsbury clearly
noted such a purpose in the Act and that decision of the Court of Claims, among
others, provides binding precedent for this court. See 563 F.2d at 1024 (stating
that one of the three basic objectives of the Act is “to preserve for the Government
defenses and counterclaims which might not be available against an assignee”);
see also, e.g., Webster Factors, Inc. v. United States, 436 F.2d 425, 430 (Ct. Cl.
1971) (holding an assignment to be “violative of the Anti-Assignment of Claims
Act [in part because] it would deny the Government the right to set off certain
downward tax adjustments from the upward tax adjustments in rent”) (citations
omitted).
11
Plaintiff’s fall-back position is that defendant has failed to identify potential
counterclaims that are at risk in the proposed assignment of its claim to Invenergy
Wind. Plaintiff argues, for example, that any counterclaims would be as viable
against Invenergy Wind as against Bishop Hill. Pl.’s Reply at 8-9. Plaintiff also
contends that the government could always join Bishop Hill as a party if a
counterclaim arose that was only valid against Bishop Hill and not against
Invenergy Wind. Id. at 9.
The court is not convinced by plaintiff’s arguments. It is well-established
that the impairment of the government’s defenses, counterclaims and rights to set-
off are valid concerns enshrined in the Anti-Assignment Act. Splitting the claim
against the United States from the company operating the wind energy facility has
the potential for limiting the government’s ability to protect its interests in this
litigation. Defendant has adequately identified potential counterclaims that it
might choose to raise in this suit. Def.’s Opp. at 9-10 & n.5. The assignment
proposed by Bishop Hill, which could impair if not eliminate some of the
defenses, counterclaims and rights to set-off that might otherwise be available to
defendant, therefore poses yet another danger which the Act seeks to eliminate.
V. Preservation of Plaintiff’s Claim
The numerous dangers inherent in the assignment envisioned by plaintiff
and the substitution of Invenergy Wind for Bishop Hill as plaintiff in this suit
show that the procedure proposed by plaintiff violates the Anti-Assignment Act.
Binding precedent compels the conclusion that the purchase and sale agreement,
as summarized by plaintiff, cannot, by itself, be effective under the Act to assign
plaintiff’s claim to Invenergy Wind. In such a circumstance, the claim against the
United States would remain with Bishop Hill. See, e.g., Wall Indus., Inc. v. United
States, 10 Cl. Ct. 82, 106 (1986) (“‘[A]n attempted assignment of a claim against
the United States does not forfeit the claim. It leaves the claim where it was
before the purported assignment [i.e., with the assignor].’” (quoting Colonial
Navigation Co. v. United States, 181 F. Supp. 237, 247 (Ct. Cl. 1960)) (emphasis
removed) (alteration in the original)). Thus, defendant’s compromise solution,
whereby plaintiff and Invenergy Wind would be joined as co-plaintiffs in this suit,
generously provides plaintiff with the means for litigating its claim and avoiding
plaintiff’s proposed violation of the Anti-Assignment Act.
12
Plaintiff, somewhat incongruously, urges the court to reject defendant’s
compromise solution (and the proposed preservation of plaintiff’s claim) on
standing grounds. Pl.’s Reply at 9-10. According to plaintiff, Bishop Hill and
“Invenergy Wind would not both have standing to simultaneously bring the
same . . . claim.” Id. at 9. Plaintiff cites no authority, however, for its standing
argument, and the court declines to adopt plaintiff’s contentions with regard to the
standing issue where only a bare unsupported assertion has been presented for the
court’s review.
The court agrees with plaintiff, however, that there are fundamental
differences between this case and Rochester Gas & Electric Corp. v. United
States, 65 Fed. Cl. 431 (2005), the case relied upon by defendant as authority for
its compromise solution. Nonetheless, the procedural innovation in Rochester,
which permitted joinder, rather than substitution, of the buyer and seller of a
nuclear power plant as co-plaintiffs, appears just as appropriate in this case. As
defendant argues, “joining Invenergy Wind as a plaintiff to the case[] would help
preserve set-offs and counterclaims that could arise and prevent multiple claims.”
Def.’s Opp. at 14. Even plaintiff notes the utility of having Invenergy Wind
participate in this suit, because TerraForm, the new owner of Bishop Hill, would
basically be a stranger to this suit. Pl.’s Reply at 4-5. The court finds that
defendant’s compromise solution advances many of the purposes of the Act and
provides for practical litigation efficiencies as well.
The court acknowledges that there is slim authority for the solution that the
government proposes. This court has, at least once, permitted co-plaintiffs to
continue to pursue a claim against the United States, even after an attempted
assignment between the plaintiffs was held to be void because of the Anti-
Assignment Act. Sun Cal, Inc. v. United States, 21 Cl. Ct. 31, 36-37 & n.3 (1990)
(citations omitted). But it is clear that the assignee of an invalid assignment
occupies a precarious position in the litigation. Id. at 37 n.3. The court notes, too,
that joinder, in certain circumstances, was disfavored in Shannon. See 342 U.S. at
293-94 (“[T]his theory that an assignee can avoid the Act by joining his assignor
as a party defendant or an unwilling party plaintiff, would not only subvert the
purposes of the Act but flood the courts with litigation . . . . We do not believe the
Act can be by-passed by the use of any such procedural contrivance.”).
The deciding factor in the current dispute, in the court’s view, is that
13
defendant has consented to joinder in this case. It is clear that the government
may waive the protections provided by the Anti-Assignment Act. See, e.g.,
Delmarva Power & Light Co. v. United States, 542 F.3d 889, 893 (Fed. Cir. 2008)
(“We see no valid reason why the government should not . . . be able to waive the
Anti-Assignment Act’s prohibition in section 3727(a) against the assignment of
claims.”). Although the full extent of the waiver here is not clear, at the very least
defendant does not object to Invenergy Wind’s participation in this suit. That is
enough to proceed with this litigation with Bishop Hill and Invenergy Wind as co-
plaintiffs.
CONCLUSION
For the foregoing reasons, it is hereby ORDERED that Plaintiff’s Motion to
Substitute Invenergy Wind LLC as Plaintiff, filed October 7, 2015, is DENIED.
Plaintiff shall FILE either a Motion to Join Invenergy Wind LLC as Plaintiff
under RCFC 25(c), or a Notice informing the court of any agreed-upon
alternative to its proposed assignment, on or before December 15, 2015.
/s/Lynn J. Bush
LYNN J. BUSH
Senior Judge
14
| {
"pile_set_name": "FreeLaw"
} |
388 F.3d 1150
Betty BROWN, on Behalf of Talvis WILLIAMS, Appellant,v.Jo Anne B. BARNHART, Commissioner of Social Security, Appellee.
No. 03-3248.
United States Court of Appeals, Eighth Circuit.
Submitted: May 14, 2004.
Filed: November 18, 2004.
Appeal from the United States District Court for the Western District of Missouri, Fernando J. Gaitan, Jr., J.
James H. Green, argued, Kansas City, MO, for appellant.
Mark S. Naggi, argued, Kansas City, MO, for appellee.
Before MORRIS SHEPPARD ARNOLD, BEAM, and MELLOY, Circuit Judges.
MORRIS SHEPPARD ARNOLD, Circuit Judge.
1
Betty Brown applied for supplemental security income benefits (SSI) under the Social Security Act on behalf of her son, Talvis Williams, based on an impairment to his right leg. An administrative law judge (ALJ), after holding a hearing, determined that Talvis was not disabled, and the Social Security Appeals Council denied Ms. Brown's request for review. The district court1 upheld the administrative decision, and Ms. Brown appealed. We affirm.
I.
2
We review the district court's decision upholding the denial of benefits de novo. See Pettit v. Apfel, 218 F.3d 901, 902 (8th Cir.2000). We will affirm the Social Security Commissioner's decision to deny benefits if there are no errors of law and it is supported by substantial evidence in the record as a whole. See Collins ex. rel. Williams v. Barnhart, 335 F.3d 726, 729 (8th Cir.2003).
3
A minor child is considered disabled and thus entitled to SSI if he or she "has a medically determinable physical or mental impairment, which results in marked and severe functional limitations," and which has lasted or is expected to last at least a year. 42 U.S.C. § 1382c(a)(3)(C)(i). Where, as here, the child is not gainfully employed, the ALJ must first determine whether the child has a "severe" impairment or combination of impairments. 20 C.F.R. §§ 416.924(a), (b), (c). If so, the child is disabled if the impairments meet or are medically equal to the listed impairments set out in the regulations. See 20 C.F.R. §§ 416.924-416.926; 20 C.F.R. Pt. 404, Subpt. P, App. 1. Even if the impairments do not come within a listing, benefits are available to a child whose impairments are "functionally equal" to the listed impairments. See 20 C.F.R. §§ 416.924(a), (d), 416.926a; Garrett ex rel. Moore v. Barnhart, 366 F.3d 643, 647-48 (8th Cir. 2004).
4
According to the record, in 1999, when Talvis was nine years old, he was diagnosed with right foot drop (inability to hold his foot horizontal) indicative of weakness in his lower right leg. One of his doctors described him as shuffling somewhat when walking, and Talvis also developed some atrophy in his right calf muscle. Although his leg sometimes failed him, this improved after he began wearing a foot brace. After testing was performed, Talvis was eventually diagnosed as having an inflammatory neuropathy of the peroneal nerve in his right lower leg. The ALJ determined that Talvis's "right leg peroneal inflammatory neuropathy" was a severe impairment. But the ALJ concluded that Talvis was not disabled because his impairment did not "meet or medically equal or functionally equal" the listed impairments.
II.
5
On appeal, Ms. Brown argues that Talvis's impairment met a listing and that the ALJ, in reaching a contrary conclusion, erroneously ignored medical evidence and relied on his own observations. At the hearing, counsel stated that Talvis met listing 112.02 (organic mental disorder), but Ms. Brown acknowledges on appeal that the ALJ properly rejected this assertion. In his decision, the ALJ also concluded generally that Talvis's impairment was not equal in medical significance or severity to any listed impairment, did not result in functional limitations equal to those in any listed impairment, and therefore did not meet and was not medically equal to any listed impairment.
6
Ms. Brown contends that Talvis's right leg impairment meets the requirements of listing 101.03 as a "[d]eficit of musculoskeletal function due to deformity or musculoskeletal disease" that results in walking that "is markedly reduced in speed or distance despite orthotic or prosthetic devices." "For a claimant to show that his impairment matches a listing, it must meet all of the specified medical criteria." Sullivan v. Zebley, 493 U.S. 521, 530, 110 S.Ct. 885, 107 L.Ed.2d 967 (1990). The Commissioner contends that Talvis's ability to walk is not "markedly reduced in speed or distance" by his impairment and, moreover, that the listings in 101.00 and the sections following address only the musculoskeletal system, and Talvis's impairment is neurological. We note that listing 101.00(B)(1) does state that "[i]mpairments with neurological causes" are to be evaluated instead under 111.00 and the sections following, and listing 111.06 for "[m]otor dysfunction (due to any neurological disorder)" requires, inter alia, a "deficit" of motor function for "two extremities."
7
We believe, however, that regardless of what listing comes closest to Talvis's condition, there is substantial evidence to support the ALJ's overall conclusion that Talvis's impairment did not meet or medically equal any listing, including both 101.03 and 111.06. Cf. Pepper ex rel. Gardner v. Barnhart, 342 F.3d 853, 855 (8th Cir.2003). As the ALJ noted, Talvis does not use a cane or any other ambulatory device to assist him with walking. At the hearing, Talvis and his mother testified that he played basketball with his neighborhood friends. Furthermore, on a function report prepared before the hearing, Ms. Brown indicated that Talvis was not limited in his ability to walk and was able to go up and down stairs. As Ms. Brown points out, one of the doctors who evaluated Talvis's medical records for the state (but did not treat or examine him) described his motor development as "markedly limited," but a treating doctor reported that Talvis was "able to keep up fairly well" when he wore his foot brace. Other medical records indicate that he was able to walk on his toes but not on his heels.
8
Ms. Brown argues that the ALJ improperly relied for his decision on his own observation that Talvis walked "with only a slight gait disturbance" during the hearing and "did not use an ambulatory assistive device." But we do not think that this is a case in which the ALJ placed undue weight on his own observations. Cf. Kouril v. Bowen, 912 F.2d 971, 974 (8th Cir. 1990). Before making reference to Talvis's appearance at the hearing, the ALJ set forth extensive evidence in the record (including evidence that we have already recited) to explain his conclusion that Talvis did not have a marked limitation on his ability to move about and manipulate objects, see 20 C.F.R. § 416.926a(b)(1)(iv).
III.
9
Ms. Brown also argues that the ALJ failed properly to consider Talvis's obesity. No mention was made of obesity in the application for disability or at the hearing, but some of Talvis's medical records describe him as being moderately obese. The ALJ specifically referred to Talvis's obesity in evaluating his claim, and having reviewed the record as a whole we think that he adequately took that condition into account when denying Talvis benefits. Cf. Forte v. Barnhart, 377 F.3d 892, 896-97 (8th Cir.2004); Anderson v. Barnhart, 344 F.3d 809, 814 (8th Cir.2003).
10
Accordingly, we affirm the judgment of the district court.
Notes:
1
The Honorable Fernando J. Gaitan, Jr., United States District Judge for the Western District of Missouri
| {
"pile_set_name": "FreeLaw"
} |
NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 7 2020
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 19-50216
Plaintiff-Appellee, D.C. No. 3:16-cr-00374-W-1
v.
MEMORANDUM*
GABRIEL RODRIGUEZ-RODRIGUEZ,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of California
Thomas J. Whelan, District Judge, Presiding
Submitted February 4, 2020**
Before: FERNANDEZ, SILVERMAN, and TALLMAN, Circuit Judges.
Gabriel Rodriguez-Rodriguez appeals from the district court’s judgment and
challenges his guilty-plea conviction and 37-month sentence for being a removed
alien found in the United States, in violation of 8 U.S.C. § 1326. Pursuant to
Anders v. California, 386 U.S. 738 (1967), Rodriguez-Rodriguez’s counsel has
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
filed a brief stating that there are no grounds for relief, along with a motion to
withdraw as counsel of record. We have provided Rodriguez-Rodriguez the
opportunity to file a pro se supplemental brief. No pro se supplemental brief or
answering brief has been filed.
Rodriguez-Rodriguez entered into a plea agreement that contained an appeal
waiver. We decline to enforce the waiver, however, because the district court
failed to advise Rodriguez-Rodriguez of the waiver during the change-of-plea
hearing, in violation of Federal Rule of Criminal Procedure 11(b)(1)(N). See
United States v. Arellano-Gallegos, 387 F.3d 794, 797 (9th Cir. 2004).
Our independent review of the record pursuant to Penson v. Ohio, 488 U.S.
75, 80 (1988), discloses no arguable grounds for relief on direct appeal.
Counsel’s motion to withdraw is GRANTED.
AFFIRMED.
2 19-50216
| {
"pile_set_name": "FreeLaw"
} |
18-2537
New York v. PVS Chemicals, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
10th day of September, two thousand nineteen.
Present: ROSEMARY S. POOLER,
BARRINGTON D. PARKER,
REENA RAGGI,
Circuit Judges.
_____________________________________________________
STATE OF NEW YORK,
Plaintiff-Counter-Defendant-Appellant,
v. 18-2537-cv
PVS CHEMICALS, INC. (NEW YORK),
Defendant-Counter-Claimant-Appellee.
_____________________________________________________
Appearing for Appellant: Frederick A. Brodie, Assistant Solicitor General (Timothy
Hoffman, Assistant Attorney General, Victor Paladino, Assistant
Solicitor General, on the brief), for Letitia A. James, Attorney
General of the State of New York, Albany, N.Y.
Appearing for Appellee: David L. Roach, Roach, Lennon & Brown, PLLC (J. Michael
Lennon, on the brief), Buffalo, N.Y.
Appeal from the United States District Court for the Western District of New York (Schroeder,
M.J.).
ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of said District Court be and it hereby is REVERSED and
the case REMANDED to the district court with instructions to enter judgment for the State of
New York.
Appellant the State of New York appeals from the July 30, 2018, judgment of the United
States District Court for the Western District of New York (Schroeder, M.J.) granting PVS
Chemicals, Inc. (New York)’s (“PVS’s”) motion for dispute resolution and precluding New York
from requiring PVS to remediate environmental conditions which existed when the parties
entered a 2002 Consent Decree with PVS (the “Consent Decree”). New York v. PVS Chems.,
Inc., 324 F. Supp. 3d 352, 365 (W.D.N.Y. 2018). We assume the parties’ familiarity with the
underlying facts, procedural history, and specification of issues for review.
A panel of this court previously held that the Consent Decree at issue in this case is
ambiguous regarding whether New York may require PVS to implement a groundwater and soil
remediation program based on evidence of contamination that existed in 2002. New York v. PVS
Chems., Inc. (New York), 589 F. App’x 10, 11 (2d Cir. 2014) (summary order). We remanded the
case for the sole purpose of allowing the district court to consider extrinsic evidence in
determining the parties’ intent with respect to the ambiguous provision. Id. Thus, the only issue
before us is whether the extrinsic evidence permits New York to require PVS to implement
corrective measures to remediate pollution that New York was aware of before agreeing to the
Consent Decree. New York now appeals the district court’s decision after reviewing the extrinsic
evidence that New York may not require PVS to remediate environmental conditions of which it
was aware when it entered the Consent Decree.
“We review the district court’s interpretation of a consent decree de novo, and its factual
findings for clear error.” United States v. Broad. Music, Inc., 275 F.3d 168, 175 (2d Cir. 2001).
The proper interpretation of an ambiguous contract based on extrinsic evidence as to the parties’
intent “is a question of fact for the factfinder.” JA Apparel Corp. v. Abboud, 568 F.3d 390, 397
(2d Cir. 2009).
The record belies the district court’s factual findings regarding the parties’ intent in
entering the Consent Decree. The record reveals that from the beginning of settlement
negotiations, New York and PVS were committed to reaching a settlement that comprehensively
addressed the alleged environmental contamination at the PVS site. App’x at 813 (letter from
New York informing PVS that “it is essential that PVS make a firm commitment from the outset
to undertake and complete this sequential process for addressing the State’s concerns regarding
groundwater and related environmental resources”); App’x at 825 (meeting notes from a PVS
representative stating, “NYS [New York State] is not willing to negotiate pieces of this, is
looking at the whole parcel. We are following this same path”). In accord with this stated goal,
New York’s first draft of the Consent Decree required PVS to “implement selected corrective
measures at the facility” to alleviate groundwater and soil contamination. App’x at 838.
2
PVS then objected to the Consent Decree’s requirement that it implement the corrective
measures, stating that it would negotiate remedial measures only “[i]f there [was] a basis for
[Resource Conservation and Recovery Act] claims or remedies as indicated by the data
generated by the proposed Investigation.” App’x at 1104 (emphasis added). New York
responded that it would permit PVS to make a “proposed change that limits defendant’s
commitment to performance of a site investigation in accordance with an approved site
investigation work plan,” only if the change were “accompanied by a corresponding limited
release.” App’x at 1127. Specifically, “[t]he State would reserve its rights to proceed against
defendant for any liability that may result from the State’s determination that further measures
are required, and defendant would reserve its rights to defend.” App’x at 1127. The final Consent
Decree reflects this agreement.
This drafting history demonstrates that New York was unwilling to settle with PVS
unless it could retain its right to pursue PVS for groundwater and soil remediation at the PVS
site, including such remediation as was warranted by the agreed-to investigation. Nothing in the
drafting history or in the Consent Decree itself reveals New York’s agreement to limit the
contamination on which it could pursue PVS for remediation to contamination discovered
through the required investigative studies. Despite PVS’s arguments to the contrary, New York
agreed only that it would decide whether to seek further remediation efforts “after review of the
reports,” JA 33—it did not agree to relinquish its rights to pursue remediation efforts on the basis
of pre-existing information. This reservation provided no time limitation during which New
York needed to assess the investigative report and decide whether to pursue further action;
neither did the reservation require that the study find a threshold amount of contamination before
New York could pursue such further action.
On the entire evidence, we are “left with the definite and firm conviction that a mistake
has been committed.” Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985) (internal
quotation marks omitted). We therefore reverse the judgment of the district court and direct the
district court to enter judgment in favor of New York.
The judgment of the district court hereby is REVERSED and the case is REMANDED to
the district court with instructions to enter judgment for the State of New York.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
3
| {
"pile_set_name": "FreeLaw"
} |
COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-01-227-CV*
WESTCHESTER FIRE INSURANCE
COMPANY APPELLANT
V.
ADMIRAL INSURANCE COMPANY APPELLEE
------------
FROM THE 48TH DISTRICT COURT
OF TARRANT COUNTY
------------
OPINION ON REHEARING EN
BANC
------------
Introduction
After
en banc reconsideration and oral argument granted on appellee Admiral Insurance
Company's (Admiral) motion for rehearing, we withdraw our prior opinion and
judgment dated June 26, 2003 and substitute the following. See Tex. R. App. P. 49.1, 49.3, 49.7.
This
case involves a Stowers action by an excess insurance carrier—the
insured’s equitable subrogee—against the insured’s primary carrier for the
negligent failure to settle an insurance claim within policy limits. See
G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544, 547 (Tex.
Comm’n App. 1929, holding approved). Appellant Westchester Fire
Insurance Company (Westchester), the excess insurance carrier, challenges the
trial court’s directed verdict for Admiral, the primary carrier, and the
partial summary judgment upon which it was based. We reverse the partial
summary judgment in part, and reverse the directed verdict, and remand the case
for trial.
Background
In
1994 PeopleCare Heritage Western Hills, Inc. (PeopleCare), the owner of Heritage
Western Hills Nursing Home, had a primary policy of professional medical
liability insurance with Admiral with limits of $1,000,000 per occurrence and an
excess policy with Westchester with limits of $10,000,000 per occurrence. Beulah
Cagle was a patient at Heritage Western Hills. In December 1994, Beulah and her
daughter Lola Cagle sued PeopleCare for negligence, gross negligence, fraud, and
violations of the Texas Deceptive Trade Practices Act (DTPA) arising out of
PeopleCare’s treatment of Beulah from January through May 1994. See Tex. Bus. & Com. Code Ann. §§
17.01-.854 (Vernon 2002 & Supp. 2004-05).
After
a bench trial, the trial court found that PeopleCare was negligent and grossly
negligent in its treatment of Beulah and that it knowingly misrepresented the
nature of Beulah’s injuries to Lola. In findings of fact and conclusions of
law, the trial court found that Beulah was entitled to compensatory damages,
plus prejudgment interest, and that Lola was entitled to mental anguish damages,
treble damages, attorneys’ fees, and prejudgment interest under the DTPA. The
compensatory damages awarded to the Cagles exceeded Admiral’s policy limits.
The trial court then scheduled a hearing on exemplary damages.1
Before the hearing, PeopleCare settled the Cagles’ suit for an amount
exceeding the Cagles’ compensatory damages, with Admiral tendering its policy
limits, less defense costs and PeopleCare’s deductible, and Westchester
contributing the remainder.
Westchester
then filed suit against (a) Admiral, alleging, among other things,2 that Admiral negligently failed to settle the Cagles’
claims against PeopleCare within the limits of the primary insurance policy, and
(b) Gardere & Wynne, L.L.P., the law firm that represented PeopleCare in the
Cagle suit, for negligence in defending the suit. Before trial, the trial court
granted Admiral a rule 166a partial summary judgment, holding that
insurance coverage for punitive damages, now and at the time in question,
violates the public policy of the State of Texas. Accordingly, coverage
for punitive damages under the Admiral insurance policy is void. . . . [T]his
court [also] finds that the award of damages and attorneys’ fees for knowing
misrepresentation under the DTPA were not covered by the Admiral insurance
policy.
Since Westchester Fire’s Stowers
recovery, if any, only extends to claims that were within the scope of the
Admiral policy’s coverage, its recovery is limited to [Beulah] and Lola
Cagle’s actual damages.
Tex. R. Civ. P. 166a. Thus, the court
held that Westchester’s recovery of damages from Admiral, if any, would be
limited to the amount of the Cagles’ compensatory damages that exceeded
Admiral’s settlement contribution.3
Before
Admiral completed its case-in-chief, Westchester settled with Gardere &
Wynne for an amount greater than the amount by which the Cagles’ compensatory
damages exceeded Admiral’s settlement contribution. Accordingly, on
Admiral’s motion, the trial court granted Admiral a directed verdict on the
ground that Admiral was entitled to a credit in the amount of Gardere &
Wynne’s settlement with Westchester, and the amount of the credit exceeded the
damages Westchester could recover from Admiral. See Tex. Civ. Prac. & Rem. Code Ann. §§
33.012, 33.014 (Vernon 1997).
Issue Presented
In
a single point on appeal, Westchester challenges the directed verdict on the
ground that the trial court erred in granting the partial summary judgment for
Admiral that limited the amount of damages Westchester could recover from
Admiral to compensatory damages because Westchester contends punitive damages
were covered under Admiral’s policy at the time the Cagle case was settled.4 Westchester does not challenge the directed verdict
independently of the partial summary judgment; therefore, in reviewing
Westchester’s arguments on appeal, we will address only whether the trial
court erred in granting partial summary judgment on Westchester’s Stowers
claim. Likewise, Westchester does not challenge the directed verdict to the
extent that it denied Westchester recovery from Admiral for amounts attributable
to treble damages and attorneys’ fees awarded to Lola Cagle for PeopleCare’s
deceptive trade practices violations on the basis that those damages were not
within coverage of the Admiral policy. Consequently, we do not address whether
the partial summary judgment was proper as to those damages.
Westchester
contends that the trial court erroneously relied on a federal case construing
Texas law in determining that insurance coverage for punitive damages at the
time the Cagle cause of action arose or was settled was void as against public
policy. In addition, Westchester claims the trial court erred in not relying on
several Texas court of appeals cases holding that punitive damages were
insurable in Texas at the time the Cagle cause of action arose or when the case
settled. Westchester further claims that the trial court erroneously relied upon
the “volunteer doctrine” in granting the partial summary judgment, averring
that this case turns upon whether in 1995 Westchester had a good faith,
reasonable belief that punitive damages were insurable in Texas at the time the
Cagles’ cause of action arose or when the case settled.
Standard of Review
Questions
of law are appropriate matters for summary judgment. Rhone-Poulenc, Inc. v.
Steel, 997 S.W.2d 217, 222 (Tex. 1999). A defendant is entitled to summary
judgment if the summary judgment evidence establishes, as a matter of law, that
at least one element of a plaintiff’s cause of action cannot be established. Elliott-Williams
Co. v. Diaz, 9 S.W.3d 801, 803 (Tex. 1999). When reviewing a summary
judgment granted on specific grounds, this court can affirm the summary judgment
only if the ground on which the trial court granted relief is meritorious. Cincinnati
Life Ins. Co. v. Cates, 927 S.W.2d 623, 625-26 (Tex. 1996). However, if a
party preserves other grounds presented in the summary judgment motion that were
not ruled on by the trial court, a court of appeals must also consider any other
grounds that the trial court did not rule on. Id. at 626. To preserve
these grounds, the party must raise them in the summary judgment proceeding and
present them in an issue or cross-point on appeal. Id. at 625-26.
Volunteer Doctrine
The
motion for partial summary judgment that was granted in Admiral’s favor did
not raise Westchester’s voluntariness as a challenge to Westchester’s right
to be equitably subrogated to PeopleCare. And nowhere in the partial summary
judgment does the trial court state that Westchester’s payment of the
settlement funds was voluntary. In addition, before filing the motion for
partial summary judgment upon which the trial court’s directed verdict was
based, Admiral filed a separate motion for partial summary judgment that
specifically challenged Westchester’s right to equitable subrogation based on
the volunteer doctrine. The record does not contain any order granting or
denying this motion, but an entry on the trial court’s docket sheet indicates
the following: “Admiral’s MSJ - denied because fact question on volunteer
payment (reasonable belief rule).” Moreover, the trial judge stated that the
basis for the directed verdict was his prior ruling that Admiral’s policy did
not provide coverage for either punitive damages or Lola’s DTPA damages; he
did not say the directed verdict was based on the volunteer doctrine. Thus, it
appears that the trial court denied summary judgment on that ground, and Admiral
concedes this in its brief.
We address the voluntariness
issue only because it was raised and ruled on at trial and because Westchester
has discussed it on appeal and at oral argument on rehearing en banc.
Westchester
contends that the trial court’s partial summary judgment is incorrect because
it was erroneously based on the volunteer doctrine. Relying on Keck, Mahin
& Cate v. National Union Fire Insurance Co., PA, 20 S.W.3d 692 (Tex.
2000), Westchester contends that in 1995 it had a reasonable, good faith belief
that insurance coverage for punitive damages did not violate public policy and
that it had no choice but to settle the portion of the Cagle claim attributable
to punitive damages, regardless of whether punitive damages were actually
covered under its policy and Admiral’s policy at that time. Thus Westchester
argues that it should not be precluded from recovering from Admiral damages
attributable to amounts Westchester paid to settle the portion of the Cagle
claim related to punitive damages. Admiral responds that Westchester’s Keck
argument was not the basis for the partial summary judgment it obtained and is
not dispositive of this appeal.
The
volunteer argument in the Keck case was asserted as a bar to equitable
subrogation. Id. at 702. A Dictionary of Modern Legal Usage defines
“subrogate” as “to put (a person) in the place of, or substitute (him)
for, another in respect of a right or claim.” A Dictionary of Modern Legal Usage 525
(1987). The two key elements of equitable subrogation are 1) that the party on
whose behalf the claimant discharged a debt was primarily liable on the debt and
2) that the claimant paid the debt involuntarily. Argonaut Ins. Co. v.
Allstate Ins. Co., 869 S.W.2d 537, 542 (Tex. App.—Corpus Christi 1993,
writ denied). Thus, one who has involuntarily discharged a debt on behalf of
another who is primarily liable for that debt is entitled to pursue any right or
claim the debtor would have against a third party in relation to the debt.
But to enforce such a right or claim, the subrogee must first prove the
debtor’s (and thus, the subrogee’s) entitlement to recover on the right or
claim. See Am. Centennial Ins. Co. v. Canal Ins. Co., 843
S.W.2d 480, 483-85 (Tex. 1992); 68 Tex.
Jur. 3d Subrogation § 35 (1989) (“One who is entitled to subrogation
stands in the shoes of the creditor whose rights he or she claims, and can
enforce every right that was available to the creditor. . . . [b]ut he or she
can enforce only such rights as the creditor could enforce.”).
Therefore, the issue of voluntariness is relevant only to a party’s standing
to bring a cause of action as a subrogee. Drilltec Tech., Inc. v. Remp,
64 S.W.3d 212, 216 (Tex. App.—Houston [14th Dist.] 2001, no pet.). Once
this issue is decided in favor of the party’s ability to bring suit, it has no
relevance to the proof required for the party to actually recover on its cause
of action.
In
Keck, the supreme court held that an excess insurer’s settlement of a
case was not voluntary—even though the excess carrier’s own policy did not
provide coverage—because at the time of the settlement, the excess carrier
made the payment in good faith and reasonably believed the payment was necessary
for its protection. Keck, 20 S.W.3d at 702–03. In light of this
“reasonable belief” rule and the supreme court’s liberal interpretation of
it, the court held that
[i]f an insurance company’s [excess insurer’s] right to subrogation could be
challenged by the wrongdoer [e.g., attorneys, primary insurer, etc.] on the
grounds that the [excess] policy did not actually provide coverage, it would
necessarily be in the company’s interest to litigate all questionable claims
with its insured. The effect of ignoring the reasonable belief rule,
therefore, is to discourage insurance companies from paying or settling disputed
claims and thereby force insureds more often into litigation with their
insurers.
Id. at 703 (quoting 1 Allan D. Windt, Insurance Claims & Disputes
§ 10.10, at 150-51 (3rd ed. 1995)). Thus, in Keck, because
the excess carrier’s settlement payment was involuntary, the excess carrier
was equitably subrogated to any claims its insured could assert against a
wrongdoer; that is, it could bring the malpractice action against its
insured’s trial counsel. See id. Likewise, in this case,
Westchester, the excess insurer, was subrogated to any rights PeopleCare could
assert against its primary carrier, Admiral, so long as its payment on the
underlying claim was involuntary. Further, under Texas law, an excess
insurer’s payment to settle a suit against the insured is presumptively
involuntary for subrogation purposes. Id. at 702.
Under
the Keck analysis, if Westchester in good faith reasonably believed at
the time of settlement that its payment was necessary for its protection, then
its settlement was not voluntary, and it was entitled to equitable subrogation,
i.e., entitled to maintain a cause of action against Admiral in the place of
Admiral’s insured, PeopleCare. See id. at 702-03; Argonaut,
869 S.W.2d at 542. Whether Westchester reasonably believed its payment was
necessary, and, therefore, whether its payment was involuntary, is a question
that relates to its right of subrogation. Even if Westchester was
entitled to bring a Stowers cause of action against Admiral as
PeopleCare’s equitable subrogee, it still had to prove the elements of
the cause of action, just as the insurer in Keck still had to prove the
insured’s malpractice action against the insured’s trial counsel.
Westchester,
in PeopleCare’s place, pursued its Stowers action against Admiral.
See Am. Centennial, 843 S.W.2d at 483. As PeopleCare’s equitable
subrogee, Westchester’s ability to recover damages on PeopleCare’s Stowers
claim was limited to PeopleCare’s ability to recover damages as Admiral’s
insured. See id. at 483; Nat’l Union Fire Ins. Co. v. Ins. Co.
of N. Am., 955 S.W.2d 120, 134 (Tex. App.—Houston [14th Dist.] 1997), aff’d
sub nom., Keck, 20 S.W.3d at 704. The Stowers duty to settle is
not activated unless three prerequisites are met: (1) the claim against the
insured is within the scope of coverage, (2) the claimant has made a settlement
demand that is within the policy limits, and (3) the terms of the demand are
such that an ordinarily prudent insurer would accept it, considering the
likelihood and degree of the insured's potential exposure to an excess judgment.
Am. Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 849 (Tex. 1994).
“[A]n insurer has no duty to settle a claim that is not covered under its
policy.” Id. at 848.
Thus,
determining that Westchester’s payment of settlement funds on behalf of
PeopleCare was involuntary—entitling it to be subrogated to PeopleCare’s Stowers
cause of action against Admiral—only resolves Westchester’s right to
pursue a Stowers claim; it would still have to prove its Stowers
cause of action against Admiral. Whether or not the insured (or its
equitable subrogee) has a reasonable, good faith belief that a policy provides
coverage for a claim is not key to a Stowers cause of action. The
issue is whether the duty to settle was breached. Even if Westchester is correct
in contending that its payment of settlement funds was involuntary, the
“involuntariness” of its payment does not resolve the issue of whether
Admiral breached its duty to PeopleCare to settle all covered claims asserted
against PeopleCare. Thus, we agree with Admiral that the volunteer issue
is not dispositive of this appeal.
Insurance Coverage for Punitive Damages
Admiral’s
Motion for Partial Summary Judgment contends that, as a matter of law, any
portion of Westchester’s Stowers claim attributable to punitive damages
must fail because (1) such damages are excluded from coverage by Admiral’s
policy language and (2) contracting for insurance coverage for punitive damages
violates Texas’s public policy. Thus, Admiral argues Westchester cannot
satisfy the first element of a Stowers claim: that the damages it seeks
against Admiral are within the scope of coverage of Admiral’s policy.
And if punitive damages are not covered under Admiral’s primary policy,
Westchester may not recover any excess judgment attributable to such punitive
damages in its Stowers action. The trial court’s partial summary
judgment in favor of Admiral on punitive damages was based upon its
determination that insurance coverage for punitive damages is against public
policy. The court did not agree with Admiral that the policy language
itself excluded coverage.5
Policy Language
On
appeal Admiral again argues that punitive damages are not covered by its policy
because they are based on conduct that results in expected or intended injuries,
and the policy provides coverage only for injuries that are “neither expected
nor intended by the insured.” Admiral claims that grossly negligent
behavior can never be an accidental error or omission. However, as
mentioned above, the trial court expressly rejected this ground for partial
summary judgment.
The
commercial general liability (CGL) portion of Admiral’s policy covered
“those sums which the Insured shall become legally obligated to pay as damages
because of . . . bodily injury . . . caused by an occurrence.” The
policy defined “occurrence” as “an accident . . . which results in bodily
injury . . . neither expected nor intended from the standpoint of the
Insured.” However, the policy also contained a portion entitled
“Coverage O-Hospital Professional Liability,” which stated that
Admiral will pay on behalf of the insured those sums which the insured shall
become legally obligated to pay as damages because of bodily injury to any
person arising out of the rendering of or failure to render, during the policy
period, the following professional services:
. . . Nursing treatment to
such person including the furnishing of food or beverages in connection
therewith.
Thus, while the CGL portion of
the policy limits coverage to bodily injury arising out of an occurrence, the
Hospital Professional Liability portion does not. It provides coverage for
nursing home care and does not limit recovery to only an “accident” or
“occurrence.”
The
trial court in the underlying Cagle case found that PeopleCare’s failure to
provide care for Beulah (e.g., leaving her in a urine-soaked bed) was grossly
negligent. Thus, any damages, including punitive damages, that the trial
court could have awarded to Beulah based on such failure to render care would
have been covered under the language of the Hospital Professional Liability
portion of PeopleCare’s policy. Consequently, the trial court properly
denied partial summary judgment on the ground that Admiral’s policy language
precluded coverage for punitive damages.
Admiral
contends that the Fifth Circuit case St. Paul Fire & Marine Insurance Co.
requires a different result. St. Paul Fire & Marine Ins., Co. v.
Convalescent Servs., Inc., 193 F.3d 340, 343 (5th Cir. 1999) (holding under
Texas law that insured could not recover from insurer portion of excess judgment
attributable to punitive damages when policy specifically excluded coverage for
punitive damages). However, in the St. Paul case, unlike this case,
the insurer, rather than settling with the plaintiff for amounts not covered by
its policy, reserved its coverage dispute and filed suit for declaratory relief
seeking a determination that it was not liable for payment of a punitive damages
award against its insured. Id. at 341. Additionally the value
of the covered claim in St. Paul was well below policy limits as opposed
to the claim in this case. Id. at 343. More importantly, the
primary policy in St. Paul specifically excluded coverage for punitive
damages, and the federal court explicitly relied on this exclusion in making
its Erie guess on Texas law. Id. at 345 (citing Erie R.R.
v. Tompkins, 304 U.S. 64, 58 S. Ct. 817 (1938)). We therefore cannot
agree that St. Paul is controlling over Admiral’s policy because of the
differences in the policies’ language.
Further,
there is no evidence in the record that Admiral assumed the defense of the
Cagles’ claims under a reservation of rights or that Admiral ever challenged
coverage for any of the Cagles’ claims until after Westchester had settled the
Cagles’ suit and brought this action. Also, the evidence showed that
Admiral was aware of its insured’s exposure to punitive damages and,
therefore, its own. In a letter from Admiral to Westchester, Admiral
stated, “Regarding evaluation of punitive exposure, punitive damages are not
excluded from our policy. As the case is venued in Texas, we are aware of
the danger of punitive damages and are making every effort to settle this
matter.” From this, we can only conclude that Admiral believed its
policy on PeopleCare covered both the negligence and gross negligence claims as
it considered and made settlement offers and that the trial court properly
denied Admiral’s motion for partial summary judgment on this basis.
Public Policy
Generally,
the legislature determines public policy. FM Props. Operating Co. v.
City of Austin, 22 S.W.3d 868, 873 (Tex. 2000) (holding legislative power is
the power to make rules and determine public policy). Courts look to state
statutes and judicial decisions to determine public policy. Stubbs v. Ortega,
977 S.W.2d 718, 722 (Tex. App.—Fort Worth 1998, pet. denied). The
supreme court has long held that “contracts against public policy are void and
will not be carried into effect by courts of justice.” James v.
Fulcrod, 5 Tex. 512, 520 (1851). A contract is against public policy
if it is illegal or injurious to the public good. See 14 Tex. Jur. 3D Contracts § 143
(1997).
Our
supreme court is highly deferential to the legislature when determining this
state’s public policy, stating that
[p]ublic policy . . . is a term of vague and uncertain meaning, which it
pertains to the law-making power to define, and courts are apt to encroach upon
the domain of that branch of the government if they characterize a transaction
as invalid because it is contrary to public policy, unless the transaction
contravenes some positive statute or some well-established rule of law.
Tex. Commerce Bank, N.A. v.
Grizzle, 96 S.W.3d 240, 250 (Tex. 2002) (quoting Lawrence v. CDB Servs.,
Inc., 44 S.W.3d 544, 553 (Tex. 2001)).
A
court should not decide a public policy question without first evaluating the
contract language. Tex. Farmers Ins. Co. v. Murphy, 996 S.W.2d 873,
878 (Tex. 1999). Only if a contractual provision violates public policy
should a court not enforce it. Alma Invs., Inc. v. Bahia Mar Co-Owners Assn.,
999 S.W.2d 820, 823-24 (Tex. App.—Corpus Christi 1999, pet. denied). The
Texas Supreme Court has applied the public policy doctrine found in the
Restatement of Contracts (Second). Id. (citing Beck v. Beck,
814 S.W.2d 745, 748-49 (Tex. 1991), cert. denied, 498 U.S. 1048 (1991); DeSantis
v. Wackenhut Corp., 793 S.W.2d 670, 681-82 (Tex. 1990) (op. on reh’g)).
Section 178 provides that “a promise or term of an agreement is unenforceable
on grounds of public policy if legislation provides that it is unenforceable or
the interest in its enforcement is clearly outweighed in the circumstances by a
public policy against the enforcement of such terms.” Id. at 824
(quoting Restatement (Second) of
Contracts § 178(1) (1981)). Accordingly, when faced with a need to
determine whether a contract term violates this state’s public policy, we
should take into account the following factors:
(a) the strength of that policy as manifested by legislation or judicial
decisions,
(b) the likelihood that a
refusal to enforce the term will further that policy,
(c) the seriousness of any
misconduct involved and the extent to which it was deliberate, and
(d) the directness of the
connection between that misconduct and the term.
Id. (quoting Restatement (Second) of Contracts §
178(3) (1981)).
At
the time of this suit between Westchester and Admiral, neither the Texas
Legislature nor the Supreme Court of Texas had addressed whether insurance
coverage for punitive damage awards against nursing homes violates Texas’s
public policy. However, a federal district court in Texas had issued its Hartford
v. Powell opinion, upon which the trial court relied. Hartford Cas.
Ins. Co. v. Powell, 19 F. Supp. 2d 678, 696 (N.D. Tex. 1998) (holding that
any insurance contract that prevents a punitive damage award from having its
punishment effect would be held void in Texas ). That court made an “Erie
guess” that the Texas Supreme Court would hold that, at least in the context
of third-party coverage for automobile insurance claims, insurance coverage for
punitive damages is void as against public policy. Westchester claims that
the trial judge erred in relying on that opinion in ruling on Admiral’s
partial summary judgment motion.
The
record shows that in a letter to trial counsel, the trial judge stated that he
“paid particular attention to” the Powell case; however, he did not
state that he relied on it as authority. We disagree with Westchester’s
contention that a Texas trial court may not consider a federal case construing
Texas law. Although these cases are not binding as precedent on Texas
state courts, they may be instructive on state law issues, and state courts are
not prohibited from considering the federal courts’ reasoning in cases
determining matters of Texas law. See Davenport v. Garcia, 834
S.W.2d 4, 20 (Tex. 1992) (orig. proceeding).
Because
neither the legislature nor the supreme court has addressed the public policy
implications of insurance coverage for punitive damage awards against nursing
homes, we engage in a similar analysis as the Powell court. See
Alma Invs., Inc., 999 S.W.2d at 824. Several Texas courts, including
this court, have held that the language in a standard form liability policy
providing coverage for “sums” or “all sums” an insured becomes required
to pay as a result of bodily injury or property damage covers punitive damages
if not otherwise excluded. See Manriquez v. Mid-Century Ins. Co.,
779 S.W.2d 482, 484 (Tex. App.—El Paso 1989, writ denied) (automobile policy),
disapproved in part on other grounds, Trinity Universal Ins. Co. v. Cowan,
945 S.W.2d 819, 823 (Tex. 1997); Am. Home Assurance Co. v. Safway Steel
Prods. Co., 743 S.W.2d 693, 704-05 (Tex. App.—Austin 1987, writ denied)
(umbrella liability policies); Home Indem. Co. v. Tyler, 522 S.W.2d 594,
597 (Tex. Civ. App.—Houston [14th Dist.] 1975, writ ref’d n.r.e.) (uninsured
motorist coverage), overruled by Milligan v. State Farm Mut. Auto.
Ins. Co., 940 S.W.2d 228, 232 (Tex. App.—Houston [14th Dist.] 1997, writ
denied); Dairyland County Mut. Ins. Co. v. Wallgren, 477 S.W.2d 341,
342-43 (Tex. Civ. App.—Fort Worth 1972, writ ref’d n.r.e.) (automobile
policy).
This
court in Dairyland also considered whether insurance coverage for
punitive damages was against Texas’s public policy, concluding that coverage
did not violate public policy for the sole reason that the policy language in
that case had been “prescribed and approved” by the Insurance Commission,
now the Texas Department of Insurance (TDI). 477 S.W.2d at 342. This
court did not, however, discuss the underlying purposes of punitive damages
awards, such as punishing the wrongdoer and preventing similar behavior in the
future, in its public policy discussion. See Tyler, 522 S.W.2d at
597. The supreme court has since held that “policy provisions, even if
TDI-approved, are invalid if they are inconsistent with express statutory
requirements or purposes.” Mid-Century Ins. Co. v. Kidd, 997
S.W.2d 265, 271-72 (Tex. 1999).
The
Safway court addressed the public policy issue, holding that a
corporation should be able to insure itself against the gross conduct of its
agents. 743 S.W.2d at 703-04. The court focused on the dual
objectives of punitive damages: punishment and deterrence. Id. at
704. The court recognized the reasoning of federal courts and other state
courts that have held insurance coverage for punitive damages is against public
policy. Id. But the court determined that denying such
coverage does not necessarily promote the punishment of corporate offenders,
stating,
An insurance company that deliberately enters into a contract to provide
coverage against liability for punitive damages is free to charge additional
premiums for such coverage, so as to provide a separate fund for the express
purpose of paying such judgments without “punishing” either the insurance
company or society. The insurance company is also free to deny coverage of
punitive damages altogether. In the case of an established corporation, it
is important to note that its inability to obtain such coverage will inevitably
be passed on to the consumers of its products--who are also innocent.
Id. In addition,
the court concluded that holding such damages void as against public policy
would not deter wrongdoers because at the time, Texas law did not allow
juries to consider “the defendant's wealth, resources, or insurance coverage
when assessing . . . damages [of any kind].” Id.
After
the Safway case, Texas’s punitive damages laws began to undergo
significant change. In 1987, the Texas legislature codified the law regarding
exemplary damages. See Act of June 3, 1987, 70th Leg., 1st C.S.,
ch. 2, § 2.12, 1987 Tex. Gen. Laws 37, 44-46 (amended 1989, 1995, 1997 &
2001) (current version at Tex. Civ. Prac.
& Rem. Code Ann. §§ 41.001-.013). The next year, the supreme
court held that evidence of a defendant’s net worth is relevant to the issue
of punitive damages and, therefore, discoverable. Lunsford v. Morris,
746 S.W.2d 471, 471-72 (Tex. 1988) (orig. proceeding), disapproved of on
other grounds, Walker v. Packer, 827 S.W.2d 833, 841-42 (Tex. 1992). In
doing so, the court relied on two of the purposes of punitive damages: punishing
the wrongdoer and deterring the same or similar future conduct. Id.
In
June 1994, the Supreme Court of Texas issued its landmark opinion in Transportation
Insurance Co. v. Moriel. 879 S.W.2d 10 (Tex. 1994). As part of its
analysis in that case, the court stated that “[t]he legal justification for
punitive damages is similar to that for criminal punishment” and that
“punitive damages are levied for the public purpose of punishment and
deterrence.” Id. at 16-17. While Texas law before Moriel
held that the general purpose of punitive damages was to punish the wrongdoer, see
Smith v. Sherwood, 2 Tex. 461, 463-64 (1847), Flanagan v. Womack, 54
Tex. 45, 50 (1880), and Cotton v. Cooper, 209 S.W. 135, 138 (Tex.
Comm’n App. 1919, judgm’t adopted), other cases suggested that punitive
damages might also serve a compensatory function, see Traweek v. Martin-Brown
Co., 79 Tex. 460, 14 S.W. 564, 565-66 (1890), Hofer v. Lavender, 679
S.W.2d 470, 474-75 (Tex. 1984), and Qualicare of East Texas, Inc. v. Runnels,
863 S.W.2d 220, 224 (Tex. App.—Eastland 1993, writ dism’d). Powell,
19 F. Supp. 2d at 683. The Moriel court clarified the purpose of
punitive damages in Texas, stating that “[o]ur duty in civil cases . . ., like
the duty of criminal courts, is to ensure that defendants who deserve to be
punished in fact receive an appropriate level of punishment.” Moriel,
879 S.W.2d at 17 (emphasis added). However, Moriel also recognized
that the civil practice and remedies code, which governs the imposition of
punitive damages, at that time defined exemplary damages as “any damages
awarded as an example to others, as a penalty, or by way of punishment.
‘Exemplary damages’ includes punitive damages.” See Act of
June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.12, 1987 Tex. Gen. Laws 37, 44
(amended 1995).
In
response to Moriel, the legislature revised the statutory provisions
regarding exemplary damages during the 1995 legislative session. See
Act of April 11, 1995, 74th Leg., R.S., ch. 19, § 1, 1995 Tex. Gen. Laws 108,
108-13. Importantly, the definition of exemplary damages was revised.
The 1995 legislation deleted the words “as an example to others,” leaving
the definition of exemplary damages as “any damages awarded as a penalty or by
way of punishment.” See Act of April 11, 1995, 74th Leg., R.S.,
ch. 19, § 1, 1995 Tex. Gen. Laws 108, 109. However, the 1995 amendments
apply only to a cause of action accruing on or after September 1, 1995 and are
thus inapplicable here. Act of April 11, 1995, 74th Leg., R.S., ch. 19, § 2,
1995 Tex. Gen. Laws 108, 113.
In
addition, beginning in 1994, Texas courts of appeals began to re-examine whether
insurance coverage for punitive damages is void as against public policy in the
context of uninsured and underinsured motorist claims. Since then, several
courts have held that punitive damages are uninsurable in these contexts. Milligan,
940 S.W.2d at 232; State Farm Mut. Auto. Ins. Co. v. Shaffer, 888
S.W.2d 146, 149 (Tex. App.—Houston [1st Dist.] 1994, writ denied); Vanderlinden
v. USAA Prop. & Cas. Ins. Co., 885 S.W.2d 239, 242 (Tex.
App.—Texarkana 1994, writ denied). The Milligan court held that
the objectives of punishment and deterrence cannot be accomplished in an
uninsured motorist claim because the wrongdoer is not even involved. 940 S.W.2d
at 231. The court went on to distinguish the Safway case on the
ground that “the policy considerations which permit an insurer to obligate
itself for punitive damages based on the conduct of its insured are different
than those where uninsured motorist coverage is at issue.” Id. at
232 (quoting Safway’s holding that “[a]s long as insurance companies
are willing, for a price, to provide protection against liability for punitive
damages to corporations they deem ‘good risks,’ . . . we see no reason why
these contracts should not be enforced”).
Courts
holding that insurance coverage for punitive damages violates public policy
generally do so on the theory that wrongdoers should not be shielded from the
consequences of their acts. See Lee R. Russ, Couch on Insurance 3d §
101:29, at 101-99 (2001).6 As noted by the Powell
court, this view was described by the Fifth Circuit in Northwestern National
Casualty Co. v. McNulty:
Where a person is able to insure himself against punishment he gains a freedom
of misconduct inconsistent with the establishment of sanctions against such
misconduct. It is not disputed that insurance against criminal fines or
penalties would be void as violative of public policy. The same public
policy should invalidate any contract of insurance against the civil punishment
that punitive damages represent.
The
policy considerations in a state where . . . punitive damages are awarded for
punishment and deterrence, would seem to require that the damages rest
ultimately as well [as] nominally on the party actually responsible for the
wrong. If that person were permitted to shift the burden to an insurance
company, punitive damages would serve no useful purpose. Such damages do
not compensate the plaintiff for his injury, since compensatory damages already
have made the plaintiff whole. And there is no point in punishing the
insurance company; it has done no wrong. In actual fact, of course, and
considering the extent to which the public is insured, the burden would
ultimately come to rest not on the insurance companies but on the public, since
the added liability to the insurance companies would be passed along to the
premium payers. Society would then be punishing itself for the wrong
committed by the insured.
307 F.2d 432, 440-41 (5th Cir.
1962), superseded in part by VA.
Code Ann. § 38.2-227 (Michie, Westlaw through 2004 Special Sess. II).
One commentator has suggested that “[t]o the extent this rationale is based on
the need to deter future wrongful conduct, it underestimates the impact that a
large payment by an insurer would have on the insured’s ability to obtain
future insurance coverage, and the amount of premiums that would have to be
paid.” Russ, supra,
§ 101:29, at 101-99. In other words, the insured wrongdoer has not only
paid premiums for the coverage, but will likely pay greater premiums after an
insurer has paid a claim or will not be able to obtain insurance at all.
Further,
as the Powell court noted, a competing public policy is the right of
parties to enter into contracts freely. Powell, 19 F. Supp. 2d at 693.
The Supreme Court of Texas has held that “contracts, when entered into freely
and voluntarily, shall be held sacred, and shall be enforced by courts of
justice.” Missouri, K. & T. Ry. v. Carter, 95 Tex. 461, 68 S.W.
159, 164 (1902); see also Lawrence, 44 S.W.3d at 553 (noting that the
Texas Supreme Court has “long recognized a strong public policy in favor of
preserving the freedom of contract” and that courts “must exercise judicial
restraint in deciding whether to hold arm’s-length contracts void on public
policy grounds”). In addition, at least one trial court has
characterized Texas’s public policy regarding insurance as follows: “Texas
has a strong public policy of enforcing its insurance policies and requiring
insurers to step up to the plate with respect to their insureds and properly
pay. . . . We have very strong public policies about not letting insurance
companies back off of their obligations.” Am. Intern. Specialty Lines Ins.
Co. v. Triton Energy Ltd., 52 S.W.3d 337, 341-42 (Tex. App.—Dallas 2001,
pet. dism'd w.o.j.) (affirming trial court’s order enjoining California
declaratory judgment action to determine whether insurance policy provided
coverage for punitive damages).
Texas’s
public policy regarding coverage for punitive damages under professional medical
liability policies in particular is found in the insurance code. See
Tex. Ins. Code Ann. art. 5.15-1
(Vernon 1981 & Supp. 2004-05). In 1977 the Texas legislature enacted
article 5.15-1, section 8 of the insurance code, which provided that “[n]o
policy of medical professional liability insurance issued to or renewed for a
health care provider or physician in this state may include coverage for
punitive damages that may be assessed against the health care provider or
physician.” Medical Liability and Insurance Improvement Act, 65th Leg., R.S.,
ch. 817, § 31.01, 1977 Tex. Gen. Laws 2039, 2056 (amended 1987, 1997 &
2001) (current version at Tex. Ins. Code
Ann. art. 5.15-1, § 8). “Health care provider” was defined as,
any person, partnership, professional association, corporation, facility, or
institution licensed or chartered by the State of Texas to provide health care
as a registered nurse, hospital, dentist, podiatrist, chiropractor, optometrist,
blood bank that is a nonprofit corporation chartered to operate a blood bank and
which is accredited by the American Association of Blood Banks, or not-for-profit
nursing home, or an officer, employee, or agent of any of them acting in the
course and scope of his employment.
Id. at 2055 (amended
2001) (current version at Tex. Ins. Code
Ann. art. 5.15-1, § 2) (emphasis added). The 1977 legislation was
passed in order to alleviate a medical insurance crisis and its stated purpose
was to:
improve and modify the system by which health care liability claims are
determined in order to:
. . . .
(2) decrease the cost of
[health care] claims and assure that awards are rationally related to actual
damages;
. . . .
(4) make available to
physicians, hospitals, and other health care providers protection against
potential liability through the insurance mechanism at reasonably affordable
rates;
. . . .
(6) make certain modifications
in the medical, insurance, and legal systems in order to determine whether or
not there will be an effect on rates charged by insurers for medical
professional liability insurance; and
(7) make certain modifications
to the liability laws as they relate to health care liability claims only and
with an intention of the legislature to not extend or apply such modifications
of liability laws to any other area of the Texas legal system or tort law.
Medical Liability and
Insurance Improvement Act, 65th Leg., R.S., ch. 817, § 1.02(b), 1977 Tex. Gen.
Laws 2039, 2040-41 (emphasis added). Another purpose was to penalize and deter
the intentional or grossly negligent wrongdoer. See Horizon/CMS Healthcare
Corp. v. Auld, 34 S.W.3d 887, 895 (Tex. 2000) (citing Texas Medical Professional Liability Study
Commission, Final Report to the 65th Legislature 25 (Dec. 1976) and Hearings
on Tex. H.B. 722 Before the House Comm. on State Affairs, 65th Leg., R.S.
(Feb. 14, 1977) (Rep. Davis’s statement in reference to the proposed
prohibition in the Insurance Code that “it’s against social policy to permit
someone to insure against their own gross negligence or a willful injury of
another”)).
In
1987, the legislature amended section 8 to provide that “the [insurance] board
may approve an endorsement form that provides for coverage for punitive damages
to be used on a policy of medical professional liability insurance issued to a hospital.”
Act of June 3, 1987, 70th Leg., 1st C.S., ch. 1, § 7.01, 1987 Tex. Gen. Laws 1,
36 (amended 1997 & 2001) (emphasis added). The legislature extended
the ability to obtain an endorsement for punitive damages to not-for-profit
nursing homes in 1997. See Act of May 21, 1997, 75th Leg., R.S.,
ch. 746, § 1, 1997 Tex. Gen. Laws 2451, 2451 (amended 2001).
It
was not until 2001 that the legislature added for-profit nursing homes to
the list of entities prohibited from obtaining coverage for punitive damages under
a primary insurance policy, but at the same time the legislature included
them in the list of entities that could obtain a specific endorsement for
such coverage. See Act of May 27, 2001, 77th Leg., R.S., ch.
1284, §§ 5.01, 5.02, 2001 Tex. Gen. Laws 3083, 3085. The 2001 amendments
were intended as “temporary solutions” to “facilitate the efficient
recovery of both for-profit and not-for-profit private long-term care
facilities,” which the legislature acknowledged were in crisis. See
Act of May 27, 2001, 77th Leg., R.S., ch. 1284, § 1.02(a), (c), 2001 Tex. Gen.
Laws 3083, 3083. Furthermore, the introduction to the 2001 amendments
states that,
[w]ith respect to the legal concepts incorporated in the measures contained in
this Act, the legislature does not intend for these concepts to be applied
outside the realm of long-term care. Because the application of the
measures contained in this Act in relation to these legal concepts is temporary
and because of the extraordinary complexity and uniqueness of the crisis facing
nursing homes, these measures should not be construed as the legislature’s
interpretation of the current law applicable to these legal concepts. In
enacting the extraordinary measures contained in this Act, the legislature
specifically rejects any suggestion that these measures represent solutions that
are appropriate for any area involving liability insurance, insurance practices,
or medical care other than long-term care facilities.
Act of May 27, 2001, 77th
Leg., R.S., ch. 1284, § 1.02(d), 2001 Tex. Gen. Laws 3083, 3083 (emphasis
added). Thus, it is clear that before the effective date of the 2001
amendments, a for-profit nursing home, such as PeopleCare, was not prohibited by
the legislature from obtaining insurance coverage for punitive damages awards
under a professional medical liability insurance policy, and after the 2001
amendments, it is permitted to do so if the nursing home specifically obtains an
endorsement for such coverage. See Tex.
Ins. Code Ann. art. 5.15-1, § 8.
Admiral
also contends that because Moriel “heightened [the] level of
culpability required to support an award of punitive damages,” and the trend
for Texas courts since Moriel has been to hold that punitive damages are
uninsurable, allowing insurance coverage for punitive damages under Admiral’s
policy contravenes public policy.
We
agree that public policy is subject to change; it is not static. See
Pawson v. State, 865 S.W.2d 36, 39 n.6 (Tex. Crim. App. 1993); Featherlite
Bldg. Prods. Corp. v. Constructors Unlimited, Inc., 714 S.W.2d 68, 70 (Tex.
App.—Houston [14th Dist.] 1986, writ ref’d n.r.e.); Kennedy v. Laird,
503 S.W.2d 664, 665 (Tex. Civ. App.—Houston [1st Dist.] 1973, no writ).
The Powell opinion aptly traces the evolution of this state’s public
policy regarding the purposes of punitive damages and the standards for imposing
them. 19 F. Supp. 2d at 682-85, 687-91, 693-96. However, the supreme
court has also clearly stated that an agreement does not violate public policy
if it does not contravene a positive statute or well-established rule of law.
See, e.g., Grizzle, 96 S.W.3d at 250.
Further,
contrary to Admiral’s reliance on Powell, and its argument that Powell’s
“Erie” conclusion that Texas’s current public policy is against the
insurability of punitive damages, we are not faced with the issue of current
insurability but with a policy originally issued in 1993, an occurrence in 1994,
and a suit and settlement in 1995. At all relevant times in the Cagle
suit—the effective dates of the Admiral policy,7
the time during which PeopleCare both treated and failed to treat Beulah, and
when the case was filed, negotiated, and tried—the legislature authorized the
imposition of exemplary damages as “an example to others.” Act of June 3,
1987, 70th Leg., 1st C.S., ch. 2, § 2.12, 1987 Tex. Gen. Laws 37, 44 (defining
exemplary damages as “any damages awarded as an example to others, as a
penalty, or by way of punishment” (emphasis added)), 45 (providing that
chapter 41 of the civil practice and remedies code governed the imposition of
exemplary damages in a personal injury case) (both amended in 1995).
Additionally,
Moriel did not address the insurability of punitive damages; insurance
coverage was not at issue in that case. The legislative change to the
definition of exemplary damages (as being solely for penalty or punishment) did
not apply to causes of action accruing before September 1, 1995. See Act
of April 11, 1995, 74th Leg., R.S., ch. 19, § 2, 1995 Tex. Gen. Laws 108, 113.
Therefore, when the Cagle case was decided—even though PeopleCare’s gross
negligence was determined under the Moriel standard—the trial judge
could have awarded punitive damages for the sole purpose of making an example of
PeopleCare, rather than punishing PeopleCare for its grossly negligent treatment
of Beulah.
Whether
or not the party against whom punitive damages are imposed actually pays (or its
insurance company pays) such an award is irrelevant when the purpose of the
award is to make an example of the party. It is the mere fact that the
damages are assessed that sets the example to the public and other similarly
situated parties. Thus, the trial court’s imposition of punitive damages
would not have violated one of the express statutory purposes then in effect as
to the Cagle case. In addition, the insurance code listed numerous entities that
were prohibited from obtaining such coverage, but for-profit nursing homes were
not listed. See Medical Liability and Insurance Improvement Act,
65th Leg., R.S., ch. 817, § 31.01, 1977 Tex. Gen. Laws 2039, 2056.
Consequently, we cannot say that coverage for such damages under Admiral’s
policy was void as against public policy at that time.
Further,
we decline to address Admiral’s argument that insurability of punitive damages
is currently against public policy even though Westchester agreed with that
proposition on rehearing. The present viability of insured punitive damages is
not before us. If we were to decide the case on that basis, we would be
deciding it on grounds not relevant to the outcome (because, as we have already
explained, the pertinent inquiry is whether Admiral’s policy covered the
Cagles’ claim for punitive damages when the claim was pending) and without the
benefit of arguments from a party representing the interests of an insured (or
the insured public of this state).8 We are
prohibited from rendering advisory opinions and have no jurisdiction to do so. Tex. Const. art. II, § 1; Brown v.
Todd, 53 S.W.3d 297, 302 (Tex. 2001); Valley Baptist Med. Ctr. v.
Gonzalez, 33 S.W.3d 821, 822 (Tex. 2000). Therefore, we decline to
address whether insurance coverage for punitive damages currently violates this
state’s public policy.9
Lastly,
we must address the assertions of the concurring and dissenting opinion.
Because Westchester, as PeopleCare’s equitable subrogee, stands in the shoes
of its insured, it may bring any cause of action against Admiral that PeopleCare
could have brought. Westchester obviously has “standing” to bring a Stowers
cause of action against Admiral. Contrary to what the concurring and dissenting
opinion says, Admiral’s standing is irrelevant because it is not the claimant
in this Stowers cause of action. Likewise, Westchester’s Stowers
action presents a real, live justiciable controversy, not an abstract question
of law. The concurring and dissenting opinion confuses Admiral’s
standing with Admiral’s failure to raise its public policy scope of coverage
issue sooner. That is a question of estoppel, not standing. And
since Westchester never claimed Admiral was estopped from challenging the Stowers
scope of coverage prong, it is barred from raising it here.
Because
we have determined that coverage for punitive damages under Admiral’s
professional liability policy would not have violated one of the express
statutory definitions of exemplary damages during the period relevant to
Westchester’s Stowers claim, and based on our review and consideration
of judicial decisions regarding punitive damages, we hold that insurance
coverage under Admiral’s policy for the punitive damages awarded to the Cagles
and against PeopleCare was not void as against the public policy of Texas at
that time.
Because
insurance coverage for punitive damages under Admiral’s policy was not void as
against public policy at the relevant time, the trial court erred in determining
that the Admiral policy did not provide coverage for punitive damages;
therefore, Westchester’s recovery should not have been limited to only those
amounts attributable to the compensatory damages exceeding Admiral’s policy
limits.
Based
on the foregoing, we conclude that the trial court erred in granting Admiral
partial summary judgment on the public policy issue. Because
Westchester’s recovery should have been reduced only by Lola’s treble
damages and related attorneys’ fees (an amount equal to one third of the
treble damages), Admiral’s election of the settlement credit did not preclude
Westchester from recovering damages from Admiral that were attributable to a
potential punitive damages award. Therefore, the trial court erred in
granting a directed verdict for Admiral on that basis.
Other Grounds for Directed Verdict
Admiral
contends that even if the trial court erred in granting a directed verdict based
on its partial summary judgment, the directed verdict was proper for other
reasons. A directed verdict is proper only under the following limited
circumstances as a matter of law: (1) when the evidence conclusively establishes
the right of the movant to judgment or negates the right of the opponent, or (2)
when the evidence is insufficient to raise a fact issue that must be established
before the opponent is entitled to judgment. Compare Tex. R. Civ. P. 268 with Tex. R. Civ. P. 301; see Prudential
Ins. Co. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000);
Boswell v. Farm & Home Sav. Ass'n, 894 S.W.2d 761, 768 (Tex. App.—Fort
Worth 1994, writ denied). In reviewing a directed verdict, we must view
the evidence in the light most favorable to the party against whom the verdict
was rendered and disregard all contrary evidence and inferences. Szczepanik
v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex. 1994); White v. S.W.
Bell Tel. Co., 651 S.W.2d 260, 262 (Tex. 1983); Heinsohn v. Trans-Con
Adjustment Bureau, 939 S.W.2d 793, 795 (Tex. App.—Fort Worth 1997, writ
denied). Further, we must determine if there is any conflicting evidence of
probative value that raises a material fact issue. See Szczepanik,
883 S.W.2d at 649; White, 651 S.W.2d at 262. If there is any such
evidence on any theory of recovery, a determination of that issue is for the
jury. See Szczepanik, 883 S.W.2d at 649; Cano v. N. Tex.
Nephrology Assoc., P.A., 99 S.W.3d 330, 339 (Tex. App.—Fort Worth 2003, no
pet.).
An
appellate court must affirm a trial court’s directed verdict, regardless of
the grounds asserted by the movant or upon which the trial court granted the
directed verdict, if the record establishes any ground that entitles the movant
to judgment as a matter of law. Crescendo Invs., Inc. v. Brice, 61
S.W.3d 465, 472 (Tex. App.—San Antonio 2001, pet. denied); Gonzales v.
Willis, 995 S.W.2d 729, 740 (Tex. App.—San Antonio 1999, no pet.) (op. on
reh'g); Smith v. Guthrie, 557 S.W.2d 163, 164-65 (Tex. Civ. App.—Fort
Worth 1977, writ ref’d n.r.e.); Granato v. Bravo, 498 S.W.2d 499,
502-03 (Tex. Civ. App.—San Antonio 1973, no writ). A directed verdict
for a defendant is proper in two situations: when a plaintiff fails to present
evidence raising a fact issue essential to the plaintiff’s right of recovery
and when a plaintiff admits or the evidence conclusively establishes a defense
to the plaintiff’s cause of action. Prudential Ins. Co., 29
S.W.3d at 77; Johnson v. Scott Fetzer Co., 124 S.W.3d 257, 262 (Tex.
App.—Fort Worth 2003, pet. denied); Cano, 99 S.W.3d at 338.
Because
the review of a directed verdict is essentially a legal sufficiency review and
we must affirm a directed verdict even if on different grounds than the trial
court’s partial summary judgment, we must consider Admiral’s other theories
that might support the verdict.
No Demand Within Policy Limits
Admiral
contends that, regardless of the propriety of the partial summary judgment on
which the directed verdict was based, the directed verdict was proper because
Westchester presented no evidence that the Cagles made a settlement demand that
triggered Admiral’s duty to settle under Stowers. An insurer has
no duty to settle a third-party claim unless it has received a demand within its
policy limits. Garcia, 876 S.W.2d at 849. A demand above policy
limits, even though reasonable, does not trigger the Stowers duty to
settle. Id.
The
evidence in this case shows that Kimberly Robinson, counsel for PeopleCare, and
Dusty Fillmore III, counsel for the Cagles, first discussed settlement of the
case in February 1995 after a pretrial conference. At that time, Fillmore
told Robinson that the Cagles would be seeking PeopleCare’s policy limits.
Later that month, Robinson sent Fillmore a “dec page” for the Admiral
policy, which showed that Admiral’s policy limits were inclusive of costs and
expenses; in other words, the policy was a “burning” or “eroding”10 policy in which the policy limits are diminished by
defense costs and expenses. Fillmore testified that he was unsure then
whether the dec page was for the entity that actually owned Heritage Western
Hills Nursing Home because several PeopleCare entities were listed on the dec
page. Fillmore orally communicated to Robinson on at least one other
occasion that the Cagles were seeking PeopleCare’s policy limits. A
letter Robinson wrote Admiral on April 25, 1995 indicates that Fillmore was
“[b]asically . . . willing to settle for the full policy limits.”
Robinson
testified at trial that she did not construe any of these conversations to be
settlement offers because “he [Fillmore] really didn’t approach me with the
topic like you would a normal settlement demand. In addition, his comments
were along the lines of, well, I can’t believe that you don’t think this is
a $1,000,000 case. . . . Those are the types of discussions that we had.”
Beverly Godbey, lead counsel for PeopleCare, also testified that Robinson told
her
that on several occasions she [Robinson] had talked to [Fillmore] about
settlement and just about his view of the case, and very consistently he would
express a very high opinion about his cases and say I think this is a policy
limits case.
. . . .
Not in terms of it being an
actual offer that we could accept, but just as – as the way plaintiff’s
lawyers sometimes talk about their cases.
. . . .
Every time he talked about it,
he talked about it in the future, we’re going to be looking for this, we’re
going to be seeking this, we’re going to be asking for this, and this was the
same way he was conveying it to [Robinson], as I remember, not as something that
he would presently take but something that he was going to do in the future.
On
July 19, 1995, Fillmore wrote Robinson a letter in which he asked “what amount
of insurance is left, out of the aggregate, on the primary policy.”
Fillmore testified at trial that he was trying to confirm what insurance was
still available because of the concern that PeopleCare-affiliated entities other
than Heritage Western Hills may have been covered under the policy and the
possibility that the aggregate may have been depleted by other claims.
Robert Schlegel, the president of PeopleCare Centers of Texas, Inc., testified
at his deposition in July 1995 that “most of the coverage was still available
under the policy.” Robinson sent Fillmore a letter in response stating
that “unless I am mistaken, I recall Mr. Schlegel testifying that the entire
$2 million aggregate on the primary insurance policy was still in place.
Indeed, that is the information received from Admiral Insurance Company.
In any event, I am sure that you will find that the insurance policies in place
are sufficient to cover Ms. Cagle’s claims.” Fillmore testified that
he thought this meant the full $1,000,000 limits of the primary policy were
available for the Cagles’ claims.
Fillmore
sent Robinson two letters dated August 1, 1995, in which he stated that the
Cagles’ settlement demand would exceed the primary policy’s coverage limits.
For this reason, he expressed concern that Westchester be notified about the
mediation and have a representative present. On August 9, 1995, Fillmore
sent Robinson a written settlement proposal, which stated, “[W]e are willing, at
this time, to settle this case for the policy limits of the primary
insurance policy: $1,000,000.00. I trust that you will apprise the excess
carrier of the fact that this case can be settled, at this time, within
the limits of the primary insurance policy.” Fillmore testified that he
“made the demand for the policy limits of the primary insurance company,
which at that time we understood to be $1,000,000.” [Emphasis added].
In
discussing the demand letter at trial, Fillmore stated, “We made a $1,000,000
demand and then they pop up later and say, oh, by the way, there wasn’t
$1,000,000 available, so you did not make a—an appropriate Stowers [sic]
demand.” According to Fillmore, the demand assumes that “the amount of
the primary policy is $1,000,000 and that the full 1,000,000 is available.”
However, in response to cross-examination asking if the demand was conditioned
upon the policy limits being $1,000,000, Fillmore stated that
what I’m setting out is basically that we are willing to settle for the
primary insurance policy limits, colon, and that sets out what they have been
represented to us to be, $1,000,000.
And then the next sentence
tells them that we are willing to [settle] within the limits of the insurance
policy.
So, if you mean it’s
conditioned on it being a million, and if it’s not a million, then we
wouldn’t be settling, I don’t believe that is correct.
Fillmore testified that he
thought the policy limits were $1,000,000 because “that’s what had been
represented to us to be available for the client.” He further testified
that he felt he had “basically been tricked into not making a Stowers [sic]
demand or not making a demand within their policy limits.”
On
August 15, 1995, Admiral sent PeopleCare a letter advising that under the terms
of the policy PeopleCare’s written consent was required in order to settle the
claim. PeopleCare responded in writing on August 16, consenting to
settlement “if it can be negotiated within [the] policy limit.”
The
case went to mediation on August 16, 1995. H. Dustin Fillmore II (Fillmore II),
Fillmore’s father and law partner, attended the mediation. According to
Fillmore II, his son made an opening demand “right at $1,000,000 or whatever
the coverage was.” He testified that he and Fillmore were aware of the
eroding nature of the policy when they attended the mediation, but that
[t]he problem was [he and Fillmore] were getting subsequent information telling
[them] that the coverage was 1,000,000. So, that’s why the demand was
couched the way it was. If it’s – If you got 1,000,000, we want that.
That’s our demand. If it’s not $1,000,000, if it’s eroded down to
950 or 990 or whatever, then that’s what we want.
Fillmore II also testified
that
[o]ur demand at the mediation
was, if it – if you have $1,000,000, that’s what we’ll settle the case
for. If it’s less than 1,000,000, if it’s depreciated some amount,
what we want is the – what’s left on the primary policy of insurance.
That’s what we’re willing to settle the case for.
. . . .
[T]hose were the terms in
which . . . the demand was communicated.
If you’ve got $1,000,000
coverage, we want the $1,000,000 to settle the claim. If you don’t have
$1,000,000, if it has been depreciated, that coverage has gone down some,
we’ll take that. Whatever you’re telling us –
You still have $1,000,000. So
we’ll take that. If you don’t have it, then we’ll take what’s left.11
Fillmore,
on the other hand, testified that “we didn’t have any discussions at the
mediation about the defense cost being subtracted from the policy” and
“[h]ad we known that at the time, we would have made a demand within
[whatever] was available at that time, but we didn’t.” In a subsequent
letter to Godbey, Fillmore stated, “We made no settlement demand of a
million dollars at mediation; we simply asked the Defendant to make an offer and
see how close to one million dollars it could come in order to settle this case.”
[Emphasis added.]
At
the mediation, PeopleCare made an opening offer of $40,000.12
Fillmore informed the mediator that unless PeopleCare made an offer in the
$500,000 range, there was no reason to continue mediating. The mediator
returned, saying that PeopleCare would not increase its offer and would never
make a $500,000 offer in the case. According to Godbey, she and Fillmore
II met personally outside the presence of the mediator and
talked about the fact that we couldn’t even pay the $1,000,000 even if we
wanted to pay the $1,000,000 because this was a wasting policy, and he said he
understand [sic] that. He said that didn’t make any difference. What he
was out there to tell me was if we would come up to $500,000, then only under
that circumstance would they come off $1,000,000.
. . . .
I believe what I ultimately
did was tell him that I did not have authority to settle the case there but that
I would be happy to talk with my client and see if there’s anything else we
can do, and he basically closed the mediation by saying, well, if you don’t
have $1,000,000, then you’re going to need to get up just as close to
1,000,0000 as you can come, or words to that effect.
. . . .
They never came off their
$1,000,000 demand.
According to Godbey, the
Fillmores “knew the policy limits were not $1,000,000, and . . . didn’t want
to come off $1,000,000.” Thus, the mediation ended without a settlement.
In
an August 17, 1995 letter to Admiral, Myrna Schlegel, another officer of
PeopleCare, wrote, “Also note that the demand for settlement is currently
within the basic insured amount. Please attempt to get this account
settled as soon as possible.”
The
record contains another handwritten note made by Guest dated August 22, 1995, in
which he states, “$1M settlement demand in.” In an August 24, 1995
letter to Robinson, Guest writes, “This will confirm receipt by copy of your
August 10, 1995 letter to Jane Hill of Admiral inclusive of the plaintiff’s
formal settlement proposal document wherein a $1,000,000 demand is extended.”
In
a September 21, 1995 letter to Fillmore, Godbey offered to settle the case for a
cash payment of $146,000 or an annuity with either a lifetime income of $2,207
per month with five years guaranteed or a guaranteed income of $2,776 per month
for five years only. That same day, Fillmore wrote back to Godbey, stating
that based on new information in the case, the demand for the Cagles’ claims
had increased to $1,750,000 for Beulah and $150,000 for Lola. The letter
also states, “You were given an opportunity to settle this case within the
primary policy limits at mediation.”
On
September 28, 1995, Godbey wrote a letter to Fillmore indicating that there had
never been a demand for policy limits in the case. She stated that
“[b]oth from our discussions at the mediation and from our interrogatory
answers, you know that defense costs are subtracted from the policy limits in
this case.” Fillmore responded in a letter dated the same day, stating
that the “only information [he had received] concerning available insurance
coverage under the primary policy of insurance” was a copy of the policy
indicating an aggregate of $2,000,000, Mr. Schlegel’s deposition testimony,
and the July 1995 letter from Robinson. He said further that the Cagles’
demands had increased because of costs and new information. The Cagles never
lowered their demands before trial.
Gary
Beck, an insurance expert hired by Westchester, testified that the settlement
demand in the August 9 letter was a demand within policy limits. He based
his opinion on “the letter, 25 years[‘] experience in looking at Stowers
[sic] demand letters, [and] knowing how a plaintiff lawyer Stowerizes an
insurance company. “ According to Beck, the letter was a demand within
the eroding limits of the policy because
I think he used the magic words policy limits. “We will settle for
policy limits.” I think that’s a direct quote.
So, in my mind, if you’re a
claims adjuster looking at that, that means policy limits as they may exist from
time to time.
Now, I think the distinction
that is being made here by the other side is that because there was the
statement made, $1,000,000, that’s the stated limit on the face of the policy
for the per occurrence limits, but I think the demand for policy limits gets
around that, if that’s a quibbling point.
Ricky
Brantley, the attorney appointed as Beulah’s guardian ad litem in the Cagle
case, testified that “[b]ased on what [he] had looked at in the file, it was
[his] opinion that there had been a demand or an offer to settle the case for
Admiral Insurance’s policy limits.” His opinion was based on “the
communications, the settlement demand that was sent at the time of the
mediation, the letters that were written about what coverage was in effect . . .
[and] answers to interrogatories.”
We
hold that, viewed under the proper standard, there is more than a scintilla of
evidence to raise a fact issue regarding whether the Cagles made a settlement
demand within policy limits. Therefore, we conclude that a directed
verdict would not have been proper on this ground.
Ordinarily
Prudent Insurer Would Not Accept Settlement Offers
Admiral
further contends that the directed verdict should be affirmed because an
ordinarily prudent insurer would not have accepted the terms of the Cagles’
premediation $1 million settlement demand. According to Admiral, an
ordinarily prudent insurer would only accept a demand within policy limits,
would not settle without its insured’s consent when the policy requires it to
first obtain consent, and would not accept an opening, premediation settlement
demand without attempting to negotiate a lower settlement amount.
We
have already determined that a fact issue exists on whether Admiral received a
policy limits demand from the Cagles. Admiral next claims that it never had the
opportunity to settle within policy limits because it did not have its
insured’s consent to do so. According to Admiral, it did not have notice
of Myrna Schlegel’s consent to settle within policy limits until after the
mediation, and at the mediation, Mrs. Schlegel would not allow Godbey and
Robinson to offer more than $40,000.
Godbey
testified that it was her understanding before the mediation that the Schlegels
had not given Admiral written authorization to settle the case and that the
issue would need to be discussed at mediation. Godbey said that at
mediation, Mrs. Schlegel would not authorize an opening demand of more than
$40,000. Godbey said she had no authority from Mrs. Schlegel to make any
further offer, and there was nothing she and Robinson could do to change Mrs.
Schlegel’s mind. Godbey did not learn about Mrs. Schlegel’s letter
authorizing a settlement within policy limits until after the mediation.
The
fax identification information on the top of Mrs. Schlegel’s letter consenting
to a settlement “within [PeopleCare’s] insurance policy limit” indicates
it was sent from the “SCHLEGEL OFFICE” on “AUG . . . 99" at 11:58.
However, the information does not indicate whether it was 11:58 a.m. or p.m. The
date of the letter is August 16, 1995, but Mrs. Schlegel did not know when the
letter was sent. Mrs. Schlegel testified by deposition that she did not
control the negotiations at mediation; the insurance company did. She said
that she told the insurance company “in [her] letters” that she wanted to
settle for more than $40,000. Fillmore testified that the initial
decision after the mediation was that the Cagles would not accept a policy
limits settlement, but that this decision was not “hard and fast,” and it
was not until some point after mediation that a policy limits settlement became
unacceptable.
We
hold that Admiral failed to conclusively prove that it did not have an
opportunity to settle the claim after receiving PeopleCare’s consent.
Admiral did not attempt to obtain its insured’s consent to settlement until
the day before mediation even though the parties had been discussing mediation
since February 1995. In addition, Fillmore’s testimony indicates it may
have been possible for Admiral to settle the case for policy limits even after
the mediation. Thus, we conclude that a directed verdict was not proper on
this ground.
Finally,
Admiral contends that an ordinarily prudent insurer would not have accepted an
opening demand for its full policy limits without first attempting to negotiate
a lower settlement amount. Admiral quotes the following testimony from Ray
Chester, one of Westchester’s experts, averring that it shows why an
ordinarily prudent insurer would not have accepted an opening offer of policy
limits:
There was [a] $1,000,000 primary insurance policy. The plaintiff’s
lawyer had indicated that he thought it was a policy limits case, that he would
settle for the primary insurance limits, but then he also agreed to mediate it,
which is a very clear signal that he will take less than 1,000,000 because if
you are firm on your 1,000,000 and you ---
All you do is you send a Stowers
letter, and there is reason to mediate because it’s a million or nothing or
I’m going to trial -- if you sent -- If you make a $1,000,000 demand or policy
limit demand, as was made in this case, and then you agree to mediate or
indicate you are willing to settle it for less . . . than policy limits.
However, the same expert
testified that he thought the value of the case exceeded $1,000,000 from the
beginning. Another of Westchester’s experts testified that it would not
have been unreasonable for Admiral to settle for $1,000,000 at the mediation.
Accordingly, we hold that Admiral failed to conclusively prove that an
ordinarily prudent insurer would not have accepted the Cagles’ policy limits
demand; therefore, Admiral was not entitled to a directed verdict on this ground
either.
Because
there remain factual issues as to whether an offer within policy limits was
tendered and whether an ordinarily reasonable person would accept the offer,
there are no other bases upon which to affirm the directed verdict.
Conclusion
Having
determined under the specific facts of this case that public policy at the time
the Cagle case was decided did not preclude coverage under Admiral’s policy
for amounts attributable to punitive damages, that the Admiral policy and
professional malpractice endorsement did not exclude punitive damages from
coverage, and that the evidence is sufficient to raise a fact issue regarding
whether Admiral received a proper Stowers demand and whether an
ordinarily prudent insurer would have settled the case for policy limits, we
reverse the part of the trial court’s partial summary judgment determining
that public policy at the time the Cagle case was tried and settled precluded
coverage under Admiral’s policy for punitive damages and excluding from
Westchester’s potential damages recovery the amount of Westchester’s
settlement contribution attributable to punitive damages on Beulah’s claim.
We affirm the part of the trial court’s partial motion for summary judgment
excluding DTPA treble damages and related attorneys’ fees from any potential
damages award as unchallenged. Because Admiral’s settlement credit is
less than the amount of Westchester’s potential recovery (i.e., the portion of
Westchester’s settlement contribution attributable to the Cagles’
compensatory damages and punitive damages on Beulah’s claim), we reverse the
trial court’s directed verdict in Admiral’s favor13
and remand the case for a new trial on Westchester’s Stowers claim.
TERRIE
LIVINGSTON
JUSTICE
EN BANC
CAYCE, C.J. filed a concurring
and dissenting opinion in which HOLMAN, J. joins.
MCCOY, J. recused
DELIVERED: December 2, 2004
COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-01-227-CV
WESTCHESTER
FIRE INSURANCE COMPANY APPELLANT
V.
ADMIRAL
INSURANCE COMPANY APPELLEE
------------
FROM
THE 48TH DISTRICT COURT OF TARRANT COUNTY
------------
CONCURRING AND
DISSENTING OPINION ON REHEARING
------------
I
concur with the majority’s holding that gross negligence is a covered claim
under the language of Admiral’s insurance contract with PeopleCare, and I
agree that the question of whether it is now against public policy to insure
punitive damages is not before us. I dissent, however, to the majority’s
advisory opinion holding that it was not against public policy to insure against
punitive damages on or before 1995.
To
invoke the subject matter jurisdiction of the trial court for the purpose of
deciding whether it was against public policy for Admiral to insure
PeopleCare’s punitive damages on or before 1995, the party challenging the
legality of insuring punitive damages, Admiral, must have standing to assert the
complaint.1 Standing is implicit in the
concept of subject matter jurisdiction and stems from two constitutional
limitations on that jurisdiction: the separation of powers doctrine and the open
courts provision.2 The separation of
powers doctrine prohibits courts from issuing advisory opinions.3 The distinctive feature of an advisory
opinion is that it decides an abstract question of law without binding the
parties. Rather than remedying an actual or imminent harm, an advisory opinion
addresses only a hypothetical injury.4
Texas courts have no jurisdiction to render such opinions.5
Standing
is also an aspect of the open courts provision of the Texas Constitution, which
contemplates access to the courts for those litigants suffering an injury.
Specifically, the open courts provision provides:
All courts shall be open, and every person for an injury done him, . . . shall have remedy by due
course of law.6
Thus,
there must be an actual, not merely hypothetical or generalized, grievance.7
As
a ground for its motion for partial summary judgment, Admiral argued that
Westchester is precluded from recovering on its Stowers8 action against Admiral for negligently refusing to
settle the Cagles’ gross negligence claim against PeopleCare, because it was
against public policy to insure punitive damages at that time. Admiral
contends that punitive damages were uninsurable at that time because the
underlying social purpose of punitive damages was, and is, to punish wrongdoers
and prevent similar behavior against society in the future—an objective that
would be frustrated if wrongdoers were permitted to insure against their own
grossly negligent conduct or willful injury to another. The trial court
expressly granted Admiral’s motion on this ground declaring:
[I]nsurance coverage for punitive damages, now and at the time in question,
violates the public policy of the State of Texas. Accordingly, coverage
for punitive damages under the Admiral insurance policy is void.
In
reversing the trial court’s judgment, a majority of this court has rendered
the following pronouncement:
Whether or not the party against whom punitive damages are imposed actually pays
(or its insurance company pays) such an award is irrelevant when the purpose of
the award is to make an example of the party. It is the mere fact that the
damages are assessed that sets the example to the public and other similarly
situated parties. . . . In addition, the insurance code listed numerous entities
that were prohibited from obtaining such coverage, but for-profit nursing homes
were not listed. Consequently, we cannot say that coverage for such
damages under Admiral’s policy was void as against public policy at that time.9
I
do not believe we have jurisdiction to make this public policy decision because
Admiral has no standing in this case to challenge the insurability of punitive
damages on public policy grounds. I, therefore, dissent to this part of
the majority’s opinion.
The
question decided by the trial court—whether “insurance coverage for punitive
damages . . . at the time in question, violates the public policy of the State
of Texas”—is an abstract question of law that has no binding effect on
either party to this case. No insured of either insurance company is a
party to the case and no party is seeking a judgment that would allow or deny
coverage of an insured’s punitive damage award.10
Consequently, the trial court’s judgment remedied no actual or imminent harm
to the public, or to a party, resulting from the potential coverage or
noncoverage of a punitive damage award. It was, therefore, an advisory judgment
which the trial court had no subject matter jurisdiction to render.
“Our
jurisdiction over the merits of an appeal extends no further than that of the
court from which the appeal is taken.”11
Because the trial court lacked subject matter jurisdiction to decide the
hypothetical question of whether insurance coverage for punitive damages
violated public policy on or before 1995, so do we.12
The
only real issue between the parties to this case is whether Westchester is
entitled under Stowers to recover damages from Admiral for its alleged
negligence in refusing to settle a claim covered by the language of Admiral’s
insurance contract with PeopleCare. Whether Admiral violated public policy
when it agreed to insure PeopleCare against its own gross negligence is
immaterial to Westchester’s right to recover against Admiral under Stowers.
The
majority misunderstands the nature of the standing problem. The issue is
not whether Westchester has standing to bring its Stowers action,
as the majority believes, but whether Admiral has standing to challenge
the legality insuring PeopleCare against punitive damages prior to 1995.
Admiral cannot rely on Westchester’s standing to bring a Stowers action
for the separate standing Admiral must have to challenge the legality of
insuring PeopleCare’s punitive damages. Westchester’s Stowers
action may involve a justiciable controversy, but Admiral’s pre-1995 public
policy challenge does not.
Moreover,
it is difficult to understand what the majority means by its statement that this
opinion “confuses Admiral’s standing with Admiral’s failure to raise its
public policy scope of coverage issue sooner. That is a question of
estoppel, not standing.”13 This
issue, which the majority has raised sua sponte, has no relevance to
Admiral’s standing to challenge the insurability of punitive damages. Standing
is a component of subject matter jurisdiction and cannot be waived.14 Because Admiral had no standing to
challenge the legality of PeopleCare’s insurance contract on pre-1995 public
policy grounds, the trial court had no subject matter jurisdiction to decide the
issue whether Admiral was estopped from asserting it or not.15
I
would hold that gross negligence is a covered claim under the language of
Admiral’s insurance contract, and that Westchester, as PeopleCare’s
equitable subrogee, is entitled to pursue recovery on its Stowers action
for any excess damages it paid on that claim as a result of Admiral’s
negligence. I would further hold that the trial court erred in rendering
summary judgment against Westchester on public policy grounds because Admiral
has no standing to challenge the insurability of punitive damages under the
facts of this case. Because the trial court had no subject matter
jurisdiction to decide the public policy question, I would vacate and set aside
the trial court’s judgment16 and remand
the case for trial on the remainder of Westchester’s Stowers action
against Admiral.
JOHN
CAYCE
CHIEF
JUSTICE
HOLMAN,
J. joins.
DELIVERED:
December 2, 2004
NOTES
* Majority Opinion by Justice Livingston; Concurring &
Dissenting Opinion by Chief Justice Cayce
MAJORITY OPINION NOTES
1.
The terms exemplary damages and punitive damages are used interchangeably
throughout this opinion; however, all references to either refer to damages
recoverable under chapter 41 of the civil practice and remedies code. See
Tex. Civ. Prac. & Rem. Code Ann.
§§ 41.001-.013 (Vernon 1997 & Supp. 2004-05).
2.
Westchester alleged several claims against Admiral but tried only the Stowers
claim.
3.
Admiral’s policy limits were reduced by defense costs and a $10,000
deductible.
4.
Westchester does not specifically refer to the partial summary judgment, but
rather the court’s previous ruling regarding the insurability of punitive
damages. We construe Westchester’s challenge to the court’s prior
ruling as a challenge to the partial summary judgment. See Tex. R. App. P. 38.9.
5.
Again, we do not discuss the court’s ruling on the Cagles’ award of DTPA
treble damages and attorneys’ fees because Westchester has not challenged
their denial on appeal.
6.
A review of other states’ decisions on this issue shows that
[t]here is considerable authority that liability insurance coverage of an award
of punitive damages is generally void as contrary to public policy. . . .
[However,] several jurisdictions recognize that there is no public policy
concern which ordinarily precludes insuring against liability for punitive
damages, so that policy provisions broad enough to include such coverage could
be enforced.
Id. §101:29, at 101-100, 101-106 (citations omitted). In twenty-nine other
states, insurance coverage for punitive damages does not violate public policy;
however, eight of those states exclude coverage for punitive damages arising out
of intentional acts. See McCullough, Campbell & Lane, The
Insurability of Punitive Damages, Jurisdictional Analysis, at
http://www.mcandl.com/puni_ states.html (last visited November 22, 2004); see
also Russ, supra, at
101-99 to 101-109. Fifteen states hold that insurance coverage for
punitive damages is void as against public policy, but eight of those states
allow coverage for punitive damages that are imposed as a result of vicarious
liability. See McCullough, Campbell & Lane, supra; see
also Russ, supra.
7.
Admiral’s policy period was from December 1, 1993 to December 1, 1994.
8.
We did not receive any amicus briefs in connection with this case.
9.
We note that the partial summary judgment is overly broad in that insurance
coverage for punitive damages cannot be void as against public policy in all
cases because the legislature has provided that an endorsement is available to
certain entities in the context of professional medical liability insurance.
See Tex. Ins. Code Ann.
art. 5.15-1, § 8.
10.
Also referred to elsewhere as an “exhausting” or “wasting” limits
policy.
11.
A post-trial letter from Michael Knippen, an attorney whom Westchester hired to
investigate the claim after the trial judge made his initial ruling on damages,
indicates that “[p]laintiff’s counsel indicated recently that the defendants
were told at the mediation that the case could be settled for the primary policy
regardless of the erosion of its limits.” The letter also states,
Because of Admiral’s exhausting limits . . . Westchester may not argue Admiral
could have settled this matter within their limits when the Plaintiff’s made
their $1 million demand. Assuming each policy [Admiral’s and
Westchester’s] is given effect as written, the exhausting nature of
Admiral’s limits inhibited it from entering into a settlement agreement with
the Plaintiff.
A footnote at the end of the quoted language, however, indicates that this
evaluation is “[s]ubject to plaintiff’s indications to defense counsel.”
12.
The parties dispute whether Admiral or PeopleCare controlled the mediation
offer. Admiral contends that PeopleCare’s representative would not allow
Robinson and Godbey to offer more than $40,000 while Westchester contends that
the $40,000 offer was Admiral’s idea. A handwritten note made by Elijah
Guest, who monitored the claim for Westchester, was introduced into evidence at
trial. The note detailed a telephone conference between Guest and Jane
Hill, the adjuster handling the claim for Admiral. Guest’s note
indicates that he “advised Hill that counsel’s recent damages/value report
indicated . . . that insured would not allow an opening offer above $40K.
Hill said Admiral chose the 40K figure.” Because we must view the
evidence in the light most favorable to Westchester, we assume that Admiral
controlled the decision to make offers at the mediation.
13.
Any damages Westchester may recover at trial will be reduced by the amount of
Admiral’s settlement credit and Lola’s DTPA treble damages and attorneys’
fees.
CONCURRING & DISSENTING OPINION NOTES
1. Brown v. Todd, 53 S.W.3d 297, 302 (Tex.
2001). Although Westchester has not raised this issue, standing is a
component of subject matter jurisdiction and cannot be waived by the parties.
Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445 (Tex.
1993).
2. Id. at 443; see Tex. Const. art. II, § 1; Tex. Const. art. I, § 13.
3. Brown, 53 S.W.3d at 302; Firemen’s Ins.
Co. v. Burch, 442 S.W.2d 331, 333 (Tex. 1968).
4. See Allen v. Wright, 468 U.S. 737, 751, 104
S. Ct. 3315, 3324 (1984).
5. Valley Baptist Med. Ctr. v. Gonzalez, 33
S.W.3d 821, 822 (Tex. 2000).
6. Tex. Const.
art. I, § 13 (emphasis supplied).
7. Brown, 53 S.W.3d at 302.
8. G.A. Stowers Furniture Co. v. Am. Indem. Co.,
15 S.W.2d 544 (Tex. Comm’n App. 1929, holding approved).
9. Maj. Op. at 35 (citation omitted).
10. Admiral has not argued that public policy would
be violated by allowing Westchester, as a Stowers plaintiff, to recover
excess on a gross negligence claim, only that it was against public policy to
insure punitive damages on or before 1995.
11. Mobil Oil Corp. v. Shores, 128 S.W.3d 718,
722 (Tex. App.—Fort Worth 2004, no pet.) (op. on reh’g).
12. Id.
13. Maj. Op. at 37.
14. Tex. Ass’n of Bus., 852 S.W.2d at 445.
15. The majority’s holding that Westchester is
barred from claiming Admiral is estopped from challenging the insurability of
punitive damages is yet another advisory ruling by the majority because neither
party raised the issue of estoppel.
16. Mobil Oil Corp., 128 S.W.3d at 722
(holding that if the trial court lacks subject matter jurisdiction, “we only
have jurisdiction to set the trial court’s judgment aside”).
| {
"pile_set_name": "FreeLaw"
} |
Opinion issued June 29, 2006
In The
Court of Appeals
For The
First District of Texas
NO. 01-05-00913-CV
__________
(CORPORATE PARK WEST) HARTMAN REIT OPERATING
PARTNERSHIP, II, L.P., Appellant
V.
WALLER COUNTY APPRAISAL DISTRICT, Appellee
On Appeal from the 215th District Court
Harris County, Texas
Trial Court Cause No. 2003-47095
MEMORANDUM OPINION
Appellant, (Corporate Park West) Hartman REIT Operating Partnership, II,
L.P. ("Hartman"), challenges the trial court's judgment, rendered after a jury verdict,
in favor of appellee, Waller County Appraisal District ("WCAD"), finding that the
appraised value of Hartman's property, as of January 1, 2003, was $8,100,000. In
two issues, Hartman contends that the evidence is legally and factually insufficient
to support the jury's determination of value and that the trial court erroneously
admitted into evidence the sales price of Hartman's property.
We affirm.
Factual and Procedural Background
Hartman, the owner of "Corporate Park West," an office warehouse property
located in Katy, Texas, filed suit against WCAD, asserting that the Waller County
Appraisal Review Board assessed a value on Corporate Park West, as of January 1,
2003, that was "grossly in excess of its actual fair market value" and that WCAD
appraised Corporate Park West "in a manner and amount which [was] not uniform
and equal." After Hartman filed a non-suit of its excessive market value claim, the
unequal appraisement claim was submitted to a jury. In its charge, the trial court
instructed the jury that equal and uniform value is "the median appraised value of a
reasonable number of comparable properties appropriately adjusted." It then asked
the jury, "What amount do you find to be the equal and uniform value of the property
commonly known as Corporate Park West as of January 1, 2003?" The jury answered
$8,100,000, and the trial court entered judgment on the jury's verdict.
Standard of Review When a party with the burden of proof challenges the legal sufficiency of the
evidence, it must demonstrate on appeal that the evidence conclusively established
all vital facts in support of the issue. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241
(Tex. 2001); Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989); City of
Pasadena v. Gennedy, 125 S.W.3d 687, 692 (Tex. App.--Houston [1st Dist.] 2003,
pet. denied). In conducting our legal sufficiency review, we first examine the record
for evidence that supports the challenged finding, ignoring the evidence to the
contrary. Francis, 46 S.W.3d at 241. If no evidence exists to support the finding, we
then examine the entire record to determine if the contrary proposition is established
as a matter of law, and we will sustain the point of error only if the contrary
proposition was conclusively established. Id.
When a party with the burden of proof attacks the factual sufficiency of the
evidence, it must demonstrate that the adverse finding is against the great weight and
preponderance of the evidence. Francis, 46 S.W.3d at 242. In conducting our factual
sufficiency review, we must consider and weigh all of the evidence, and may set aside
a verdict only if the evidence is so weak or if the finding is so against the great weight
and preponderance of the evidence that it is clearly wrong and unjust. Id.
Equal and Uniform Value
In its first issue, Hartman argues that the evidence is legally and factually
insufficient to support the jury's value determination of Corporate Park West because
WCAD did not make "appropriate adjustments" in determining the median appraised
value of a reasonable number of comparable properties as required by former section
42.26(d) of the Texas Tax Code. See Act of June 1, 1997, 75th Leg., R.S., ch. 1039,
§ 42, 1997 Tex. Gen. Laws 3897, 3917 (amended 2003) (current version at Tex. Tax
Code Ann. § 42.26(a)(3) (Vernon Supp. 2005)). It asserts that WCAD improperly
used an income approach in its equal and uniform analysis, effectively conducting a
"market analysis" on each of the comparable properties. Hartman notes that former
section 42.26(d) did not require the comparison of "actual market values" of
comparable properties.
Former section 42.26(d) provided:
The district court shall grant relief on the ground that a property
is appraised unequally if the appraised value of the property exceeds the
median appraised value of a reasonable number of comparable
properties appropriately adjusted.
Id.
At trial, Hartman's expert and only witness, Gary Brown, testified that,
pursuant to former section 42.26(d), he was retained by Hartman to find a reasonable
number of comparable properties, analyze them, and "come up with a median
indication of value." Once he found the reasonable number of properties to use in his
analysis, he adjusted the properties "for various . . . dissimilarities or similarities to
[Corporate Park West] to make them comparable to [Corporate Park West] and to
give an indication of the median assessed value." In making adjustments, Brown
considered factors such as location, age, size, and construction type, though Brown
stated that, in light of the Corporate Park West's characteristics, some of these factors
were more significant than others in making appropriate adjustments. After making
his adjustments, Brown derived an adjusted value for the comparable properties of
$34.13 per square foot and then calculated a "median total value" of $5,812,975.
Based on his analysis, Brown concluded that Corporate Park West was unequally
appraised and that its appraised value, which was $8,100,000 as of January 1, 2003,
exceeded the median value of the comparable properties appropriately adjusted for
the tax year 2003.
Chris Barzilla, WCAD's director and only witness, testified that he also
analyzed a reasonable number of comparable properties pursuant to former section
42.26(d) to determine a median appraised value for those properties. During his
testimony, Barzilla agreed that "if you're going to compare [properties], you're going
to have to adjust them back to the subject [property] for differences such as the age,
the condition, the quality, occupancy, [and] differences in rents they get." However,
in conducting his analysis, Barzilla stated that he used an income approach, which
was based, in part, on the rental income generated by the properties. Barzilla
repeatedly contended that the income approach took all of the appropriate adjustment
factors into consideration. Barzilla presented his calculations and findings in a table,
which contained columns reflecting the year built, the building class, total appraised
value per square foot, the net operating income per square foot, and capitalization rate
for both Corporate Park West and the comparable properties. The table, which was
introduced into evidence, also showed the difference in per-square foot income
between Corporate Park West and the comparable properties and contained a column
titled "income adjustment," which Barzilla stated accounted for the appropriate
adjustments, i.e., the differences between the comparable properties and Corporate
Park West in condition, age, size, and quality of construction. Based on his analysis,
Barzilla concluded that the appraised median value per square foot of the comparable
properties would be approximately $50.09 and that, based on this figure, the total
median value of Corporate Park West was approximately $8,799,060. Barzilla further
concluded that the actual total appraised value for Corporate Park West, on January
1, 2003, which was $8,100,000, with a value of $46.11 per square foot, did not
exceed the median appraised value of a reasonable number of comparable properties
appropriately adjusted. (1)
In support of its argument, Hartman first asserts that WCAD did not make
appropriate adjustments and that Barzilla, WCAD's expert, contended at trial that
"adjustments were not necessary." However, the record reveals that while both
Brown and Barzilla used different methods in conducting their analysis under former
section 42.26(d), both Hartman and WCAD presented evidence pursuant to this
statute concerning the "median appraised value of a reasonable number of comparable
properties appropriately adjusted." Barzilla elected to make the appropriate
adjustments by, in part, considering the rental income generated by comparable
properties, and Barzilla testified that this would necessarily account for other
differences in the location, size, age, and construction type between the comparable
properties and Corporate Park West. Barzilla also testified that in conducting his
equal and uniform analysis, he complied with former section 42.26(d) by locating a
reasonable number of comparable properties, making appropriate adjustments, and
comparing the median appraisal value of those comparable properties to the appraisal
value of Corporate Park West. See Harris County Appraisal Dist. v. (Kempwood
Plaza Ltd.) Hartman REIT Operating P'ship, L.P., 186 S.W.3d 155, 158 (Tex.
App.--Houston [1st Dist.] 2006, no pet.).
Hartman next refers us to section 23.0101 of the Texas Tax Code, which
provides, "In determining the market value of the property, the chief appraiser shall
consider the cost, income, and market data comparison methods of appraisal and use
the most appropriate method." See Tex. Tax Code Ann. § 23.0101 (Vernon 2001).
It also cites section 23.012, which sets forth the requirements for conducting an
"income method of appraisal" to determine the market value of the property. See
Tex. Tax Code Ann. § 23.012 (Vernon Supp. 2005). Hartman argues that, in light
of these provisions, former section 42.26(d) "does not require comparison of
appraised values to actual market values" and, by using an income approach, WCAD
impermissibly relied upon market value figures in performing its equal and uniform
analysis. It concludes that WCAD improperly merged the analysis under former
section 42.26(d) with a market value approach.
However, former section 42.26(d) did not require that the appropriate
adjustments be made exclusively using the methods suggested by Hartman or that the
appropriate adjustments may be made by considering only information contained in
the tax rolls or on WCAD's website. It is true that former section 42.26(d) was added
in 1997 as part of the Taxpayer's Bill of Rights, which "was intended to facilitate tax
remedies for property owners." See Harris County Appraisal Dist. v. United
Investors Realty Trust, 47 S.W.3d 648, 652 (Tex. App.--Houston [14th Dist.] 2001,
pet. denied). But Hartman does not explain why WCAD could not make appropriate
adjustments using the information relied upon by Barzilla. Rather, it merely argues
that such information was not available to it on the tax rolls or on the appraisal
district's website. In response, WCAD notes that most of the information used by
Barzilla in his analysis was likely available to the public before litigation, upon a
proper request, and that the information was certainly available through the discovery
process after the commencement of litigation.
We conclude that former section 42.26(d) did not foreclose, as a matter of law,
WCAD from considering the information used by Barzilla in determining that the
appraised value of Corporate Park West did not exceed the median appraised value
of a reasonable number of comparable properties appropriately adjusted.
Accordingly, we hold that the jury's finding that $8,100,000 was the equal and
uniform value of Corporate Park West was supported by legally and factually
sufficient evidence.
We overrule Hartman's first issue.
Evidence as to Sales Price
In its second issue, Hartman contends that the trial court erroneously admitted
evidence as to the market value of Corporate Park West and that "sales price is an
indicator of market value, which is not relevant in a case addressing equity."
Before trial, Hartman filed a motion in limine seeking to exclude evidence that
in 2002 Corporate Park West sold for approximately $12 million. The trial court
denied Hartman's motion. During trial, WCAD referenced, without objection,
Corporate Park West's 2002 sales price during its cross-examination of Brown.
Additionally, at the beginning of its case, WCAD introduced into evidence, without
objection, a "filing by [Hartman] with the Securities and Exchange Commission in
which [Hartman] report[ed] that Corporate Park West sold in 2002 for $12,817,830."
It is well-settled that a trial court's ruling on a motion in limine preserves nothing for
appellate review, and a party must object at trial when the testimony is offered in
order to preserve error. Zinda v. McCann Street, Ltd., 178 S.W.3d 883, 894 (Tex.
App.--Texarkana 2005, pet. denied) (citing Hartford Accident & Indem. Co. v.
McCardell, 369 S.W.2d 331, 335 (Tex. 1963)). Thus, we hold that Hartman has
waived this issue for review.
We overrule Hartman's second issue.
Conclusion
We affirm the judgment of the trial court.
Terry Jennings
Justice
Panel consists of Justices Jennings, Hanks, and Higley.
1. WCAD summarizes the methodology used by Barzilla in his testimony as follows:
"Since [Corporate Park West] is income producing property, Mr. Barzilla applied
capitalization rates to the difference in income on a per-square-foot basis between
each comparable property in his study and [Corporate Park West] and added those
amounts to the appraised value of the comparable property to account for [the] same
differences in Mr. Brown's analysis. In other words, those physical characteristics
were incorporated into the income that each comparable property could generate."
| {
"pile_set_name": "FreeLaw"
} |
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-09-00492-CV
In the Matter of M. A. J.
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT
NO. J-30,114, HONORABLE W. JEANNE MEURER, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
The district court, sitting as a juvenile court, adjudicated M.A.J. delinquent
after finding that he had committed the offense of assault. See Tex. Penal Code Ann. § 22.01(a)(1)
(West Supp. 2009). The juvenile court then transferred the case to Williamson County, where
M.A.J. resided, for disposition. (1) M.A.J. appeals from the order adjudging him delinquent. (2) In a
single point of error, M.A.J. asserts that the evidence is factually insufficient to show that he did not
act in self-defense. We will affirm the order.
BACKGROUND
The juvenile court heard evidence that, on February 8, 2009, M.A.J., a 15-year-old
boy, punched S.K., a 16-year-old boy, in the mouth. The issue at trial was whether S.K. provoked
M.A.J. and, if so, whether such provocation justified M.A.J.'s use of force.
S.K. testified that, on the day of the incident, he was visiting some of his friends,
including his girlfriend, L.L., at an apartment complex when they walked past M.A.J., who was
sitting in the courtyard of the complex with his friend, A.V.C. As they were walking past M.A.J.,
A.V.C. apparently told M.A.J. that S.K. said "F**k Blue." (3) S.K. testified that he did not say that.
In fact, S.K. claimed that he did not remember saying anything to M.A.J. According to S.K., after
A.V.C. told M.A.J. what S.K. had allegedly said, M.A.J. stood up, walked toward S.K., asked him
if he had made the statement, and, before S.K. could respond, hit him in the mouth, causing S.K. to
fall to the ground.
L.L. testified similarly about the incident, although she recalled that, before M.A.J.
hit S.K., S.K. asked M.A.J., "Are you really going to believe what [A.V.C.] says?" After that, L.L.
recalled, "[M.A.J.] just started hitting him." When asked "who threw the first punch," L.L. testified,
"[M.A.J.]" L.L. denied that S.K. did anything to provoke M.A.J. L.L. also testified that, after
M.A.J. hit S.K., A.V.C. admitted to M.A.J. that "she was just kidding" about what S.K. had said.
M.A.J. then helped S.K. to his feet. L.L. took S.K. to her house, where L.L.'s mother called the
police. According to one of the officers who responded to the call, S.K. "had a large laceration to
his lip. It was actually filleted open. He was bleeding profusely." S.K. was transported to the
hospital, where he was treated for his injuries.
A.V.C. also testified. She admitted that she had not heard S.K. say "F**k Blue" prior
to telling M.A.J. that she had heard him say that, although she claimed that S.K. did say those
words "like a second later." According to A.V.C., she "always plays around with [M.A.J.] like that
and he knows I don't mean it." When asked "who threw the first punch" during the altercation,
A.V.C. testified, "[M.A.J.]" However, A.V.C. added that, before M.A.J. hit S.K., S.K. appeared to
be in a fighting stance with his arms raised and his chest puffed up, "[as] if he was going to hit
[M.A.J.] first."
Officer Christi Kathleen Bergh of the Austin Police Department investigated the
incident. Bergh testified that when she found M.A.J. at the apartment complex, he "was very
uncooperative. He was very abrasive and it took us a while to try to talk him down and to get him
to calm down. When we tried to get information, he finally just said that [S.K.] made him upset
due to some comments he had made and that he broke his hand on his face." M.A.J. also told Bergh
"that he had anger management problems and that [S.K.] made him upset and he couldn't
control himself."
The only witness to testify on behalf of M.A.J. was Sharon Simmons, an adult
resident at the apartment complex who claimed to have witnessed the altercation. According to
Simmons, S.K. said "F**k Blue" as he was walking past M.A.J. and began "bucking up" to him,
which Simmons described as having his hands in a fist and his chest puffed out, as if he was "coming
towards a person." Then, Simmons recalled, M.A.J. asked S.K., "What did you say?" S.K.
responded, "You heard me." After that, Simmons testified, M.A.J. "got up and hit him." On cross-examination, when asked "who threw the first punch," Simmons admitted, "[M.A.J.]"
After hearing the evidence and listening to argument from both sides, the
juvenile court recited its findings orally. Finding the testimony of the defense witness, Simmons,
"completely unbelievable" and having "no reason to doubt the State's witnesses," the juvenile court
found that the State had proven beyond a reasonable doubt that M.A.J. had assaulted S.K. The
juvenile court then adjudicated M.A.J. delinquent. This appeal followed.
STANDARD OF REVIEW
Adjudications of delinquency in juvenile cases are based on the criminal standard of
proof. See Tex. Fam. Code Ann. § 54.03(f) (West Supp. 2009). Therefore, we review adjudications
of delinquency in juvenile cases by applying the same standards applicable to sufficiency of the
evidence challenges in criminal cases. In re M.C.L., 110 S.W.3d 591, 594 (Tex. App.--Austin 2003,
no pet.).
In a factual-sufficiency review, we view the evidence in a neutral light and ask
whether the fact-finder was rationally justified in finding guilt beyond a reasonable doubt. See
Watson v. State, 204 S.W.3d 404, 414 (Tex. Crim. App. 2006). We then determine (1) whether the
evidence supporting the verdict is so weak that the verdict is clearly wrong and manifestly unjust or
(2) whether the verdict is against the great weight and preponderance of the conflicting evidence.
Id. at 414-15. We will not reverse a verdict for factual insufficiency unless we can say, with some
objective basis in the record, that the great weight and preponderance of the evidence contradicts the
fact-finder's verdict. Id. at 417. Nor will we intrude on the fact-finder's role as the sole judge of
the weight and credibility of witness testimony. Vasquez v. State, 67 S.W.3d 229, 236 (Tex. Crim.
App. 2002). The trial judge is the fact-finder in bench trials, and we give the same deference to
a trial judge's credibility and weight determinations as we would a jury's. See Joseph v. State,
897 S.W.2d 374, 376 (Tex. Crim. App. 1995).
ANALYSIS
In his sole point of error, M.A.J. asserts that the evidence is factually insufficient to
prove that he did not act in self-defense. We disagree.
A person is justified in using force against another when and to the degree the actor
reasonably believes the force is immediately necessary to protect the actor against the other's use or
attempted use of unlawful force. Tex. Penal Code Ann. § 9.31(a) (West Supp. 2009). "Reasonable
belief" means a belief that would be held by an ordinary and prudent man in the same circumstances
as the actor. Id. § 1.07(a)(42) (West Supp. 2009). The defendant has the burden of producing some
evidence to support a claim of self-defense. Zuliani v. State, 97 S.W.3d 589, 594 (Tex. Crim. App.
2003); Lee v. State, 259 S.W.3d 785, 791 (Tex. App.--Houston [1st Dist.] 2007, pet. ref'd). Once
the defendant produces such evidence, the State has the burden of persuasion in disproving
self-defense. Saxton v. State, 804 S.W.2d 910, 913-14 (Tex. Crim. App. 1991). The State's burden
of persuasion does not require it to produce evidence refuting the self-defense claim. Id. at 913.
Rather, the burden requires the State to prove its case beyond a reasonable doubt. Id.
To support his self-defense claim, M.A.J. points to the testimony of A.V.C. and
Simmons, both of whom claimed that they heard S.K. actually say the words, "F**k Blue" and
that S.K. was in a fighting stance and "bucked up" to M.A.J. prior to M.A.J. hitting him. Viewing
this evidence in a neutral light, we cannot say that the juvenile court's finding that the State proved
its case beyond a reasonable doubt was "clearly wrong and manifestly unjust" or "against the great
weight and preponderance of the conflicting evidence." See Watson, 204 S.W.3d at 414-15. The
use of force against another is not justified in response to verbal provocation alone. Tex. Penal Code
Ann. § 9.31(b)(1). Therefore, even if S.K. had said those words to M.A.J. (which the juvenile court
was free to disbelieve), this alone would not justify M.A.J.'s use of force against S.K. See Trammell
v. State, 287 S.W.3d 336, 342 (Tex. App.--Fort Worth 2009, no pet.). As for the testimony about
S.K.'s aggressive behavior, the juvenile court could have simply found this testimony not credible,
and such a finding would not have been against the great weight and preponderance of the evidence.
S.K. denied saying or doing anything to provoke M.A.J., and L.L. testified similarly. We must defer
to the fact finder's decision regarding what weight to give contradictory testimonial evidence. See
Lancon v. State, 253 S.W.3d 699, 706 (Tex. Crim. App. 2008). Moreover, Officer Bergh testified
that M.A.J. told her that "he had anger management problems and that [S.K.] made him upset and
he couldn't control himself." Also, when asked "who threw the first punch," L.L., A.V.C., and
Simmons each testified that it was M.A.J. Thus, the juvenile court could have reasonably inferred
from this and other evidence that it was M.A.J. and not S.K. who was the aggressor.
We conclude that the evidence is factually sufficient to disprove M.A.J.'s theory that
he acted in self-defense. We overrule M.A.J.'s sole point of error.
CONCLUSION
We affirm the order of the juvenile court.
__________________________________________
Bob Pemberton, Justice
Before Chief Justice Jones, Justices Pemberton and Waldrop
Affirmed
Filed: February 26, 2010
1. The order of disposition is not in the record before us.
2. See Tex. Fam. Code Ann. § 56.01(c)(1)(A) (West Supp. 2009) (authorizing appeal from
order adjudging juvenile delinquent).
3. "Blue" is a reference to the gang known as "Crips." According to the officer who arrested
M.A.J., M.A.J. is a "self-proclaimed" member of that gang.
| {
"pile_set_name": "FreeLaw"
} |
735 F.2d 1366
Catesv.Morgan Portable Bldg. Corp.
83-1128, 83-1271
United States Court of Appeals,Seventh Circuit.
5/14/84
1
S.D.Ill.
REVERSED
| {
"pile_set_name": "FreeLaw"
} |
653 S.W.2d 927 (1983)
HESS DIE MOLD, INC., Appellant,
v.
AMERICAN PLASTI-PLATE CORPORATION, Appellee.
No. 12-81-0139-CV.
Court of Appeals of Texas, Tyler.
June 2, 1983.
*928 James W. Jenkins, Tyler, for appellant.
Richard W. Lottmann, Wilson, Miller, Spivey, Sheehy, Knowles & Hardy, Tyler, for appellee.
McKAY, Justice.
Defendant (Hess) appeals from a judgment wherein plaintiff (American) recovered damages for breach of contract. Trial was to the court. No statement of facts appears in the record, but findings of fact and conclusions of law were requested and filed.
In presenting the nature of the case and the contentions of the parties, we must rely exclusively upon the pleadings and findings of fact made by the trial court, in the absence of a statement of facts. Mial v. Mial, 543 S.W.2d 736, 737 (Tex.Civ.App.El Paso 1976, no writ); Ives v. Watson, 521 S.W.2d 930, 932 (Tex.Civ.App.Beaumont 1975, writ ref'd n.r.e.).
American is in the business of injection molding of plastics. Hess manufactures die molds. One of American's molds had become old and worn to the point that it no longer performed satisfactorily, and it solicited bids for a new one. On April 27, 1979, Hess submitted a quote to American to design and build a suitable mold at a price of $23,445.00, one-half in advance and the balance due on delivery. This quote was accepted by American on the same day, and it thereafter sent a purchase order embodying the terms of said quote to Hess. One of these terms provided for delivery of the finished mold within eighteen weeks from April 27, 1979. Pursuant to the terms of the contract, American issued a check to Hess on May 7, 1979, in the amount of $11,722.50 as payment of one-half of the agreed price.
Hess never completed a mold which would perform or operate properly in American's business. As a result, on June 20, 1980, American was forced to contract with another manufacturer for the production of a suitable mold at a contract price of $47,500. Thus the cost to American for this mold, over and above its contract price with Hess, was $24,065.
American thereafter filed suit against Hess for breach of contract, praying for a return of the $11,722.50 down payment and the $24,065.00 excess incurred to procure a similar mold from another manufacturer, among other things. After a nonjury trial, the court rendered judgment awarding the above amounts to American, and Hess appeals.
Appellant's points of error all attack the award of $24,065.00, stated by the trial court to represent the benefit of the bargain for American. Its first three points attack said award on the ground that such losses are "special damages," as opposed to "general damages." Thus points one *929 through three allege that the pleadings of American and the findings of the trial court do not support such an award because there is no allegation or finding that said losses were contemplated by Hess at the time the contract was made.
General damages are those which naturally and necessarily flow from a wrongful act, are so usual an accompaniment of the kind of breach alleged that the mere allegation of the breach gives sufficient notice, and are conclusively presumed to have been foreseen or contemplated by the party as a consequence of his breach of contract. Special damages arise naturally but not necessarily from the breach, are so unusual as to normally vary with the circumstances of each individual case, and must be shown to have been contemplated or foreseen by the parties. Sherrod v. Bailey, 580 S.W.2d 24, 28 (Tex.Civ.App.Houston [1st Dist.] 1979, writ ref'd n.r.e.); Anderson Dev. Corp. v. Coastal States, etc., 543 S.W.2d 402, 405 (Tex.Civ.App.Houston [14th Dist.] 1976, writ ref'd n.r.e.); Sterling Projects, Inc. v. Fields, 530 S.W.2d 602, 605 (Tex.Civ.App.Waco 1975, no writ).
In our opinion, the damage award of $24,065.00 is properly characterized at an item of general damages. Hess contracted to replace an existing mold which American was actively using in its manufacturing process. It should have been clearly foreseeable to Hess that if it failed to supply a suitable new mold to American within the time specified, American would be forced to obtain said mold from another manufacturer in order to meet its commitments to its customers. The time limit specified in the contract was only eighteen weeks, while a period of fourteen months eventually passed before American abandoned its efforts with Hess and contracted with another supplier.
We note that the procurement of substitute goods is a remedy specifically provided a buyer after the seller breaches a contract to deliver goods, under § 2.712, Tex.Bus. & Com.Code Ann. (Vernon 1968). That section provides:
Section 2.712. "Cover"; Buyer's Procurement of Substitute Goods
(a) After a breach within the preceding section the buyer may "cover" by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller.
(b) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined (Section 2.715), but less expenses saved in consequence of the seller's breach. (Emphasis added.)
Section 2.715 provides:
Section 2.715. Buyer's Incidental and Consequential Damages
(a) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.
(b) Consequential damages resulting from the seller's breach include
(1) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
(2) injury to person or property proximately resulting from any breach of warranty. (Emphasis added.)
It is thus apparent that the common law concept of "special damages" has been embodied in the Code definition of "consequential damages," while the difference between the cost of cover and the original contract price is, in our opinion, properly characterized as general damages.
Since we hold that the cost of "cover" was an item of general damages in this instance, it follows that allegations and/or findings of contemplation of said loss were *930 not necessary to support the judgment in this case. We therefore overrule appellant's points one through three.
In point four, appellant asserts the trial court erred in failing to grant its motion for new trial, in which appellant alleged the damage award was excessive. The trial court failed to act on said motion, thus allowing it to be overruled by operation of law. Tex.R.Civ.P. 329b(c). There is nothing in the record to indicate that said motion was ever called to the attention of the trial judge.
No authority is cited in support of this point. Failure to cite authority in support of a point of error waives said point. Leckey v. Warren, 635 S.W.2d 752, 753, 754 (Tex.Civ.App.Corpus Christi 1982, no writ), and cases there cited.
Furthermore, appellant's only argument under this point is that the damages awarded are not supported by the record. As we noted at the outset of this opinion, the record in this court contains no statement of facts. The pleadings and findings of fact set out the original contract price with Hess and the "cover" contract price. Without a statement of facts we must presume on appeal that sufficient evidence was introduced to support the findings and judgment of the trial court. Yoast v. Yoast, 620 S.W.2d 223, 229 (Tex.Civ.App. Tyler 1981) aff'd in part and rev'd in part on other grounds, 649 S.W.2d 289 (1983). Every presumption will be indulged in favor of the trial court's findings and judgment, and appellant is powerless to make a viable complaint as to the sufficiency of the evidence to support a judgment in the absence of a statement of facts. Yoast, supra at 229-230; Mial v. Mial, supra at 737-8; Ives v. Watson, supra at 932. Moreover, since the appellant requested the trial court to file such findings, and did not request any additional findings, the findings of the trial court are binding on the parties and this court. Yoast, supra; Mial, supra; Ives, supra. Appellant's fourth point is overruled.
The judgment of the trial court is affirmed.
| {
"pile_set_name": "FreeLaw"
} |
679 F.2d 874
U. S.v.Bedria
81-1312
UNITED STATES COURT OF APPEALS Second Circuit
11/6/81
1
S.D.N.Y.
AFFIRMED
| {
"pile_set_name": "FreeLaw"
} |
125 S.W.3d 708 (2003)
Angel Lopez PAITA, Appellant,
v.
The STATE of Texas, Appellee.
No. 01-02-00512-CR.
Court of Appeals of Texas, Houston (1st Dist.).
December 11, 2003.
*711 Charles Portz, Kirk J. Oncken, Houston, TX, for Appellant.
Amanda J. Peters, Assistant District Attorney, Charles A. Rosenthal, Jr., District Attorney-Harris County, William J. Delmore, III, Chief Prosecutor, Appellate Division, Houston, TX, for Appellee.
Panel consists of Chief Justice RADDACK, and Justices KEYES and ALCALA.
OPINION
ELSA ALCALA, Justice.
Appellant, Angel Paita, pleaded not guilty to the misdemeanor offense of resisting arrest. A jury found appellant guilty. Pursuant to an agreement with the State, the trial court assessed punishment at confinement in the county jail for one year, probated for two years, and a $350 fine. In his first point of error, appellant contends that the trial court erred when it allowed the State to impeach appellant's testimony with evidence of a prior conviction. In his second point of error, appellant claims that he received ineffective assistance of counsel. In his third and fourth points of error, appellant contends that the evidence was legally and factually insufficient to support his conviction. We affirm.
Background
Houston Police Officer Roger Espinoza was responding to a noise disturbance in the parking lot of an apartment complex when he encountered appellant. Appellant and another man were leaning against appellant's car and drinking beer. The trunk of appellant's car was open, and loud music was emanating from speakers inside the trunk.
Espinoza approached the two men, told them that a neighbor had contacted police to complain about the music, and told the men to turn down the music. Appellant's friend apologized to the officer and walked back to his apartment, but appellant cursed and threatened Espinoza. While attempting to arrest appellant for assault by threat, Espinoza reached for appellant's arm to handcuff him, but appellant jerked his arm away. Espinoza tried again to handcuff appellant, but he pulled away again, struggled with Espinoza, and hit Espinoza on the chin with his elbow, which caused both men to fall to the ground. Espinoza eventually handcuffed appellant, but only after appellant's son intervened and told appellant to cooperate.
Impeachment with Prior Conviction
In his first point of error, appellant argues that the trial court erred by permitting the State to impeach appellant's testimony with his prior conviction for interference with a public servant. Appellant contends that he had not placed his character for respecting police officers into issue, but the State replies that appellant "opened the door" for admission of his prior conviction and, alternatively, that any error was harmless.
Appellant's issue in this appeal concerns his nonresponsive testimony during direct examination by his own attorney. Appellant was asked to state where he was positioned when he first saw the police car pull into the driveway. Appellant responded that he was by the rear tire of his car. Appellant then volunteered, "And Mario washe was about this much further away. He was on this side. When I was in there, I saw a police officer coming into the property, and me, for respect, I turned the car completely off. If I turn the key off, I have shut the engine off and the music off, for respect because maybe I think he probably need to talk to us and *712 for me, for respect, it is better to not have no noise around." (Emphasis added.) While cross-examining appellant, the prosecutor referred to appellant's testimony that he acted "out of respect" for police and asked appellant whether he always respected police officers. Appellant replied that he did. The State cannot "open the door" for a defendant and may not bootstrap its way to impeachment. See Hammett v. State, 713 S.W.2d 102, 105 n. 4 (Tex.Crim.App.1986). Under these circumstances, we limit our review to the statements that appellant made during his direct examination.
Outside the presence of the jury, the State requested permission from the trial court to introduce evidence of appellant's prior conviction for interference with a public servant under the theory that appellant's testimony that he acted out of respect for police, contradicted and went "completely against" his previous conviction. Appellant argued that his testimony did not open the door, although the State's cross-examination inquiry attempted to do so; that the conviction the State attempted to introduce was not one of moral turpitude; and that the prior conviction was more prejudicial than probative. The trial court overruled appellant's objections and allowed the State to elicit testimony from appellant that he was previously convicted of interference with the duties of a public servant.
We review a trial court's evidentiary rulings under an abuse-of-discretion standard and will not disturb the trial court's ruling unless it falls outside the zone of reasonable disagreement. See Burden v. State, 55 S.W.3d 608, 615 (Tex. Crim.App.2001). Specific acts of misconduct are admissible to impeach a party or witness only if the crime was a felony or involved a crime of moral turpitude, regardless of punishment, and the trial court determines that the probative value of the evidence outweighs its prejudicial effects. See Delk v. State, 855 S.W.2d 700, 704 (Tex.Crim.App.1993); Reyna v. State, 99 S.W.3d 344, 349 (Tex.App.-Fort Worth 2003, pet. ref'd); Tex.R. Evid. 609(a).
An exception to the prohibition against impeachment through a prior conviction arises when the testimony of a witness during direct examination "opens the door" or leaves a false impression with the jury as to the extent of the witness's prior arrests, convictions, charges, or trouble with the police. See Delk, 855 S.W.2d at 704; Reyna, 99 S.W.3d at 349. The exception is not limited to final convictions, Reyna, 99 S.W.3d at 349, and also applies when the witness purports to detail his past convictions, but leaves an impression there are no others. Ochoa v. State, 481 S.W.2d 847, 850 (Tex.Crim.App.1972). Once the witness's response triggers the exception, opposing counsel may introduce what would otherwise have been irrelevant evidence about the witness's past criminal history. See Delk, 855 S.W.2d at 704-05; Reyna, 99 S.W.3d at 349. The past criminal history becomes relevant and thus admissible because the witness has created a false impression about his past conduct, which "opens the door" for the opponent to expose the false impression. See Delk, 855 S.W.2d at 704.
In evaluating whether the responses by a witness for the State opened the door for the defendant to correct a false impression, the Delk court emphasized the importance of examining whether the statement was responsive to the question asked and how broadly one would determine the question asked, given the major substantive issue in the case. Id. When a witness voluntarily or nonresponsively testifies concerning extraneous matters, the opposing side may correct a false impression presented by the answer. See *713 Roberts v. State, 29 S.W.3d 596, 601 (Tex. App.-Houston [1st Dist.] 2000, pet. ref'd). The intonation and tenor of a statement can assist in determining its context. See Hammett, 713 S.W.2d at 106. The scope of the impeachment must not exceed the issue that the defendant opened. See id. at 105-07.
Appellant's previous conviction for interference with the duties of a public servant was neither a felony nor a crime of moral turpitude and was thus not admissible under rule 609(a). See Tex.R. Evid. 609(a).[1] Therefore, we must determine whether appellant's conviction for interference with the duties of a public servant was admissible to correct a false impression with the jury about the issue of appellant's respect for police officers.
Appellant's statements concerning his respect for police officers were non-responsive to the question asked, which inquired only about appellant's location when Officer Espinoza arrived at the scene. In volunteering the self-serving information about respect for police, appellant ventured completely outside the parameters of the narrow question concerning his location. The major substantive issue in the case concerned whether the appellant complied with the officer's commands or whether he resisted arrest. Accordingly, appellant's respect for police officers was central to the dispute.
Appellant's thrice repeating his statements about respect for police officers demonstrated that appellant did not make his statements inadvertently or in passing. Rather, his repeated assertions were calculated to convey to the jury that he was generally respectful of police officers. Although we do not know the intonation of appellant's statements about police officers, we can discern, from the context and appellant's repetition, that the tenor of appellant's testimony appears to be a deliberate attempt to convey the impression that he respects the police and would not have disobeyed the officer's commands. See Hammett, 713 S.W.2d at 106. Appellant's self-serving remarks about respect for police placed his attitude toward public servants into issue and were thus properly subject to impeachment to refute that false representation with contrary evidence. See Turner v. State, 4 S.W.3d 74, 79 (Tex. App.-Waco 1999, no pet.). After reviewing the record and the overall tenor of appellant's testimony, we agree with the State that the trial court could have found that appellant left a false impression with the jury. See Delk, 855 S.W.2d at 704. Accordingly, the trial court's ruling that appellant opened the door to the admission of evidence of his prior conviction for interference with the duties of a public servant is not outside the zone of reasonable disagreement, and we will not disturb that ruling. See Burden v. State, 55 S.W.3d at 615.
We overrule appellant's first point of error.
Ineffective Assistance of Counsel
In his second point of error, appellant relies on the allegedly erroneous admission of his prior conviction into evidence to *714 support his contention that his trial counsel was ineffective. Appellant contends that his trial counsel did not object adequately to the prosecutor's questioning appellant about his prior conviction and should have objected when the prosecutor referred to appellant's prior conviction in final argument to the jury.
The standard for evaluating ineffective assistance of counsel claims is set forth in Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 2064, 80 L.Ed.2d 674 (1984). See Hernandez v. State, 726 S.W.2d 53, 55 (Tex.Crim.App. 1986); Gamble v. State, 916 S.W.2d 92, 93 (Tex.App.-Houston [1st Dist.] 1996, no pet.). To be entitled to a new trial on the ground that his trial counsel was ineffective, appellant must show that (1) counsel's performance was so deficient that he was not functioning as acceptable counsel under the Sixth Amendment, and that (2), but for counsel's error, the result of the proceedings would have been different. Strickland, 466 U.S. at 687, 104 S.Ct. at 2064; Gamble, 916 S.W.2d at 93. In determining whether the Strickland test has been met, we focus on the totality of the representation afforded, not on individual alleged errors. See Ex parte Welborn, 785 S.W.2d 391, 393 (Tex.Crim.App.1990).
The defendant bears the burden to prove ineffective assistance of counsel. Strickland, 466 U.S. at 687, 104 S.Ct. at 2064; Gamble, 916 S.W.2d at 93. A defendant must overcome the presumption that, under the circumstances, the challenged action might be considered sound trial strategy. Strickland, 466 U.S. at 689, 104 S.Ct. at 2064; Gamble, 916 S.W.2d at 93. A claim of ineffective assistance of counsel must be firmly supported in the record. McFarland v. State, 928 S.W.2d 482, 500 (Tex.Crim.App.1996). Finally, the constitutional right to counsel does not mean errorless counsel or counsel whose competency is judged by hindsight. Doherty v. State, 781 S.W.2d 439, 441 (Tex. App.-Houston [1st Dist.] 1989, no pet.).
Appellant contends that his trial counsel should have objected when the prosecutor cross-examined him concerning whether he had always respected police officers and, when he replied that he did, his trial counsel should have objected to the prosecutor's follow-up question, "Without fail?" Appellant also argues that his trial counsel should have objected when the prosecutor referred to appellant's prior conviction in final argument to the jury.
In contending that his trial counsel was ineffective for not objecting to the prosecutor's cross-examination, appellant argues that the questions by the prosecutor improperly placed appellant's character in issue. We disagree. As addressed above, in response to his own counsel's specific, narrow, direct-examination questions concerning appellant's location at the scene of the offense, appellant had already placed his respect for police officers in issue by volunteering additional, nonresponsive testimony. Any failure to object to the prosecutor's questions did not, therefore, result in the introduction of improper character evidence. We overrule appellant's claim that his trial counsel was ineffective by not objecting to the prosecutor's cross-examination.
Appellant also claims that his trial counsel provided ineffective assistance because he did not object when the prosecutor referred to appellant's prior conviction during closing argument to the jury. Appellant contends that the prosecutor improperly relied on the conviction as substantive evidence of appellant's guilt, in violation of the trial court's limiting instruction to the jury that the conviction was to be considered for impeachment only.
*715 Appellant complains of the State's closing argument during the guilt and innocence phase of trial:
The officer goes out there on the noise call. Then he wants to tell you that out of respect for police officers, hey, as soon as I saw him enter that parking lot, I turned off my music. In fact, I turned the keys and turned off the whole entire car, out of respect for police officers. However, you heard him answer the question that I asked him. Remember going back in that room for a while and we talked about some things out here and then you came back out? Well, guess what. I have been convicted one prior time of interference with a public servant, but I have so much respect for public servants and police officers, I always do what they say. Are you really going to buy that?
The State's closing argument concerned the credibility of appellant's testimony in light of his previous conviction, and, as such, was proper as a reasonable deduction from the evidence. Even if the prosecutor's argument exceeded the permissible scope of impeachment, the trial court's oral and written instructions to the jury, which appear below, cured any error that might have arisen from the prosecutor's reference to appellant's prior conviction. Moreover, the record reflects that the trial court included the written instructions in the jury charge in response to appellant's trial counsel's request. The trial court's instruction in the charge to the jury on guilt and innocence reads as follows:
You are instructed that certain evidence was admitted before you in regard to the defendant's having been charged and convicted of an offense other than the one for which he is now on trial. You are instructed that such evidence cannot be considered by you against the defendant as any evidence of guilt in this case. Said evidence was admitted before you for the purpose of aiding you, if it does aid you, in passing on the credibility of the defendant as a witness for himself in this case, and to aid you, if it does aid you, in deciding upon the weight you will give to him as such witness, and you will not consider the same for any other purpose.
[Emphasis added.] Similarly, before reading the charge aloud to the jury, the trial court explained that final arguments by counsel would follow, but that those arguments would "surmise to you what [counsel] think the evidence in this case shows[,]" but that "what they say in final argument is not evidence" but what counsel "think the evidence showed." Without evidence to the contrary, we must presume that the jury followed the trial court's instructions. Hutch v. State, 922 S.W.2d 166, 170 (Tex.Crim.App.1996); Herrera v. State, 11 S.W.3d 412, 415-16 (Tex.App.-Houston [1st Dist.] 2000, pet. ref'd).
Appellant has thus not shown that the outcome of his trial would have been different if his trial counsel had objected to the prosecutor's reference to appellant's prior conviction. See Strickland, 466 U.S. at 687, 104 S.Ct. at 2064.
We overrule appellant's second point of error.
Legal Sufficiency
In his third point of error, appellant contends that the evidence was legally insufficient to support his conviction because the State's case was not credible. In evaluating the legal sufficiency of the evidence, we view the evidence in the light most favorable to the verdict and determine whether any rational trier of fact could have found the essential elements of the offense beyond a reasonable doubt. King v. State, 29 S.W.3d 556, 562 (Tex. Crim.App.2000); Johnson v. State, 95 *716 S.W.3d 568, 571 (Tex.App.-Houston [1st Dist.] 2002, pet. ref'd). Although our analysis considers all evidence presented at trial, we may not re-weigh the evidence and substitute our judgment for that of the jury. King, 29 S.W.3d at 562.
The information alleged that appellant unlawfully and intentionally prevented Officer Espinoza, a person appellant knew to be a peace officer, from effecting an arrest of appellant by using force against the officer and striking him with his elbow. Viewed in the light most favorable to the verdict, the evidence shows that on November 17, 2001, at about 11:40 p.m., Officer Espinoza was dispatched to Timberline Apartments to investigate a complaint about loud music. Espinoza arrived at the apartment complex and traced the sound of the music to a car. Espinoza drove by the car, turned around, and approached two men who were standing outside the car. One of the men was appellant. Officer Espinoza told appellant that, because the hour was approaching midnight and residents of the complex had called police to complain about loud music, appellant should either turn down the music or go inside. Espinoza repeated his request that appellant either go inside or turn his music down several times. Each time that the officer asked, appellant replied by cursing at Espinoza. Once, appellant made a threatening remark. Espinoza tried to maintain distance between himself and appellant.
When appellant made a second threatening comment, Officer Espinoza decided to arrest appellant for assault by threat. Espinoza allowed appellant to approach him, grabbed his wrist, and attempted to place handcuffs on him, telling him he was under arrest for assault by threat. Appellant attempted to jerk his wrist free, but Espinoza maintained his grip on his wrist and followed him. Both men ended up at appellant's car. After Espinoza instructed appellant to "Stop" and to "Quit it," appellant spun to his left side and hit Officer Espinoza on the chin with his elbow. Both men fell to the ground. After a struggle, Espinoza handcuffed appellant and took him to his patrol car.
We conclude the evidence was amply sufficient to enable a jury, as the judge of the credibility of the witnesses and testimony, to find the essential elements of the crime alleged in the information beyond a reasonable doubt.
We overrule appellant's third point of error.
Factual Sufficiency
When reviewing the factual sufficiency of evidence, we examine all the evidence neutrally and ask whether proof of guilt is so obviously weak as to undermine confidence in the jury's determination or so greatly outweighed by contrary proof as to indicate that a manifest injustice has occurred. Zuliani v. State, 97 S.W.3d 589, 594 (Tex.Crim.App.2003); King v. State, 29 S.W.3d 556, 563 (Tex. Crim.App.2000); Valencia v. State, 51 S.W.3d 418, 423 (Tex.App.-Houston [1st Dist.] 2001, pet. ref'd). In conducting our analysis, if probative evidence supports the verdict, we must avoid substituting our judgment for that of the trier-of-fact, even when we disagree with the determination. King, 29 S.W.3d at 563. The trier-of-fact is the sole judge of the weight and credibility of witnesses' testimony. Johnson v. State, 23 S.W.3d 1, 7 (Tex.Crim.App.2000).
Appellant contends that the State's case against appellant was not sufficiently credible to sustain a conviction. Appellant argues that the jury's finding of guilt was against the great weight and preponderance of the evidence because the State did not provide physical evidence to corroborate Officer Espinoza's testimony and because *717 both appellant and his son testified that appellant did not resist arrest. The jury chose to believe Officer Espinoza and to disbelieve appellant and his son. We conclude, having viewed the evidence neutrally, that the proof of guilt in this case was not so obviously weak as to undermine confidence in the jury's determination or so greatly outweighed by contrary proof as to indicate that a manifest injustice occurred. See Zuliani, 97 S.W.3d at 594. Because probative evidence supports the jury's verdict and because the jury is the sole judge of the weight and credibility, we may not reweigh the evidence in appellant's favor. See King, 29 S.W.3d at 563. Accordingly, we conclude that the evidence is factually sufficient to support the verdict.
We overrule appellant's fourth point of error.
Conclusion
We affirm the judgment of the trial court.
NOTES
[1] Appellant's prior conviction for interfering with a police officer was a class B misdemeanor and was thus not a felony. See Tex. Pen.Code Ann. § 38.15(a)(1), (b) (Vernon 2003). Likewise, his prior conviction did not involve a matter of personal morality and was thus not a crime of moral turpitude. See In re G.M.P., 909 S.W.2d 198, 208 (Tex.App.-Houston [14th Dist.] 1995, no. pet.) (citing In re Humphreys, 880 S.W.2d 402, 407 (Tex. 1994)); see also Hartford Accident & Idem. Co. v. Williams, 516 S.W.2d 425, 428-29 (Tex.Civ. App.-Amarillo, writ ref'd n.r.e.) (noting that using loud and profane language in public place and to police officer not crimes of moral turpitude).
| {
"pile_set_name": "FreeLaw"
} |
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
December 7, 2000 Session
JIM VINES D/B/A GOOD STUFF! v. DAVID GIBSON D/B/A GOOD STUFF!
Appeal from the Circuit Court for Anderson County
No. 97LA0256 James B. Scott, Jr., Judge
FILED FEBRUARY 27, 2001
No. E2000-02257-COA-R3-CV
In this breach of contract case, the defendant appeals from the trial court’s refusal to grant a new trial
or set aside an order favorable to the plaintiff. Because we find that the defendant did not receive
advance notice of the hearing that led to the entry of the order, we vacate the order of the trial court.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
Vacated; Case Remanded
CHARLES D. SUSANO, JR., J., delivered the opinion of the court, in which HOUSTON M. GODDARD ,
P.J., and D. MICHAEL SWINEY, J., joined.
Robert M. Bailey, Knoxville, Tennessee, for the appellant, David Gibson, d/b/a Good Stuff!.
David S. Clark, Oak Ridge, Tennessee, for the appellee, Jim Vines, d/b/a Good Stuff!.
OPINION
I.
The issue on this appeal is whether the defendant is entitled to relief from an order -- entered
August 27, 1999 -- pursuant to Tenn. R. Civ. P. 59, which affords relief from a judgment due to
mistake, inadvertence, surprise, or excusable neglect. See Campbell v. Archer, 555 S.W.2d 110, 112
(Tenn. 1977); Henson v. Diehl Machines, Inc., 674 S.W.2d 307, 310 (Tenn. Ct. App. 1984).
Because a Rule 59 motion to set aside a judgment addresses itself to the sound discretion of the trial
court, our scope of review is limited to whether the trial court abused its discretion in denying the
defendant’s motion. See Henson, 674 S.W.2d at 310.
II.
In 1997, the plaintiff, Jim Vines, d/b/a Good Stuff!, filed suit against the defendant, David
Gibson, d/b/a Good Stuff!, alleging that the defendant had breached a contract to sell his business
to the plaintiff. The defendant retained R. Louis Crossley, Jr. of the Knoxville law firm of Long,
Ragsdale & Waters, P.C., to represent him in that suit.
An agreed order was entered in this case in July, 1997. Pursuant to that order, the parties
agreed that the defendant would not use the name of the business sold to the plaintiff for any
business purpose in Tennessee. In March, 1998, the trial court found the defendant in contempt for
using the name of the business in violation of the agreed order. The court further ordered the
defendant to provide the plaintiff with various bank, phone, and facsimile records of the business.
In April, 1998, the plaintiff filed a second petition for contempt, alleging that the defendant had
failed to produce the specified records. The plaintiff’s second petition was before the court on May
10, 1999. The defendant was not present at the hearing. The record is silent as to whether Crossley
attended the hearing; however, we note that he did not approve the order that followed the May 10,
1999, proceeding. 1
At the May 10, 1999, hearing, the trial court considered a motion to withdraw filed by
Crossley four days earlier. Crossley’s motion states that the defendant
has requested that [Crossley] withdraw as his counsel, and that he be
allowed to either represent himself pro se or obtain substitute counsel
in this cause. Movant has thouroughly [sic] explained the
ramifications of his withdrawal to Defendant and Defendant assents
to the requested withdrawal.
By the above-referenced order, which was entered on May 27, 1999, the trial court permitted
Crossley to withdraw. In the same order, the court gave the defendant thirty days to hire another
attorney and to produce the various records as previously ordered. While making no specific finding
of contempt, the May 27, 1999, order sanctioned the defendant in the form of an attorney’s fee award
of $1,500, the collection of which the court “deferred.” The court further held in the order that if the
defendant did not comply with its terms, he would be held in contempt and “punished accordingly.”
In June, 1999, the defendant, acting pro se, filed a motion to set aside the trial court’s order
of May 27, 1999, alleging that the plaintiff’s attorney had agreed to delay the hearing on the second
petition for contempt and that “[n]either Mr. Crossley or the defendant had any idea that [the
plaintiff’s attorney] intended to go forward on 5/10/99.” A hearing on the defendant’s motion to set
aside was scheduled for September 13, 1999.
1
The ord er contains a certificate of serv ice on Cro ssley.
-2-
A “final” hearing on the plaintiff’s breach of contract action was held on August 27, 1999.
The defendant did not attend. Upon the testimony of the plaintiff and the record as a whole, the trial
court found that the defendant had breached the contract. It awarded the plaintiff $30,580.34 in
damages, plus attorney’s fees. On September 27, 1999, the defendant filed a pro se motion to set
aside the order, alleging that he had not been notified of the August 27, 1999, court date. Later, the
defendant retained his current counsel and filed an amendment to the motion, attached to which was
the affidavit of the defendant. The affidavit states, in pertinent part, as follows:
I did not receive notice orally or in writing that a trial was set in this
case for August 27, 1999. If I had been aware of a trial setting of
August 27, 1999, I would have appeared for the hearing and presented
proof in this case.
I appeared in this Court on September 13, 1999 for a hearing on the
Motion I filed on June 22, 1999 to set aside an Order entered May 27,
1999 concerning a contempt issue. I appeared on that date because
I was told by the Clerk that my motion would be set for September
13, 1999. I was never told by the Clerk or anyone else that a trial was
set for August 27, 1999.
A hearing on the defendant’s motion to set aside the August 27, 1999, order revealed the
following facts. The scheduling of cases for trial in the trial court is governed by Local Rule 118.06,
which provides for a “regular docket sounding” to be held on the first Monday in February, June, and
October for the purpose of setting the court’s docket and scheduling cases for trial. For parties
represented by counsel, notice of a docket sounding is mailed by the Circuit Court Clerk via an
envelope addressed to the law firm with which the attorney of record is affiliated. Cases in which
juries have been requested are not set until the day of the docket sounding. On the other hand, cases
in which juries have not been requested are set for trial by the Circuit Court Clerk in advance of
mailing notice of the docket sounding. To notify attorneys of these bench trials, the Clerk includes
with the general notice of the docket sounding a separate sheet for each attorney in the firm, listing
the attorney’s name and his or her cases that have been scheduled for bench trials.
The instant case was initially scheduled for a bench trial in May, 1998. For reasons not
specified in the record, the case was continued and reset for a trial date in December, 1998. The case
was continued again and rescheduled for August 27, 1999. According to court records, the August
trial date was set in January, 1999, presumably in anticipation of the February, 1999, docket
sounding. At the time the case was set for trial, Crossley was listed as attorney of record for the
defendant. Thus, any notice of the August trial date should have been placed in an envelope
addressed to Crossley’s law firm, Long, Ragsdale & Waters.
Crossley testified, however, that while serving as the defendant’s counsel, he did not receive
notice of the August 27, 1999, trial date; in fact he testified that he had received “no notice
whatsoever of any of the trial settings in this case.” In addition, Crossley testified that the plaintiff’s
-3-
attorney had never mentioned the August trial date. He stated that he “had no knowledge from any
source that it was set for trial at that time.” Because he was never aware that the case had been set
for trial, Crossley, according to his testimony, did not inform the defendant of that trial date.
Darlene Loy, the chief deputy clerk of the Anderson County Circuit Court, testified regarding
the procedure by which attorneys are notified of the scheduling of bench trials. She further testified
in pertinent part, as follows:
Q. What happens in the event that that lawyer is no longer at that
office or there’s been a bad address or there is some problem with the
mailing, what happens to that piece of paper or that envelope?
A. If the envelope is returned unable to serve or whatever, then
we put it in the file folder, you know, so we’ll know that that attorney
did not get notice of docket sounding.
Q. Do you know if there is such a return in this file?
A. I have looked in the file. There is no such – no.
Loy testified that she had no recollection of anything other than the normal procedure occurring in
this case. She noted that she was not aware of any instances since the County began their system of
notification in 1992 where attorneys did not receive notification of trial dates. In fact, she reported
that she had never received any complaints about the system.
Following the conclusion of the proof, the trial court remarked from the bench as follows:
THE COURT: Well, Gentlemen, I am not going to set this aside. I
am not going to unravel my system on the testimony that we have
thus far. I think basically that I can take judicial knowledge of what
is contained in the file and what has occurred at least as is
documented in the file. And,...I could be wrong, but until a court tells
me that our routine practice of setting cases here is going to be based
upon testimony of someone not getting notice of those docket
soundings – we have people come here all the time and our system
has not been found to be in error, but as [deputy clerk Loy] stated, has
been complimented because we organize it in such a way that the
attorneys know exactly what cases they have in this jurisdiction,
whether they are nonjury or jury. If they are nonjury, then it’s set for
trial, and if it’s jury, then we have a docket sounding, and if they
come – some people don’t. Some people don’t come to our docket
sounding, and I go ahead and set their case anyway based upon that.
-4-
So I am not going to set aside the whole system based upon what I
have heard thus far. All right?
MR. BAILEY: Well, Your Honor, just one thing before we finish. I
am not asking you to set aside your whole system, I am just asking
you to set aside this one judgment.
THE COURT: Well, that’s what I do, you see.
MR. BAILEY: Your Honor, you have had some testimony from this
attorney, who I don’t think has any reason to mislead the court, that
he did not receive notice.
THE COURT: We have a presumption that once you place something
in the United States mail, it’s received. Now, as to whether the
problem is maybe in his office, I don’t know. Mr. Crossley is an
officer of this court and I trust him. But nonetheless, I have been an
attorney myself out there practicing and we routinely send these
things out. We send it to the address. No one is really taking issue
with that. At least [deputy clerk Loy is] 99 percent positive. Now,
our envelopes I believe are prepared by the same computer.
Everything goes in it. And it’s not something that I am easily swayed
whenever I feel like that maybe the error is somewhere else. I am not
saying that Mr. Crossley has made an error in this case. It’s just that
[the defendant has not] carried the burden to set this aside, and that’s
the judgment of the court.
It is important to note that the trial court did not question Crossley’s credibility. As can be seen from
the excerpt, the court noted that “Mr. Crossley is an officer of this court and I trust him.”
Nevertheless, the court found that the defendant had failed to carry his burden to set the judgment
aside. We respectfully disagree with the trial court’s conclusions.
III.
The defendant testified, without direct contradiction, that he was not aware of the August 27,
1999, trial date.2 Crossley testified that, not having knowledge himself of that trial setting, he would
have had no occasion to notify the defendant. There is also direct evidence from Crossley that, for
whatever reason, he was not receiving notices of trial settings during the time that he was counsel
of record for the defendant. While there is no direct testimony that the clerk’s system of notification
2
This testimony com es from the d efendant’s affida vit filed in conne ction with his attem pt to set aside the August
27, 1999, order. The parties stipulated that this affidavit along with one other could be considered by the trial court.
The defendant apparently resides, at least part time, in Florida.
-5-
was not followed in this case, there is proof that the system did not result in the receipt of notice by
Crossley. No system is perfect, and, as we all know from personal experience, the mails do not
always “complet[e]...their appointed rounds,” despite the United States Postal Service’s assertion
to the contrary. If Crossley is to be believed – and, as the trial court noted, there is no reason to
doubt his veracity – the system, for whatever reason, did not achieve its intended result, i.e., notice
to Crossley. If the latter had no notice, there is absolutely no reason to doubt the defendant’s
testimony that he did not receive notice.
Due process requires that all parties to litigation receive notice of hearings. Bryant v.
Edwards, 707 S.W.2d 868, 870 (Tenn. 1986). In this case, the defendant was to have received that
notice through his counsel. For whatever reason, this did not happen in the instant case. We find
that this record “make[s] out a case of mistake, inadvertence, or excusable neglect, rather than one
of willful failure to appear.” Campbell, 555 S.W.2d at 113. Accordingly, we hold that the trial court
erred in refusing to set aside the “final” order in this case.
Our opinion should not be read as a repudiation of the system of notification long in place
in Anderson County. From the testimony, it is clear that the system is working well. By the same
token, our decision should not be interpreted as a departure from the line of cases treating a mailing
as complete upon the deposit of same with the United States Postal Service. See, e.g., Card v.
Tennessee Civil Serv. Comm’n, 981 S.W.2d 665, 666 (Tenn. Ct. App. 1998) (holding that proof of
due mailing raises the presumption that a letter was received). We simply hold that there is
compelling evidence that the notification system did not work in this case.
IV.
The order of the trial court entered August 27, 1999, is hereby vacated. This case is
remanded for further proceedings, consistent with this opinion. Exercising our discretion, we tax
the costs on appeal to the appellant, David Gibson, d/b/a Good Stuff!.
___________________________________
CHARLES D. SUSANO, JR., JUDGE
-6-
| {
"pile_set_name": "FreeLaw"
} |
RENDERED: FEBRUARY 16, 2017
TO BE PUBLISHED
~uprtmt Qlnurf nf Ifttnfurk11
2016-SC-000063-DG
CLARENCE L. COBB APPELLANT
ON REVIEW FROM COURT OF APPEALS
V. CASE NO. 2014-CA-000419-MR
GRAVES CIRCUIT COURT NO. 13-CR-00119
COMMONWEALTH OF KENTUCKY APPELLEE
OPINION OF THE COURT BY JUSTICE WRIGHT
AFFIRMING
Clarence Cobb entered a conditional guilty plea in Graves Circuit Court
to possessing a handgun as a convicted felon, possessing marijuana, and
operating a motor vehicle on a suspended license. The trial court sentenced
Cobb to five years' imprisonment; however, the plea agreement allowed Cobb to
appeal the trial court's order denying his motion to suppress evidence found in
the vehicle he drove at the time of his arrest. Cobb appealed the trial court's
order, and the Court of Appeals affirmed. Cobb moved this Court for
discretionary review, and we granted his motion. On appeal, Cobb argues the
Court of Appeals erred by affirming the trial court's order denying his motion to
suppress evidence because police illegally seized and searched his vehicle. We
disagree. Therefore, we affirm the judgment of the Court of Appeals.
I. BACKGROUND
While on routine patrol, Mayfield Police Officer Rodney Smith believed he
recognized a driver whom he previously arrested for driving on a suspended
license. Officer Smith followed the car until it pulled into a driveway and the
occupant exited the vehicle. The driver identified himself as Keith Burton when
questioned by Officer Smith. Believing he confused the driver of this car with
the previous arrestee, Officer Smith returned to his cruiser. Officer Smith
watched as the driver entered a different residence from the driveway in which
he parked. At that point, Officer Smith accessed the jail's website and retrieved
a photo of Keith Burton. He realized the driver of the car had given him a false
name, and he went to the house the driver entered. Once confronted with a
photo of Keith Burton, the driver admitted he was Clarence Cobb-the man
Officer Smith previously arrested for driving on a suspended license. After
verifying that Cobb's license remained suspended, Officer Smith placed Cobb
under arrest.
Having seen the police make an arrest, a vigilant neighbor came outside
and informed Officer Smith she was the caretaker of the elderly man in whose
driveway Cobb parked. The neighbor told police that Cobb did not live in that
home, that Cobb's car did not belong in the driveway where he parked it, and
Cobb did not have permission to park there.
At that point, Officer Smith seized the vehicle, called a tow truck, and
conducted an inventory search pursuant to department policy. Another officer
arrived on the scene to assist in the inventory search. During that search,
2
police opened the center console of the vehicle and found marijuana, rolling
papers, and a loaded handgun. The seizure of Cobb's vehicle and its
subsequent search are the focus of this appeal.
II. ANALYSIS
A. The Record Contains Substantial Evidence Supporting the Trial
Court's Findings of Fact
When reviewing a motion to suppress evidence, our analysis is two-fold.
Williams v. Commonwealth, 364 S.W.3d 65, 68 (Ky. 2011). First, "we defer to
the trial court's findings of fact if they are not clearly erroneous. Findings of
fact are not clearly erroneous if they are supported by substantial evidence.
Substantial evidence is evidence of substance and relevant consequence having
the fitness to induce conviction in the minds of reasonable men."
Commonwealth v. Jennings, 490 S.W.3d 339, 346 (Ky. 2016) (internal citations
and quotation marks omitted). Secondly, we review a lower court's application
of the law to the facts de novo. Id.
Cobb argues we should not defer to the trial court's finding that the
Mayfield Police Department had a standard policy on towing vehicles. Cobb
contends that the trial court's finding was clearly erroneous because the trial
court relied solely upon the testimony of Officer Smith. When questioned by
the trial court during the suppression hearing, Officer Smith testified that the
Mayfield Police Department had a written policy on towing vehicles.
Furthermore, Officer Smith testified that standard procedure required police to
conduct an inventory search before towing a vehicle in order to protect the
police, the vehicle owner, and tow-truck driver.
3
On another matter, Cobb identifies "language that could be
misinterpreted" in the trial court's order. Specifically, the trial court's order
stated that, "the automobile was parked in a neighbor's driveway, and the
caretaker of the person who lived there came out and spoke to the officer about
the car being in the driveway." Whether the caretaker emerged from her home
or the home of the elderly man in whose driveway Cobb parked is immaterial to
our analysis. What remains relevant is Officer Smith's testimony in which he
clearly stated a vigilant neighbor, Ms. Biggers, told him that she took care of
the elderly gentleman who owned the property where Cobb parked his vehicle,
that she did not know Cobb, and that Cobb's car did not belong in that
driveway.
In previous cases, we concluded that an officer's testimony provides
sufficient evidence to meet the substantial evidence standard. E.g. Williams,
364 S.W.3d at 68; Chavies v. Commonwealth, 354 S.W.3d 103, 108 (Ky. 2011)
("Based on the officer's testimony, we find there is substantial evidence
supporting the trial court's finding .... "). Our review of the record leads us to
agree with the Court of Appeals' conclusion that Officer Smith's testimony is
sufficient to establish substantial evidence supporting the trial court's findings
of fact. Officer Smith's testimony is of requisite substance and relevance to
invoke a conviction of veracity in the minds of reasonable people. See
Jennings, 490 S.W.3d at 346. Therefore, we affirm the Court of Appeals'
holding that the trial court's findings of fact were not clearly erroneous.
4
Now, we review de novo the application of the law to these facts.
Williams, 364 S.W.3d at 68.
B. Warrantless Searches Are Per Se Unreasonable, Subject Only to a
Few Well-Established Exceptions
1. A Search Incident to Arrest is But One Exception to the Warrant
Requirement
Cobb contends that police illegally seized and searched his car, thus
requiring this Court to reverse the judgment of the Court of Appeals. As we
said in Robbins v. Commonwealth, 336 S.W.3d 60, 63 (Ky. 2011), "[w]arrantless
searches are 'per se unreasonable under the Fourth Amendment-subject only
to a few specifically established and well-delineated exceptions. m (Quoting Katz
v. United States, 389 U.S. 347, 357 (1967)). Therefore, in order to determine
whether police illegally seized and searched Cobb's car, we must analyze
whether the search and seizure fits into one of the exceptions to the Fourth
Amendment's general warrant requirement.
In this case, Cobb conflates two wholly-separate exceptions to the
warrant requirement: 1) a search incident to arrest, and 2) an inventory search
after seizure. Cobb argues that police conducted a thinly-veiled search
incident to arrest that does not comport with the dictates of the Supreme Court
of the United States opinion in Arizona v. Gant, 556 U.S. 332, 338 (2009). Gant
significantly narrowed the circumstances under which police may search an
automobile incident to arrest. The Supreme Court of the United States set out
two permissible scenarios when the passenger compartment of a car may be
5
searched, after an arrest, without a warrant. First, "[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 .... " Gant, 556 U.S. at 351. Secondly, police may search a vehicle
incident to a recent occupant's arrest if "it is reasonable to believe the vehicle
contains evidence of the offense of arrest." Id. Importantly, however, the Gant
Court clarified that "[w]hen these justifications are absent, a search of an
arrestee's vehicle will be unreasonable unless police obtain a warrant or show
that another exception to the warrant requirement applies." Id. (emphasis
added). Despite Cobb's argument to the contrary, the holding in Gant limiting
searches incident to arrest does not apply here. Gant exempted from its
holding searches covered by other exceptions to the warrant requirement. The
Commonwealth never argued that it met the Gant exceptions. As such, our
analysis turns upon whether another exception to the warrant requirement
applies to the instant case .
.2. Inventory Searches are a Well-Defined Exception to the Warrant
Requirement of the Fourth Amendment
The Supreme Court of the United States recognized in Colorado v.
Bertine, 479 U.S. 367, 371 (1987), that inventory searches are a well-defined
exception to the Fourth Amendment's warrant requirement. After Bertine,
courts across the country have recognized that "[v]ehicle inventories are an
exception to the general warrant requirement." Hunnicutt-Carter v. State, 308
P.3d 847, 851 (Wyo. 2013); Accord United States v. Hockenberry, 730 F.3d 645,
6
658 (6th Cir. 2013); State v. Gauster, 752 N.W.2d 496, 502 (Minn. 2008);
Commonwealth v. Lagenella, 83 A.3d 94, 102 (Pa. 2013).
An inventory search is a well-defined exception to the general warrant
requirement; therefore, we analyze the lawfulness of the seizure of Cobb's
vehicle and its subsequent search within the confines of that exception.
a. A Lawful Inventory Search Requires a Reasonable Seizure
Since the need for an inventory search arises only after police seize a
vehicle without a warrant, the lawfulness of that inventory search turns first
upon the reasonableness of the seizure. Commonwealth v. Campbell, 59 N.E.3d
394, 398 (Mass. 2016) ("Reasonableness" is the "touchstone" when determining
the propriety of a warrantless seizure.); Gauster, 752 N.W.2d at 502. Noting
that the Fourth Amendment only prohibits unreasonable searches and
seizures, the Supreme Court of the United States stated that when determining
the lawfulness of a seizure, "[t]he relevant test is ... the reasonableness of the
seizure under all of the circumstances. The test of reasonableness cannot be
fixed by Per se Rules; each case must be decided on its own facts." South
Dakota v. Opperman, 428 U.S. 364, 373 (1976) (citing Coolidge v. New
Hampshire, 402 U.S. 443, 509-510 (1971); see also Cooper v. California, 386
U.S., 58, 59 (1967) ("Whether a search and seizure is unreasonable within the
meaning of the Fourth Amendment depends upon the facts and circumstances
of each case .... "). Therefore, we must look to the facts of this case
concerning what information Officer Smith knew when he seized Cobb's
vehicle.
7
At the time of the seizure, Officer Smith: 1) observed Cobb operating a
vehicle on a public roadway after previously arresting him for driving on a
suspended license; 2) attempted to confirm his identity by asking for his name;
3) observed Cobb park his vehicle in a different driveway from the residence he
entered; 4) verified that Cobb lied by providing a false name; 5) confirmed that
Cobb's license remained suspended; 6) was told by the caretaker of the elderly
man who owned the property that Cobb parked his vehicle on private property
without permission; and 7) arrested Cobb for operating a vehicle on a
suspended license.
In Opperman, 428 U.S. at 373, the Supreme Court upheld an inventory
search after police seized and impounded a vehicle with multiple parking
violations that was unlawfully parked in a parking spot on the side of a public
street. Here, according to the record on appeal, courts in Fulton and Graves
County entered a combined total of six guilty judgments against Cobb for
driving on a suspended license, while a seventh charge remained pending at
the time of this incident. We are unclear whether Officer Smith knew of all
seven times police charged Cobb with driving on a suspended license.
However, per Officer Smith's testimony at the suppression hearing, he knew of
at least one instance: he assisted in a prior arrest of Cobb for driving on a
suspended license.
In United States v. Petty, 367 F.3d 1009, 1012 (8th Cir. 2004), the United
States Court of Appeals for the Eighth Circuit stated that "[p]olice may take
protective custody of a vehicle when they have arrested its occupants, even if it
8
is lawfully parked and poses no public safety hazard." (Internal citations and
quotation marks omitted). And in United States v. Evans, 781 F.3d 433, 437
(8th Cir. 2015), the Eighth Circuit upheld the warrantless seizure and inventory
search of Evans' vehicle after police arrested him for driving without a valid
license and after parking his vehicle on private property without permission.
As in Evans, Cobb drove without a valid license and parked his vehicle on
private property without permission. Not only did Cobb commit an offense
against the Commonwealth and violate a court order by driving on a suspended
license, Cobb also trespassed upon the private property of an elderly man. And
once police arrested Cobb, his vehicle would have been left illegally blocking
the elderly man's driveway had it not been impounded.
Once Officer Smith diligently ascertained the totality of the situation, he
arrested Cobb and seized Cobb's car. Officer Smith followed his Department's
policy by conducting an inventory search before towing Cobb's vehicle. We see
no indication that Officer Smith arrested Cobb and then seized his vehicle in
order to search it for evidence of an additional crime without obtaining a
warrant. Likewise, we see no difference between seizing the vehicle of one who
received multiple parking violations, as in Opperman, and seizing the vehicle
driven by Cobb who habitually violated the law by operating a vehicle on a
suspended license. Nor do we see a distinction between the rationale validating
the seizure of a vehicle unlawfully parked in a parking spot on the side of a
public street, as in Opperman, and seizing a vehicle used to trespass unlawfully
upon private property. In sum, we hold that under these circumstances, police
9
acted reasonably in seizing Cobb's vehicle and performing the subsequent
inventory search of its contents.
b. The Scope of the Inventory Search Was Reasonable
Cobb contends that the seizure and search in question violate principles
outlined in Bertine, 479 U.S. 367, and Florida v. Wells, 495 U.S. 1 (1990). In
Bertine, when conducting the inventory search of the impounded vehicle, "[t]he
officer opened a closed backpack in which he found controlled substances,
cocaine paraphernalia, and a large amount of cash." Bertine, 479 U.S. at 369.
The Supreme Court's analysis primarily focused on the standardized criteria
necessary in the conduct of the inventory search, specifically whether the
Officer improperly opened and searched the backpack. The Court upheld the
search of the backpack and went on to uphold the discretion given to the
officer in deciding to impound rather than lock and park the vehicle.
In Wells, the Supreme Court invalidated part of an inventory search in
which the Florida Highway Patrol opened a locked suitcase found in the trunk
of an impounded car. The locked suitcase c~ntained a large quantity of
marijuana. Because the Florida Highway Patrol lacked a policy with respect to
opening closed containers in the course of an inventory search, the Court
affirmed the suppression of the evidence of the marijuana found in the
suitcase.
Contrary to Cobb's assertion, these two cases concern the necessity that
police abide by standard criteria while conducting an inventory search. In fact,
the Supreme Court's holding in Bertine specifically references inventory
10
procedures, "[w]e conclude that here, as in [Rlinois v.] Lafayette, [462 U.S. 640,
648 (1983) ,] reasonable police regulations relating to inventory procedures
administered in good faith satisfy the Fourth Amendment, even though courts
might as a matter of hindsight be able to devise equally reasonable rules
requiring a different procedure." Bertine, 479 U.S. at 374 (emphasis added).
In Wells, 495 U.S. at 4, the Supreme Court stated, "[o]ur view that
standardized criteria, or established routine, must regulate the opening of
containers found during inventory searches is based on the principle that an
inventory search must not be a ruse for a general rummaging in order to
discover incriminating evidence." (Internal citations and quotation marks
omitted) (emphasis added). The Court reasoned, that "[t]he policy or practice
governing inventory searches should be designed to produce an inventory. The
individual police officer must not be allowed so much latitude that inventory
searches are turned into a purposeful and general means of discovering
evidence of crime[.]" Id. (emphasis added).
Here; when police found the loaded handgun during the inventory
search, they merely opened the center console-a factory installed component
of the vehicle-a routine practice when inventorying the contents of a vehicle.
In fact, it would be impossible for police to complete an inventory search of the
vehicle without opening a compartment in the center of the car. Therefore, we
conclude that police acted reasonably in conducting the inventory search.
11
C. Section 10 of the Kentucky Constitution Provides No Greater
Protection than the Federal Fourth Amendment in the Context of
Warrantless Searches
Cobb argued to the Court of Appeals-and argues now-that Section 10
of the Kentucky Constitution provides greater protection than the Fourth
Amendment of the federal Constitution. Cobb contends that this Court's
holding limiting the circumstances in which a vehicle may be impounded
outlined in Wagner v. Commonwealth, 581 S.W.2d 352, 356 (Ky. 1979),
overruled by Estep v. Commonwealth, 663 S.W.2d 213 (Ky. 1983), governs the
outcome of this case. However, in LaFollette v. Commonwealth, 915 S.W.2d
7 4 7, 7 48 (Ky. 1996), after noting the similarities in language between the state
and federal provisions in the context of warrantless searches, we held that
"Section 10 of the Kentucky Constitution provides no greater protection than
does the federal Fourth Amendment." For more than two decades, this Court
has rendered opinions affirming this principle of Kentucky constitutional law,
and we see no reason to address Cobb's argument further.
To the extent not previously made clear over twenty years of our case law
from LaFollette to Chavies, 354 S.W.3d at 107, to our recent holding in
Commonwealth v. Cox, 491 S.W.3d 167, 170, fn. 2 (Ky. 2015) ("The Kentucky
Constitution on this subject mirrors its federal counterpart and is considered
co-extensive to the Fourth Amendment."), we expressly overrule the holding in
Wagner, 581 S.W.2d at 356, that within the context of warrantless searches,
Section 10 of the Constitution of this Commonwealth provides greater
12
protection than the Fourth Amendment of the Constitution of the United
States.
III. CONCLUSION
For the foregoing reasons, we affirm the judgment of the Court of
Appeals.
All sitting. All concur.
COUNSEL FOR APPELLANT:
SUSAN JACKSON BALLIET
Assistant Public Advocate
COUNSEL FOR APPELLEE:
ANDY BESHEAR
Attorney General Of Kentucky
JULIE SCOTI JERNIGAN
Assistant Attorney General
WILLIAM ROBERT LONG, JR.
Assistant Attorney General
JASON BRADLEY MOORE
Assistant Attorney General
13
| {
"pile_set_name": "FreeLaw"
} |
326 A.2d 818 (1974)
Frank L. PATTON, Appellant,
v.
UNITED STATES, Appellee.
No. 8116.
District of Columbia Court of Appeals.
Submitted September 25, 1974.
Decided October 23, 1974.
*819 Jerry Lee Dier, court appointed, for appellant.
Earl J. Silbert, U. S. Atty., John A. Terry, James F. McMullin, and S. Allen Early, III, Asst. U. S. Attys., for appellee.
Before NEBEKER, YEAGLEY and HARRIS, Associate Judges.
NEBEKER, Associate Judge:
This appeal from a conviction of willful failure to appear while subject to conditions of release (D.C.Code 1973, § 23-1327(a)), presents the question whether the offense requires proof of a specific intent. We hold that it does not and affirm.
Section 23-1327 provides, inter alia, for mandatory consecutive sentences for anyone who, while on release under our bail statutes,[1] "willfully fails to appear before any court or judicial officer as required". Failure to appear after notice of an appearance date is prima facie evidence of willfulness, and a warning of the possible consequences of such failure is relevant to willfulness, but a warning is not a prerequisite to conviction. Likewise, that section permits conviction in the absence of notice to appear if reasonable efforts to notify were made and the accused frustrated receipt of that notice.
In the charge to the jury, the court instructed that the word "willful" in this case meant "that the [act] was done consciously and voluntarily and not inadvertently or accidently . . . [and] that an act is done willfully if it is done knowingly, intentionally and deliberately." At the conclusion of the charge, defense counsel, in apparent reference to the court's use of the term "general intent", and in response to a question whether he had "additional objections . . . to the Court's instructions", stated:
[F]irst I would ask that the specific intent rather than the general intent instruction be given.
This request was refused.[2]
The government, in its brief, correctly observes that so-called bail jumping offenses do not have their genesis in the common law. As observed above, section 23-1327, supra, provides that the failure to *820 appear must be willful. In this particular statutory context, we hold that the government satisfies this burden by demonstrating what is commonly referred to as a general intent of the defendant to commit the act of omission.
We recognize that those offenses which existed at common law, and those that have their roots in the common law in the sense that they encompass "positive aggressions or invasions," or a crime against "person or property",[3] require that the defendant entertain a specific intent to commit a crime or harbor an evil state of mind. Mitchell v. United States, D.C.App., 302 A.2d 216 (1973).
In certain offenses which "[impair] the efficiency of controls deemed essential to the social order as presently constituted", Morissette v. United States, 342 U.S. 246, 256, 72 S.Ct. 240, 246, 96 L.Ed. 288 (1952), courts have commonly held that proof of general as opposed to specific intent is sufficient. In such public welfare or regulatory offenses, for example, those involving prosecution for the sale of a prohibited drug, the commission of the act itself implies the requisite intent. Morissette v. United States, supra at 258, 72 S.Ct. 240. While the Supreme Court has admonished against presuming that proof of specific intent is not required in a statutory offense merely because the statute does not facially require it (Morissette v. United States, supra), we find convincing evidence that it is not required for conviction under our statutory bail jumping offense.
We subscribe to the government's contention that this offense, not in existence at common law, is of the sort described by the Supreme Court as regulatory in nature rather than as a statutory proscription of an act malum in se. Such a context guides our construction of the word "willfully". As the Supreme Court stated in United States v. Illinois Central R. R. Co., 303 U. S. 239, 242, 58 S.Ct. 533, 535, 82 L.Ed. 773 (1938):
In statutes denouncing offenses involving turpitude, "willfully" is generally used to mean with evil purpose, criminal intent or the like. But in those denouncing acts not in themselves wrong, the word is often used without any such implication.. . .
Furthermore, we note that D.C.Code 1973, § 23-1327(b), provides that "[a]ny failure to appear after notice of the appearance date shall be prima facie evidence that such failure to appear is willful." This provision is irreconcilable with the contention that specific intent or an "evil mind" is required; rather, the requisite intent is inferable from the omission itself.
Finally, we note the following case which supports our holding. In United States v. Miller, 451 F.2d 1306 (4th Cir. 1971), the court held that the trial court did not err when it denied a request for a continuance when a defendant to bail jumping charges (there 18 U.S.C. § 3150)[4] proffered that he would produce witnesses to show that his absence was caused by fear for his own person. In so holding, the court observed that such fear, even if proved, would not amount to a defense in law for defendant's nonappearance. Clearly that case stands for the proposition that lack of an evil state of mind does not exculpate a bail jumping defendant. Therefore, a showing of general intent is sufficient to sustain the conviction.
Accordingly, we hold that the trial court did not commit error when it refused defendant's request to modify his instruction on intent.
Affirmed.
NOTES
[1] D.C.Code 1973, § 23-1321 et seq.
[2] Counsel took no definitive position respecting how he desired a specific intent instruction to be applied to this offense. The statute does not specify that a defendant must have a specific intent to avoid prosecution or trial or to disobey a lawful order to appear. Moreover, there is no separate "specific intent instruction" contained in the Bar Association's CRIMINAL JURY INSTRUCTIONS FOR THE DISTRICT OF COLUMBIA (2d ed. 1972). Instruction No. 3.01 contained in that work is entitled "Intent". It contains a so-called "general intent" definition as well as a "specific intent" definition, but as phrased the latter is hardly suitable for abstract use. It may be a valuable definition to use where a particular offense has an element requiring a specific intent.
[3] Morissette v. United States, 342 U.S. 246, 255-256, 72 S.Ct. 240, 96 L.Ed. 288 (1952).
[4] The federal statute, though worded differently from D.C.Code 1973, § 23-1327, contains the same sort of willfulness language as does our provision.
| {
"pile_set_name": "FreeLaw"
} |
626 F.3d 239 (2010)
In Re: Kenneth K. KIZZEE-JORDAN; Debtor.
Tax Ease Funding, L.P., Appellee,
v.
Glenn Thompson; Elizabeth Thompson, Appellants.
In Re: Glenn Thompson, Elizabeth Thompson, Debtors.
Glenn Thompson; Elizabeth Thompson, Appellants,
v.
Tax Ease Funding L.P., Appellee.
No. 09-20777.
United States Court of Appeals, Fifth Circuit.
November 11, 2010.
*240 Howard Marc Spector (argued), Spector & Johnson, P.L.L.C., Dallas, TX, for Appellee.
Reese Walker Baker (argued) (Court-Appointed), Baker & Associates, Houston, TX, for Appellants.
Eloise A. Guzman, Guzman Law Firm, Houston, TX, for Glenn Thompson.
Richard W. Aurich, Jr (argued), Houston, TX, for Peake, Amicus Curiae.
Robert Lynn Barrows, Warren, Drugan & Barrows, P.C., San Antonio, TX, for Texas Property Tax Lienholders Ass'n, Amicus Curiae.
Before JONES, Chief Judge, and REAVLEY and HAYNES, Circuit Judges.
REAVLEY, Circuit Judge:
In this case, we must consider whether a third-party lender who pays a debtor's ad valorem taxes and receives a transfer of the local taxing authority's tax lien under Texas law holds a tax claim protected from modification by 11 U.S.C. § 511 of the Bankruptcy Code. We conclude that the third-party lender's claim is a tax claim, and that the interest rate due thereon may not be modified by a debtor's Chapter 13 reorganization plan. We therefore AFFIRM the district court's judgment.
I.
Glenn and Elizabeth Thompson owed ad valorem property taxes on their home in Humble, Texas, for 2006 and 2007 to the *241 Humble Independent School District, Harris County, and the Harris County Municipal Utility District (collectively "the taxing authorities"). In February 2008, they borrowed funds from Tax Ease Funding, L.P. and, pursuant to Texas law, authorized Tax Ease to pay the taxes on their behalf. See TEX. TAX CODE § 32.06(a-1). The Thompsons executed a promissory note agreeing to repay the debt amount of $11,600.11 over a ten year period with an annual interest rate of 14.8%. In return for providing the funds, Tax Ease received a transfer of the taxing authorities' tax liens against the Thompsons' property.
In April 2009, the Thompsons filed in the United States Bankruptcy Court a voluntary petition for Chapter 13 reorganization. Their reorganization plan proposed to repay the debt to Tax Ease at an annual interest rate of only 5%. Tax Ease objected to the plan on the ground that under 11 U.S.C. § 511 its claim for repayment was a tax claim for which the interest rate must be determined by nonbankruptcy law and may not be modified by the bankruptcy court. Tax Ease sought by its objection to preserve its contract rate of interest.
The bankruptcy court disagreed with Tax Ease. It reasoned that because Tax Ease paid the Thompsons' taxes, the tax claim was extinguished. Although Tax Ease received a transfer of the tax lien, the bankruptcy court held that the claim for payment was based on the new promissory note and could be modified. After the bankruptcy court denied Tax Ease's objection, but before it confirmed the Thompsons' plan, Tax Ease filed a notice of appeal to the district court. The bankruptcy court subsequently confirmed the plan in a separate written order. Tax Ease's appeal to the district court was consolidated with another case presenting the same issue.
The district court reversed the bankruptcy court's order and held that Tax Ease's claim was a tax claim under § 511. The district court reasoned that the debt originated from the debtors' responsibility to the taxing authorities for their property taxes and that the transfer of the debt to Tax Ease did not change the nature of the debt. It noted that under Texas law Tax Ease became subrogated to the rights of the taxing authorities. Therefore, Tax Ease was entitled to the same protection of § 511 that would be afforded to the taxing authorities, and the bankruptcy court could not modify the interest rate. The Thompsons now appeal to this court.
II.
Before addressing the merits of the appeal, we first consider our appellate jurisdiction. Tax Ease suggests that we lack jurisdiction because its appeal to the district court was not based on a final, appealable order of the bankruptcy court, and therefore the district court also lacked jurisdiction.
District courts have jurisdiction to hear appeals from bankruptcy courts to review "final judgments, orders, and decrees."[1] District courts also have appellate jurisdiction to consider the bankruptcy court's interlocutory orders and decrees if the district court has granted leave to appeal.[2] Because the instant case does not involve an order for which the district court granted leave to appeal, the district court's jurisdiction depended on whether the bankruptcy court's order was final. This court's appellate jurisdiction similarly turns on the finality of the decisions in the *242 bankruptcy and district courts. See In re Bartee.[3]
Under our precedent, finality in bankruptcy proceedings is viewed in a practical, less technical light. In re England.[4] Our approach to determining whether an order is therefore appealable in a bankruptcy case is flexible.[5] An appealed bankruptcy order will be considered final if it constitutes "either a `final determination of the rights of the parties to secure the relief they seek,' or a final disposition `of a discrete dispute within the larger bankruptcy case[.]'"[6] The conclusion of a "discrete judicial unit in the larger case," rather than the conclusion of the entire litigation, results in a final, appealable order.[7]
We are satisfied that the bankruptcy court's order here denying Tax Ease's objection resolved a discrete dispute between these parties and was appealable. The record reveals that the only contested issue in the bankruptcy court with respect to confirmation of the Thompsons' proposed Chapter 13 plan was whether Tax Ease held a tax claim, and the resulting interest rate on that claim. The parties agreed at a hearing before the bankruptcy court that there were no other issues pending in the Thompsons' plan. Tax Ease's claim was a two-party dispute, and the bankruptcy court's decision necessarily resolved the dispute and determined the amount, priority, and interest rate on the claim. Although the order itself did not confirm the Thompsons' plan, it was considered by all parties to be final on the claim at issue and left nothing more for the court to do. It effectively resolved the merits of the controversy and was a final, appealable order; there is no impediment to our jurisdiction.[8]
III.
We turn next to the merits of the appeal and consider whether the district court correctly determined that Tax Ease held a tax claim and was therefore entitled to receive its contract rate of interest. In bankruptcy appeals we review findings of fact for clear error and conclusions of law de novo. In re Laughlin.[9]
The sole issue in this appeal turns on the applicability of § 511 of the Bankruptcy Code. Enacted as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,[10] § 511 limits a debtor's ability to modify the interest rate on a "tax claim" as follows:
If any provision of this title requires the payment of interest on a tax claim or on an administrative expense tax, or the payment of interest to enable a creditor to receive the present value of the allowed amount of a tax claim, the rate of *243 interest shall be the rate determined under applicable nonbankruptcy law.[11]
Because there was no uniform rate of interest for tax claims prior to the enactment of § 511, and varying standards had been used to determine the applicable rate, Congress sought to simplify the interest rate calculation.[12] It is now clear that when a federal, state, or local governmental entity pursues a claim against a bankrupt for unpaid taxes, the applicable interest rate is determined in accord with nonbankruptcy law.[13] What is not immediately clear from the statute is whether a third-party creditor who pays the debtor's taxes continues to hold a "tax claim."
The Bankruptcy Code does not define the term "tax claim." But it does define a "claim" in the broadest manner to be a "right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured[.]"[14] In the simplest terms, a tax claim is a broad right to payment of taxes. Section 511 protects the interest rate due on this "right to payment" held by governmental entities and by private parties alike because it includes "creditors" within the realm of those able to make tax claims.[15] This must be so since the Bankruptcy Code elsewhere specifically defines a "governmental unit,"[16] but Congress chose instead to use the more broadly defined term "creditor" in § 511.[17] We think the broad definition of "claim," in conjunction with the broad protection afforded in § 511, shows Congress' intent to include within § 511 tax claims held by private entities. See In re Davis.[18]
We know from the Bankruptcy Code that a tax claim is a broad claim for the payment of taxes and that a private entity may seek the benefit of § 511 in pursuing such a claim. But we still have not decided what specific rights a private entity such as Tax Ease possesses when it pays the taxes of the debtor. The statute provides that the "rate of interest shall be the rate determined under applicable nonbankruptcy law." We read that to direct us to the Texas law in this case. See In re Haber Oil Co.[19]
Under Texas law authorizing a third party's payment of taxes, "[a] tax lien may be transferred to the person who pays the *244 taxes on behalf of the property owner[.]"[20] Upon an authorized transferee's payment of the property owner's taxes, the tax collector certifies that the taxing unit's tax lien is transferred to that transferee.[21] The transferee of the tax lien is then "subrogated to and is entitled to exercise any right or remedy possessed by the transferring taxing unit, including or related to foreclosure or judicial sale[.]"[22]
Whether a third-party lender who pays a property owner's taxes in Texas holds a tax claim under the above provisions for purposes of § 511 has resulted in conflicting opinions among the bankruptcy courts in this circuit.[23] The Thompsons argue, consistent with the holdings of some courts, that Tax Ease does not hold a tax claim because only a tax lien is transferred under state law, and there is no provision for a transfer of the tax claim. They argue that the tax claim was extinguished and was replaced by a new debt owed under their promissory note. We are not persuaded.
The fact that the lien is transferred does not mean that Tax Ease does not possess a tax claim. As noted above, a claim is a right to payment.[24] A lien is a "charge against or interest in property to secure payment of a debt or performance of an obligation."[25] And a debt is a "liability on a claim."[26] Therefore, a holder of a lien has a secured right to payment on a claim. In Johnson, the Supreme Court recognized that the holder of a mortgage lien on the debtor's property still had a claim against the debtor even though the debtor's personal liability had previously been discharged because the lien holder maintained a right to payment in the form of proceeds from a sale of the debtor's property.[27] Similarly here, the tax lien on the Thompsons' property evidences the claim for payment.
The bankruptcy court in this case acknowledged that the tax lien creates an imposition against the real property, but it reasoned that the lien secures only a garden variety claim, not a tax claim, because the taxes were paid. The Thompsons also urge this position, but we disagree that the tax claim has been extinguished. The state law provides that when the transferee pays the taxes, the tax collector "shall issue a tax receipt to that transferee."[28] If the tax claim against the property owner were extinguished, the tax collector would issue the tax receipt to that property owner, not the transferee. By allowing a transferee to pay the taxes and receive the tax receipt and lien, the statutory scheme changes only the entity to which the Thompsons are indebted for the taxes originally owed, not the nature of the underlying debt upon which the claim is based. We do not think the tax lien otherwise could be properly transferred if the *245 tax debt was extinguished. See United States v. Phillips.[29]
Moreover, the Texas statutory scheme provides that upon payment to the taxing authorities and transfer of the tax lien, the transferee is subrogated to all the rights and remedies of the taxing authorities.[30] If the tax claim were extinguished upon payment by the transferee and replaced by a new debt, there would be no need to provide for rights of subrogation because the transferee could simply prosecute the new debt. Instead, the subrogation rights flow from the original tax debt. As a subrogee, Tax Ease should enjoy at least the same advantages and disadvantages of its claim as the taxing authorities would have, including the application of § 511 for the tax claim. See, e.g., Burns v. Bishop.[31]
The Thompsons argue, however, that Tax Ease is not really subrogated to the taxing authorities because state law grants Tax Ease a different bundle of rights than the taxing authorities have. For example, the taxing authorities are permitted under state law to charge interest of 12% on delinquent taxes and to recover attorneys fees in the event of foreclosure of up to 15% of the judgment.[32] But a third-party transferee who pays the property owner's taxes is permitted by statute to charge 18% interest and to recover attorneys fees of up to 10% of the judgment.[33] One bankruptcy court has held that this difference means that the "third-party lender does not receive the original tax claim, but rather a new claim secured by the transferred tax lien."[34] Because of the nature of the subrogation rights at issue in this case, however, the transferee need not receive the precise bundle of rights as the taxing authorities in order to be subrogated to a tax claim.
"Subrogation is the right of one who has paid an obligation which another should have paid to be indemnified by the other." Tex. Ass'n of Sch. Bds., Inc. v. Ward.[35] Texas recognizes three types of subrogation: equitable, contractual, and statutory.[36] When a statute provides a subrogation right, its nature is governed by the terms of the statute creating the right.[37] In this case, Tax Ease has been granted general statutory subrogation rights that include any rights held by the taxing authorities.[38] The fact that the Texas legislature also chose to grant third-party *246 lenders specific rights different from the taxing authorities does not change the fact that the lenders are subrogated, nor does it change the nature of the underlying debt as a tax debt. If we adopted the Thompsons' argument we would effectively read the subrogation provision out of the statute.
Our conclusion that Tax Ease holds a tax claim is in accord with decisions of other courts which have considered the nature of the third-party creditors' assignment or subrogation rights under state law. In In re Cortner,[39] the court held that a third-party creditor in a tax certificate sale held a tax claim under § 511, and not merely a new debt with a lien against the property, where Ohio law provided for the transfer of the delinquent taxes to the tax sale purchaser. In In re Princeton Office Park, L.P.,[40] the court held that a tax sale certificate holder possessed only a lien on the property owner's real estate, not a tax claim. But in so holding, the court agreed that a transferee of a tax lien possesses a tax claim. The court held that it was constrained by New Jersey law to find that the holder there did not possess a tax lien, and thus not a tax claim, because under state law the taxes are paid in full at a tax sale.[41] Significantly, the court noted that the case was distinguishable from similar situations in Texas because New Jersey law did not provide that transferees are assignees or subrogees of the taxing authority.[42] The court held that had the taxing authority assigned or subrogated its rights to the third-party creditor, as the Texas law provides, it would follow the approach taken by the district court in this case, i.e. that the claim was a tax claim.[43]
For the foregoing reasons, we conclude that Tax Ease, as the transferee of the tax lien and a subrogee of the taxing authorities' rights, holds a tax claim for purposes of § 511. The district court therefore correctly held that the bankruptcy court could not modify the interest rate due on the claim. The district court's judgment is AFFIRMED.
NOTES
[1] 28 U.S.C. § 158(a)(1).
[2] Id. § 158(a)(3).
[3] 212 F.3d 277, 282 (5th Cir.2000); 28 U.S.C. § 158(d)(1) ("The courts of appeals shall have jurisdiction of appeals from all final decisions, judgments, orders, and decrees entered under subsections (a) and (b) of this section.").
[4] 975 F.2d 1168, 1171 (5th Cir. 1992).
[5] See Bartee, 212 F.3d at 282.
[6] Id. (quoting In re Orr, 180 F.3d 656, 659 (5th Cir. 1999)).
[7] England, 975 F.2d at 1172.
[8] See, e.g., Bartee, 212 F.3d at 283 (holding that bankruptcy court's order was final where is was labeled as a final judgment and was clearly intended to serve as denial of relief sought; the order determined the substantive rights at issue; there was no indication in the record that the court intended to take further action; and no party argued that any further action by the court was to occur).
[9] 602 F.3d 417, 421 (5th Cir.2010).
[10] See Pub.L. No. 109-8, § 704, 119 Stat. 23, 125-26 (2005).
[11] 11 U.S.C. § 511(a).
[12] See H.R.REP. No. 109-31, at 101 (2005), U.S. Code Cong. & Admin.News 2005, p. 88; see also 4 COLLIER ON BANKRUPTCY ¶ 511.01 (Alan Resnick & Henry J. Sommer eds. 16th ed. 2010) ("The purpose of section 511 is to establish uniformity in the rate of interest paid on deferred tax claims[.]").
[13] See H.R.REP. No. 109-31, at 101 (2005) (Section 511 "provides that for all tax claims (federal, state, and local), ... the interest rate shall be determined in accordance with applicable nonbankruptcy law.").
[14] 11 U.S.C. § 101(5)(A); see also Johnson v. Home State Bank, 501 U.S. 78, 83, 111 S.Ct. 2150, 2154, 115 L.Ed.2d 66 (1991) ("Congress intended by this language to adopt the broadest available definition of `claim.'").
[15] See § 511(a).
[16] See 11 U.S.C. § 101(27).
[17] A "creditor" is an "entity that has a claim against the debtor[.]" 11 U.S.C. § 101(10)(A).
[18] 352 B.R. 651, 654 (Bankr.N.D.Tex.2006).
[19] 12 F.3d 426, 435 (5th Cir.1994) ("[I]n the absence of controlling federal bankruptcy law, the substantive nature of the property rights held by a bankrupt and its creditors is defined by state law."); see also Butner v. United States, 440 U.S. 48, 54, 99 S.Ct. 914, 918, 59 L.Ed.2d 136 (1979) ("Congress has generally left the determination of property rights in the assets of a bankrupt's estate to state law.")
[20] TEX. TAX CODE § 32.06(a-2).
[21] Id. § 32.06(b).
[22] Id. § 32.065(c).
[23] Compare In re Davis, 352 B.R. 651 (Bankr. N.D.Tex.2006) (holding that the third-party lender as the successor-in-interest of the taxing authority holds a tax claim subject to § 511) with In re Kizzee-Jordan, 399 B.R. 817 (Bankr.S.D.Tex.2009), In re Prevo, 393 B.R. 464 (Bankr.S.D.Tex.2008), and In re Sheffield, 390 B.R. 302 (Bankr.S.D.Tex.2008) (all holding that third-party lender holds a new, non-tax claim based on the property owner's promissory note that is not subject to § 511).
[24] 11 U.S.C. § 101(5)(A).
[25] 11 U.S.C. § 101(37) (emphasis added).
[26] 11 U.S.C. § 101(12).
[27] Johnson, 501 U.S. at 83, 111 S.Ct. at 2154.
[28] TEX. TAX CODE § 32.06(b) (emphasis added).
[29] 267 F.2d 374, 376-77 (5th Cir. 1959) ("A lien is a charge upon property for the payment or discharge of a debt. It is therefore dependent upon the existence, the amount of, and the provability of the debt. If the debt has been paid ... the lien is extinguished.") (internal quotation marks and citation omitted); Tex. Bank & Trust Co. of Dallas v. Custom Leasing, Inc., 402 S.W.2d 926, 930 (Tex. Civ.App.1966) ("A lien in itself is neither property nor a debt, but a right to have satisfaction out of property to secure the payment of the debt; and therefore is not subject to assignment without the debt.").
[30] TEX. TAX CODE § 32.065(c).
[31] 48 S.W.3d 459, 466 (Tex.App.2001) ("It is axiomatic that an assignee or subrogee walks in the shoes of his assignor and takes the assigned rights subject to all defenses which the opposing party might be able to assert against his assignor."); see also Smart v. Tower Land & Inv. Co., 597 S.W.2d 333, 337 (Tex. 1980) ("If entitled to full subrogation, the payor is allowed to enforce the rights available to the creditor[.]").
[32] TEX. TAX CODE §§ 33.01(a), and 33.48(a)(5).
[33] Id. § 32.06(e) & (j).
[34] In re Prevo, 393 B.R. at 471.
[35] 18 S.W.3d 256, 258 (Tex.App.2000).
[36] Id.
[37] Id. at 259.
[38] See TEX. TAX CODE § 32.065(c).
[39] 400 B.R. 608, 612 (Bankr.S.D.Ohio 2009).
[40] 423 B.R. 795, 804-05 (Bankr.D.N.J.2010).
[41] Id. at 804.
[42] Id.
[43] Id. at 805.
| {
"pile_set_name": "FreeLaw"
} |
964 A.2d 452 (2008)
LEDGER
v.
EASTON.
No. 1366 MDA 2007.
Superior Court of Pennsylvania.
October 16, 2008.
Affirmed.
| {
"pile_set_name": "FreeLaw"
} |
511 So.2d 912 (1987)
Loretta S. DeFOE
v.
GREAT SOUTHERN NATIONAL BANK, et al.
No. 56728.
Supreme Court of Mississippi.
July 29, 1987.
As Modified on Denial of Rehearing September 16, 1987.
Paul M. Neville, Jackson, for appellant.
Robert S. Murphree, John L. Low, IV, Watkins & Eager, Jackson, for appellees.
Before HAWKINS, P.J., and ROBERTSON and ANDERSON, JJ.
HAWKINS, Presiding Justice, for the Court:
Loretta S. DeFoe has appealed from a summary judgment of the chancery court for the First Judicial District of Hinds County dismissing her complaint against the Great Southern National Bank of Jackson (Great Southern), United Petroleum Corporation and Charles D. Champlin.
DeFoe was beneficiary under a life insurance policy on the life of C. Delbert Hosemann, Sr., assigned by him to Great Southern as collateral security for an indebtedness due it by United Petroleum Corporation. Following Hosemann's death, the bank received the proceeds of the policy which it applied on the debt. Hosemann had also executed a personal guaranty for the debt. DeFoe sought to be subrogated to the bank's position against Champlin, also a guarantor of the debt, United Petroleum Corporation and Hosemann's estate. The chancellor did subrogate DeFoe as against Hosemann's estate (from which there has been no appeal), but dismissed her claim to subrogation against Champlin and United Petroleum Corporation.
We find the chancellor was correct in granting summary judgment in favor of Champlin, but prematurely found in favor of United Petroleum Corporation. DeFoe may very well be entitled to the right of subrogation as against United Petroleum *913 Corporation, the maker of the note. We reverse and remand in part.
FACTS
Charles D. Champlin, a resident of Rankin County, and C. Delbert Hosemann, Sr., a resident of Hinds County, were shareholders in United Petroleum Corporation, an Ohio corporation with principal offices in Jackson. Champlin owned 55% of the outstanding shares, and Hosemann owned 200 shares. The record does not reveal if any other individuals owned stock in the corporation.
On July 30, 1982, United Petroleum borrowed $1,200,000 from the Great Southern National Bank and executed a note in this amount due in six months. United Petroleum also executed a deed of trust covering oil and gas leases and mineral interests in Ohio as security. Champlin and Hosemann each executed a continuing guaranty for $1,200,000 to secure United Petroleum's indebtedness to Great Southern.
Champlin also assigned a $2,000,000 life insurance policy in effect with Transamerican Occidental Life Insurance Company as collateral security for United Petroleum's indebtedness.
On September 23, 1982, the Penn Mutual Life Insurance Company issued a life insurance policy to Hosemann in the face amount of $500,000. The beneficiary was Loretta S. DeFoe, a resident of Jackson, if she survived Hosemann, and if not, a son, William J. DeFoe, and if he failed to survive Hosemann and Loretta S. DeFoe, then to Hosemann's executors and administrators. On January 17, 1983, Hosemann assigned this policy to Great Southern as collateral security for the indebtedness due the bank by United Petroleum.
On July 25, 1983, United Petroleum executed a renewal note to Great Southern in the principal amount of $1,007,455, due January 23, 1984.
Hosemann died September 24, 1983. Great Southern filed a claim as assignee under the insurance policy and on November 17, 1983, Penn Mutual, after making an adjustment because of age discrepancy, paid Great Southern $454,610.83 as payment in full for all sums due under the policy.
On January 13, 1984, Loretta S. DeFoe filed her complaint in the chancery court of the First Judicial District of Hinds County naming as defendants Great Southern, United Petroleum, Champlin and Hosemann's estate.
DeFoe charged Great Southern was required to marshal all the assets of the debtors in seeking payment, but the main thrust of her complaint was that she was entitled to be subrogated to Great Southern's position against United Petroleum, Champlin and Hosemann's estate insofar as the insurance proceeds had reduced United Petroleum's indebtedness.
Following affidavits and pre-trial depositions, all parties filed motions for summary judgment. The chancellor granted a summary judgment in favor of United Petroleum, Champlin and Great Southern, and in favor of DeFoe against Hosemann's estate.
DeFoe appealed. Hosemann's estate filed no appeal.
LAW
I.
DOES DeFOE HAVE ANY RIGHT OF SUBROGATION?
Because she was beneficiary under a life insurance policy assigned as collateral security for United Petroleum's debt, the proceeds of which were applied to the debt of that corporation, is DeFoe entitled to any right of subrogation? If so, is the right of subrogation limited to Great Southern's right of recourse against United Petroleum, or may it also be extended to the bank's right against Champlin?
The right of subrogation of a beneficiary under a life insurance policy is not a question frequently encountered by courts, but its infrequency does not diminish its extreme importance to the parties involved when it does arise.
To answer the first question of this case, we must begin with an understanding of the doctrine of subrogation.
*914 In Robinson v. Sullivan, 102 Miss. 581, 596, 59 So. 846, 847 (1912), this Court stated:
... "Subrogation is the substitution of one person in place of another, whether as a creditor or as the possessor of any rightful claim, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim, and to its rights, remedies, or securities." Words and Phrases, vol. 7, page 6722. "The doctrine is one of equity and benevolence, and, like contribution and other similar equitable rights, was adopted from the civil law, and its basis is the doing of complete, essential, and perfect justice between all the parties, without regard to form, and its object is the prevention of injustice. The right does not necessarily rest on contract or privity, but upon principles of natural equity, and does not depend upon the act of the creditor, but may be independent of him, and also of the debtor." 37 Cyc. 363. As was said by Chief Justice Sharkey in Blackwell v. Davis, 2 How. 812, the doctrine of subrogation is "the offspring of natural justice, and courts should rather incline to extend than to restrict the operation of a principle so elevated and pure." It applies in general, "wherever any person, other than a mere volunteer, pays a debt or demand which in equity or in good conscience should have been satisfied by another . .."
In American Fidelity and Casualty Co. v. U.S. Fidelity and Guaranty Co., 305 F.2d 633 (5th Cir.1962), the Court of Appeals, interpreting Mississippi law, stated that the doctrine of subrogation is "pure equity, founded on principles of natural justice," and "includes every instance in which one who is not a volunteer pays the debt of another. * * * It is applied only when necessary to bring about equitable adjustment of a claim founded on right and natural justice."
In Box v. Early, 181 Miss. 19, 178 So. 793, 796 (1938), this Court stated:
The doctrine of subrogation is one of equity; its object is the prevention of injustice; it rests upon the principle of natural equity; and its basis is the doing of complete and essential justice between the parties without regard to form. Prestridge v. Lazar, 132 Miss. 168, 95 So. 837 ...
See also: Sadler v. Glenn, 190 Miss. 112, 199 So. 305 (1940); First National Bank v. Huff, 441 So.2d 1317, 1319 (Miss. 1983).
II.
RIGHT OF BENEFICIARY
Whenever the question has arisen concerning the right of subrogation of a beneficiary under a life insurance policy, the proceeds of which have been used to apply to a debt as a risk, almost invariably it has involved insurance on the life of the debtor himself, not one secondarily liable as in this case.
This Court has addressed the former situation in Seitz v. Seitz, 238 Miss. 296, 118 So.2d 135 (1960). In that case, Wiley Nash Seitz was a debtor of a bank. To secure his debt he assigned as collateral security an insurance policy on his life in which his mother was a beneficiary. From time to time he renewed the note evidencing the debt, and expressed the intention of paying the debt from proceeds of his crop harvest. Seitz died intestate; his sole heir at law was his widow. The insurance company paid the proceeds of the policy to the bank, completely extinguishing the debt. The mother sued Seitz's estate claiming a right of subrogation against the estate because the proceeds of the life insurance policy had paid Seitz's debt. The Court found in favor of the mother, and we affirmed.
We held a beneficiary is entitled to subrogation to the claim of a creditor against an insured's estate where nothing appeared from the assignment of the policy indicating an intention on the part of the debtor that the insurance proceeds should be the primary source of payment, and that the determining factor was the intention of the insured debtor. We found that Seitz did not intend to make the policy the primary source of payment for his debt, but only as collateral security for his personal obligation, and that the insurance policy was *915 not primarily liable for the debt, but Seitz's estate was.
We further held that the mother's right as a beneficiary was inchoate while Seitz lived, but it became vested at his death, subject only to the collateral liability for the payment of the debt.
It was the view of the chancellor that Seitz controlled in DeFoe's claim for subrogation against Hosemann's estate, and as noted, no appeal has been taken by the estate, and we are not called upon to decide whether the chancery court erred in granted a judgment against this estate. The chancellor did not consider whether the fact that Hosemann was only secondarily liable may have distinguished this case from Seitz.
Seitz announced the majority rule prevailing in the states where this question has arisen. In Smith v. Coleman, 184 Va. 259, 35 S.E.2d 107, 160 A.L.R. 1376 (1945), Heflin collaterally assigned his life insurance policy in which his sister was the beneficiary to secure a note due by him to a bank. Upon his death the assignee bank received the proceeds of the policy and applied them to paying off the note in full. Thereafter, the executor of the estate of his sister (who had also died) sued Heflin's estate to recover the sum paid the bank. This instructive case states some basic principles to which we adhered in Seitz,:
The beneficary, during the life of the insured, had no vested interest in the policy. She had a mere expectancy quite similar to that of a legatee during the life of the testator. However, if no change was made in the policy, upon the death of the insured, the right of the beneficiary became fixed and vested.
The right of the insured to the contract of insurance was absolute. He could have defeated the expectancy of the beneficiary in many ways. He could have exercised the power of appointment and named another beneficiary; he could have surrendered the policy for its then cash value; he could have designated the pledgee, the bank, as beneficiary pro tanto; or he could have made the proceeds of the insurance policy a primary fund out of which to discharge his indebtedness. The insured exercised none of these rights. He simply assigned the policy with other assets owned by him as collateral security to pay an obligation for which he was otherwise primarily bound. "Collateral means secondary or subsidiary. Such security is to be resorted to only in the event that the pledgor fails to perform the principal contract. A pledge as collateral security ex vi termini excludes the idea that the thing pledged is designed as the primary source from which payment is to be made." Barbin v. Moore, 85 NH 362, 159 A 409, 415, 83 ALR 63, 73.
35 S.E.2d at 112.
[T]he cases are practically unanimous in declaring that the intention of the insured is the controlling factor in determing rights of the parties.
Id. at 113.
The principal obligation is the amount owed the Farmers and Merchants State Bank of Fredericksburg, as evidenced by the promissory note executed by Elmer G. Heflin. The life insurance policies were transferred and used as a collateral or secondary means to insure its payment. While the bank had a right to use the collateral in payment of the obligation due it, the exercise of this right did not deprive the beneficiary named in the policy of her right to subrogation as it was her money that was used to discharge an obligation for which the Heflin estate was primarily obligated.
Id. at 113-114. See also, Re Gallagher's Will, 57 N.M. 112, 255 P.2d 317, 37 A.L.R.2d 149, 165-167 (1953), and cases cited under Footnote 89 of 83 C.J.S. Subrogation, § 44.
It is, of course, entirely possible for the owner of the policy by language of the assignment to remove any right to subrogation. Such a case was Kash v. Kash, 260 Ky. 508, 86 S.W.2d 273 (1935). Another case in which it was clear that the insured did not intend for the beneficiary to have any subrogation right against his estate was In re Cohen's Estate, 23 Ill. App.2d 411, 163 N.E.2d 533 (1960).
*916 In Chaplin v. Merchant's National Bank of Aurora, 186 F. Supp. 273 (N.D.Ill. 1959), the court stated:
To defeat the right of a beneficiary it must appear that the insured, by the wording of the instrument assigning the policy or evidencing the loan, or by testamentary disposition, accomplishes such a result.
As we have observed, this is not a case where the owner of the policy assigned it to secure his own debt, but a debt made by another and on which his liability was secondary. Great Southern, under the terms of the note, security agreement, guaranty and the assignment, had the absolute right to receive the proceeds of the policy and apply it to United Petroleum's debt. Does the fact, however, that Hosemann may have only been secondarily liable under the United Petroleum note diminish in some way DeFoe's right of subrogation to the bank's claim against that corporation? To the contrary, it would appear that if there were nothing about the instrument which would have removed a right of subrogation if Hosemann, not United Petroleum, were the primary debtor, then certainly there would be a right of subrogation against United Petroleum.
We have found two cases which address this question of secondary liability, and both held there was a right of subrogation against the primary debtor. In Ulery v. Asphalt Paving Co., Inc., 119 So.2d 432 (Fla.App. 1960), the Florida Court of Appeals upheld a widow's right of subrogation against a corporation in which her husband was president and a shareholder for a bank's debt against the corporation, and for which debt the husband had collaterally assigned a life insurance policy as security. Also, in Falk v. Vreeland Trading Corp., 284 S.C. 201, 325 S.E.2d 333 (App. 1985), the South Carolina Court of Appeals held a widow was entitled to subrogation for a bank's debt against a corporation whose note had been guaranteed by a separate guaranty against the deceased husband, who had also assigned his life insurance policy as collateral security. That court concluded its opinion with the following paragraph:
Finally, the respondents emphasize, as did the master, that the estate is not primarily indebted to the SBA and received no benefit from the payment of the insurance proceeds to the creditor. While we recognize that the issue involved in this case usually arises where a debt of the deceased insured is paid by the assignment of an insurance policy [see Annot., 91 A.L.R.2d 496 (1961)], we regard as irrelevant the fact that the deceased insured was not the primary debtor here. Again, the intention of the insured ordinarily determines whether a beneficiary of a life insurance policy pledged by the insured as security for a debt enjoys a right of subrogation. Seitz v. Seitz, supra; Smith v. Coleman, supra; In re Gallagher's Will, supra.
325 S.E.2d 365-366.
We also adopt the view of the states in which the question has been presented that there is no right of subrogation against a party only secondarily liable, and that the chancellor was correct in rendering summary judgment in favor of Champlin. See Quality Wood Chips, Inc. v. Adolphsen, 636 S.W.2d 94, 97 (Mo. App. 1982); Tschider v. Burtts, 149 N.W.2d 710 (N.D. 1967); Street v. Lincoln National Life Ins. Co., 347 S.W.2d 455 (Mo. App. 1961).
As stated in this last case:
The burden is upon the party seeking subrogation to establish clearly and convincingly that as between himself and another party, the latter, in equity, should bear the loss. Fundamentally, the right of subrogation exists only against the principal debtor and does not extend against a person who is merely secondarily liable.
Id. at 459.
This record is clear that the debt in this case was primarily the debt of United Petroleum. Although the language of the guaranty executed by Champlin (as well as the guaranty executed by Hosemann) may have been broad and inclusive, this does not remove this paramount equitable consideration. This was, after all, United Petroleum's debt.
*917 We therefore reverse and remand this cause for hearing to determine whether DeFoe has any right of subrogation against United Petroleum. The chancellor after a full hearing, and consistent with the views expressed herein, should determine what right of subrogation, if any, DeFoe has against United Petroleum by virtue of the application of the life insurance proceeds to that corporation's debt.
II.
NO INTERFERENCE OF GREAT SOUTHERN'S RIGHT OF COLLECTION[1]
Great Southern was made a party to this appeal and remains a proper party on remand, not however, because of any liability it has to DeFoe, but because of the rights it has as a creditor of United Petroleum. Over half of its debt against United Petroleum remains unpaid, and whatever right of subrogation DeFoe has against United Petroleum cannot impair or diminish Great Southern's absolute right to proceed to collection for the full amount of the debt under the instruments executed by United Petroleum, Champion and Hosemann.
In general, one may not be subrogated to the rights of a creditor unless the debt has been paid in full. See: Continental Bank & Trust Co. v. Alabama General Insurance Co., 274 Ala. 622, 150 So.2d 688 (1963); North Arkansas Milling Co. v. Lipari, 231 Ark. 965, 333 S.W.2d 713 (1960). Although partial subrogation has never been favored by this Court, United States Fid. & Guaranty Co. v. Sunflower County, 194 Miss. 680 12 So.2d 142 (1943), we note that pro tanto subrogation has been allowed in certain situations, not, however, to the prejudice of the original creditor whose debt has not been fully paid. See, e.g., Continental Bank & Trust Co., supra, 150 So.2d at 691; Ulery v. Asphalt Paving Co., supra, at 437; United States Fid. & Guar. Co. v. Maryland Cas. Co., 186 Kan. 637, 352 P.2d 70, 76 (1960). Therefore, upon remand if the chancery court does find DeFoe has a right of subrogation against United Petroleum, the decree should be framed in such a manner that Great Southern's right to collect its debt in full is not impaired.
AFFIRMED IN PART; REVERSED AND REMANDED IN PART FOR PROCEEDINGS CONSISTENT WITH THIS OPINION.
WALKER, C.J., ROY NOBLE LEE, P.J., and DAN M. LEE, PRATHER, ROBERTSON, SULLIVAN, ANDERSON, and GRIFFIN, JJ., concur.
NOTES
[1] This question was not specifically addressed by counsel for Great Southern in its reply brief, but we address it to avoid any possible error on remand as to the banks' unfettered right to recover its debt in full.
| {
"pile_set_name": "FreeLaw"
} |
263 F.2d 437
Aston BARTHOLOMEW, Plaintiff-Appellee,v.UNIVERSE TANKSHIPS, INC., Defendant-Appellant.
No. 22.
Docket 25011.
United States Court of Appeals Second Circuit.
Argued October 8, 1958.
Decided January 9, 1959.
Morton M. Shreck and Nathan L. Berke, New York City, for plaintiff-appellee.
Victor S. Cichanowicz, New York City (Cunningham & Cichanowicz, New York City, on the brief), for defendant-appellant.
Before CLARK, Chief Judge, and MEDINA and LUMBARD, Circuit Judges.
MEDINA, Circuit Judge.
1
Aston Bartholomew, a citizen of the British West Indies, was a seaman on board the Ulysses, a vessel owned and operated by appellant, a Liberian corporation, and flying the flag of Liberia. On April 15, 1952, as the vessel was proceeding within the three-mile limit, and hence in the territorial waters of the United States, Bartholomew was assaulted by a fellow member of the crew who had previously attacked other seamen. The complaint alleged a claim based upon the Jones Act, another based upon alleged unseaworthiness under the Maritime Law and a third claim for maintenance and cure, also under the Maritime Law. Over the objection of appellant the trial judge held: that the circumstances disclosed by the evidence made the Jones Act applicable; that, although the trial was had on the civil side of the Court to a judge and jury, and not in admiralty, there was pendent jurisdiction over the maritime cause for unseaworthiness of the vessel; and he submitted both the Jones Act claim and the maritime cause for unseaworthiness to the jury, reserving the maintenance and cure maritime cause for decision by himself as a "judge in admiralty," his determination to be based upon the evidence adduced at the trial and such further proofs as the parties might wish to offer later. The jury found for Bartholomew on each of the claims submitted to it, fixing the damages in the sum of $24,600, or $25,000, less the $400 paid upon the signing of a release by Bartholomew which the jury disregarded as not binding on him. The maintenance and cure claim is held in abeyance pending the outcome of this appeal.
2
Appellant contends: that the court below improperly found the Jones Act applicable; that in any event the maritime cause should not have been submitted to the jury; that it was error to refuse to give certain instructions to the jury as requested by appellant; and that the motion to set aside the verdict and grant a new trial should have been granted because the jurors allegedly compromised their views on the subject of damages. We shall discuss seriatim these points and the evidence and the portions of the record relevant to each.
Applicability of the Jones Act
3
Did the District Court err in holding that Bartholomew had a right to invoke the Jones Act against his employer, a Liberian corporation? In Lauritzen v. Larsen, 1953, 345 U.S. 571, at page 582, 73 S.Ct. 921, at page 928, 97 L.Ed. 1254, the Supreme Court tells us that the answer is to be found by "ascertaining and valuing points of contact between the transaction and the states or governments whose competing laws are involved," and by "weighing * * * the significance of one or more connecting factors between the shipping transaction regulated and the national interest served by the assertion of authority," such as the place of the wrongful act, the law of the flag, the allegiance or domicile of the claimant, the allegiance of the shipowner, the place of contract between the parties, the inaccessibility of the foreign forum and the law of the forum.
4
A study of the numerous adjudicated Jones Act cases reveals not only the vagueness inherent in the general and undefined direction in Lauritzen for the "valuing" and "weighing" of the various facts or groups of facts that are said to be "points of contact" between the transaction and the states whose competing laws are involved, but also a lack of any common principle of decision or method of approach to the problem. Sometimes the courts seem to be employing choice of law techniques, and not infrequently the result arrived at seems to be based on mere dialectic manipulation or guesswork. All this, however, is to be expected as new law develops in a new field. This substantial background of judicial consideration of a great variety of combinations of relevant factors in cases where application of the Jones Act is asserted on the one hand and denied on the other makes it possible for us to undertake a restatement of the method of approach and the principles to be applied.
5
To begin with, as pointed out in Lauritzen, 345 U.S. at page 578, 73 S.Ct. at page 926, "we are simply dealing with a problem of statutory construction." For this reason traditional choice of law techniques may be more misleading than helpful.
6
In the second place, certain possible interpretations of the Jones Act have already been rejected, and their elimination simplifies the problem. For example, when the question was first presented it might have been held that in the enactment of the Jones Act the Congress intended to exercise the full measure of its power over the subject of the legislation, in which event any contact between the transaction and the United States would have been sufficient to warrant its application. But a contrary view prevailed. See The Paula, 2 Cir., 1937, 91 F.2d 1001, certiorari denied sub nom., Peters v. Lauritzen, 302 U.S. 750, 58 S.Ct. 270, 82 L.Ed. 580; O'Neill v. Cunard White Star, 2 Cir., 1947, 160 F.2d 446, certiorari denied 332 U.S. 773, 68 S.Ct. 56, 92 L.Ed. 358. Such inclusiveness was not read into the statute, since it was assumed that the Congress intended the Jones Act to be given a construction in consonance with international maritime law. This meant that not every contact, no matter how ephemeral or fortuitous it might be, would be deemed a basis for applying American law, that is to say the Jones Act. Instead, as commented on in Lauritzen (345 U.S. at page 582, 73 S.Ct. at page 928) "the necessity of mutual forbearance" to avoid international retaliation, and the desire to avoid changing and variant regulations aboard ship, have been stressed. Moreover, the courts might have so construed the Jones Act as to make some particular factor indispensable; but they did not. In other words, even if it appeared that a single special factor of obvious significance was lacking the Jones Act has been held to be applicable despite the absence of such a factor.
7
Thus the Jones Act has often been applied although the "flag of the ship" was foreign. E.g., Uravic v. F. Jarka Co., 1931, 282 U.S. 234, 51 S.Ct. 111, 75 L.Ed. 312; Gerradin v. United Fruit Co., 2 Cir., 1932, 60 F.2d 927, certiorari denied 287 U.S. 642, 53 S.Ct. 92, 77 L.Ed. 556; Gambera v. Bergoty, 2 Cir., 1942, 132 F.2d 414, certiorari denied 1943, 319 U.S. 742, 63 S.Ct. 1030, 87 L.Ed. 1699. Ownership of the vessel by American citizens was also lacking in the Uravic and Gambera cases.
8
That the tort need not occur in domestic waters was clearly shown in Panama R. Co. v. Johnson, 1923, 264 U.S. 375, 44 S.Ct. 391, 68 L.Ed. 748; Carroll v. United States, 2 Cir., 1943, 133 F.2d 690; Wenzler v. Robin Line S.S. Co., D.C.W.D. Wash.1921, 277 F. 812. In the Carroll case, supra, and in Torgersen v. Hutton, 2nd Dept. 1934, 243 App.Div. 31, 276 N.Y.S. 348, affirmed 1935, 267 N.Y. 535, 196 N.E. 566, certiorari denied, 1935, 296 U.S. 602, 56 S.Ct. 118, 80 L.Ed. 426, the seaman was neither a citizen nor domiciliary of the United States.
9
Other contacts such as the place of contract and the origin and destination of the vessel have probably never even been suggested as indispensable.
10
Nor can a "center of gravity" or "place of most vital connection" approach properly rationalize the decided cases.
11
Thus in the Uravic and Gambera cases though the flag of the ship and the owners of the vessel were foreign, the American citizenship or domicile of the seaman and the occurrence of the tort in the waters of the United States still led the courts to apply the Jones Act. Yet could anyone doubt that if the ship flew the American flag, without more, the Jones Act would apply? See Lauritzen v. Larsen, supra; O'Neill v. Cunard White Star, Ltd., 2 Cir., 1947, 160 F.2d 446, certiorari denied, 332 U.S. 773, 68 S.Ct. 56, 92 L.Ed. 358; Sonnesen v. Panama Transport Co., 1948, 298 N.Y. 262, 82 N. E.2d 569, certiorari denied, 1949, 337 U. S. 919, 69 S.Ct. 1157, 93 L.Ed. 1729. In this very case the "law of the flag" controlled the determination of the maritime claim. And in Carroll v. United States, 2 Cir., 1943, 133 F.2d 690, and Bobolakis v. Compania Panamena Maritima San Gerassimo, S. A., D.C.S.D. N.Y.1958, 168 F.Supp. 236, American ownership alone was deemed sufficient to apply the Jones Act.1 It is apparent then that the contacts considered most vital in one case are not necessarily of controlling importance in another.
12
Hence it must be said that in a particular case something between minimal and preponderant contacts is necessary if the Jones Act is to be applied. Thus we conclude that the test is that "substantial" contacts are necessary. And while as indicated supra one contact such as the fact that the vessel flies the American flag may alone be sufficient, this is no more than to say that in such a case the contact is so obviously substantial as to render unnecessary a further probing into the facts.
13
Some of the advantages of this simple formula are that it states a rational method of ascertaining the congressional intent, and that in its application there is no occasion to consider and "weigh" the contacts that do not exist, nor to go through any process of balancing one set of facts that are present against another set of facts that are absent, without any sure guide as to how the balancing is to be done. Accordingly, the decisional process of arriving at a conclusion on the subject of the application of the Jones Act involves the ascertainment of the facts or groups of facts which constitute contacts between the transaction involved in the case and the United States, and then deciding whether or not they are substantial. Thus each factor is to be "weighed" and "evaluated" only to the end that, after each factor has been given consideration, a rational and satisfactory conclusion may be arrived at on the question of whether all the factors present add up to the necessary substantiality. Moreover, each factor, or contact, or group of facts must be tested in the light of the underlying objective, which is to effectuate the liberal purposes of the Jones Act. We shall now proceed to apply these principles to the case before us.
14
The basic facts may be briefly stated. The assault took place in the territorial waters of the United States. It matters not that the evidence was conflicting; the finding of the trial judge on this point is certainly not clearly erroneous.
15
Bartholomew was brought to the United States in 1950 by appellant and taken to Baltimore where he first signed on as a seaman on one of appellant's vessels. Since then he has lived in Brooklyn, New York, where all his personal effects have been located; he made two voyages aboard vessels of appellant other than the Ulysses, worked for Macy's and another concern for about a year, and maintained a bank account in Brooklyn. About three months after the assault, Bartholomew left the United States and proceeded to Puerto Rico, where he remained for two weeks for the sole purpose of obtaining a visa so that he could be eligible to apply for United States citizenship. Promptly upon his return to the United States he signed the usual declaration of intention.
16
Appellant is a Liberian corporation and the Ulysses flew the Liberian flag. But all the stock of the Liberian corporation is held by a Panamanian corporation, and all the stock of the Panamanian corporation is owned by citizens of the United States. All the officers of appellant are American citizens, its principal place of business is in New York City, and it maintains an office in Liberia as a mere formality to comply with the Liberian statutory requirements.
17
The articles for the voyage on the Ulysses which was in progress at the time of the assault were signed by Bartholomew in Baltimore. There is no provision in these articles on the subject of what law is to govern in the event of an accident or other occurrence resulting in personal injuries or damage to a seaman. The voyage began in Baltimore and ended in Philadelphia.
18
We start with the fact that the assault occurred in the territorial waters of the United States. This is undoubtedly a factor of significance, see Lauritzen, 345 U.S. at page 583, 73 S.Ct. at page 928. We have no occasion here to determine whether or not the presence of this factor alone would suffice to make the Jones Act applicable.2
19
Although appellant contends otherwise, the practice in this type of case of looking through the facade of foreign registration and incorporation to the American ownership behind it is now well established. Gerradin v. United Fruit Co., 2 Cir., 1932, 60 F.2d 927, certiorari denied 287 U.S. 642, 53 S.Ct. 92, 77 L.Ed. 556; Carroll v. United States, 2 Cir., 1943, 133 F.2d 690; Zielinski v. Empresa Hondurena de Vapores, D.C.S.D.N.Y.1953, 113 F.Supp. 93; Torgersen v. Hutton, 2nd Dept. 1934, 243 App.Div. 31, 276 N.Y.S. 348, affirmed, 1935, 267 N.Y. 535, 196 N.E. 566, certiorari denied, 1935, 296 U.S. 602, 56 S.Ct. 118, 80 L.Ed. 426. This is essential unless the purposes of the Jones Act are to be frustrated by American shipowners intent upon evading their obligations under the law by the simple expedient of incorporating in a foreign country and registering their vessels under a foreign flag. See Lauritzen, 345 U.S. at page 587, 73 S.Ct. at page 930. In the case now before us appellant has taken the trouble to insert an additional nominal foreign corporation between the flag and the true beneficial ownership of the vessel. But we have little difficulty in brushing all this aside when considering the applicability vel non of the Jones Act. Complicating the mechanics of evasive schemes cannot serve to make them more effective. What we now do is not to disregard the corporate entity to impose liability on the stockholders, but rather to consider a foreign corporation as if it were an American corporation pursuant to the liberal policies of a regulatory act.3 See Zielinski v. Empresa Hondurena de Vapores, supra, 113 F.Supp. at page 95.
20
We also think the evidence overwhelmingly establishes that Bartholomew had sufficient presence and intent to be deemed a resident and domiciliary of the United States for the purpose of determining whether or not the Jones Act is applicable. Appellant, however, urges us to rule that the lack of a legal entry for immigration and naturalization purposes precludes us from considering Bartholomew as a "permanent inhabitant" (see Lauritzen, 345 U.S. at page 586, 73 S.Ct. at page 930) in connection with the problem of statutory construction now under consideration. Several cases are cited for this proposition but all of them arose in matters involving various provisions of the statutes affecting immigration and naturalization. E.g., United States ex rel. Bartsch v. Watkins, 2 Cir., 1949, 175 F.2d 245; Del Castillo v. Carr, 9 Cir., 1938, 100 F.2d 338; Taguchi v. Carr, 9 Cir., 1932, 62 F.2d 307; Hurst v. Nagle, 9 Cir., 1929, 30 F.2d 346, certiorari denied 279 U.S. 861, 49 S.Ct. 419, 73 L.Ed. 1001. That there is no basis for analogizing plaintiff's status under strict immigration laws, designed to keep undesirable aliens out of this country, to his status under a broadly worded, liberally construed statute designed for the protection of seamen almost goes without saying. Barber v. Varleta, 9 Cir., 1952, 199 F.2d 419, another immigration case, goes more to the point. There an alien seaman who had entered this country illegally, but who had lived here a number of years, was deemed to have "actually resided" here for the purposes of the Philippine Trade Act, 22 U.S.C.A. § 1251 et seq., and hence was found to be entitled to the benefits of a non-quota immigrant. Similarly, there can be little doubt that for Jones Act purposes plaintiff's actual "resident" status is to be considered apart from the technical legality of such status.
21
That the factors or contacts just discussed are in the aggregate substantial is clear beyond peradventure of doubt.4 No other conclusion is rationally admissible in the light of the decided cases. Uravic v. F. Jarka Co., 1931, 282 U.S. 234, 51 S.Ct. 111, 75 L.Ed. 312; Gerradin v. United Fruit Co., 2 Cir., 1932, 60 F.2d 927, certiorari denied 287 U.S. 642, 53 S.Ct. 92, 77 L.Ed. 556; Gambera v. Bergoty, 2 Cir., 1942, 132 F.2d 414, certiorari denied, 1943, 319 U.S. 742, 63 S.Ct. 1030, 87 L.Ed. 1699; Carroll v. United States, 2 Cir., 1943, 133 F.2d 690; Zielinski v. Empresa Hondurena de Vapores, supra.
22
It is true that Lauritzen appears to stress the law of the flag as perhaps the most important factor, but we can perceive no indication whatever in Justice Jackson's opinion of an intention to repudiate the earlier cases just cited. And yet little short of the rejection of all of them would permit us to hold the Jones Act inapplicable in the case before us. Indeed, the discussion in Lauritzen does no more than establish the insubstantiality of the contacts present in that case.
23
Moreover, this is not a matter resting in the discretion of the trial judge, as seems to have been thought to be the case here. The facts either warrant the application of the Jones Act or they do not. Under 28 U.S.C. § 1331, once federal law is found applicable the court's power to adjudicate must be exercised. While at times the impact of intricate questions of state law may require a federal court to stay its hand, Burford v. Sun Oil Co., 1943, 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424, and we need not attempt to catalogue other exceptional situations, it is clear that the District Court in the instant case had no discretionary power to refuse to adjudicate the case.
The Maritime Claims
24
Was it error to submit the maritime claim for unseaworthiness to the jury along with the Jones Act claim for negligence?
25
Preliminarily, it may be well to clear up a possible misconstruction of our decision in Paduano v. Yamashita Kisen Kabushiki Kaisha, 1955, 221 F.2d 615, 619. There we held that the civil side of the District Court had no jurisdiction to try a maritime cause for unseaworthiness "in which the general maritime law is the sole substanive basis for awarding the relief claimed in the complaint."5 But, as pointed out by Judge Waterman in Troupe v. Chicago, Duluth & Georgian Bay Transit Company, 2 Cir., 1956, 234 F.2d 253, 257, Paduano has significance primarily with respect to the mode of trial. There is always subject matter jurisdiction in admiralty over an unseaworthiness claim. In Paduano we did not transfer the case to the admiralty docket of the District Court, rather than affirm the judgment of dismissal for lack of jurisdiction, simply because no such request was presented to us, and we gave no consideration to the making of such a transfer.
26
We are now required to decide the question left open in Troupe (see 234 F. 2d at page 258), whether, in a case where federal-question jurisdiction on the civil side of the District Court has attached in an action at law under the Jones Act, and a maritime cause for unseaworthiness is also alleged, arising out of the same occurrence, it is proper to try both causes together to a court and jury. In the typical case and in the case before us the basic operative facts are almost but not quite identical; and as a matter of expediency and sound judicial administration it is plainly wasteful of the time of all concerned to require separate trials (see Troupe, at page 258). On the negligence phase of the case Bartholomew was required to prove that the shipowner knew or should have known of a propensity to violence on the part of the seaman who attacked him, whereas the unseaworthiness count depended upon no more than proof that the shipowner had not provided a vessel "sufficient, that is reasonably adequate, in materials, construction, equipment, stores, officers, men and outfit for the trade or service in which the vessel is employed." Doucette v. Vincent, supra, 194 F.2d at pages 837, 838 and cases cited. Knowledge or lack of knowledge of the defeat is not material, "the shipowner must at his peril furnish a seaworthy ship." While in the present case the Liberian maritime law was held applicable, the proof showed that the Liberian maritime law and the American maritime law on the point were the same. The thrust of all this with respect to the precise question now under discussion is that separate trials involve the possibility of an application of the doctrines of res judicata or collateral estoppel. Such procedural entanglements are, of course, to be avoided in the interest of justice. Thus while Baltimore S.S. Co. v. Phillips, 1927, 274 U.S. 316, 47 S.Ct. 600, 71 L.Ed. 1069, seems to preclude recovery under the Jones Act if the unseaworthiness issues have been previously decided adversely to the seaman,6 the converse may not be true,7 because the seaman might have lost his Jones Act recovery because the trier of the facts decided he had not established the requisite notice to the shipowner of the defect or omission.
27
As we have concluded that it was proper to try both claims to a jury, it would perhaps suffice to say that we are content to follow the courts that have already given their approval to this procedure.8 But the question cuts deep; it has not yet been passed upon by the Supreme Court; and we prefer briefly to state the reasons we think support the view we have taken of the matter. Our analysis of the series of theoretical and practical problems involved may serve somewhat to clarify the general subject of the method of trial in a federal District Court of the composite rights of an injured seaman, including his claims under the Jones Act for negligence, under the general maritime law for unseaworthiness and, also under the general maritime law, for maintenance and cure, a subject that has been almost endlessly discussed in the opinions of the courts and by text writers and commentators.9
28
Counsel in the case before us have articulated their argument on the subject of the method of trial in terms of pendent jurisdiction as outlined in Hurn v. Oursler, 1933, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148. But Hurn v. Oursler, was concerned with the distribution of judicial power between the state and federal courts; the rule was formulated solely for the purpose of preventing piecemeal litigation; and the solution of the type of problem there presented was stated to depend upon the distinction between separate causes of action on the one hand, and separate grounds for a single cause of action, on the other.10 But in the case before us there is undoubted jurisdiction in the District Court of the entire controversy between the parties. Jurisdiction of no single one of the claims is ancillary to jurisdiction over either or both of the others. On the other hand, as we found in Paduano, the competence of the District Court is divided, for purposes of the mode of trial and for other purposes, into compartments having separate civil, criminal and admiralty powers or competence. But as in the merger of law and equity, all these powers reside in a single District Court. To meet the practical necessities of the problem now before us we find no insuperable difficulty in carrying over the pendent doctrine to this analogous field, by holding that the Jones Act claim carries along with it the maritime claim of unseaworthiness for purposes of a trial, in the civil part of the District Court,11 of all the issues arising out of both such claims.
29
The two claims may and usually are set forth as separate counts in a single pleading, or in separate pleadings in separate proceedings, and as a complaint in a civil action and a libel in rem or in personam, or both, in admiralty. Thus the problem we seek to solve involves indirectly calendar, pre-trial and consolidation procedures.
30
Assuming that the two counts are in a single pleading, as here, or, if in separate proceedings, have been consolidated, that plaintiff has demanded a jury trial, and that the case is called for trial in the civil part of the District Court, it may seem possible to dispose of the negligence and unseaworthiness claims together, with the judge leaving the negligence claim issues of fact to the jury, while at the same time reserving the unseaworthiness claim issues for determination by himself, as Judge Conger did in the case before us with respect to the issues arising out of the claim for maintenance and cure. But this is an unrealistic and purely theoretical solution.
31
Thus, the judge and jury may have different views on questions of the credibility of witnesses, each may draw different inferences from certain established groups of facts or apply circumstantial evidence in different ways. The application of the doctrine of res judicata, already referred to, may cause further complications and injustice. Moreover, needless interruptions and disputes may well arise over what evidence the jury should or should not hear. But a single trial of the negligence and unseaworthiness claims together to a judge and jury is subject to none of the disadvantages just described and the practical advantages of doing so are perfectly manifest, as the central core of disputed facts involved in the two claims is identical.
32
These considerations demonstrate, we think, some of the practical advantages of trying at least the negligence and unseaworthiness claims together to the same trier of the facts. But, once these advantages are recognized and it becomes settled procedure to try the two together to a jury, other advantages follow as a matter of course for the future by reducing calendar delays and congestion, which will be avoided by the greater number and certainty of the consolidations that are bound to result from the ruling we are now making.
33
We wish to make plain, however, what undue emphasis on the Hurn v. Oursler test may obscure, namely, that the fundamental desideratum is that all litigation should be decided in the manner most conducive to the just, speedy and inexpensive disposition of the business of the courts untrammelled by unnecessary technicalities and possible dilatory maneuvers. Persistent and continued efforts to attain this objective constitute one of the most admirable features of modern judicial federal practice, which has supplanted a cumbersome and inflexible procedure that inevitably led to technical and dilatory moves by litigants, while at the same time adding to the already excessive cost of litigation and to unnecessary appeals.
34
In using the doctrine of pendency we are aware that the term is somewhat misleading in that it implies that the unseaworthiness count is a detachable unit hanging or dependent on the Jones Act claim. In reality we find the doctrine applicable because of the fundamental singleness of the underlying claim, the fact that the Jones Act claim and the maritime claim of unseaworthiness are so intertwined factually that they cannot as a matter of practice be separated into pieces.12 While the legal theories differ somewhat, from the standpoint of the parties the facts all exist as a single unit.
35
Thus, and for the reasons just stated, we conclude that the District Court on its civil side, in a case in which plaintiff seaman was entitled as of right to a jury trial of his Jones Act claim for negligence, had pendent "jurisdiction" of his maritime claim for unseaworthiness arising out of the same occurrence or transaction, and that both were properly submitted to the jury for a common law adjudication. We express no conclusion on the validity of this use of the pendent doctrine when sought to be applied to other related claims in other areas of the law.
36
Nor does our present holding conflict with what was decided by us in Paduano, supra. In that case we said, 221 F.2d at page 619:
37
"In view of the persistence of this legislative attitude and in the absence of any indication that there are situations in which it has not prevailed, we are constrained to conclude that the Congress, in enacting Section 1331 and its predecessor provisions, intended to exclude from its scope, cases such as the one now before us, in which the general maritime law is the sole substantive basis for awarding the relief claimed in the complaint."
38
Had we held otherwise, in view of the historical background developed in the opinion, we would not only have opened the door to a whittling away of the traditional method of trial to a judge in admiralty in maritime cases, but we would, we think, have wrongly decided the case. Here we do not have a claim based upon the general maritime law as "the sole substantive basis for awarding the relief claimed in the complaint." On the contrary, we are now dealing with a Jones Act negligence claim with respect to which the seaman, by the explicit terms of the statute, is entitled as of right to a jury trial; and we now do no more than hold that in this particular situation the Jones Act claim as alleged is so factually intertwined with the maritime claim as to carry it along into the civil side of the District Court for trial with the Jones Act claim to a court and jury.
39
Our discussion of this interesting problem would not be complete if we did not mention another possible solution. It cannot be, we think, that a United States District Court lacks power to do what Judge Conger did here. We have applied the doctrine of pendent jurisdiction because this seemed the theory best adapted to the preservation of the traditional method of a trial to a judge in maritime cases in admiralty. But American admiralty courts have from the earliest times since the founding of the Republic exercised their inherent powers to adjust American general substantive maritime law to new conditions by a process of development and elaboration, when the matters involved were not affected by legislation by the Congress. Perhaps the time will come when these same admiralty courts may decide to develop or elaborate upon the applicable adjective law in admiralty by adopting the common law trial to a jury in some very limited class of maritime matters. We hesitate to take such a bold step in the case before us, as we think the theory we have adopted is a rational means of deciding the case before us and the one least likely to affect adversely the general structure of the admiralty jurisdiction that has so well served its purpose over the years.
40
All that remains on this phase of the case is the necessity for clear and explicit instructions to the jury, and that necessity exists in every case of trial to a court and jury. In this case not only were the instructions unexceptionable, but Judge Conger took the additional precaution of formulating a series of questions to be answered by the jury with reference to each of the two separate claims. This is a desirable procedure, especially in this type of case; and requiring answers to such separate interrogatories greatly facilitates the decisional process in a court of review.
The Instructions to the Jury
41
Appellant asserts that it was error for the trial judge to refuse to instruct the jury, as requested:
42
"That a seaman who refuses to undergo hospitalization pursuant to the advice of physicians forfeits any right which he may have to any damages for injuries or any prolongation thereof which such refusal brings about."
43
But the judge was clearly right in refusing this request. It is far from clear that the seaman left the Kings County Hospital without any doctor's permission to do so. Indeed, he seems to have left because he "disliked the place." Moreover, he left in the care of another doctor and thereafter received substantial medical treatment. He seems never to have manifested any inclination to refuse medical assistance.
The Alleged Compromise Verdict
44
As above stated, the trial judge submitted a series of questions on each of the two separate claims, to be answered by the jury to aid them in determining whether the seaman was to recover damages from the shipowner, and, if so, the amount of such recovery. They related to the validity of the release, the issues of negligence and unseaworthiness, proximate cause, contributory negligence and the application of the doctrine of comparative negligence. When the jury returned to the courtroom to announce its verdict it appeared that they had not answered the questions formulated by the judge. One juror stated that the jury thought it not necessary to answer the questions, another said the questions had in fact been answered but the answers had not been filled in. The judge then sent the jury back to the jury room with clear and explicit instructions to answer the questions. Five minutes later the jury returned; they had filled in the answers and had reached the conclusion that the seaman should recover $24,600 from the shipowner. When polled each juror gave assent to the verdict thus rendered.
45
On the following morning the trial judge inadvertently opened the door leading to the room containing the jury pool, and saw several of the jurors there who had sat on the Bartholomew case. After a brief irrelevant exchange one juror asked, "What did you think of the verdict?" Without thinking, the trial judge replied, "Well, it might have been more." The juror then said, "Yes, that's right, we couldn't agree." "That's why we didn't answer the questions." The trial judge quickly withdrew, explaining that he did not wish to discuss the case.
46
The motion to set aside the verdict and grant a new trial was properly denied. Under the circumstances it is immaterial that the jurors did not answer the questions before returning to the courtroom to announce their verdict; and it is settled law that statements made by jurors and not part of the trial record cannot be used to impeach their verdict. Nothing on the face of the trial record gives the slightest support to the claim that the verdict was the result of a compromise. Maher v. Isthmian Steamship Co., 2 Cir., 1958, 253 F.2d 414; McDonald v. Pless, 1915, 238 U.S. 264, 35 S.Ct. 783, 59 L.Ed. 1300; Rotondo v. Isthmian Steamship Co., 2 Cir., 1957, 243 F.2d 581, certiorari denied 355 U.S. 834, 78 S.Ct. 53, 2 L.Ed.2d 45.
47
Affirmed.
Notes:
1
But see Footnote 4 infra
2
Several cases have found the Jones Act inapplicable under such circumstances. E. g., The Paula, 2 Cir., 1937, 91 F.2d 1001, certiorari denied sub nom., Peters v. Lauritzen, 302 U.S. 750, 58 S.Ct. 270, 82 L.Ed. 580; Hansen v. A.S.D., S.S. V. Endborg, D.C.S.D.N.Y.1957, 155 F.Supp. 387; Nakken v. Fearnley & Eger, D.C. S.D.N.Y.1955, 137 F.Supp. 288; Samad v. The Etivebank, D.C.E.D.Va.1955, 134 F.Supp. 530. In Romero v. International Terminal Operating Co., D.C.S.D.N.Y. 1956, 142 F.Supp. 570, affirmed Per Curiam, 2 Cir., 1957, 244 F.2d 409, this issue was one of the numerous points in contention. The Supreme Court has granted certiorari, 355 U.S. 807, 78 S.Ct. 55, 2 L.Ed.2d 27
3
It should be unnecessary to add that in treating the foreign incorporation of appellant as if American for Jones Act purpose, we do not pass upon, nor have we considered, the wholly separate question of similar treatment for purposes of jurisdiction under 28 U.S.C. § 1332 (a) (2)
4
Indeed, cases such as Mproumeriotis v. Seacrest Shipping Co., D.C.S.D.N.Y.1957, 149 F.Supp. 265, and Argyros v. Polar Compania De Navegacion, Ltda., D.C. S.D.N.Y.1956, 146 F.Supp. 624, holding American ownership alone insufficient to warrant application of the Jones Act must be considered of doubtful validity. In Mproumeriotis and Hansen v. A.S.D., S.S. V. Endborg, D.C.S.D.N.Y.1957, 155 F.Supp. 387; Nakken v. Fearnley & Eger, D.C.S.D.N.Y.1955, 137 F.Supp. 288; Rankin v. Atlantic Maritime Co., D.C.S.D.N.Y.1953, 117 F.Supp. 253, the courts apparently adopted the unsatisfactory procedure of balancing or comparing present with absent factors
5
Paduano, supra, 221 F.2d at page 619. Accord Jordine v. Walling, 3 Cir., 1950, 185 F.2d 662; Jenkins v. Roderick, D.C. D.Mass.1957, 156 F.Supp. 299, 302. Contra, Doucette v. Vincent, 1 Cir., 1952, 194 F.2d 834
6
Recovery by the seaman on either claim is deemed mutually exclusive. Pacific S.S. Co. v. Peterson, 1928, 278 U.S. 130, 138, 49 S.Ct. 75, 73 L.Ed. 220
7
The Supreme Court recently in McAllister v. Magnolia Petroleum Co., 1958, 357 U.S. 221, 78 S.Ct. 1201, 2 L.Ed.2d 1272, appears to have assumed that the doctrine ofres judicata worked both ways. In that case a state was prohibited from applying its shorter statute of limitations to a maritime claim for unseaworthiness on the ground that under Baltimore S.S. Co. v. Phillips, supra, the seaman was compelled to bring both causes of action simultaneously or lose one via res judicata. Hence, it was reasoned, shortening the time limitation on the maritime facet of the case adversely affected the three-year period given to seamen by the Congress on their Jones Act claims. However, although all three opinions seemed to regard the point as settled, it was not necessary to find a complete interchangeability of claims for res judicata purposes. To demonstrate the adverse effects of applying the state statute of limitations, it would have been sufficient to reaffirm Baltimore S.S. Co. v. Phillips, supra, and hold that a decision on the maritime claim barred the Jones Act claim. And see Troupe v. Chicago, Duluth & Georgian Bay Transit Company, 2 Cir., 1956, 234 F.2d 253, and Balado v. Lykes Brothers S.S. Co., 2 Cir., 1950, 179 F.2d 943, where despite jury verdicts for defendants on the Jones Act claim, the cases were remanded for more clear-cut verdicts on unseaworthiness. See also the comment by Judge Wyzanski in Jenkins v. Roderick, D.C.D. Mass.1957, 156 F.Supp. 299, 300.
It is all very well to say that the advantages of joining Jones Act, unseaworthiness and maintenance and cure claims in the same proceeding is so manifest "that a seaman will rarely forego his right to sue for all three," McAllister, supra, 357 U.S. at page 224, 78 S.Ct. at page 1204; the fact remains, however, that neither the seamen nor their lawyers are always aware of the substantive and procedural rules affecting the rights of the injured seamen, and it is not improbable that suits will hereafter be brought in state or federal courts involving the assertion of only one of the three claims or as many combinations of each of the three as are mathematically possible. Indeed, the number of motions by shipowners for consolidation appearing in the reports of decisions in this field would seem to indicate that at least in some cases the seaman has sought to take two bites of the apple by bringing the action involving the Jones Act claim first, and then later filing his libel in admiralty asserting the maritime claim for unseaworthiness, in the hope that the Jones Act claim could be tried first, in which event, if the seaman lost, he might still prevail on his claim for unseaworthiness.
8
See Troupe v. Chicago, Duluth & Georgian Bay Transit Company, supra, 234 F.2d at page 258; Doucette v. Vincent, 1 Cir., 1952, 194 F.2d 834, 840, note 5; Jordine v. Walling, 3 Cir., 1950, 185 F.2d 662, 670; Jenkins v. Roderick, D.C.D.Mass.1957, 156 F.Supp. 299; Andersen v. McAllister Lighterage Line, Inc., D.C.E.D.N.Y.1957, 157 F.Supp. 384; cf. McCarthy v. American Eastern Corp., 3 Cir., 1949, 175 F.2d 724, certiorari denied 338 U.S. 868, 70 S.Ct. 144, 94 L.Ed. 532; McAfoos v. Canadian Pacific Steamships, Ltd., 2 Cir., 1957, 243 F. 2d 270, certiorari denied 355 U.S. 823, 78 S.Ct. 32, 2 L.Ed.2d 39. See also Balado v. Lykes Bros. S.S. Co., 2 Cir., 1950, 179 F.2d 943 (both questions submitted to jury without discussion)
9
See cases cited Footnote 8, supra and Gonzales v. United Fruit Co., 2 Cir., 1951, 193 F.2d 479, 480, note 1; Mullen v. Fitz Simons & Connell Dredge & Dock Co., 7 Cir., 1948, 172 F.2d 601, certiorari denied, 1949, 337 U.S. 959, 69 S.Ct. 1534, 93 L.Ed. 1758; Lindquist v. Dilkes, 3 Cir., 1942, 127 F.2d 21; Nolan v. General Seafoods Corp., 1 Cir., 1940, 112 F.2d 515; Stevens v. R. O'Brien & Co., 1 Cir., 1933, 62 F.2d 632. See also 5 Moore, Federal Practice p. 278 (1951) and Supp. p. 17 (1957); 71 Harv.L.Rev. 1359 (1958); 19 G.Wash.L.Rev. 453 (1951); Comment, 57 Yale L.J. 243 (1947)
10
See Hart and Wechsler, The Federal Courts and the Federal System, pp. 802-809 (1953)
11
The Jones Act, 46 U.S.C.A. § 688, reads:
"Any seaman who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law, with the right of trial by jury, and in such action all statutes of the United States modifying or extending the common-law right or remedy in cases of personal injury to railway employees shall apply; * *".
12
Cf. Pate v. Standard Dredging Corp., 5 Cir., 1952, 193 F.2d 498, 502, where for purposes of the federal removal statute, 28 U.S.C. § 1441(c), a claim of "unseaworthiness" was not a "separate and independent claim or cause of action" so as to permit removal of a Jones Act claim which cannot by itself be removed from the state court
48
LUMBARD, Circuit Judge (concurring).
49
My concurrence in that part of the majority opinion which approves sending to the jury the unseaworthiness count, although there is no diversity of citizenship, rests on reasons quite different from those which Judge MEDINA states, and I feel that they are of sufficient importance to warrant discussion.
50
First, the Jones Act, 41 Stat. 1007 (1920), 46 U.S.C.A. § 688, itself authorizes this action to be tried at law and to a jury. Second, even if the only source of jurisdiction of the unseaworthiness count was in admiralty, such a count may be tried to a jury when it is tried simultaneously with a count under the Jones Act at law. It seems to me unfortunate that Judge Medina's opinion, instead of ruling on either one or both of these bases for jury action, chooses to place the emphasis instead on "pendent jurisdiction" which thus becomes a cure-all for whatever a federal court feels will assist in the tidy and expeditious administration of justice. It seems to me that pendent jurisdiction is inapplicable both because the federal admiralty courts have adequate power to hear the unseaworthiness claim in any event, and because the invocation of the doctrine does not fully resolve the issue presented. Moreover, the application of pendent jurisdiction is inconsistent with the rationale of our prior decision in Paduano v. Yamashita Kisen Kabushiki Kaisha, 2 Cir., 1955, 221 F.2d 615, where we held that such maritime actions are not included in 28 U.S.C. § 1331 (1952), which statute confers general federal question jurisdiction on the district courts, because the historic separateness of the admiralty jurisdiction must be preserved in the absence of an express congressional mandate to alter it.
* A — The Jones Act
51
The Jones Act itself constitutes congressional authorization for the commencement of the unseaworthiness action on the law side of a federal court and for its trial to a jury if the jurisdictional requirements of 28 U.S.C. § 1331 (1952) are otherwise met,1 whether or not a negligence count under the Act is pleaded, provided only that the plaintiff is of the class which is covered by the Act as currently construed. I am aware that no court has adopted this view, although several seem to have intimated it,2 but it seems to me consonant with the history of the Act and with the repeated declarations of the Supreme Court in construction of it.
52
The lack of judicial attention to the terms of the Act itself is difficult to account for, since it is the provision of the Act allowing the plaintiff to make an "election" for an action "at law" with jury trial that has given rise to the problem in almost every case including this one. Instead, attention has, for example, been given to the far broader jurisdictional question whether substantially all in personam maritime claims may be said to arise "under the Constitution, laws, or treaties of the United States" within the meaning of 28 U.S.C. § 1331 (1952), and therefore be susceptible of trial on the law side of a federal court in the absence of diversity of citizenship.3 But the issue presented by such cases is far broader than need be considered in the solution of the problem confronted here.
53
The Jones Act deals only with that aspect of maritime law governing seamen's remedies for personal injury which the Supreme Court has stated are to be considered as a unit and are to be liberally regarded by the courts.4
In relevant part the Act provides:
54
"Any seaman who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law, with the right of trial by jury, and in such action all statutes of the United States modifying or extending the common-law right or remedy in cases of personal injury to railway employees shall apply; * *".
55
The language of the Act with its apparently broad grant of permission to sue "at law" for "damages" for "personal injury" does not exclude an action based upon liability without fault known as unseaworthiness. On its face the Act appears to permit the seaman to sue at law for all claims that he may have for damages for personal injury sustained in the course of employment, and permits him the added advantage of certain remedial statutes originally passed for the benefit of railway workers. Only by reading the clause beginning "and in such action" as a deliberate limitation on the broad authorization of the opening clause for an action "at law" for "damages" for "personal injury" can the opposite result be reached. The question therefore is whether the second clause ought to be read as stating that the only action subject to the election authorized by the Act for a trial at law and to a jury is the action analogous to the railway workers' action for negligent injury. Nothing in the statutory language itself predicts such a result.
56
The statutory history is of little help. The Act, § 33 of the 1920 Amendments to the Merchant Marine Act,5 appears to have passed through both Houses of Congress without debate, and without discussion in committee reports,6 and it is therefore undoubtedly true that as to the specific question here considered the Congress cannot be said to have expressed any intention. Ought the general language of the Act nevertheless to be approached with a presumption of some limitation on the grant? I think not.
57
In Paduano v. Yamashita Kisen Kabushiki Kaisha, 2 Cir., 1955, 221 F.2d 615, we placed great reliance on the fact that ever since 1875 the statute conferring general "federal question" jurisdiction on the district courts has been assumed to be subject to an implied exception for maritime matters. We might therefore find that in the absence of a specific manifestation of intention to alter this historic (albeit implied) exception, maritime jurisdiction remains maritime. Even the discovery of so strong a presumption would not end the problem, however, since the Jones Act itself specifically removes a maritime claim from the admiralty courts at the plaintiff's election. The Supreme Court held in Panama R. Co. v. Johnson, 1924, 264 U. S. 375, 44 S.Ct. 391, 68 L.Ed. 748, that the remedy afforded seamen under the railway Acts was given in modification of and consequently was part of the maritime law. The question would therefore remain whether in allowing an election under the Act for an action at law with a jury trial the Congress should be presumed to have intended to carve up the mode of trial for seamen's maritime claims for personal injury and to have provided the election as to the new maritime count but not as to the old.7
58
Despite the generality of the statutory language, if in 1920 there was a significant difference in the nature of the claims for unseaworthiness and the new claim afforded under the railway Acts it might be argued that the Congress, in recognition of the difference, intended to provide an altered mode of trial only for the new negligence count. Before proceeding to examine this possibility it is well to note however that it contains an element of fiction. Jury trial for these maritime matters was not new in 1920. Ever since 1789 it has been available in the state courts by virtue of the "saving clause," 1 Stat. 76-77, now 28 U.S.C. § 1333(1) (1952), and in the federal courts by virtue of the same clause coupled with the grant of jurisdiction at law in diversity, 28 U.S.C. § 1332 (1952). Only maritime claims asserted in the federal courts at law and in the absence of diversity would have been subject to the supposed exception in the Jones Act. But the broad language of the Act provided for juries in all courts which try actions "at law" without apparent exceptions. Nevertheless, it is not impossible that such an exception was contemplated for the federal courts if indeed there was a significant difference in the nature of the claims. It appears, however, that there was not.
59
The doctrine that an action for unseaworthiness imposes a species of liability "without fault" for personal injury peculiar to maritime law is of very recent vintage, appearing first in the Supreme Court in Mahnich v. Southern S.S. Co., 1944, 321 U.S. 96, 64 S.Ct. 455, 88 L.Ed. 561 and Seas Shipping Co. v. Sieracki, 1946, 328 U.S. 85, 66 S.Ct. 872, 90 L.Ed. 1099.8 Earlier, in Baltimore S.S. Co. v. Phillips, 1927, 274 U.S. 316, 47 S.Ct. 600, 71 L.Ed. 1069, for example, the owner's liability for injuries due to unseaworthiness was thought to turn on his "negligence."9 It may have been true, of course, that a very severe duty of diligence was placed upon the owner to provide a seaworthy ship with seaworthy appliances. But if there was such a duty of care in excess of that familiarly required at common law, it is now plain that a similarly heightened duty of diligence was imposed by the Jones Act as well. See Cortes v. Baltimore Insular Line, 1932, 287 U.S. 367, 53 S.Ct. 173, 77 L.Ed. 368. Thus, in 1920 at least, no distinction could have been drawn between the absolute character of the maritime duty imposed by the action for unseaworthiness, and the duty of due care imposed by the incorporation of the railway statutes in the new Act. There was a difference between the old law and the new duty of course, but it was the difference between a liability for the negligent provision of the vessel, and its negligent operation. It was liability for the latter which Chelentis v. Luckenbach S.S. Co., 1918, 247 U.S. 372, 38 S.Ct. 501, 62 L.Ed. 1171, held was not imposed by the exclusive maritime law, and it was apparently to circumvent the Chelentis decision that the 1920 amendment was enacted. It is difficult to find that the Congress which spoke in the broad terms of the Jones Act nevertheless should be presumed to have intended to distinguish between the modes of trial appropriate to the proof of two negligence counts.
60
Furthermore, the recent growth of the scope of the unseaworthiness remedy to encompass an increasing proportion of those cases formerly regarded as involving only operating negligence, see Gilmore & Black, The Law of Admiralty, § 6-39 (1957), thus rendering somewhat superfluous the incorporation of the railway acts into the maritime law, suggests that there would have been considerable wisdom in the view that seamen's remedies should be treated as a unit by the courts. At least it is true that in the light of this development there is no good purpose served by a distinction in the mode of trial of these counts especially as it creates untoward problems of judicial administration. Since the language that the Sixty-sixth Congress used in no way intimates that it regarded these claims as other than a single action "at law" for "damages" there does not seem to me now to be any reason for supposing that it intended otherwise.
61
In the early cases a view was taken of Jones Act remedies that would probably have precluded the analysis I have suggested had the view been upheld. In dictum in Panama R. Co. v. Johnson, 1924, 264 U.S. 375, 44 S.Ct. 391, 392, 68 L. Ed. 748, the Supreme Court first suggested that the phrase "at his election" meant that the plaintiff in order to sue under the railway provisions of the Jones Act had to seek "either the relief accorded by the old rules or that provided by the new rules. The election is between alternatives accorded by the maritime law as modified * * *" 264 U.S. at pages 388, 389, 44 S.Ct. at page 394. See also Pacific S.S. Co. v. Peterson, 1938, 278 U.S. 130, 137, 138, 49 S.Ct. 75, 73 L.Ed. 220. If this implication had been carried forward it would have meant that the Act provided only an "election" to choose the railroaders' remedies in lieu of the old maritime counts, and did not provide permission for an action at law to qualified suitors seeking redress based on maritime counts for personal injuries. This was a curious view to take of a remedial statute, and the Supreme Court has recently found a footnote reference sufficient to discredit it. McAllister v. Magnolia Petroleum Co., 1958, 357 U.S. 221, 222, note 2, 78 S.Ct. 1201, 2 L.Ed.2d 1272.
62
In another line of cases the Supreme Court appears to have taken the view that seamen's remedies are to be regarded as a unit for purposes of trial. In Baltimore S.S. Co. v. Phillips, 1927, 274 U.S. 316, 47 S.Ct. 600, 71 L.Ed. 1069, the Court held that a federal "splitting" rule would operate against a plaintiff who pleaded only one of the two claims for unseaworthiness and operating negligence and that the doctrine of res judicata would bar the later assertion of the unlitigated claim.10 The possibility of such estoppel by judgment is of course not conclusive of the question of the existence of jurisdiction at law and to a jury for the seaman's unseaworthiness claim. Attention has recently been called to the fact that it may be doubted whether the Baltimore rule would apply if the Jones Act claim for operating negligence were pleaded on the law side of a federal court in which there was no jurisdiction to hear the maritime claim. Jenkins v. Roderick, D.C.Mass.1957, 156 F.Supp. 299, 300.11 It seems to me, however, that this is somewhat aside from the point. Only if it were supposed that the Congress did not deal with "two grounds" for the same maritime "cause of action" would the Act be read to grant jurisdiction for an action at law for only "one-half" of the cause of action. This is an area in which both of the "halves" are created by federal law and the subject is controlled by the Congress in "its substantive as well as its procedural features." Panama R. Co. v. Johnson, 1924, 264 U.S. 375, 386, 44 S.Ct. 391, 393, 68 L.Ed. 748. This is not a case in which the second "ground" comes from a body of local law over which the Congress could not or plainly did not exert power. It seems to me anomalous to assume that the inclusive federal power was exercised so as to create a purposeless dilemma in the mode of trial.
63
For these reasons12 I would hold that the Jones Act, in permitting an action "at law" for "damages" for "personal injury" to seamen, permitted them such an action based on the maritime doctrine of unseaworthiness as well as the legislative maritime doctrine of negligent operation.13 This is precisely the result reached by the court by a somewhat more elaborate route, so that whenever a Jones Act claim is pleaded at law and is tried with a claim in unseaworthiness, the claims may now be tried together in a common law action to a jury without regard to an independent basis of jurisdictional law for the unseaworthiness count.14
B — Jury Trial in Admiralty Cases
64
In the closing lines of its opinion the majority states categorically the principle that if a claim is regarded as on the admiralty side of the district court it must then be tried to the court without a jury, as has been customary in admiralty proceedings. It apparently assumes, since it nowhere discusses the question, that if the claim were properly on the law side of the district court the jury-right would automatically attach.15 It thus converts the question of the propriety of jury trial, which it has already decided on a priori standards of convenience, into one of jurisdiction, which it similarly decides on the ground of convenience. I do not believe that, apart from the Jones Act, it is necessary or desirable to reach difficult questions of jurisdiction in deciding the question presented here. If I did not believe that the Act provided for jurisdiction at law I would hold that an unseaworthiness count properly pleaded in admiralty may be tried there to a jury if in the court's discretion it is tried simultaneously with a related claim at law under the Jones Act, whether or not there is an independent basis of jurisdiction of the maritime count at law.16 Since the convenience of joint trial of the unseaworthiness count to a jury is the only ground offered to support each step of the court's decision, it seems to me that this would be a more direct and therefore adequate response to the underlying problem. The court could exercise control over the joinder of such admiralty and law claims when it decided the motion to consolidate the separate actions for purposes of trial. If the delay would be untoward because of really serious docket congestion, or if serious prejudice might result to the objecting party, the court for reasons sufficient to overcome the obvious desirability of joint trial could deny the motion. Once consolidation is achieved, however, the same practical reasons which persuade the court that jury trial is appropriate would carry the unseaworthiness count to the Jones Act jury.
65
It is true that this solution is not without some difficulty, since such precedent as there is on the matter of jury trial for non-jury counts joined with counts triable to a jury under Constitution or statute points in the direction of preservation of the separate modes of trial to court and jury. Thus when the equity and law courts were merged, an effort was made to determine whether the claim asserted was "primarily legal" or "primarily equitable" and the determination governed the mode of trial selected. The mere presentation of a claim at law for damages was not of itself enough to take a "primarily equitable" claim to a jury. See 5 Moore's Federal Practice §§ 38.16-38.19. We could apply a similar approach and simply hold that the Jones Act claim is always "primary" when accompanied by a count in unseaworthiness. But one may imagine cases in which the issue of negligence might be so much more doubtful than that of the unseaworthiness of the vessel as to render the holding fictional.
66
Of course it would be possible to preserve the separate modes of trial even after consolidation by simply having the court decide the unseaworthiness counts. Under Pacific S.S. Co. v. Peterson, 1928, 278 U.S. 130, 49 S.Ct. 75, 73 L.Ed. 220, if the jury returned a Jones Act verdict for the plaintiff that would be the end of the matter. If it found for the defendant the determination of the maritime count would be up to the court. Unlike the majority I do not believe that the resulting problems in the nature of res judicata or collateral estoppel would be insurmountable. For that matter, as I will show below, I do not believe that these problems can be avoided even by the court's method of solution. But as we are unanimous in the conclusion that it is proper to try both counts to the jury, I am not dissuaded by the distant analogy of the law-equity merger and its attempts to preserve historically separate modes of trial. The point is that the problem of the propriety of joint jury trial is not made more amenable to solution by the discovery of pendent jurisdiction of the maritime count on the law side unless it is found that the Seventh Amendment guarantees a jury right on the unseaworthiness claim, a matter which the court nowhere discusses.
67
The majority expressly declines to employ the route I propose because it says: (1) as against the trial of certain admiralty counts to a jury the discovery of a hitherto nearly unknown jurisdiction at law over maritime matters is "least likely to affect adversely the general structure of the admiralty jurisdiction," and (2) because the step of trying an admiralty count to a jury is "bold" when contrasted with the timid assumption of a novel jurisdiction at law. It could be maintained, I think, that the extension of coordinate jurisdiction of the federal courts at law poses as great a threat as can be imagined to what remains of the exclusivity of the admiralty prerogatives in seamen's cases. However, I merely note that so long as the rule of joint trial to a jury is confined to those admiralty claims which are tried with a related Jones Act claim there is absolutely no difference in practical effect between considering the trial of certain admiralty matters when joined with claims at law as sui generis and trying them to a jury, and treating some of them as properly brought at law solely in order to reach the same result. The two routes seem equally capable of giving rise to further erosions of admiralty prerogatives. Not only has the majority's dealing with jurisdiction accomplished no good; it seems to me that it may give rise to considerable harm.
II
A — Pendent Jurisdiction
68
But the majority, by ruling that an unseaworthiness claim for which statutory jurisdiction exists only in admiralty may not be tried to a Jones Act jury, has chosen to consider the issue of jury trial to be a jurisdictional issue which it resolved by finding pendent jurisdiction of the admiralty count on the law side of the federal court. I cannot agree with the application of this doctrine to sustain jurisdiction in a federal law court over a count for which there is federal jurisdiction in a federal court of admiralty, even if the result in cases such as these will not be to work an increase of federal jurisdiction at the expense of the state courts.
69
The origin of the concept of pendent jurisdiction was, as the majority notes, the serious problems of judicial administration which resulted from the existence of separate federal and state claims for the same injury. If the state claim could not be tried in a federal court when substantially identical federal claims were tried there, in many cases there would have been a complete duplication of the effort of litigation in the state courts. The alternative to such duplication would have been an untoward extension of the doctrine of res judicata to require the plaintiff to forego his state claim if he litigated and lost in the federal courts, despite the fact that the federal courts never purported to have jurisdiction of the state claim. Hurn v. Oursler, 1933, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148, was the basic solution to the dilemma, and the bedrock on which it rested was that without "pendent" jurisdiction the state claim could not have been tried at all in the federal forum.
70
Furthermore, the Hurn rationale arises in an area which is not practically susceptible of legislative control except by occasional intervention in areas in which the federal-state overlap is very frequent. See 28 U.S.C. § 1338(b) (1952). It has been noted that the very fact that a Constitutional barrier to the Hurn doctrine might have been thought to exist indicates the strength of the doctrine and its ability to overcome the relatively minor non-constitutional issue presented here. Jenkins v. Roderick, D.C. D.Mass.1957, 156 F.Supp. 299, 301. But the issue of jurisdiction with which the court believes itself to be confronted here is plainly within easy legislative grasp, as we so forcefully noted in Paduano v. Yamashita Kisen Kabushiki Kaisha, 2 Cir., 1955, 221 F.2d 615. Moreover the problem is one which exists wholly within the framework of the federal courts, and which is amenable to solution by the simple device either of joint trial, or gradual evolution of the doctrine of res judicata. If it does appear that the Congress has not vested jurisdiction of these claims in the federal law courts, it is not the function of those courts to invent a new basis of jurisdiction.
71
Finally, the majority's resort to pendent jurisdiction is least satisfactory when it rests frankly on its only sound basis, viz., that it is desirable to avoid what would be difficult problems of res judicata if separate trials were held, or if joint trial to court and jury separately were the rule. It seems to me that no conceivable adaptation of the pendent jurisdiction rationale could cope with the situation presented when a plaintiff who does not possess diversity from the defendant now pleads a Jones Act count at law and demands a jury, and pleads his unseaworthiness count by a libel in rem and in personam in admiralty. Assuming that the actions are consolidated for purposes of trial, the court's present logic requires that the count in admiralty, where the jury may not intrude, be tried to the court without a jury, since the claim is in admiralty and since "pendent jurisdiction" could hardly be thought to have destroyed that traditional basis of jurisdiction.
72
I believe, however, that the court would find the considerations of convenience sufficiently compelling to reach the result of joint trial to the jury in such a case. It could do so of course by applying the Baltimore17 rule to require that the unseaworthiness count be pleaded at law or lost. But this would merely be an oblique way of holding that the "election" provided by the Jones Act includes both counts, and that they may not be divided, which merely states what I have already suggested, that the Jones Act provides an affirmative basis of jurisdiction of the unseaworthiness count at law. Or the court might hold that, although pleaded in admiralty, the count may nevertheless be tried to a jury because it is tried with the Jones Act count, which is simply to state, as I have alternatively suggested, that claims properly pleaded in admiralty may, in an appropriate and limited class of cases, be tried to a jury. Thus resort to "pendent jurisdiction" is unnecessary.
B — Jurisdiction Under 28 U.S.C. § 1331
73
Finally, I believe that the majority's decision that there is pendent jurisdiction of the maritime claim on the law side of the federal court is in conflict with our decision in Paduano v. Yamashita Kisen Kabushiki Kaisha, supra, which Judge Medina reaffirms but distinguishes by confining it to its facts. In Paduano we held that an unseaworthiness count brought on the law side of a federal court did not fall within the jurisdictional requirements of 28 U.S.C. § 1331. In the absence of diversity of citizenship, and since, as the majority here points out, no one asked us to permit a transfer to the admiralty docket, we dismissed the action.
74
We gave two reasons for the result we then reached.18 The first of these was that maritime matters do not fall within the rationale which apparently gave rise to § 1331, viz., that there ought to be a federal forum of first instance for the vindication of federal rights. Since as to maritime matters there has since 1789 been separate federal jurisdiction in admiralty, no extension of jurisdiction at law was necessary to assure litigants of a federal forum. The second reason given was that whereas the Congress has seen fit to use special statutory grants when it desired to modify the prerogatives of admiralty, as by the provision of jury trial for certain maritime matters, it has made no such grant with regard to unseaworthiness claims.
75
Thus the foundation of Paduano was that the federal courts of admiralty have since the first Judiciary Act provided an adequate federal forum for the proper trial of all maritime matters, and that in the absence of express congressional intervention the courts themselves would not be the innovators of a novel jurisdiction. Yet the majority now holds that despite the fact that the unseaworthiness claim could have been pleaded and tried to a federal admiralty court a novel jurisdiction at law is appropriate solely because of the desirability of jury trial for which it believes the Congress has not otherwise provided. I think that the two views cannot be reconciled.
76
It is of course true that to hold, as I have alternatively suggested, that the adjective law of admiralty may in these cases be judicially developed is itself inconsistent with our emphasis in Paduano on congressional control of such matters. But this conflict is surely less fundamental than that created by the court's resort to a novel jurisdiction.
77
Furthermore, the conflict of this decision with Paduano is more than merely theoretical. The result will be a nearly total abandonment of Paduano. It will be a simple matter for all plaintiffs who now desire a jury trial to plead both an unseaworthiness count and its related Jones Act count in every case.19 The cases will be few if any in which it will be possible to say that the Jones Act claim is so frivolous as to be unable to support the "pendent" claim and take it to the jury.
78
Thus it seems to me that the majority has for all practical purposes abandoned without discussion the substance of the jurisdictional grounds used to support the decision in Paduano, while it has used as its justification here a doubtful proposition of federal power.
79
It seems to me both unnecessary and most unfortunate that we give further support to the vague and troublesome doctrine of pendent jurisdiction. It is a highly salutary principle that the federal courts may not assume jurisdiction unless jurisdiction has been unequivocally and constitutionally conferred upon them by an act of the Congress. At a time when much is said and written about the desirability of curtailing federal jurisdiction and when the Congress has but recently enacted legislation toward that end, 28 U.S.C. § 1332, as amended 72 Stat. 415 (1958), we should not look the other way.
Notes:
1
On these facts we need not consider the availability of jurisdiction under other federal statutes. See, e. g., Lykes Bros. S.S. Co. v. Grubaugh, 5 Cir., 1942, 128 F.2d 387; McDonald v. Cape Cod Trawling Corp., D.C.D.Mass.1947, 71 F.Supp. 888
2
See, e. g., McCarthy v. American Eastern Corp., 3 Cir., 1949, 175 F.2d 724, 726, 727; Balado v. Lykes Bros. S.S. Co., 2 Cir., 1950, 179 F.2d 943, 945. These cases rejected the possibility that the Jones Act required an "election" between a claim of unseaworthiness and a claim of operating negligence. They construed the "election" affirmatively as providing that "an injured seaman, instead of suing in admiralty, could at his option assert his cause of action at law regardless of diversity * * *" 175 F.2d at page 726. This affirmative construction does not appear to be based on the ground used to reject the alternative construction of the "election," viz., that an election between counts might work an estoppel by judgment. But see Jenkins v. Roderick, D.C.D.Mass.1957, 156 F.Supp. 299, 300
3
See, e. g., Doucette v. Vincent, 1 Cir., 1952, 194 F.2d 834; Jordine v. Walling, 3 Cir., 1950, 185 F.2d 662
4
See, e. g., McAllister v. Magnolia Petroleum Co., 1958, 357 U.S. 221, 78 S.Ct. 1201, 2 L.Ed.2d 1272; Cortes v. Baltimore Insular Line, 1932, 287 U.S. 367, 53 S.Ct. 173, 77 L.Ed. 368; Baltimore S.S. Co. v. Phillips, 1927, 274 U.S. 316, 47 S.Ct. 600, 71 L.Ed. 1069
5
41 Stat. 1007 (1920)
6
See S.Rept. 573, H.Rept. 1093, H.Rept. 1102, H.Rept. 1107, 66th Cong., 2d Sess. 1920
7
The doubtful authority of the floor debates suggests that such a presumption should not be applied to the Act's sponsor, Senator Jones. In response to a question directed to the effect on admiralty jurisdiction of another provision of the 1920 amendments, the Senator replied: "I will say to the Senator that this deals very largely with admiralty matters, and I am not familiar with admiralty practice." 59 Cong.Rec., part 7, p. 6992, May 13, 1920. I cite this only to indicate the extent to which the attribution of a presumption of intention to preserve the status quo of admiralty practice may become fictional
8
The earlier cases announcing an absolute liability in actions for cargo damage do not appear to have been thought controlling. See, e. g., The Caledonia, 1895, 157 U.S. 124, 15 S.Ct. 537, 39 L. Ed. 644
9
The circuit courts were divided on the question whether due diligence would satisfy the obligation to provide a seaman with a seaworthy vessel. Compare The Tawmie, 5 Cir., 1936, 80 F.2d 792 and Burton v. Greig, 5 Cir., 1921, 271 F. 271, with The H. A. Scandrett, 2 Cir., 1937, 87 F.2d 708. In The Fullerton, 9 Cir., 1908, 167 F. 1, 8, 11, the court seems to have taken both views
10
Referring to the alleged difference in claims for unseaworthiness and operating negligence the Court used language closely paralleling the Act itself: "In either view, there would be but a single wrongful invasion of a single primary right of the plaintiff, namely, the right of bodily safety * * *" 274 U.S. at page 321, 47 S.Ct. at page 602
11
The Baltimore rule could be applied without undue hardship even in this circumstance, however, by imposing the requirement that an appropriate libel be filed simultaneously in admiralty. Thus it may also be doubted whether the compartmentalized character of the district court's jurisdiction over these claims would, even in the situation supposed, be allowed to overcome the salutary rule of the Baltimore case
12
An alternative possibility suggested by Turcich v. Liberty Corp., 3 Cir., 1954, 217 F.2d 495, 496 should be noted
13
I am aware that a problem of the applicability of the three-year statute of limitations on the Jones Act count for operating negligence to the unseaworthiness count may be raised by this approach. The facts here do not present the problem. It is enough to note that the application of the limitation may not be a necessary result, and, with the opposite emphasis, to point to McAllister v. Magnolia Petroleum Co., 1958, 357 U.S. 221, 78 S.Ct. 1201, 2 L.Ed.2d 1272, with particular reference to the concuring opinion of Mr. Justice Brennan
14
As the court notes, the retention of the maintenance and cure count by the district court was agreed to by both parties
15
It makes this assumption although it does not discuss the applicability of the Seventh Amendment to the unseaworthiness count once it is found to be properly on the law side, and apparently believes that the fact that the claim is "pendent" to a Jones Act count is sufficient ground for trial to a jury of all issues, including application of the definition of unseaworthiness itself. It has been held that the Amendment does not apply because the remedy of "divided" damages for unseaworthiness when the plaintiff is contributorily negligent, prescribed as a matter of federal law for unseaworthiness actions, Pope & Talbot, Inc. v. Hawn, 1953, 346 U.S. 406, 74 S. Ct. 202, 98 L.Ed. 143, is not a "common law" remedy. Jenkins v. Roderick, D.C.D.Mass.1957, 156 F.Supp. 299, 302-304. The difficulty with this suggestion is that it would undermine the basis of federal jurisdiction at law since if the action is not one for a "common law" remedy it is not "saved" by the saving clause, 28 U.S.C. § 1333(1) (1952), and is exclusively for the federal admiralty courts. See 71 Harv.L.Rev. 1359, 1362 (1958). Furthermore, even if this objection were overcome by assuming a difference in meaning for the words "common law" as used in the amendment and the saving clause, jury trial would be defeated even for unseaworthiness actions based on the diversity jurisdiction at law, 28 U.S.C. § 1332 (1952). It is difficult to believe that this is a necessary consequence of the holding in Pope & Talbot, supra. It seems more reasonable, if there is any doubt of the applicability of the Seventh Amendment, that the common-law may now be regarded as competent to divide damages in certain cases
16
Whether the unseaworthiness count can be separately pleaded in admiralty when there is a basis for jurisdiction of it at law and the Jones Act count is pleaded at law is a separate question. See note 17, infra
17
If the Jones Act does provide an independent basis of jurisdiction at law, the "election" provided by the Act may require that both claims be pleaded and tried on a single side of the district court
18
Although the case of American Insurance Co. v. Canter, 1828, 1 Pet. 511, 26 U.S. 511, 7 L.Ed. 242, was relied upon for the proposition that the classes of "Cases" over which jurisdiction is enumerated in Article III are historically recognized as separate, it was not suggested that they were ever regarded as exclusive, and therefore reliance on the case was not critical to the result
19
The Paduano case itself, as Judge Medina implies, is not disturbed, since the plaintiff there could not have maintained a colorable action under the Jones Act
| {
"pile_set_name": "FreeLaw"
} |
138 F.3d 955
Barnesv.Reid*
NO. 96-2910
United States Court of Appeals,Eleventh Circuit.
March 12, 1998
Appeal From: M.D.Fla. ,No.9500682CIVT24C
1
Affirmed.
*
Fed.R.App.P. 34(a); 11th Cir.R. 34-3
| {
"pile_set_name": "FreeLaw"
} |
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
02/23/2018 09:13 AM CST
- 970 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
Cite as 298 Neb. 970
Platte R iver Whooping Crane M aintenance
Trust, Inc., appellant, v. H all County
Board of Equalization, appellee.
___ N.W.2d ___
Filed February 9, 2018. No. S-17-389.
1. Taxation: Judgments: Appeal and Error. Appellate courts review
decisions rendered by the Tax Equalization and Review Commission for
errors appearing on the record.
2. Judgments: Appeal and Error. When reviewing a judgment for errors
appearing on the record, an appellate court’s inquiry is whether the deci-
sion conforms to the law, is supported by competent evidence, and is
neither arbitrary, capricious, nor unreasonable.
3. Taxation: Statutes: Appeal and Error. The meaning of a statute is a
question of law, and a reviewing court is obligated to reach its conclu-
sions independent of the determination made by the Tax Equalization
and Review Commission.
4. Taxation: Charities. A tax exemption for charitable use is allowed
because those exemptions benefit the public generally and the orga-
nization performs services which the state is relieved pro tanto from
performing.
Appeal from the Tax Equalization and Review Commission.
Reversed and remanded with directions.
Jordan W. Adam, of Fraser Stryker P.C., L.L.O., for
appellant.
Timothy L. Moll, of Rembolt Ludtke, L.L.P., for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, K elch, and
Funke, JJ.
- 971 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
Cite as 298 Neb. 970
K elch, J.
NATURE OF CASE
The issue presented is whether the Platte River Whooping
Crane Maintenance Trust, Inc. (Crane Trust), is a char-
itable organization within the meaning of Neb. Rev. Stat.
§ 77-202(1)(d) (Cum. Supp. 2014).
BACKGROUND
A pplication for Exemption
The Crane Trust is a nonprofit corporation dedicated to
conserving and protecting the natural habitat for whooping
Cranes, sandhill Cranes, and other migratory birds along the
Platte River in central Nebraska. For the last decade, the
Hall County Board of Equalization (Board) granted a chari-
table tax exemption under § 77-202(1)(d) to various properties
owned by the Crane Trust. In December 2014, the Crane Trust
sought a property tax exemption for six additional parcels
of land (Subject Properties). The Subject Properties consist
of 829.68 acres of land and carry a property tax liability of
approximately $22,000 for 2015, the tax year in question. At
that time, the Board denied the Crane Trust’s application for
a property tax exemption for the Subject Properties. There is
no explanation in the record as to why the Board granted tax
exemption to some of the Crane Trust’s properties, but not to
the Subject Properties.
The Crane Trust appealed to the Nebraska Tax Equalization
and Review Commission (TERC). A hearing was held, dur-
ing which the Crane Trust presented evidence about its edu-
cational efforts, contributions to the scientific community,
and other benefits to the public. The evidence was largely
undisputed.
Evidence Presented at Hearing
The Crane Trust presented evidence showing that its con-
servation efforts benefit the thousands of people who visit
its property each year to observe the crane migration, learn
about the prairie, and interact with nature. The Crane Trust
- 972 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
Cite as 298 Neb. 970
provides free public tours during crane season, and its prop-
erty is open year round at no charge to the public. The Crane
Trust also has a large network of public trails, which are used
by the public for exercise and for an annual cross-country race
for a local high school.
Students, researchers, and scientists from all across the
country visit the Crane Trust to perform scientific research
on the Subject Properties every week. The Crane Trust also
performs research on the land and has published more than 30
articles in the past decade, which are available to the public for
free. Some of the articles come from research that the Crane
Trust performed on the Subject Properties in 2015.
The Crane Trust also provides educational activities to teach
the public about habitat and conservation. It posts informa-
tional signs along its trails and hosts a program for public
schools in which students visit its property every month to
study the plants, wildlife, insects, and habitat with the help of
a Crane Trust biologist.
The evidence also showed that a portion of the Subject
Properties was leased to a farming operation for cattle graz-
ing, for which the Crane Trust received $9,300. The Crane
Trust’s chief executive officer testified that the lease money
was not distributed to its members, directors, officers, or any-
one else and that the cost of managing the Subject Properties
far exceeded the amount of lease money. The chief executive
officer testified that the cattle grazing was part of the Crane
Trust’s habitat management program—that the grazing and
hoof compaction on the soil provides a natural disturbance on
the grassland that helps promote and sustain different species
on the parcels, cycle nutrients on the prairie, open up the grass-
land for the crane to use, and keep invasive species of plants
at bay.
TERC A ffirms Board’s
Denial of Exemption
Following the hearing, TERC affirmed the Board’s deci-
sion to deny tax exemption to the Subject Properties. It stated
- 973 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
Cite as 298 Neb. 970
that the issue was whether the term “charitable organization”
in the relevant statute was broad enough to include an orga-
nization devoted to protecting natural habitat. It concluded
that although the Crane Trust provides educational, scientific,
and recreational benefits to the public, Nebraska courts have
limited charitable exemptions to “traditional charitable enter-
prises providing relief [to] the poor and distressed.” Therefore,
it concluded that the policy question of whether to expand
the definition to include conservation efforts must be left to
the Legislature.
TERC found that the Crane Trust provided some level of
mental, social, and physical benefits to the public, but ulti-
mately determined that it was not a charitable organization
because § 77-202(1)(d) has never been applied to conservation
groups or activities.
The Crane Trust now appeals from TERC’s decision.
ASSIGNMENT OF ERROR
The Crane Trust assigns that TERC erred in affirming
the Board’s decision to deny tax exemption for the Subject
Properties for the 2015 tax year.
STANDARD OF REVIEW
[1-3] Appellate courts review decisions rendered by TERC
for errors appearing on the record.1 When reviewing a judg-
ment for errors appearing on the record, an appellate court’s
inquiry is whether the decision conforms to the law, is sup-
ported by competent evidence, and is neither arbitrary, capri-
cious, nor unreasonable.2 The meaning of a statute is a ques-
tion of law, and a reviewing court is obligated to reach its
conclusions independent of the determination made by the Tax
Equalization and Review Commission.3
1
Cain v. Custer Cty. Bd. of Equal., 291 Neb. 730, 868 N.W.2d 334 (2015).
2
Id.
3
Creighton St. Joseph Hosp. v. Tax Eq. & Rev. Comm., 260 Neb. 905, 620
N.W.2d 90 (2000).
- 974 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
Cite as 298 Neb. 970
ANALYSIS
The Nebraska Constitution authorizes the Legislature to
exempt from taxes “property owned and used exclusively
for educational, religious, charitable, or cemetery purposes,
when such property is not owned or used for financial gain or
profit to either the owner or user.”4 Pursuant to this authority,
the Legislature adopted a statute that exempts from prop-
erty taxes:
Property owned by educational, religious, charitable, or
cemetery organizations, or any organization for the exclu-
sive benefit of any such educational, religious, charitable,
or cemetery organization, and used exclusively for educa-
tional, religious, charitable, or cemetery purposes, when
such property is not (i) owned or used for financial gain
or profit to either the owner or user, (ii) used for the sale
of alcoholic liquors for more than twenty hours per week,
or (iii) owned or used by an organization which discrimi-
nates in membership or employment based on race, color,
or national origin.5
The parties stipulated that the Subject Properties were not
used for the sale of alcohol and were not owned or used by an
organization which discriminates in membership or employ-
ment based on race, color, or national origin. Furthermore, the
Crane Trust applied for exemption as a charitable organization;
it does not argue that it qualifies as an educational, religious, or
cemetery organization. Thus, the issues are limited.
For Crane Trust to be entitled to a property tax exemption
for its six parcels, it must show (1) that the parcels are owned
by a charitable organization; (2) that the parcels are used
exclusively for educational; religious, charitable, or cemetery
purposes; and (3) that the parcels were not owned or used
for financial gain or profit to either the owner or user. TERC
concluded that the Crane Trust failed to show the parcels were
4
Neb. Const. art. VIII, § 2.
5
§ 77-202(1)(d).
- 975 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
Cite as 298 Neb. 970
owned by a charitable organization and thus did not address
the other two requirements.
Nature of Organization
In concluding that the Crane Trust was not a charitable
organization, TERC noted that the Supreme Court has never
held that a conservation group may fit within the definition of
“charitable organization” under § 77-202. While true, we have
also never considered it.
Section 77-202(1)(d) provides that a “charitable organiza-
tion means an organization operated exclusively for the pur-
pose of the mental, social, or physical benefit of the public
or an indefinite number of persons.” Applying this statutory
language, TERC acknowledged that the Crane Trust’s conser-
vation efforts provided mental, social, and physical benefits
to the public, but concluded, without explanation, that the
Subject Properties were not operated exclusively for those
purposes.
We conclude that TERC’s finding that the Crane Trust did
not operate exclusively for the public’s benefit is not supported
by the evidence. The term “exclusively” means the primary
or dominant use of the property is controlling in determining
whether the property is exempt from taxation.6 And as TERC
noted, the Crane Trust adduced considerable evidence of its
efforts to provide educational, scientific, and recreational ben-
efits to the general public. The evidence shows that the Crane
Trust’s efforts to protect the natural habitat for migratory birds
ensures that the public can continue to enjoy and learn about
that habitat and birds and wildlife thereon.
Additionally, the evidence shows that the Crane Trust is
engaged in numerous endeavors to educate the public about the
habitat, the wildlife on the habitat, and conservation in general.
The Crane Trust’s land, including the Subject Properties, is
6
See Fort Calhoun Bapt. Ch. v. Washington Cty. Bd. of Eq., 277 Neb. 25,
759 N.W.2d 475 (2009).
- 976 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
Cite as 298 Neb. 970
also open for and subject to scientific study. While the Board
argues that the evidence discussed in this paragraph is irrel-
evant, because the Crane Trust is not applying for exemption as
an educational organization, we disagree. We find this evidence
relevant to whether the Crane Trust is providing a mental ben-
efit to the public. “‘[M]ental’” means “‘intellectual,’” which in
turn means, among other things, “‘engaged in creative literary,
artistic, or scientific labor.’”7
After reviewing the evidence, we conclude that the Crane
Trust operated exclusively for the purpose of the mental,
social, or physical benefit of the public.
[4] TERC found, and the Board argues, that the Legislature
did not intend for conservation groups to be considered a
“charitable organization” under § 77-202(1)(d). Although we
appreciate TERC’s deference to the Legislature, we respect-
fully disagree. A tax exemption for charitable use is allowed
because those exemptions benefit the public generally and the
organization performs services which the state is relieved pro
tanto from performing.8 In Neb. Rev. Stat. § 37-803 (Reissue
2016) of the Nongame and Endangered Species Conservation
Act, the Legislature declared that the “state shall assist in the
protection of [certain] species of wildlife and wild plants which
are determined to be threatened or endangered” and that “it
is the policy of this state to conserve species of wildlife for
human enjoyment” and other purposes. Because the Legislature
views the conservation of endangered species as a policy of the
state, and conservation groups like the Crane Trust relieve the
state of that burden, we conclude that the Legislature intended
for those groups, provided they otherwise meet “charitable
organization” criteria, to be considered “charitable organiza-
tions” under § 77-202(1)(d).
7
Neb. State Bar Found. v. Lancaster Cty. Bd. of Equal., 237 Neb. 1, 15, 465
N.W.2d 111, 120 (1991).
8
Bethesda Found. v. Buffalo Cty. Bd. of Equal., 263 Neb. 454, 640 N.W.2d
398 (2002).
- 977 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
Cite as 298 Neb. 970
Our decision is supported by several other states’ inter-
pretations of similar statutes. For example, in Francis Small
Heritage v. Town of Limington,9 the Maine Supreme Judicial
Court held that a conservation group qualified as a charitable
organization because the organization lessened the burdens
of the government by assisting the state in achieving its con-
servation policy goals. The Maine court concluded that the
Legislature enunciated a strong public policy in favor of con-
servation when it declared in a section of its Natural Resources
Protection Act that the state’s wetlands and wildlife habitat are
“‘resources of state significance’” and that they benefit the
state’s citizens.10
And in Turner v. Trust for Public Land,11 a Florida court
concluded that a conservation group qualified as a charitable
organization because there was “little question that conserva-
tion serves a public purpose” where Florida’s state constitution
provided that it was “‘the policy of the state to conserve and
protect its natural resources and scenic beauty . . . .’” A number
of other states, using rationale similar to that in Francis Small
Heritage and Turner, have also concluded that conservation
organizations may qualify as charitable organizations.12
Use of Subject Properties
In addition to showing that the Subject Properties are owned
by a charitable organization, the Crane Trust must also show
that the Subject Properties are used exclusively for educational,
religious, charitable, or cemetery purposes.13
9
Francis Small Heritage v. Town of Limington, 98 A.3d 1012 (Me. 2014).
10
Id. at 1020.
11
Turner v. Trust for Public Land, 445 So. 2d 1124, 1126 (Fla. App. 1984).
12
See, New England Forestry v. Board of Assessors, 468 Mass. 138, 9
N.E.3d 310 (2014); Pecos River Open Spaces, Inc. v. Cnty. of San Miguel,
2013 NMCA 029, ___ P.3d ___ (2013); Little Miami v. Kinney, 68 Ohio
St. 2d 102, 428 N.E.2d 859 (1981); Mohonk Trust v. Assessors, 47 N.Y.2d
476, 392 N.E.2d 876, 418 N.Y.S.2d 763 (1979).
13
See Lincoln Woman’s Club v. City of Lincoln, 178 Neb. 357, 133 N.W.2d
455 (1965).
- 978 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
Cite as 298 Neb. 970
In this case, the Crane Trust’s status as a charitable organi-
zation and its use of the Subject Properties are closely related
issues. For this reason, the parties largely repeat their argu-
ments or incorporate them by reference. For the same reasons
that we found the Crane Trust qualified as a charitable orga-
nization, we find that the Subject Properties were used exclu-
sively for charitable purposes.
Financial Gain or Profit
Finally, the Crane Trust must show that the Subject
Properties were not owned or used for financial gain or profit
to either the owner or user. The Board argues that the Subject
Properties were used for financial gain or profit solely because
the Crane Trust entered into a lease agreement for cattle graz-
ing with a farming operation for $9,300. However, the fact
that income is generated as a result of an exempt use of the
property does not make the property taxable.14 Property is not
used for financial gain or profit to either the owner or user if
no part of the income from the property is distributed to the
owners, users, members, directors, or officers, or to private
individuals.15
Here, the evidence showed that the lease money was not
distributed to its owners, users, members, directors, officers,
or anyone else, and that the cost of managing the Subject
Properties far exceeded the amount of lease money. Although
there was some evidence that the cattle grazing furthered the
Crane Trust’s habitat management program, even if it did not,
the use of the land for cattle grazing was incidental to the
Crane Trust’s primary purpose of conserving and protecting the
natural habitat for migratory birds and wildlife for the public’s
benefit. We therefore conclude that the Subject Properties were
not owned or used for financial gain or profit to either the
owner or user.
14
Neb. Unit. Meth. Ch. v. Scotts Bluff Cty. Bd. of Equal., 243 Neb. 412, 499
N.W.2d 543 (1993).
15
Fort Calhoun Bapt. Ch., supra note 6.
- 979 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
Cite as 298 Neb. 970
Because the Subject Properties meet the requirements for a
charitable tax exemption under § 77-202(1)(d), we conclude
that they are entitled to exemption for the tax year in question.
We therefore reverse TERC’s decision and remand the cause
for an order in accordance with this opinion.
CONCLUSION
For the reasons set forth above, we reverse TERC’s deci-
sion and remand the cause for TERC to enter an order that
the Subject Properties are entitled to a property tax exemption
under the provisions of § 77-202(1)(d).
R eversed and remanded with directions.
Wright, J., not participating.
Cassel, J., dissents.
| {
"pile_set_name": "FreeLaw"
} |
39 F.2d 528 (1930)
BANKERS' RESERVE LIFE CO.
v.
MATTHEWS et al.
No. 8670.
Circuit Court of Appeals, Eighth Circuit.
February 20, 1930.
*529 W. P. Strait, of Morrillton, Ark., for appellant.
John G. Moore, of Morrillton, Ark., and G. B. Colvin, of Perry, Ark., for appellees.
Before STONE and GARDNER, Circuit Judges, and MILLER, District Judge.
STONE, Circuit Judge.
A suit was filed by Minerva C. Matthews and another by Minerva C. Matthews and H. A. Thedford (administrator of George Henry Thedford) on two life insurance policies for $5,000 each. Mrs. Matthews was the beneficiary under one of these policies, and Mrs. Matthews and the estate were the beneficiaries under the other. These cases were consolidated for trial. From judgments upon verdicts favoring recovery, the defendant brings this appeal.
Three issues are argued here: First, that the contracts were void as wagering contracts; second, that certain statements in the application upon which the policies were based were warranties and untrue; third, that, if such statements were representations instead of warranties, they were false to the knowledge of the applicant at the time made.
I. Appellant's first contention is that these policies are void as wagering contracts. The application was by insured (George Henry Thedford) for a single policy of $5,000. When the agent forwarded this application to the company, he suggested, without the knowledge of any one else, that an additional policy for $5,000 be sent him. This was done, and the additional policy was accepted by the insured. As originally issued, both policies were to the estate of insured. Shortly after delivery of the two policies, changes in beneficiary were made so that the original policy was changed so as to be to the benefit of the estate for $2,000 and to Minerva C. Matthews for $3,000, and the additional policy changed to Minerva C. Matthews for the entire amount $5,000. Appellant makes three successive alternative contentions: First, that both policies are void as wagering contracts; second, that the additional policy, and so much of the original policy as is for the benefit of Mrs. Matthews, are void for the same reason; third, that the additional policy is void for like reason.
An insurance contract originally made for the benefit of one not having an "insurable interest" in the life insured is void as against public policy. Grigsby v. Russell, 222 U. S. 149, 154, 32 S. Ct. 58, 56 L. Ed. 133, 36 L. R. A. (N. S.) 642, Ann. Cas. 1913B, 863; Crotty v. Union Mutual Life Ins. Co., 144 U. S. 621, 623, 12 S. Ct. 749, 36 L. Ed. 566; Warnock v. Davis, 104 U. S. 775, 779, 26 L. Ed. 924; Cammack v. Lewis, 15 Wall. 643, 647, 21 L. Ed. 244; Conn. Mut. L. Ins. Co. v. Schaefer, 94 U. S. 457, 460, 24 L. Ed. 251; Gordon v. Ware Nat. Bank, 132 F. 444, 445, 67 L. R. A. 550, this court. Obviously this rule could be easily evaded if the courts looked solely to the beneficiary in the policy as issued, because there could be an immediate assignment thereof to one having no insurable interest, but for whose benefit the policy was intentionally taken out. On the other hand, it is highly desirable that life insurance policies (which are in all respects valid) should be broadly assignable by the one having such right to assign. Therefore, the rule is that "any person has a right to procure an insurance on his own life and to assign it to another provided it be not done by way of cover for a wager policy." Ætna Life Ins. Co. v. France, 94 U. S. 561, 564, 24 L. Ed. 287. Also see Midland National Bank v. Dakota L. Ins. Co., 277 U. S. 346, 350, 48 S. Ct. 532, 72 L. Ed. 911; Grigsby v. Russell, 222 U. S. 149, 155, 32 S. Ct. 58, 56 L. Ed. 133, 36 L. R. A. (N. S.) 642, Ann. Cas. 1913B, 863; Mutual L. Ins. Co. v. Armstrong, 117 U. S. 591, 597, 6 S. Ct. 877, 29 L. Ed. 997; Gordon v. Ware Nat. Bank, 132 F. 444, 446, 67 L. R. A. 550 (this court). In short, the test is the good faith in taking out the policy for the benefit of one having an insurable interest. The crux is whether the policy was a wagering contract at the time it became effective as a contract. If, at that time, such assignment was contemplated by the insured, it is a wagering contract, otherwise it is not.
Both of these policies were originally issued payable to the estate of insured and "a person has an insurable interest in his own life for the benefit of his estate." Central Nat. Bank of Washington v. Hume, 128 U. S. 195, 204, 9 S. Ct. 41, 44, 32 L. Ed. 370. Later, assignments were made of one policy and a portion of the other to Mrs. Matthews, who was a first cousin of the insured, not dependent upon him nor a creditor, and therefore having no insurable interest in the life of insured. Therefore, the question here is whether this insured, at the time these policies became contracts, contemplated assignment to Mrs. Matthews. This is a question of fact. This question was submitted to the jury, which held against appellant. The matter for our determination is the sufficiency of the evidence to justify such submission.
*530 The two policies were on the life of George Henry Thedford for $5,000 each. The application was for one policy for $5,000. An additional policy for $5,000 was requested by the insurance agent (T. C. Scroggin) when he sent in the application. Both policies were delivered, accepted, and premiums ($170.05 each) paid thereon for the first year. The application is dated August 8, 1927. The medical examination was on August 11, 1927. The policy is dated August 19, 1927.
The application named the "Estate" of insured as beneficiary, and both policies were so issued. Requests for change in beneficiary were executed, as of September 6, 1927, on blanks furnished by the company. As to the policy issued on the application, the change was $2,000 to the estate of insured and $3,000 to Minerva C. Matthews. As to the additional policy, Minerva C. Matthews was made sole beneficiary. In each request the unconditional right to make further change in beneficiary was expressly reserved to the insured. The policies were sent to the appellant with these requests; the requested changes were made as of September 12, 1927, and the policies returned. The insured died on January 11, 1928.
The beneficiary, Minerva C. Matthews, was the first cousin of the insured and the wife of Dr. J. M. Matthews. Mrs. Matthews had nothing to do with the procuring of this insurance, the payment of the premiums, nor the change in beneficiaries, and was not, therefore, a witness. Dr. Matthews paid out the money for the first premiums, and had to do with procuring the insurance and with the change in beneficiary. The truth of his testimony is really the center of the controversy concerning this issue of whether the policies were wagering contracts. All of the other evidence upon that issue is aimed either at confirming or at denying his story. Therefore, the importance of stating that story.
A summary of his testimony is as follows: At the time here involved he was fifty-one years old and had been a practicing physician for many years, and was then located at Morrilton, Ark. He had been married about 25 years. He had known the insured about 28 years. The insured (an orphan) had been raised in the family with Mrs. Matthews by her father, who was his uncle. Insured was a tenant farmer of no means, and Dr. Matthews assisted him financially at times whenever insured sought such. Insured lived about twenty-two miles from Morrilton on a rented farm a few miles from Perryville. On the afternoon of August 8, 1927, Dr. Matthews drove up to his office, parked his car in front of a restaurant, "and George Thedford happened to be standing there." After a few minutes conversation, Thedford said:
"`Doctor, I would like to have some insurance.' I says: `Haven't you got insurance?' and he says: `No, I have let it lapse.' I knew he had had some before, but did not know he had let it lapse, and he says: `I would like to have some insurance.' At that time, just at that time I looked around and T. C. Scroggins, an agent of the Bankers Reserve Life Insurance Company, who lived at Morrilton, happened to be walking on the other side of the street, and I said `There is an agent now, George, see him if you want some insurance.' So I hailed Scroggin and called him across the street, and told him: `Scroggins, here is Mr. Thedford, a man who would likely be interested in some insurance.' And I left them and went to my office."
Later that day, or the next day, he learned, either from Thedford or Scroggin, that an application had been made for $5,000 of insurance. He had not discussed the matter either with Thedford or Scroggin prior to that time. The next he heard of it was on August 11, when Thedford came for his medical examination. Although he was an examining physician for appellant, the rules forbade him to examine relatives by blood or marriage, so he took Thedford up to the office of Dr. Bradley, in the same building, introduced them, and immediately left. He knew nothing more about the matter until Scroggin called him over the phone, "and asked me when I reckoned I would be going to Perry County, and when I would see George Thedford, and I says: `I don't know, possibly in a day or so,' but I says: `I don't know,' and he says: `I have his policy, insurance policy for five thousand dollars.'"
He knew nothing about the additional policy for $5,000 until Scroggin called him up and said the policies had come. The next morning he saw Thedford on the street and "apprised him of the fact the insurance had come and that he had an extra five thousand dollars policy. * * * He seemed to be pleased that he had the extra policy and wanted to take them both. I suggested to him that possibly he would get more insurance than he would be able to carry, and asked him if he didn't think five thousand dollars was all he was able to carry, and he insisted he thought he could carry the two policies and cited as a reason his boys were getting large enough to do a man's work, *531 his wife did as much work as he did, and he was getting on his feet a little better in a financial way, he had made a good crop the year before and had prospects for this year, and he says, `I don't see why I can't pay that. If I don't get a little insurance I will never have anything,' and he says `I would like to take both policies.' And then he asked me to go on his note; he wanted me to help him. He didn't think I had any money, but did think I would go on his note to secure the money to meet this premium."
Dr. Matthews did not go on a note, but loaned Thedford the money.
"I told him, I says: `George, let me ' I agreed to let him have the money I says: `Let me make this settlement with Scroggins, because Scroggins owes me an account and' I says `I think I can collect it.' I says: `Let me make the settlement with Scroggins and enable me to collect what he owes me.'"
Thedford agreed to this, and Dr. Matthews paid the premiums, less his account, to Scroggin, who turned over to him the policies to be delivered by him to Thedford, and also an acceptance receipt for the additional policy, which was to be signed by Thedford. This was about August 25. The policies were given Dr. Matthews in the morning at his office, and that afternoon Thedford came in, and the doctor delivered the policies to him. At that time Dr. Matthews was very busy, and told Thedford he would expect him to give him a note for the premiums he had paid, "and also sign these policies to me until he paid the note." Dr. Matthews never saw the policies again until September 6. A few days after delivering the policies to Thedford, he came up to Dr. Matthews' office and said "Dock I don't want to assign these policies to you. I have decided " At this point an objection was made to stating what Thedford said, and was sustained; whereupon an offer was made to prove that Thedford "said he did not want to make an assignment, but did offer to change the beneficiary or make Minerva C. Matthews the beneficiary to the extent of eight thousand dollars." This agreement to substitute change of beneficiary for assignment of the policies was made the latter part of August. Dr. Matthews then "went to Mr. Scroggins and asked him if it, if this change of beneficiary could be made without avoiding the policy, or whether a cousin was eligible or not, and he told me that she was, and I said In that case order a change of beneficiary form or blanks."
So far as he knows, the beneficiary change blanks were received from the appellant by Scroggin on September 6. On that day he was going over to see Irwin Brown, a tenant on Thedford's farm, who had cut his foot with an ax. He took Charles C. Eddy (a lawyer and notary living at Morrilton) with him in his car in order to have the acknowledgment on the change of beneficiary blanks executed. "I was going over to see Brown, and incidentally took these change of beneficiary blanks along, and had George sign them, and also sign the acceptance receipt for the policy as I had failed to have him sign it the day I delivered it to him; he had not paid the premium. I forgot to have him sign it that day, and so that day I had him sign that also. I also had him sign the note that I had drawed up for him for the amount of this premium I had loaned him, and it all took place on September 6th."
Dr. Matthews then took the policies, signed receipt and beneficiary change papers, and delivered them to Scroggin to be sent to the appellant for indorsement of change upon the policies. The date (September 6) was filled in on the receipt by Scroggin when the executed papers were returned to him, upon the doctor's statement. The policies were indorsed at the home office and returned to Scroggin, who turned them over to Dr. Matthews who retained possession of them. The note given on September 6 had covered the amount paid for the premiums and an additional debt due from Thedford. On December 10 Thedford came over to Morrilton and wanted a loan of $50 to go to see his brother in Texas. The loan was made. A new note was made at that time to cover this loan, a small account for "illness the first of November" and the former note (of September 6) and the earlier note destroyed. He filed this note (of December 10) in the administration of Thedford's estate. At that time (December 10) he gave Thedford a receipt reading:
"Morrilton, Ark. Dec. 10, 1927.
"R Recd of G. H. Thedford a promissory note of even date for $487.50 which settles everything to date.
"J. M. Matthews, M. D."
With one exception, Thedford had always repaid loans, and he expected him to pay this note. Dr. Matthews specifically denied there was any thought of a future change of beneficiary when the policies were taken out, delivered, or the premiums paid.
The above story of Dr. Matthews was not shaken on his cross-examination. The evidence of Dr. Bradley, Scroggin, Eddy, H. A. Thedford, and (in one respect) Walter G. *532 Preston supports this story, while that of Mrs. Thedford, the widow, and E. E. Peel contradicts it.
The testimony of Dr. Bradley, who made the medical examination, is that Dr. Matthews brought Thedford to his office. Matthews remained: "Just a minute, or just a second, I was doing a little work at the time he came in and he said I want to introduce you to Mr. Thedford, and says, I want you to examine him for life insurance. And I said all right, and I said sit down there and Dr. Matthews left and I finished up the work I was doing and started the examination."
He did not know when Matthews found out he had passed Thedford as a proper risk and does not think Matthews called him up about it soon afterward.
Scroggin, the agent of appellant who took the application, testified as follows: On August 8th he was walking along the street when Dr. Matthews called him across the street, to where he and Thedford were talking on the running board of a car.
"Dr. J. M. Matthews introduced me to Mr. Thedford and said that he would probably be interested in some life insurance. And Dr. Matthews left then and I talked over the proposition of selling Mr. Thedford some insurance. And the best I remember, Mr. Thedford had a policy with him in some company I don't recall the name of the company or the amount. He had let it lapse and he was thinking of taking some more insurance. I talked over the proposition of selling him $5,000.00 of ordinary life, and finally he agreed to take it. I wrote the application for the $5,000.00, and told him to go to Dr. A. R. Bradley to be examined, and I went with him. I immediately left then and went to my office.
"Q. Were you present at the time the examination was made? A. No. I went to my office, which was then over Mr. Riddick's store, and fixed up the application. There was a space on the application blank for ordering extra policies, and I told the Company to send an extra $5,000.00 of the same kind and amount. And that I would try to deliver it."
Also:
"Q. Just state how you made the delivery and what happened at that time. A. Well, when the policies came to me through the mail, I happened to be in Dr. J. M. Matthews' office, or passing, and I told him the Thedford policies had come in. And he says `all right, you can just let me have them'; the best I remember, `and I will see they are delivered.' And he paid me the premium at that time.
"Q. How did Dr. Matthews pay you the premium by check? A. No, in money currency. But when I wrote the application for the insurance it was my understanding that Mr. Thedford was to pay me and I gave the company's official receipt, and on the margin I stated `to be paid on delivery of the policies.'
"Q. You mean on the day of the application you gave Thedford a receipt? A. Yes, sir, and marked it `to be paid on delivery of the policies.'
"Q. Was that a receipt for the premium? A. Yes, sir.
"Q. But in the face it showed that it was not paid and was to be paid on receipt of the policies? A. Yes, sir, I do that all the time. I do it in preference to taking notes. I do not take notes from anybody.
"Q. Then in effect, that was a mere statement in writing that it was to be paid at delivery of the policies? A. Yes, sir. * * *
"Q. That is just for one policy? A. $5,000.00. That is what I sold him.
"Q. How came you, at that time, not to make it for both? A. Because I didn't discuss with him taking both.
"Q. Then, you did not know you could deliver two $5,000.00 policies until the return of the policies? A. No. After going to my office and writing the letter of advice and the application, I stated in that space the order for the extra policy. I do that frequently."
He does not "remember sure," but thinks it was "something like a week or two weeks or maybe three weeks" after delivery of the policies to Dr. Matthews that he was approached regarding change in beneficiary. This was by Dr. Matthews, who said "he had been in conversation with Mr. Thedford and he wanted it changed. I said `all right, I will order the change of beneficiary blanks down from the Home Office and fill them out, and he can execute them, and the application for change of beneficiary together with the policies will have to go back to the Company for them to make notations on the back of the policies.' * * * When Dr. Matthews told me Mr. Thedford wanted to change the beneficiary in the policies the first thing for me to do was to write the Company for a change of beneficiary blank, and when those blanks were mailed to me I turned them over to Dr. Matthews properly executed with the exception of the signature of Mr. Thedford, and at that time the policies were turned over *533 to me with these application blanks, and I returned them to the Home Office and they were then returned to me and I gave them to Dr. Matthews."
The extra policy was not ordered either by Dr. Matthews or Thedford. It was "several days" after delivery of the policies to Dr. Matthews and payment of the premiums by him that Dr. Matthews told him Thedford wanted to change the beneficiaries.
Eddy testified as follows: On September 6 Dr. Matthews asked him to go with him to take some acknowledgments. Dr. Matthews was going over to see a man, who lived near Thedford, who had cut his foot with an ax. On cross-examination:
"Q. I will ask you did Dr. Matthews discuss it with you, as you went over there, about the matter any? A. No, sir, don't think anything other than just stated that we were going to a man's farm, that he lived over there said something about going over there to see this man, and talked about insurance, said something about he felt the man had too much insurance, something about it, that is all I recollect about it."
Thedford rode back with them (about five miles) to Perryville. During this trip Thedford said "that the Doctor had always assisted him and that he felt like he could never re-pay them for what they had done for him, that he would always go to Mrs. Matthews and Dr. Matthews when he needed anything, that they would always help him get his loans and things of that nature, that they had always assisted him and he said that he felt that he never could repay them for what they had both done for him along that line."
Also on cross-examination:
"Q. Did he tell you anything about while you were riding together on to Perryville, his original agreement with Dr. Matthews that Dr. Matthews was to pay his premium when he took this insurance out? A. I don't believe he told me I don't remember but I don't believe he did.
"Q. Did he discuss it anywhere in your presence? A. Nothing further than when he signed the affidavit for change of beneficiary
"Q. He did say then he had an original agreement with Dr. Matthews that Dr. Matthews was to pay the premium? A. They talked it over in my presence they talked it over together.
"Q. Was that the substance of what they said? A. They agreed there their conversation was that the agreement was, to the best of my recollection now that they had had this agreement sometime or other that Dr. Matthews was to pay the premiums from then on.
"Q. Well, Dr. Matthews also discussed it with him that he had paid the first? A. There was something understood between them that way. It is just like I stated before, that he signed a note to pay for the premium and some other indebtedness I just don't remember the exact words of their agreement but something to that effect."
They met Thedford, who was walking into Perryville with some eggs and butter which he intended to sell there. Either before or after meeting Thedford they went to the house of the injured man, Brown. Thedford had the policies with him, and said he was going over to Perryville "to have the beneficiary changed over there to Mrs. Matthews, that he was going to sign the affidavit of change of beneficiary." What took place then:
"Well, Dr. Matthews just stopped in his car when we met Mr. Thedford and spoke to Mr. Thedford and we got out of the car and Dr. Matthews told him that the blanks had come, I think he had notified Mr. Thedford, for Mr. Thedford said he knew that they were there, and Dr. Matthews told him that he had brought a Notary Public along with him, that he had just brought the blanks along with him, that it would save him a trip over to Morrilton or to Perryville, something like that, to that effect I don't remember just the exact words, but anyway something to that effect
"Q. Then he understood at that time when you met Mr. Thedford when he met Dr. Matthews and you, why you gathered from the conversation that he understood that Mrs. Matthews was to be made the beneficiary in the policies, to that extent, if any such change was made? A. Yes, sir.
"Q. Then, did they when they first talked about it when they first met, they talked and agreed on that? A. No, sir, I don't believe they did
"Q. Did Dr. Matthews say anything to him then about having paid the premiums? A. He did.
"Q. Did he say something, or did they have any agreement that Dr. Matthews was to pay the premiums for him? A. Yes, sir, I think that it was the agreement between him and Mr. Thedford, that is, to the best of my recollection that they agreed that Dr. Matthews was to keep the premiums paid up from then on.
*534 "Q. Then Dr. Matthews was to, as you understood it from their talk, why Dr. Matthews was to pay the first premium by their agreement? A. Now, Mr. Thedford gave Dr. Matthews a note for that on that day. I understood that the note was to secure the balance due on the premium that Dr. Matthews had paid, and also some other indebtedness, too.
"Q. How much was that note for? A. Well, now, I disremember.
"Q. You have any idea as to how much it was? A. I don't know, no, sir
"Q. Was the note already prepared for him to sign? A. I don't think it was. No, sir, I don't think it was.
"Q. What was said about the execution of the note? A. Well, as I stated before, he said it was to pay for the balance due on the premium as I understood it Dr. Matthews had paid for him up to that time, and also for some other indebtedness, but I don't know how much that was for.
"Q. Have you any idea? A. No, sir, I don't know as I remember it, they were writing the note on the turtle shell, or the back of the car, and I was not concerned in that at all I just recall that they executed that note there that is the best I can recall about it now.
"Q. But you did understand from their conversation, and it was mentioned between them out there, that was the agreement between them, that Dr. Matthews was to pay the first premium for him and had paid it that was the agreement, as you understood it, between Mr. Thedford and Dr. Matthews? A. Yes, sir, he had paid it.
"Q. Mr. Eddy, I will ask you, did you correct the date of the acknowledgment, or jurat to that application and show it to be on September 6th, 1927? A. Well, I knew I did it close on to September 6th now it could have been misdated, but I am just sure that it was on that date.
"Q. But they did discuss in your presence there, about Dr. Matthews' agreement to pay that premium, and that he had paid it? A. Yes, sir.
"Q. Now, did he state how long he had known that Dr. Matthews had this application to change the beneficiary? A. No, sir, he didn't.
"Q. You say he didn't state to you how long he had known that Dr. Matthews had this application to change the beneficiary? A. No, sir, but I did say he already knew it
"Q. Well he knew that it would be there, and that because he knew that it would be in the possession of Dr. Matthews at that time, he said that he had brought them along with him, had brought the policies along with him, was the very reason that Dr. Matthews got you to go along to take the acknowledgment, to get him to sign that application for change of beneficiary? A. I didn't state that I knew Dr. Matthews had them I was speaking about Mr. Scroggin having them."
Dr. Matthews had the beneficiary change blanks with him. He took the acknowledgment of Thedford to the changes in beneficiary. Thedford gave Dr. Matthews the policies to have the change made.
H. A. Thedford testified as follows: He was an uncle of insured and administrator of his estate. The receipt given by Dr. Matthews to Thedford when the note of December 10 was made had been handed to him by the widow of Thedford after his death.
Preston testified as follows: He was vice president of appellant, and had handled these transactions at the home office. The additional policy was not covered by the application, but "was sent down at the request of the agent, to be subject to the acceptance of the applicant," and "the company understood this as being a mere request of the agent to send another policy on approval."
Mrs. Thedford testified as follows: Her husband had told her of taking out the insurance, and: "He told me that Dr. Matthews had had this done and had just worked him into it. He told me Dr. Matthews had had a five thousand dollar policy taken out and $3,000.00 was to be paid to me and $2,000.00 to Dr. Matthews so my husband told me. After this my husband told me Dr. Matthews had taken out $5,000.00 more insurance and made it payable to his wife and my husband said he told Dr. Matthews that this wouldn't work, that he wasn't entitled to insurance and if he could make it work why not take it out in favor of his own wife instead of Dr. Matthews' wife."
She does not remember being told anything regarding payment of premiums.
E. E. Peel testified as follows: As an insurance adjuster investigating this matter he interviewed Dr. Matthews about February 25-27, 1928, five or six weeks after the death of insured. After and while talking with Dr. Matthews, he wrote a statement which the doctor read, initialed each page, and signed. The parts of that statement pertinent to this issue are as follows:
*535 "With reference to his insurance; I will state that my wife, Minerva Matthews, was a first cousin of George H. Thedford; and practically a sister to him; as George Thedford was brought up (an Orphan) by the father of my wife; and they were very affectionate with each other Financially, George Thedford never amounted to very much; largely making a living as a tenant farmer; but my wife and I liked him very much
"Thedford and I were talking about insurance one day, in the summer of 1927; and I learned that he had allowed some policies to lapse, that he formerly held when he stated he would like to carry some other insurance, I told him that could be arranged; and about that time, Agent T. C. Scroggin passed by and I called to him, and told him Thedford wanted a policy I left them talking together, and went away; and later on, I am not certain just how long; I learned from Thedford that he wanted to make Mrs. Matthews (my wife) a beneficiary This was agreeable to me, and I told Thedford I would pay the premiums; and I then went to Scroggins, the agent, and had him secure an additional policy for the same amount. * * *
"The only interest that I have in the Thedford matter can be summed up as follows: I had no part in soliciting the business, or in the examination of this applicant; was not present at any time while he was examined, altho I went with him to the office of Dr. Bradley; but, when I learned that he wanted to name my wife as beneficiary, I was willing to pay the premiums on the policies, and told him so; as I considered it as a good business affair "
On direct examination, Dr. Matthews denied that he had read this statement before signing it, saying that Peel had read it. He denies making certain statements contained therein, and explains others.
If the story of Dr. Matthews is true, these policies were not wagering contracts. That testimony is supported on important points by witnesses who are not interested in the result of this litigation. It is also attacked on important points. There was a clear-cut conflict of evidence on a matter of fact. The court properly left the solution to the jury. The instructions of the court thereon were as favorable to appellant as they should have been.
This issue must be resolved against appellant as to both policies.
II. Appellant contends that the statement of insured as to his physical condition and history, contained in the application, were warranties, and not merely representations. The basis of this contention is "that when the representations, as in the case at bar, are made a part of the policy and contract of insurance, they become warranties as a matter of law." This position is claimed to be supported by two quotations from 14 R. C. L., one from sections 207 and 208 (p. 1027) and the other from section 210 (p. 1030). The only citation of decisions are those in the footnotes to the above quotations. The quotations are as follows:
"The distinction between a representation and a warranty in an insurance contract is, that the former precedes and is not part of the contract, and need be only materially true, while the latter is part of the contract, and must be strictly fulfilled, or the policy is void. Another difference between a warranty and a representation is that a warranty must be strictly true; a representation need only be substantially true. The falsity of a representation may render the contract voidable for fraud; but a noncompliance with a warranty is an express breach of the contract. Although the effect of a breach of a warranty and of a material misrepresentation may be the same on a policy, yet they cannot be confounded together in deciding on pleadings or on a special verdict.
"As stated heretofore, a warranty must appear on the face of a policy, or in another part of it or on another paper so referred to as to become a part of the contract. It is therefore necessary to consider what is a sufficient reference to make a statement a warranty."
"Where a policy in express terms refers to the application or other papers connected with the risk, and adopts them as part of the contract of insurance, they become part of the policy, and warranties."
We will continue the first quotation to include the next following portion of the text, which is as follows:
"Preliminarily it may be said that the courts lean against a construction of a statement by an applicant as a warranty, and unless it is clearly shown by the form of the contract to have been intended by both parties to be a warranty, to be strictly and literally complied with, it will be held to be a representation. But where, taking the whole instrument together, it is obvious that the insurer has made the strict and literal exactness of the answers a condition of the *536 contract of insurance and a warranty on the part of the insured, it cannot be deprived of the advantage thus secured, for it has a legal right to say that it will determine for itself what is or is not material to the risk. In determining whether a statement is a warranty on the part of the assured, the entire policy must be considered, and if, from the whole, it appears that such statement was not intended as a warranty, it will not be so construed; where other statements and stipulations are coupled with an express and specific provision that a violation thereof shall work a forfeiture, it is evidence showing that the parties did not intend the same result from the violation of the statement or stipulation not containing such provision for a forfeiture. The court also may consider the character of the question and its answer, the opportunity of the insurer to guard against the representation in the light of its consequences, or whether it is material to the risk. Where statements are denominated `representations' in a policy, and it would work a hardship to construe them as warranties, the policy not requiring such a construction, they will be held to be representations and not warranties."
The reason of a rule and its place in the law must measure the limits of its application. Insurance policies are purely contractual. So long as the parties thereto do not transgress some rule of public policy (declared by statute or by judicial decision), they may make any insurance contract they desire. Usually, if not universally, such contracts are induced and based upon statements desired by the insurer and made by the insured. The truthfulness of such statements enters into the contract either as an inducement or as a part thereof usually the latter, by expression in the contract. Such statements may be either representations or warranties the difference being that representations must be the honest belief of the insured (although they may, in fact, be untrue), while warranties must be true, irrespective of the honesty of statement. Obviously, the parties may contract that the statements will be treated as representations only or that they will be regarded as warranties. Which of the two is present in a particular contract depends upon the terms of that contract. The contract is to be construed like ordinary contracts. Where there are no expressions in the contract to make clear which the parties intend, the courts are driven to search for other indications of their meaning. It is in this search that the rule relied upon by appellant has arisen. It is to meet that situation, and that alone. It is an indicium of intention which will prevail if better means be not at hand to show intention. Obviously, it was not intended to override all expressions in the contract, no matter how clear. There is no rule nor reason for a rule that parties cannot, as matter of law, make representations a part of the contract without changing them to warranties. No public policy is served by such construction of the rule. Public policy denies such construction because public policy favors freedom of lawful contracts.
These policies expressly make the application "a part of this contract" and part of the consideration for the insurer entering into the contract. They contain a number of "Provisions and Conditions," all of which are expressly made "a part of this contract." The first of these is entitled "Incontestability," and, after stating that "this policy and the application therefor constitute the entire contract," continues in the next paragraph:
"All statements made by the insured shall in the absence of fraud be deemed representations and not warranties, and no such statement shall avoid this Policy unless it is contained in the written application therefor, and a copy of such application is attached hereto when issued."
The application contains the following:
"It is agreed on behalf of myself, and any other person who may have or claim any interest in any policy that may be issued under this application as follows (1) That the answers and statements contained in Part I and Part II, in continuation of and forming a part of this application, shall be a consideration for, and the basis of the contract of the Bankers Reserve Life Company under any policy issued under this application; and the answers and statements printed and written therein by whomsoever made, are represented to be full, complete, and true, and this agreement together with copy of this application, are hereby made part of any contract that may be issued thereon."
From the above, it is clear that the parties intended and declared that the statements in the application should be a part of the contract of insurance. It is equally clear that they intended and declared that such statements should "in the absence of fraud be deemed representations and not warranties." There is no inconsistency in the two intentions and the declarations *537 thereof, and therefore no ambiguity. The meaning being clearly expressed, there is no place for any rule of construction to ascertain the intention of the parties. Under these policies, the statements in the applications are not warranties. They are representations.
Appellant places reliance upon the wording of the acceptance of the additional policy. A part of this is: "He agrees that this shall constitute a binding application for the policy to which it is attached, subject to all the warranties and provisions contained in said original application."
Obviously, the use in such an instrument of the word "warranties" should not be construed to nullify the plain provision to the contrary in the policy itself. Such would be little short of a fraud upon the insured, and certainly that was not the intention of either party.
Being representations, they do not void the contract, even though untrue in fact, provided they were honestly made in the belief by insured that they were true. That is, they must be both untrue and knowingly falsely made by insured. Whether any one of them was both untrue and falsely made is a question of fact to be determined from the evidence.
III. We have carefully read and considered the entire evidence. There is a sharp conflict upon several points relating to the state of insured's health before the application and as to his knowledge thereof at that time. It was a case of conflicting testimony, and properly left to the jury.
The judgments should be, and are, affirmed.
| {
"pile_set_name": "FreeLaw"
} |
735 N.E.2d 325 (2000)
Johnie E. DAVIDSON, Appellant-Petitioner,
v.
STATE of Indiana, Appellee-Respondent.
No. 22A01-0004-PC-116.
Court of Appeals of Indiana.
September 25, 2000.
Rehearing Denied November 13, 2000.
*326 Susan K. Carpenter, Public Defender of Indiana, C. Brent Martin, Deputy Public Defender, Indianapolis, Indiana, Attorneys for Appellant.
Karen M. Freeman-Wilson, Attorney General of Indiana, Timothy W. Beam, Deputy Attorney General, Indianapolis, Indiana, Attorneys for Appellee.
OPINION
BAKER, Judge
Appellant-petitioner Johnie E. Davidson appeals the denial of his petition for post-conviction relief, claiming ineffective assistance of both trial and appellate counsel. Specifically, Davidson claims that he is entitled to relief because trial counsel failed to seek a mandatory severance of unrelated charges which resulted in the imposition of otherwise illegally consecutive sentences. Davidson also asserts that trial counsel was ineffective for failing to object to the trial court's use of impermissible aggravating factors when imposing the sentence and that appellate counsel was ineffective for failing to raise these issues on direct appeal.
FACTS
The facts most favorable to the judgment reveal that Davidson was charged with robbery as a class B felony of the Swifty Food Mart in New Albany which occurred on December 22, 1988. He was also charged with robbery of the Ace Food Mart as a class B felony which took place on December 4, 1988, and for attempted robbery of an individual at gunpoint resulting in serious bodily injury as a class A felony which occurred on January 1, 1989. The State also alleged that Davidson confined that individual and charged him with a class B felony for that offense. Moreover, Davidson was charged with battery of that individual as a class C felony. Finally, Davidson was charged with the attempted robbery of another individual as a class B felony which also occurred on January 1, 1989.
Davidson's counsel did not move to sever the charges and, following a jury trial which commenced on March 13, 1989, Davidson was found guilty on all counts except for the robbery of the Ace Food Mart. Additionally, the jury convicted him of the attempted robbery charge, which occurred on January 1, 1989, as a class B *327 felony and the battery of that individual as a class A misdemeanor.
As a result of these convictions, on April 17, 1989, the trial court sentenced Davidson to the maximum sentence on each count with all time to be served consecutively for an aggregate sentence of eighty-one years. This court affirmed Davidson's convictions on direct appeal in an unpublished memorandum decision. Davidson v. State, 557 N.E.2d 8 (Ind.App. 1990).
On February 25, 1999, Davidson filed an amended petition for post-conviction relief,[1] claiming that trial counsel was ineffective for failing to move for separate trials. Davidson asserted that the trial court would have been prohibited from imposing consecutive sentences for each charge had trial counsel requested severance. R. at 107. Davidson also alleged that he was erroneously sentenced because the trial court considered a number of improper aggravating factors in determining the proper sentence to impose. At a hearing on the petition, Davidson's trial counsel testified that he could not recall whether he considered filing a motion for severance or what the law was concerning a sentencing court's authority to order consecutive sentences at the time of Davidson's trial. Following an evidentiary hearing, the post-conviction court denied Davidson's petition for post-conviction relief on March 14, 2000. Davidson now appeals.
DISCUSSION AND DECISION
I. Standard of Review
Post-conviction procedures do not afford the petitioner with a "super-appeal." Benefiel v. State, 716 N.E.2d 906, 911 (Ind.1999). Instead, these procedures create a narrow remedy for subsequent collateral challenges to convictions which must be based on grounds enumerated in the post-conviction rules. Weatherford v. State, 619 N.E.2d 915, 916-17 (Ind.1993). We will neither reweigh the evidence nor judge the credibility of witnesses. Rather, we will consider only the evidence and the reasonable inferences therefrom supporting the post-conviction court's judgment. Taylor v. State, 717 N.E.2d 90, 92 (Ind. 1999).
We note that when analyzing claims of ineffective assistance of counsel, this court applies the two-pronged standard announced in Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674 (1984). That standard requires Davidson to prove both that counsel's performance was deficient, and that any of those alleged deficiencies prejudiced him. See Williams v. State, 706 N.E.2d 149, 154 (Ind.1999). The petitioner must show that there is a reasonable probability that but for counsel's errors, the result would have been different. Woods v. State, 701 N.E.2d 1208, 1224 (Ind.1998); Smith v. State, 689 N.E.2d 1238, 1243 (Ind. 1997). This court has held that failure to seek automatic severance as a right rises to the level of deficient performance. Wilkerson v. State, 728 N.E.2d 239, 248-49 (Ind.Ct.App.2000).
II. Davidson's Claims
A. Ineffective AssistanceFailure to Move for Severance
Davidson claims that trial counsel was ineffective for failing to move to sever the charges. Specifically, he asserts that prejudice resulted because, at the time of his trial, the court was limited to ordering consecutive sentences to cases that were simultaneously before the court for sentencing. Appellant's brief at 9. Thus, Davidson contends that he is entitled to relief because he could only have received a maximum of forty-one years had the trials been severed.
To resolve this issue, we note at the time of Davidson's trial, IND. CODE § 35-34-1-11(a), the severance statute, provided in relevant part as follows:
*328 Whenever two or more offenses have been joined for trial in the same indictment or information solely on the ground that they are of the same or similar character, the defendant shall have the right to a severance of the offenses.
Here, as pointed out in the FACTS, there were four separate incidents, with four different victims, at four different times at four different locations with no common distinctive nature or mode of operation. Thus, each offense could have been tried without reference to any of the other charges. While the charged offenses involved robberies, they were unrelated in all respects. As the severance statute points out, the defendant has the right to severance of the charges when they are joined solely on the ground that they are of the same or similar character. Thus, the trial court lacked discretion to deny a motion to sever the trial had one been made.
In addition to the provisions set forth in the severance statute, we note that the relevant provisions of the sentencing statute, I.C. § 35-50-1-2,[2] provided as follows:
Except as provided in subsection (b), the court shall determine whether terms of imprisonment shall be served concurrently or consecutively.
(b) If, after being arrested for one (1) crime, a person commits another crime:
(1) before the date the person is discharged from probation, parole or a term of imprisonment imposed for the first crime; or
(2) while the person is released:
(A) Upon the person's own recognizance;
(B) On bond;
the terms of imprisonment for the crimes shall be served consecutively, regardless of the order in which the crimes are tried and sentences are imposed.
Under the terms of the sentencing statute that then existed, our supreme court determined that a trial court may impose consecutive sentences only when it was contemporaneously imposing two or more sentences. Kendrick v. State, 529 N.E.2d 1311, 1312 (Ind.1988); see also Seay v. State, 550 N.E.2d 1284, 1289 (Ind.1990).[3] Thus, in this case, the maximum sentence that Davidson could have received was forty-one years. Specifically, the trial court could have ordered the sentences for the convictions on attempted robbery, confinement and battery regarding the same victim that were committed on January 1, 1989, to run consecutively. However, in light of the provisions of the sentencing statute which applied to Davidson, the sentences imposed on the remaining counts could only have been ordered to run concurrent with the sentences imposed in the January 1 incident. Inasmuch as Davidson's trial counsel was deficient for failing to seek automatic severance, the consecutive sentences that were imposed cannot stand. See Wilkerson, 728 N.E.2d at 248-49.
B. SentencingImpermissible Aggravating Factors
Davidson next contends that he was improperly sentenced. Specifically, he asserts that the sentence must be vacated because the trial court considered a number of improper aggravating circumstances. In support of his claim, Davidson points to the alleged erroneous aggravating factors that the trial court identified: 1) there were multiple offenses; 2) Davidson pointed a gun at the victims; 3) Davidson has displayed bad character because *329 he is a criminal; 4) the normal feelings of the victims; 5) Davidson is in need of correctional or rehabilitative treatment best provided by commitment to a penal facility as it relates to the use of a gun; and 6) a reduced sentence and imposition of probation would depreciate the seriousness of the crime. R. at 1947-52.
To resolve this issue, we initially observe that the trial court has discretion to determine the appropriate sentence, and it may be reversed only if the defendant shows a manifest abuse of discretion. Ford v. State, 704 N.E.2d 457, 461 (Ind. 1998). Additionally, it is within the trial court's discretion to impose enhanced and maximum sentences. Allen v. State, 722 N.E.2d 1246, 1250 (Ind.App.2000). A single aggravating factor may be sufficient to support both the enhancement of a presumptive sentence and the imposition of consecutive sentences. Allen v. State, 720 N.E.2d 707, 716 (Ind.1999). In Thacker v. State, 709 N.E.2d 3, 9 (Ind.1999), our supreme court outlined a trial court's responsibilities when it considers imposing a sentence that deviates from the presumptive sentence authorized by statute:
If a trial court uses aggravating or mitigating circumstances to enhance or reduce the presumptive sentence, or to impose consecutive sentences, it must (1) identify all significant mitigating and aggravating circumstances; (2) state the specific reason why each circumstance is determined to be mitigating or aggravating; and (3) articulate the court's evaluation and balancing of the circumstances.
Inasmuch as only one properly considered aggravating factor may appropriately enhance a sentence or justify the imposition of consecutive sentences, we need not address Davidson's claim that each circumstance cited above was improper. Rather, we note that the trial court in this instance determined that the risk was "extremely high" that Davidson would commit other offenses if he were "allowed to be back in public." R. at 1947-48. Such is a proper aggravating circumstance as found by the trial court. See Staton v. State, 640 N.E.2d 741, 743 (Ind.Ct.App.1994), trans. denied. As the sentencing court is required to consider a defendant's character pursuant to I.C. § 35-38-1-7.1, the trial judge noted that Davidson's "character" displayed extreme self-centeredness, exertion of control over others and absolutely no concern for what could have happened to the victims. Contrary to Davidson's claim, the trial court pointed to more than "the mere fact the defendant committed the crimes of which he was convicted." Appellant's brief at 17. Thus, the trial court's imposition of the maximum sentence which was ordered to run consecutively may stand.
C. Ineffective Assistance of Appellate Counsel
Inasmuch as we have decided that Davidson received the ineffective assistance of trial counsel with respect to the failure to move for severance of the charges, we need not address his contention of ineffective assistance of appellate counsel for failing to raise this issue. Similarly, because Davidson was properly sentenced with respect to the finding of aggravating circumstances, we need not address his argument with respect to appellate counsel's failure to raise this sentencing error.
CONCLUSION
In light of our disposition of the issues set forth above, we conclude that Davidson's trial counsel was ineffective for failing to move for severance of the charges. We note, however, that Davidson was properly sentenced with respect to the finding of valid aggravating circumstances. Inasmuch as Davidson was entitled to severance of the charges as a matter of right, and consecutive sentences could not have been imposed under the sentencing statute as it then existed, we must reverse and remand this case to the trial court with instructions that it vacate the order directing *330 Davidson to serve consecutive sentences. Thus, Davidson may only be ordered to serve an aggregate term of forty-one years.
Reversed in part and remanded with instructions.
SHARPNACK, C.J. and VAIDIK, J., concur.
NOTES
[1] Davidson had filed a pro se petition for post-conviction relief on September 12, 1994.
[2] This statute has been substantially revised and is now codified at I.C. § 35-50-1-2.
[3] Although not applicable to this case as Davidson was sentenced in 1989, the 1994 amendment to I.C. § 35-50-1-2 has overturned the contemporaneity requirement set forth in Kendrick and Seay. See Weaver v. State, 664 N.E.2d 1169, 1170 (Ind.1996); Wilkerson, 728 N.E.2d at 248 n. 2.
| {
"pile_set_name": "FreeLaw"
} |
917 F.Supp. 392 (1996)
BOON PARTNERS, et al., Plaintiffs,
v.
ADVANCED FINANCIAL CONCEPTS, INC., et al., Defendants.
No. 5:95-CV-427-BO(2).
United States District Court, E.D. North Carolina, Western Division.
March 6, 1996.
*393 M. Ryan Dyson, Raleigh, NC, Kevin P. Hopper, Raleigh, NC, for Plaintiffs.
Hayden J. Silver, III, Beverly L. Rubin, Moore & Van Allen, Raleigh, NC, for Defendant Elborne Mitchell.
ORDER
TERRENCE WILLIAM BOYLE, District Judge.
This matter is before the undersigned on defendant Elborne Mitchell's motion to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) and for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). Finding insufficient contacts by defendant with North Carolina or the United States as a whole, the court holds that it may not assert personal jurisdiction over defendant Elborne Mitchell under either the North Carolina long-arm statute or the relevant federal statutes providing for nationwide service of process. Consequently, defendant's Rule 12(b)(2) motion is GRANTED and defendant's Rule 12(b)(6) motion is moot.
*394 This action arises out of plaintiffs' investment of $1 million in a project coordinated by some of defendants. The $1 million was to be used to obtain financing for the purchase of Greek flour mills by defendant Farina Securities, Inc., a Virgin Islands corporation. Plaintiffs' investment or loan purportedly was insured by two insurance bonds issued by defendant International Casualty & Surety Co, Ltd. of New Zealand, to be repaid by reinsurance cover notes issued by Australian insurance companies through a brokerage firm in London, General Risk Management, Ltd. (GRM). The reinsurance was in turn collateralized by 80,000 shares of preferred stock issued by Maxxim Corporation. Plaintiff alleges that the stock and insurance bonds are worthless.
The involvement of defendant Elborne Mitchell, an English firm of solicitors in London, in this matter is limited to two events. First, at the request of defendant Steel Smith Roberts & Lawson Insurance Management (Steele) and its agent GRM, Maurice Lennon, a non-lawyer employed by Elborne Mitchell, certified a copy of a "Binding Authority Agreement" between Steele and the Australian insurance companies and sent it to defendant Pinekenstein in Wisconsin. An accompanying cover letter stated that Elborne Mitchell "certif[ies] that this is a true copy of the original Binding Authority Agreement." Defendant Pinekenstein subsequently used the certified copy and letter in negotiations with plaintiffs. Second, plaintiffs allege that their agent in North Carolina telephoned a third party in Georgia who then patched in Lennon from London. Lennon purportedly advised the other parties that the certified copy was authentic and that the agreement was valid and legally enforceable. Neither Lennon nor Elborne Mitchell was ever retained or compensated by plaintiffs.
After plaintiffs received neither the promised return on their investment nor a refund of their $1 million, they filed this action, alleging multiple violations of North Carolina law, federal securities law, and the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968. In its motion, defendant Elborne Mitchell responds that it is not subject to the court's personal jurisdiction and that plaintiffs fail to state federal securities and RICO claims. Before addressing the latter issue, the court begins with defendant's fundamental challenge based on personal jurisdiction. See Combs v. Bakker, 886 F.2d 673, 675 (4th Cir.1989).
As a preliminary matter, however, the court must address plaintiffs' motion to vacate the clerk's denial of plaintiffs' Rule 6(b)(2) motion for an extension of time in which to respond to defendant's motion. Defendant filed its motion to dismiss on August 4, 1995. Plaintiffs filed their motion for an extension on September 11, 1995, and their response on September 21, 1995, approximately two-and-a-half and four weeks after the due date, respectively. In their motion plaintiffs argued to the clerk that they were unaware of the 20 day response time set forth in Local Rule 4.05 and that defendant's motion should be treated as a motion for summary judgment, permitting them to file a response at any time prior to the hearing. In his order of September 28, 1995, the clerk found that plaintiffs' failure to read the Local Rules did not constitute excusable neglect. Furthermore, the clerk noted that Fed. R.Civ.P. 56(c) establishes a time for filing responsive affidavits, not the response to the motion itself. Consequently, the clerk denied plaintiffs' motion and granted defendant's motion to strike the untimely response.
Pursuant to Local Rule 9.03, the court may suspend, alter, or rescind the clerk's order for "cause shown." Under Rule 6(b)(2) a court may retroactively extend the period for completion of an act where failure to act was the result of "excusable neglect." Fed. R.Civ.P. 6(b)(2); see Lujan v. National Wildlife Federation, 497 U.S. 871, 896, 110 S.Ct. 3177, 3192, 111 L.Ed.2d 695 (1990). A finding of excusable neglect requires circumstances that are "unique or extraordinary." Byrd v. City of Fayetteville, 110 F.R.D. 71, 73-74 (E.D.N.C.1986), aff'd, 819 F.2d 1137, 1987 WL 37522 (4th Cir.1987). The failure "to read and comprehend the plain language of the federal rules" does not constitute excusable neglect. In re Cosmopolitan Aviation Corp., 763 F.2d 507, 515 (2d Cir.), cert. denied sub nom. Rothman v. New York State *395 Dep't of Transp., 474 U.S. 1032, 106 S.Ct. 593, 88 L.Ed.2d 573 (1985). Furthermore, even if the court were to treat defendant's motion to dismiss as a motion for summary judgment, which it does not, plaintiffs' construction of Rule 56(c) is patently erroneous. Accordingly, the court denies plaintiffs' motion to vacate the clerk's order.
The court now returns to consideration of defendant's motion to dismiss for lack of personal jurisdiction. When a court's personal jurisdiction is properly challenged by a Rule 12(b)(2) motion, the issue is a matter of law for the court. Combs, 886 F.2d at 676. The burden of proving jurisdiction by a preponderance of the evidence rests with the plaintiff. Id. In considering a challenge on the basis of motion papers, supporting memoranda, and pleadings, the court must construe any factual allegations in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction. Id. Finally, with respect to plaintiffs' factual allegations, the court considers the allegations as set forth in plaintiffs' proposed amended complaint because, in a separate order, the court grants plaintiffs' motion to amend their complaint.
Personal Jurisdiction: North Carolina Long-Arm Statute
The determination of whether personal jurisdiction exists for plaintiffs' state law claims requires a two-step inquiry. First, the court must look to whether North Carolina's long-arm statute, N.C.Gen.Stat. § 1-75.4, confers jurisdiction. Fed.R.Civ.P. 4(e); Southern Case, Inc. v. Management Recruiters Int'l, Inc., 544 F.Supp. 403, 405 (E.D.N.C. 1982). Attention then turns to federal law for an analysis of whether the exercise of jurisdiction would violate due process of law. Id.
Two provisions of the long-arm statute potentially confer personal jurisdiction over defendant. First, N.C.Gen.Stat. § 1-75.4(1)(d), "Local Presence or Status," provides for jurisdiction over a person "engaged in substantial activity [in North Carolina], whether such activity is wholly interstate, intrastate, or otherwise." Second, N.C.Gen. Stat. § 1-75.4(4)(a), "Local Injury; Foreign Act," provides for jurisdiction "in any action claiming injury to person or property within [North Carolina] arising out of an act or omission outside [North Carolina] by the defendant, provided in addition that at or about the time of the injury ... solicitation or services [sic] activities were carried on within [North Carolina] by or on behalf of the defendant." Because the long-arm statute has been construed to permit the assertion of personal jurisdiction over foreign persons to the full extent allowed by due process under the United States Constitution, Dillon v. Numismatic Funding Corp., 291 N.C. 674, 676, 231 S.E.2d 629 (1977); Southern Case, 544 F.Supp. at 405, the court need only address whether the exercise of personal jurisdiction over defendant would comport with the constitutional standards of due process.
For a defendant to be subject to suit in a forum where it is not physically present, due process demands certain "minimum contacts" with the forum such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Specifically, the defendant's conduct and connection with the forum state must be such that "he should reasonably anticipate being hauled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). There must be some act by which the defendant "purposefully avails [him]self of the privilege of conducting activities within the forum State, thus invoking the benefits and protection of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958).
In the absence of any alleged substantial and continuous contacts with the forum,[1] the court considers whether the two *396 alleged contacts permit the exercise of specific jurisdiction over defendant. Specific jurisdiction arises when a defendant performs an act that is related to the cause of action and sufficiently purposeful in its aim at the forum state. First American, First, Inc. v. National Ass'n of Bank Women, 802 F.2d 1511, 1516 (4th Cir.1986). Because a state has a greater and more legitimate interest in providing a forum for claims based upon conduct causing harm within its borders than for those based on conduct unconnected throughout its course with the forum's territory, the contacts required by due process to support specific jurisdiction need not rise to the level of the "systematic and continuous" contacts required for general jurisdiction. Id.; see Helicopteros, 466 U.S. at 414-15 & nn. 8, 9, 104 S.Ct. at 1872 & nn. 8, 9. Due process simply requires some act related to the claim which is "purposefully directed toward the forum State." Asahi Metal Indus. Co., Ltd. v. Superior Court of California, 480 U.S. 102, 112, 107 S.Ct. 1026, 1032, 94 L.Ed.2d 92 (1987). This requirement guards against the possibility that a defendant will be haled into a forum solely as a result of "random, isolated, or fortuitous" contact. Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S.Ct. 1473, 1478, 79 L.Ed.2d 790 (1984).
Here, defendant's contacts with North Carolina are virtually non-existent. Defendant, an English firm of solicitors in London, (1) has not conducted any business in North Carolina for the past three years; (2) does not receive revenues from any source in North Carolina; (3) does not solicit business in North Carolina; and (4) does not own any assets or property in North Carolina. Furthermore, defendant's partners have not traveled to North Carolina on business during the past three years.
In fact, plaintiffs identify only two contacts by defendant with North Carolina as a basis for jurisdiction. First, plaintiffs allege that defendant's employee, a non-lawyer, drafted and mailed to defendant Pinekenstein in Wisconsin a letter and certified copy of the reinsurance agreement between defendant's client and three Australian reinsurance companies, which was to insure repayment of the loan at issue. Plaintiffs contend that defendant Pinekenstein then provided a copy of that letter and the certified copy of the agreement to plaintiffs. Second, plaintiffs allege that their agent placed a phone call from North Carolina to a third party in Georgia, who then patched in one of defendant's employees from England. During the telephonic conference, defendant's employee purportedly rendered a gratuitous opinion that the reinsurance agreement was valid and enforceable.
The court finds that these contacts are insufficient to support personal jurisdiction over defendant. The alleged contacts, the dispatch of a letter to Wisconsin and the provision of a gratuitous legal opinion over the phone to individuals in Georgia and North Carolina, are so "unique and unsolicited that to sustain jurisdiction would inevitably trench upon the personal liberty the Constitution safeguards." Chung v. NANA Dev. Corp., 783 F.2d 1124, 1126-27 (4th Cir.), cert. denied, 479 U.S. 948, 107 S.Ct. 431, 93 L.Ed.2d 381 (1986). Certainly, the fact that a copy of defendant's letter came to be found in North Carolina after its original dispatch to Wisconsin is inadequate to support jurisdiction. None of the pleadings indicates an intent on the part of defendant to direct its letter to North Carolina via Wisconsin. Similarly, defendant's participation in a single phone conversation after being patched in by a third party does not evince the required purposeful availment including any "prior negotiations [or] contemplated future consequences" within the forum. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 479, 105 S.Ct. 2174, 2185, 85 L.Ed.2d 528 (1985). In fact, the circumstances surrounding each of the contacts suggest an absence of purposefulness on the part of defendant. See Chung, 783 F.2d at 1130 (finding no jurisdiction despite phone calls and single shipment of goods to forum); Glaxo Inc. v. Genpharm Pharmaceuticals, Inc., 796 F.Supp. 872, 877 (E.D.N.C.1992) (finding no jurisdiction where defendant mailed one document to plaintiff in the forum). Consequently, the exercise of personal jurisdiction over defendant pursuant to the North Carolina long-arm statute would *397 not comport with "traditional notions of fair play and substantial justice" as required by the Due Process Clause of the Fourteenth Amendment. International Shoe, 326 U.S. at 316, 66 S.Ct. at 158.
Personal Jurisdiction: Federal Statutes
An alternative basis upon which the court may assert personal jurisdiction is known as the national contacts theory. "Where Congress has authorized nationwide service of process by federal courts under specific federal statutes, so long as the assertion of jurisdiction over the defendant is compatible with due process, the service of process is sufficient to establish the jurisdiction of the federal court over the person of the defendant." Hogue v. Milodon Engineering, Inc., 736 F.2d 989, 991 (4th Cir.1984). Because RICO and the securities statutes authorize nationwide service of process, 18 U.S.C. § 1965(d); 15 U.S.C. §§ 77v(a), 78aa, the national contacts theory is applicable here.
Application of the national contacts theory requires a due process analysis controlled by the Fifth Amendment, rather than the Fourteenth Amendment, because the underlying service of process statute is federal and not state. Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 293-94 (3d Cir.), cert. denied, 474 U.S. 980, 106 S.Ct. 383, 88 L.Ed.2d 336 (1985). Under the Fifth Amendment, due process permits a federal court to assert personal jurisdiction over a defendant who has minimum aggregate contacts with the United States. Stafford v. Briggs, 444 U.S. 527, 553-54, 100 S.Ct. 774, 789-90, 63 L.Ed.2d 1 (1980) (Stewart, J., dissenting); Busch v. Buchman, Buchman & O'Brien, Law Firm, 11 F.3d 1255, 1258 (5th Cir.1994). Unlike the Fourteenth Amendment, the Fifth Amendment does not also require an examination of the fairness of forcing a defendant to litigate in a particular state because the encroachment by one state upon the sovereignty of another is not at issue. Max Daetwyler, 762 F.2d at 294. Moreover, fairness to a defendant can be resolved through application of the federal venue and transfer statutes. See 28 U.S.C. §§ 1391, 1404; Hogue, 736 F.2d at 991.
Assessment of the sufficiency of a defendant's contacts with the United States involves an examination of the extent to which the defendant availed himself of the privileges of American law and the extent to which he could reasonably anticipate being involved in litigation in the United States. Max Daetwyler, 762 F.2d at 295. In light of the absence of any alleged contacts in addition to the letter and unsolicited phone call,[2] the analysis under the national contacts theory does not significantly differ from that above. Even when defendant's dispatch of the letter to Wisconsin is considered as a second contact with the United States, it is clear that defendant's conduct does not meet the threshold requirements for jurisdiction.
Finally, plaintiffs' conclusory allegations of a conspiracy between defendant Elborne Mitchell and other defendants is insufficient to create jurisdiction under the "conspiracy theory of personal jurisdiction," a theory not yet adopted by the Fourth Circuit. See McLaughlin v. McPhail, 707 F.2d 800, 807 (4th Cir.1983). Assuming arguendo the adequacy of the contacts between the United States and the other alleged conspirators, the contacts can not be imputed to defendant because plaintiffs fail to allege sufficient facts in support of their bare allegations of defendant's involvement in the conspiracy. See Chrysler Corp. v. Fedders Corp., 643 F.2d 1229, 1236-37 (6th Cir.), cert. denied, 454 U.S. 893, 102 S.Ct. 388, 70 L.Ed.2d 207 (1981). Thus, assertion of personal jurisdiction over defendant pursuant to the national contacts theory, even in conjunction with the conspiracy theory of jurisdiction, would not comport with due process under the Fifth Amendment.
Conclusion
Accordingly, defendant Elborne Mitchell's motion to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) is GRANTED. All claims against Elborne *398 Mitchell are DISMISSED. Therefore, defendant's Rule 12(b)(6) motion is moot.
NOTES
[1] A court may exercise general jurisdiction over a defendant in a matter unrelated to its contacts with the forum if the aggregate contacts are substantial and continuous. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415 & n. 9, 104 S.Ct. 1868, 1872 & n. 9, 80 L.Ed.2d 404 (1984); Nichols v. G.D. Searle & Co., 991 F.2d 1195, 1199 & n. 2 (4th Cir.1993).
[2] Defendant was served with process in London.
| {
"pile_set_name": "FreeLaw"
} |
No. 11-0799 – State of West Virginia v. Timothy Ray Sutherland
FILED
July 16, 2013
RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
OF WEST VIRGINIA
Benjamin, Chief Justice, concurring, in part, and dissenting, in part:
I agree with the Majority’s decision to affirm Mr. Sutherland’s conviction,
yet the route chosen by the Majority in reaching that conclusion is confused. First, unlike
the Majority, I believe the circuit court was incorrect when it chose not to strike the juror
at issue, Mr. Wong, for cause. Second, I do not understand how the Majority can support
creating new law—syllabus point three in the opinion, overruling syllabus point 8 of
State v. Phillips, 194 W. Va. 569, 461 S.E.2d 75 (1995)—in a discussion that is entirely
obiter dictum. Third, I am concerned about the implications of the new syllabus point on
the efficacy of peremptory strikes.
I. Striking the Juror for Cause
The following exchanges show that Mr. Wong was biased and should have
been struck for cause by the court:
(1) The jury panel was asked the following question: “[Defense Counsel:] . . . Does
anyone think if you intentionally murder someone, you should never leave
prison?” Mr. Wong raised his hand.
(2) Defense counsel followed up on Mr. Wong’s initial response: “[Defense Counsel:]
Mr. Wong, so, if you found Mr. Sutherland guilty of first degree murder, you
1
could not recommend mercy? [Mr. Wong:] No, I just feel if somebody takes a life,
and since you don’t have the death penalty here in West Virginia, that’s where he
ought to stay.”
(3) Defense counsel continued by asking a third question: “[Defense Counsel:] Is
there anyone here who agrees with the saying, ‘An eye for an eye and a tooth for a
tooth?’ Mr. Wong raised his hand.
In total, Mr. Wong responded to three questions posed by defense counsel
dealing with the issue of mercy. Three times Mr. Wong indicated he would be unwilling
to recommend mercy. The Majority insists that Mr. Wong did not make a “clear
statement of bias,” as required by State v. Newcomb, 223 W. Va. 843, 679 S.E.2d 675
(2009), and that further questioning by defense counsel was needed to establish whether
Mr. Wong was indeed able to impartially decide the case. How many different ways can
someone say—unconditionally and unequivocally—that they would not recommend
mercy?
The Majority unsuccessfully compares this case to the facts of State v.
Juntilla, 227 W. Va. 492, 711 S.E.2d 562 (2011). The juror at issue in Juntilla made an
initial statement that was clearly equivocated: “[T]he juror stated that it would be
‘unlikely that I would feel any mercy but I would have to, you know, I would have to hear
the case through.” 227 W. Va. at 499, 711 S.E.2d at 569 (emphasis added). Upon further
questioning, the juror stated,
2
I have to, you know, hear the case. I don’t know if I
could stand here and give that decision at this very time but it
would probably be unlikely that I would feel any mercy but I
would have to, you know, I would have to hear the case
through.
Id. at 499–500, 711 S.E.2d at 569–70 (emphasis added). Again, the Juntilla juror’s
statement was equivocated.
Mr. Wong’s statements were perfectly clear. He did not say, “If somebody
takes a life, prison is where he should probably to stay.” He affirmatively indicated that
he believes that a person who takes a life should stay in prison, and through three
questions, he never made any indication that he could be convinced otherwise. Mr. Wong
made a clear expression of bias and should have been struck by the court for cause.
II. Overruling Phillips
I agree with the Majority’s conclusion that syllabus point 8 of Phillips must
be overruled. The federal and West Virginia constitutions guarantee the right to an
impartial jury, and that is precisely what Mr. Sutherland received. Applying Phillips
would lead to an absurd result. Therefore, I agree that Mr. Sutherland’s conviction should
be affirmed; however, I am disturbed by the path the Majority took in overruling Phillips.
The new syllabus point announced by the Majority is in a section of the
opinion included “for the sake of argument.” The Court has created new law that has no
3
effect on Mr. Sutherland’s conviction. This is obiter dictum. “It is a basic principle of
American jurisprudence that a court cannot gratuitously pronounce what they envisage
the law should be but must limit themselves to rulings in the context of a justiciable case
or controversy.” Teller v. McCoy, 162 W.Va. 367, 396–97, 253 S.E.2d 114, 131 (1978)
(Neely, J., concurring, in part, and dissenting, in part). By creating law that does not have
any effect on the case at bar, the Majority has exceeded its appellate jurisdiction as
granted by Article 8, Section 14 of the Constitution of West Virginia.
Had the Majority correctly found that Mr. Wong should have been struck
for cause by the circuit court, the overruling of Phillips would be legitimate. Instead,
because the new syllabus point created in the opinion is obiter dictum, the validity of the
new syllabus point is doubtful.
III. Prejudice and Peremptory Strikes
I am concerned about the effect the Court’s new syllabus point will have on
the defendant’s statutory right to peremptory strikes. Requiring a showing of prejudice
may place some defendants between “a rock and a hard place”: continuing to allow a
biased juror to sit on the jury in hopes of success on appeal or using a peremptory strike
to correct a court’s error.
The Majority reasons that if a defendant does not wish to use a peremptory
strike to correct a court’s error, the defendant can essentially make a gamble: allow the
4
biased juror to sit on the case with the hopes of obtaining a reversal of the case on appeal.
Unlike the Majority, I do not believe our state and federal constitutions condone or
encourage gambling on a person’s liberty.
I find it more likely that a defendant would choose to strike an offending
juror. In practice, most defendants use all of their peremptory strikes. If a defendant
wished to use all six of his strikes to eliminate jurors who would otherwise not be struck
for cause, but was instead required to use one of those strikes to correct a court’s error—
failing to strike a juror showing clear bias—that defendant has effectively been denied a
peremptory strike. In that case, the jury may contain one juror (or more) whom the
defendant may have wished to strike for a perceived bias, but could not do so because of
the court’s error.
Peremptory strikes originated in English law and arose to prevent a biased
juror from sitting on a jury:
“[I]n criminal cases, or at least in capital ones, there is, in
favorem vitae, allowed to the prisoner an arbitrary and
capricious species of challenge to a certain number of jurors,
without showing any cause at all; which is called a
peremptory challenge: a provision full of that tenderness and
humanity to prisoners, for which our English laws are justly
famous. This is grounded on two reasons.
“1. As every one must be sensible, what sudden impressions
and unaccountable prejudices we are apt to conceive upon the
bare looks and gestures of another; and how necessary it is,
that a prisoner (when put to defend his life) should have a
5
good opinion of his jury, the want of which might totally
disconcert him; the law wills not that he should be tried by
any one man against whom he has conceived a prejudice,
even without being able to assign a reason for such his
dislike.
“2. Because, upon challenges for cause shown, if the reason
assigned prove insufficient to set aside the juror, perhaps the
bare questioning his indifference may sometimes provoke a
resentment; to prevent all ill consequences from which, the
prisoner is still at liberty, if he pleases, peremptorily to set
him aside.”
4 Bl. Comm. 353.
Swain v. Alabama, 380 U.S. 202, 242–243 (1965) (Goldberg, J., dissenting), overruled on
equal protection and racial discrimination grounds by Baston v. Kentucky, 476 U.S. 79
(1986). Historically, peremptory strikes did not exist to correct a court’s errors.
The effective denial of a peremptory strike may result in a person sitting on
the jury, who through his responses to questions, mannerisms, and tone, has shown bias
that would not rise to requiring the court to strike that juror for cause. Nonetheless, that
juror is biased, and peremptory strikes exist so that that juror can be removed from the
jury. I contend that the United States and West Virginia constitutions would require
reversal of a conviction obtained where such a biased juror sits on a jury if a defendant’s
peremptory strike has been effectively denied. However, the Majority’s new syllabus
point requires that prejudice be shown to warrant reversal, and it would be impossible to
prove prejudice in that situation. In this way, I believe the Majority may have
overcorrected the error in Phillips, resulting in the diminishment of the right to
peremptory strikes.
6
| {
"pile_set_name": "FreeLaw"
} |
J-S10034-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
ROBERT ENDRIKAT
Appellant No. 1839 EDA 2014
Appeal from the Judgment of Sentence March 14, 2014
In the Court of Common Pleas of Monroe County
Criminal Division at No(s): CP-45-CR-0000505-2012
BEFORE: GANTMAN, P.J., STABILE, J., and PLATT, J.*
MEMORANDUM BY GANTMAN, P.J.: FILED MAY 05, 2015
Appellant, Robert Endrikat, appeals from the judgment of sentence
entered in the Monroe County Court of Common Pleas, following Appellant’s
jury trial convictions of involuntary deviate sexual intercourse (“IDSI”)—
forcible compulsion, unlawful contact with a minor, corruption of minors,
sexual assault, indecent assault—without consent, and indecent assault—
forcible compulsion.1 We affirm.
The trial court’s opinion sets forth the relevant facts and procedural
history of this case as follows:
____________________________________________
1
18 Pa.C.S.A. §§ 3123(a)(1), 6318(a)(1), 6301(a)(1)(ii), 3124.1,
3126(a)(1), and 3126(a)(2), respectively.
_________________________
*Retired Senior Judge assigned to the Superior Court.
J-S10034-15
On May 21, 2012, the Commonwealth filed the Information
charging [Appellant] with Rape by Forcible Compulsion,
[IDSI], Unlawful Contact with a Minor, Sexual Assault,
Corruption of Minors and Indecent Assault.
On January 15, 2013, [Appellant] filed an Omnibus Motion
challenging the prima facie case. On March 21, 2013, [the
court] held a hearing on the Omnibus Motion. On June 6,
2013, [the court] issued an opinion and order denying
[Appellant’s] Omnibus Motion.
On August 20, 2013, after a trial by jury, [Appellant] was
convicted of all charges with the exception of Rape by
Forcible Compulsion. Trial counsel, an attorney with the
Public Defender’s Office, then filed a petition for withdrawal
after stating that relations with [Appellant] had broken
down. On November 6, 2013, [the] [c]ourt allowed
counsel to withdraw and appointed [new counsel] to act as
counsel for [Appellant].
On December 9, 2013, [the court] granted [Appellant’s]
Motion for Transcripts.
On March 14, 2014, [the court] sentenced [Appellant] to a
term of six years to twelve years on each of the charges of
[IDSI], Unlawful Contact, and Corruption of Minors. All
sentences were to run concurrently. [The court] also
found that the charges of Sexual Assault, Indecent Assault
without Consent and Indecent Assault by Forcible
Compulsion merged with [IDSI] for sentencing purposes.
Therefore, [the court] imposed no additional sentence on
those charges.
On March 24, 2014, [Appellant] filed the Post-Sentence
Motions. The Commonwealth also filed its own Motion for
Reconsideration of sentence.[2]
____________________________________________
2
The Commonwealth complained Appellant’s sentence was too lenient and
sought imposition of consecutive terms of incarceration in the aggravated
range of the sentencing guidelines.
-2-
J-S10034-15
On May 23, 2014, [the court] held a hearing on the [post-
sentence] motions and the parties filed briefs. …
(Post-Sentence Motion Opinion, filed June 4, 2014, at 1-2). The court
subsequently denied both Appellant’s and the Commonwealth’s post-
sentence motions on June 4, 2014. On June 24, 2014, Appellant timely filed
a notice of appeal. The court ordered Appellant on July 10, 2014, to file a
concise statement of errors complained of on appeal pursuant to Pa.R.A.P.
1925(b), and Appellant timely complied on July 31, 2014.
Appellant raises the following issues for our review:
WHETHER IT WAS AN ABUSE OF DISCRETION TO DENY
[APPELLANT’S] MOTION FOR MISTRIAL AFTER THE
ALLEGED VICTIM’S OUTBURST?
WHETHER THE EVIDENCE WAS INSUFFICIENT TO SUSTAIN
THE VERDICT WHERE THERE WAS NO EVIDENCE OF
FORCIBLE COMPULSION, THREAT OF FORCIBLE
COMPULSION, OR THAT THE ALLEGED VICTIM WAS
UNCONSCIOUS OR MENTALLY DEFICIENT AND INCAPABLE
OF CONSENT.
WHETHER THE VERDICT WAS AGAINST THE WEIGHT OF
THE EVIDENCE BASED ON THE CONFLICTING TESTIMONY
OF THE ALLEGED VICTIM, AND THE LACK OF EVIDENCE OF
FORCIBLE COMPULSION OR LACK OF CONSENT.
WHETHER THE TRIAL COURT ABUSED ITS DISCRETION BY
RELYING ON AGGRAVATING CIRCUMSTANCES THAT ARE
ENCOMPASSED IN THE ELEMENTS OF THE OFFENSES AND
TAKEN INTO CONSIDERATION BY THE OFFENSE GRAVITY
AND STATUTORY CLASSIFICATIONS OF THE CRIME.
(Appellant’s Brief at 7).
After a thorough review of the record, the briefs of the parties, the
applicable law, and the well-reasoned opinion of the Honorable Stephen M.
-3-
J-S10034-15
Higgins, we conclude Appellant’s issues one through three merit no relief.
The trial court’s opinion comprehensively discusses and properly disposes of
the questions presented. (See Post-Sentence Motion Opinion at 7-15)
(finding: (1) court issued curative instruction to jury to disregard victim’s
outbursts and conduct concerning anger towards Appellant; court reiterated
curative instruction after closing arguments and told jury not to allow
emotion to prejudice determination of facts; presumption exists that jury
followed court’s instructions; outburst did not unfairly prejudice Appellant,
because jury already knew victim was angry with Appellant; likewise,
Appellant made no effort to explain how victim’s outburst unduly prejudiced
Appellant; Appellant’s failure to raise at trial or in post-sentence motion
challenge to victim’s characterization of Appellant’s behavior prevented court
from considering prejudice in this circumstance as basis for mistrial; (2)
victim’s initial statement that “Billy” raped victim does not indicate mistaken
identity because Commonwealth’s DNA expert testified that swabs of victim’s
penis revealed twenty-three-trillion-to-one chance that Appellant’s DNA was
present in form of saliva, victim identified Appellant as rapist, victim’s first
meeting of Appellant on day of incident could explain why victim used wrong
name to identify Appellant as “Billy” instead of “Bob”; Appellant’s claim that
another individual named “Billy” raped victim lacks any support; jury could
reasonably believe victim’s representations and determine Appellant was
properly identified as rapist; Appellant cites no authority to support claim
-4-
J-S10034-15
that expert testimony was necessary, nor does he specify what required
expert testimony; Appellant did not raise objection at trial regarding lack of
expert testimony; evidence of victim’s “mental deficiency” was not present
in case, as Commonwealth did not proceed under theory that victim was
intellectually disabled; evidence of victim’s “emotional deficiency” was
relevant factor in considering whether victim suffered psychological forcible
compulsion; expert evidence of victim’s “emotional deficiency” was
unnecessary because jury learned victim was adjudicated delinquent, victim
testified to emotional instability due to anger issues, and victim
demonstrated emotional difficulties at trial by breaking down on stand,
refusing to testify, and yelling at Appellant; several factors supported jury’s
guilty verdict, including: Appellant was in his fifties and victim was only
sixteen years old, Appellant was larger than victim, Appellant deceived
victim by representing to his mother that Appellant mentored youth and was
trained in therapeutic methods, Appellant isolated victim by bringing him to
Appellant’s home at night in rural setting with which victim was unfamiliar,
Appellant purported to have authority by telling victim that Appellant knew
of therapy for dealing with anger, Appellant used his legs to pin victim’s
arms during one of massages, Appellant grabbed victim’s penis without
informing victim or asking for his consent, Appellant continued with charade
that massages were medical treatment even after Appellant asked victim if
he wanted more and victim replied “no,” victim looked for opportunity to
-5-
J-S10034-15
escape and ran to neighbor’s home without shoes, victim began crying when
he reached neighbor’s home and indicated he had been raped, Appellant was
observed near neighbor’s home looking for victim with flashlight, Appellant
left in his car and was stopped by state police, Appellant’s DNA was found on
victim’s penis corroborating victim’s account of events, and victim’s mother
called Appellant three times to speak with victim, but each time Appellant
represented that victim was unavailable for various reasons; victim’s age,
lack of judgment, and emotional vulnerability made him prime target for
Appellant and allowed Appellant to manipulate victim; evidence at trial was
sufficient to find forcible compulsion; (3) verdict was not against weight of
evidence; evidence that forcible compulsion was largely non-physical, victim
did not fight Appellant, and victim voluntarily complied with Appellant’s
instructions were explained by surrounding circumstances, which allowed
jury to determine reasonably that victim was forcibly compelled; all evidence
in support of sufficiency indicates Appellant is not entitled to relief). The
record supports the trial court’s decision to deny relief on these issues.
Therefore, we see no reason to disturb it. Accordingly, we affirm Appellant’s
issues one through three on the basis of the trial court’s opinion.
In his final issue, Appellant argues the aggravating circumstances of
Appellant being in a position of trust, his seeking to take advantage of the
young victim to assault him sexually, and the victim’s suffering after the
sexual assault occurred, were improperly considered in the imposition of
-6-
J-S10034-15
Appellant’s sentence. Appellant contends the court already considered these
circumstances in the elements of the offenses, the offense gravity score, and
the statutory classifications of the crimes. Specifically, Appellant maintains
his position of trust was considered in determining the sufficiency of the
evidence for forcible compulsion, the victim’s youth was encompassed in the
examination of the evidence for unlawful contact with a minor and corruption
of a minor, and the victim’s suffering was accounted for when the court took
the effect of the crime on the victim into consideration for the classification
of Appellant’s offenses and his offense gravity score. Appellant concludes
this Court should vacate the judgment of sentence and remand for further
proceedings. Appellant challenges the discretionary aspects of his sentence.
Commonwealth v. Anderson, 830 A.2d 1013 (Pa.Super. 2003) (stating
claim that court considered improper factors at sentencing refers to
discretionary aspects of sentencing).
Challenges to the discretionary aspects of sentencing do not entitle an
appellant to an appeal as of right. Commonwealth v. Sierra, 752 A.2d
910 (Pa.Super. 2000). Prior to reaching the merits of a discretionary
sentencing issue:
[W]e conduct a four-part analysis to determine: (1)
whether appellant has filed a timely notice of appeal, See
Pa.R.A.P. 902 and 903; (2) whether the issue was properly
preserved at sentencing or in a motion to reconsider and
modify sentence, See Pa.R.Crim.P. 720; (3) whether
appellant’s brief has a fatal defect, Pa.R.A.P. 2119(f); and
(4) whether there is a substantial question that the
sentence appealed from is not appropriate under the
-7-
J-S10034-15
Sentencing Code, 42 Pa.C.S.A. § 9781(b).
Commonwealth v. Evans, 901 A.2d 528, 533 (Pa.Super. 2006), appeal
denied, 589 Pa. 727, 909 A.2d 303 (2006) (internal citations omitted).
When appealing the discretionary aspects of a sentence, an appellant
must invoke the appellate court’s jurisdiction by including in his brief a
separate concise statement demonstrating a substantial question as to the
appropriateness of the sentence under the Sentencing Code.
Commonwealth v. Mouzon, 571 Pa. 419, 812 A.2d 617 (2002); Pa.R.A.P.
2119(f). The concise statement must indicate “where the sentence falls in
relation to the sentencing guidelines and what particular provision of the
code it violates.” Commonwealth v. Kiesel, 854 A.2d 530, 532 (Pa.Super.
2004) (quoting Commonwealth v. Goggins, 748 A.2d 721, 727 (Pa.Super.
2000), appeal denied, 563 Pa. 672, 759 A.2d 920 (2000)). “The
requirement that an appellant separately set forth the reasons relied upon
for allowance of appeal ‘furthers the purpose evident in the Sentencing Code
as a whole of limiting any challenges to the trial court’s evaluation of the
multitude of factors impinging on the sentencing decision to exceptional
cases.’” Commonwealth v. Williams, 562 A.2d 1385, 1387 (Pa.Super.
1989) (en banc).
[O]nly where the appellant’s Rule 2119(f) statement
sufficiently articulates the manner in which the sentence
violates either a specific provision of the sentencing
scheme set forth in the Sentencing Code or a particular
fundamental norm underlying the sentencing process, will
such a statement be deemed adequate to raise a
-8-
J-S10034-15
substantial question so as to permit a grant of allowance of
appeal of the discretionary aspects of the sentence. See
[Commonwealth v. Koehler, 558 Pa. 334, 370, 737 A.2d
225, 244 (1999)] (party must articulate why sentence
raises doubts that sentence was improper under the
Sentencing Code).
Mouzon, supra at 435, 812 A.2d at 627.
The determination of what constitutes a substantial question must be
evaluated on a case-by-case basis. Commonwealth v. Anderson, 830
A.2d 1013 (Pa.Super. 2003). A substantial question exists “only when the
appellant advances a colorable argument that the sentencing judge’s actions
were either: (1) inconsistent with a specific provision of the Sentencing
Code; or (2) contrary to the fundamental norms which underlie the
sentencing process.” Sierra, supra at 912-13. An appellant raises a
substantial question where he alleges an excessive sentence due to the
court’s reliance on impermissible factors. Commonwealth v. McNabb, 819
A.2d 54 (Pa.Super. 2003).
Instantly, Appellant preserved his discretionary aspects of sentencing
claim in his post-sentence motion and Rule 2119(f) statement. See Evans,
supra. Moreover, Appellant’s claim raises a substantial question. See
McNabb, supra. Nevertheless, the court determined:
First, that [Appellant] was in a position of trust.
[Appellant] was given supervision of the victim by the
victim’s mother, allegedly to employ the victim and to
engage in mentoring. The trial record supports this. Being
in a position of trust is clearly not an element of the crime
and we believed it to be an appropriate aggravating factor
in considering [Appellant’s] sentence.
-9-
J-S10034-15
Second, that [Appellant] sought to take advantage of a
youthful victim to sexually assault him. This is
approximately the wording employed in the Pre-Sentence
Investigation and the way the aggravator was discussed at
the sentencing hearing. We did not understand this
wording to mean that [Appellant] engaged in conduct[,]
which constituted some form of sexual assault. By
definition, that is the offense itself and is necessarily
considered in the sentencing guidelines. As such, we do
not believe it could constitute a legitimate aggravator.
Rather, we viewed this aggravator as having to do with
[Appellant’s] planning to commit this crime and the
predatory nature of what he planned to do, i.e. the
targeting of a vulnerable youth. This is not an element of
the crime and not all rapes necessarily include this type of
behavior. This conduct certainly worsens [Appellant’s]
offense and we properly considered it as an aggravator in
sentencing.
Third, and finally, we considered the victim’s suffering
after being raped by [Appellant]. This particular victim
was already a “troubled youth” prior to being raped by
[Appellant] and his subsequent suffering from this
encounter has done him more harm. Every victim suffers
and is harmed, in a near permanent way, from such a
violating and severe betrayal by a fellow human being.
However, we viewed the inherent seriousness of rape
alongside the particular suffering of this victim in
considering how this should aggravate [Appellant’s]
sentence.
In sum, we properly considered these aggravators in
determining [Appellant’s] sentence.
(Post-Sentence Motion Opinion at 16-17) (internal citations and footnotes
omitted). We accept the court’s conclusions. Thus, Appellant’s discretionary
aspects of sentencing claim merits no relief. Accordingly, we affirm the
judgment of sentence.
Judgment of sentence affirmed.
- 10 -
J-S10034-15
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/5/2015
- 11 -
Circulated 04/09/2015 02:17 PM
COURT OF COMMON PLEAS OF MONROE COUNTY
FORTY-TfilRD IBDICIAL DISTRICT
COMMONWEAL TH OF PENNSYLVANIA
COMMONWEALTH OF PENNSYLVANIA NO. SOS CRIMINAL 2012
v.
ROBERT ENDRIKAT,
Defendant. POST-SENTENCE MOTION
OPINION
The two matters before us are the Post-Sentence Motion filed by Robert Endrikat
("Defendant") and the Motion for Reconsideration of sentence filed by the Commonwealth. In
the Post-Sentence Motion, the Defendant requests arrest of judgment or a new trial, and alleges
as grounds for relief: (1) insufficiency of evidence; (2) weight of the evidence; (3) failure to
colloquy the Defendant; ( 4) failure to direct a mistrial; and (5) error in allowing the
Commonwealth to amend the information. Alternatively, the Defendant also requests
reconsideration of his sentence, alleging that (6) the aggravators could not lawfully be considered
and (7) the sentence was unreasonable and excessive. On the other hand, the Commonwealth
feels that the sentence of incarceration for six to twelve years was too lenient and asks that we re-
sentence the Defendant to consecutive terms of incarceration in the aggravated range. The
relevant procedural history is as follows:
On May 21, 2012, the Commonwealth filed the Information charging the
Defendant with Rape by Forcible Compulsion, Involuntary Deviate Sexual Intercourse, Unlawful
Contact with a Minor, Sexual Assault, Corruption of Minors and Indecent Assault.
Circulated 04/09/2015 02:17 PM
On January 15, 2013, the Defendant filed an Omnibus Motion challenging the
prima facie case. On March 21, 2013, we held a hearing on the Omnibus Motion. On June 6,
2013, we issued an opinion and order denying the Defendant's Omnibus Motion.
On August 20, 2013, after a trial by jury, the Defendant was convicted of all
charges with the exception of Rape by Forcible Compulsion. Trial counsel, an attorney with the
Public Defender's Office, then filed a petition for withdrawal after stating that relations with the
Defendant had broken down. On November 6, 2013, this Court allowed counsel to withdraw and
appointed Donald Leeth, Esq. to act as counsel for the Defendant.
On December 9, 2013, we granted the Defendant's Motion for Transcripts.
On March 14, 2014, we sentenced the Defendant to a term of six years to twelve
years on each of the charges ofl.D.S.I., Unlawful Contact and Corruption of Minors. All
sentences were to run concurrently. We also found that the charges of Sexual Assault, Indecent
Assault without Consent and Indecent Assault by Forcible Compulsion merged with I.D.S.I. for
sentencing purposes. Therefore, we imposed no additional sentence on those charges.
On March 24, 2014, the Defendant filed the Post-Sentence Motions. The
Commonwealth also filed its own Motion for Reconsideration of sentence.
On May 23, 2014, we held a hearing on the instant motions and the parties filed
briefs. At the hearing, the Defendant waived his claim that this Court failed to colloquy him on
his right to testify. 1 The Defendant had also indicated that his claim regarding the amendment of
the information depends on the sufficiency of evidence. Thus, we will not address the
amendment claim beyond examining the sufficiency of evidence.
1
A trial court is not required to colloquy the defendant on his right to testify. Com, v. Todd, 820 A.2d 707, 712 (Pa.
Super. Ct. 2003); Com. v, Duffy, 832 A.2d 1132, 1141 th. 3 (Pa. Super. Ct. 2003). After filing Post-Sentence
Motions, defense counsel had discussed the colloquy issue with his client and explained to him that this claim would
more properly be raised as the ineffective assistance of counsel during collateral proceedings.
2
Circulated 04/09/2015 02:17 PM
We will now address the merits of the remaining claims.
1) Sufficiency of the Evidence
Evidence is sufficient to support the verdict where it establishes each material
element of the crime charged and the commission thereof by the accused, beyond a reasonable
doubt. Com. v. Widmer, 744 A.2d 745, 751 (Pa. 2000). Where the evidence offered to support
the verdict is in contradiction to the physical facts, in contravention to human experience and the
laws of nature, then the evidence is insufficient as a matter of law. Id. When reviewing a
sufficiency claim the court is required to view the evidence in the light most favorable to the
verdict winner giving the prosecution the benefit of all reasonable inferences to be drawn from
the evidence. Id.
Generally, how to resolve inconsistencies in testimony or other evidence is a
question for the jury. See Com. v. Baker, 511 A.2d 777, 783 (Pa. 1986) (credibility
determinations are for the jury); Com. v. Sullivan, 371 A.2d 468, 478 (Pa. 1977) ("the facts and
circumstances need not be absolutely incompatible with defendant's innocence, but the question
of any doubt is for the jury ... "). The jury's verdict will not be overturned "unless the evidence
be so weak and inconclusive that as a matter of law no probability of fact can be drawn from the
combined circumstances." Sullivan, 371 A.2d at 478.
To decide the Defendant's challenge vis-a-vis forcible compulsion and lack of
consent, we only need discuss the sufficiency of evidence for Involuntary Deviate Sexual
Intercourse by Forcible Compulsion. Our disposition for this charge is dispositive of the other
charges at issues because the majority of the Defendant's convictions were lesser-included
offenses ofl.D.S.I. by Forcible Compulsion. The remaining convictions, i.e. Unlawful Contact
3
Circulated 04/09/2015 02:17 PM
and Corruption of a Minor, are not implicated in the Defendant's sufficiency challenge as those
charges do not include forcible compulsion or lack of consent as elements.
Here, the Defendant alleges that the record is "riddled with critical
inconsistencies" and these inconsistencies support his conclusion that there was insufficient
evidence. These alleged inconsistences are (1) testimony that the victim initially claimed an
individual named "Billy" raped him; (2) the victim's failure to indicate his lack of consent or to
physically resist the Defendant; and (3) the lack of evidence that the victim was mentally or
emotionally deficient.2 The Defendant also cites caselaw stating that there is insufficient
evidence where the jury would be forced to decide between two equally reasonable and mutually
inconsistent inferences.3
The critical showing at issue is "forcible compulsion." See 18 Pa.C.S.A. §
3123(a)(l) (I.D.S.l. by forcible compulsion). The Crimes Code defines forcible compulsion in
the following manner:
"Forciblecompulsion." Compulsion by use of physical, intellectual, moral,
emotional or psychological force, either express or implied. The term includes,
but is not limited to, compulsion resulting in another person's death, whether the
death occurred before, during or after sexual intercourse.
18 Pa.C.S.A. § 3101 (definitions).
Forcible compulsion requires something more than a lack of consent. Com. v.
Berkowitz, 641 A.2d 1161, 1164 (Pa. 1994). For example, forcible compulsion cannot be shown
where the only evidence is that the victim told the defendant "no" and offered no physical
resistance. Id.
To show forcible compulsion, the 'force' needs to be such as to demonstrate an
absence of consent inducing submission without further resistance. Com. v. Buffington, 828
2 Def.'s Brief, 5/23/14 at unnumbered pages 3-7.
3
Def.'s Brief, 5/23/14 at unnumbered pages 2-3.
4
Circulated 04/09/2015 02:17 PM
A.2d 1024, 1031 (Pa. 2003). As defined in the statute, the 'force' exerted may be intellectual,
moral, psychological or emotional. Com. v. Eckrote, 12 A.3d 383, 387 (Pa. Super. Ct. 2010)
( citation omitted).
Determining forcible compulsion is based on the totality of the circumstances of a
particular case. Com. v. Frank, 577 A.2d 609, 618 (Pa. Super. Ct. 1990). Significant factors
include "the respective ages of the victim and the accused, the respective mental and physical
conditions of the victim and the accused, the atmosphere and physical setting in which the
incident was alleged to have taken place, the extent to which the accused may have been in a
position of authority, domination or custodial control over the victim, and whether the victim
was under duress." Com. v. Rhodes, 510 A.2d 1217, 1226 (Pa. 1986). This is a non-exclusive
list. Id. Ultimately, the question of forcible compulsion aims at determining whether the victim
was compelled to do a thing against his will. See id. at 1227.
In Frank, the Superior Court considered whether there was psychological forcible
compulsion sufficient to convict the defendant of Rape. In that case, the defendant was a
counselor and the victim was a minor, age eleven or twelve. Com. v. Frank, 577 A.2d 609, 619
(Pa. Super. Ct. 1990). The alleged rape lacked any physical force. Id. The victim's adoptive
mother brought the victim to the defendant for psychological counseling. Id. During the course
of multiple counseling sessions, the defendant first asked the victim to sit on his lap, then to kiss
his cheek, eventually masturbating the victim and finally directing him to engage in fellatio. Id.
The defendant threatened that he could interfere with the victim's adoption and cause bad things
to happen to persons that the victim cared about ifhe told anyone about what had happened. Id.
The Court also noted how the victim was isolated behind the closed doors of the counseling
room and the defendant occupied a position of authority, both as a counselor and an adult. Id.
5
Circulated 04/09/2015 02:17 PM
The Superior Court considered the above facts in finding psychological forcible compulsion and
quoted the following language with approval: "[w]hile the force used to overcome the will of the
victim in this case was to a large extent subtle and psychological, it nonetheless satisfies the
element of forcible compulsion." Id. (citation omitted).
In Eckrote, the Superior Court again considered psychological compulsion to
support a charge of Rape. The defendant grabbed the victim, apparently a minor," and took her
to an undisclosed location. Com. v. Eckrote, 12 A.3d 383, 387 (Pa. Super. Ct. 2010). There, he
told her that he wanted to have sex with her to which the victim adamantly told the defendant
"no." Id. The defendant then stated he wanted to kill himself and ordered her to remove her
pants. Id. The victim complied and the defendant climbed on top of her and raped her. Id.
Without elaboration, the Superior Court concluded that there was forcible psychological
compulsion, based on the totality of the circumstances. Id.
The Defendant correctly states that evidence is insufficient to convict where the
record merely supports two mutually inconsistent but equally reasonable inferences leading to
guilt and innocence. See Com. v. Montalvo, 986 A.2d 84, 99 (Pa. 2009) ("When two equally
reasonable and mutually inconsistent inferences can be drawn from the same set of
circumstances, a jury must not be permitted to guess which inference it will adopt..."). The
criminal standard of proof is enough to make it obvious that the presentation of inherently
ambiguous evidence cannot support a criminal conviction. In practice such circumstances rarely
arise, however, and the Defendant overzealously suggests that this legal theory applies to the
situation at hand.
4In Eckrote the victim's age was never disclosed. However, she was apparently old enough to drive a car as the
defendant grabbed victim's car keys during the kidnapping. Eckrote, 12 A.3d at 385.
6
Circulated 04/09/2015 02:17 PM
The Defendant claims that another person, Billy, was implicated as the rapist at
trial. The trial testimony revealed that the victim initially referred to the Defendant as "Billy"
when speaking to the neighbors who he ran to for help and to the police. 5 However, this is by no
means a case of mistaken identity. As the Commonwealth's DNA expert testified, the DNA
recovered from the swabs of the victim's penis indicated a twenty-three trillion to one chance
that the Defendant's DNA was present, purportedly in the form of saliva.6 The victim himself
also clearly identified the Defendant as the rapist. 7 Moreover, the victim was only just
acquainted with the Defendant that day,8 which could explain why the victim used the wrong
name for him at the time, i.e. Billy instead of Bob. The suggestion in the Defendant's brief that
it was actually another person named "Billy" who raped the victim9 is without any support in the
record and is completely spurious. In short, the jury could reasonably have determined that the
Defendant was properly identified as the rapist by believing the victim's representations.
The Defendant cursorily argues that there was no expert evidence that the victim
was mentally or emotionally deficient. The Defendant cites no authority in support of his claim
that expert testimony was necessary and he does not even specify what evidence required expert
testimony.l'' Neither did the Defendant raise such an objection at the time of trial. Evidence of
'mental deficiency' was not presented in this case as the Commonwealth did not proceed under
the theory that the victim was intellectually disabled. Evidence of 'emotional deficiency,'
however, understood in its lay usage, was relevant as a factor in considering whether the victim
suffered psychological forcible compulsion. See Rhodes, 510 A.2d at 1226 (non-exclusive
5
N.T., 8/19/13 at 36-42 (neighbor); 127 (police officer).
6
N.T., 8/19/13 at201-02.
7
N.T., 8/19/13 at 84-85.
8
N.T., 8/19/13 at 85.
9
Def.'s Brief, 5/23/14 at unnumbered page 7.
10
The Defendant merely references the Commonwealth's opening statements in his brief.
7
Circulated 04/09/2015 02:17 PM
factors include respective mental condition of defendant and victim, duress, etc.). Such evidence
was presented at trial. First, the jury learned that the victim was adjudicated delinquent, which is
evidence of instability in a person's life if nothing else.11 The victim went on to testify to his
emotional instability due to 'anger issues,'ofwhich the Defendant was well aware.12 If that were
not enough, the victim demonstrated his difficulties to the jury by breaking down on the stand,
refusing to testify further and yelling threats and obscenities at the Defendant.13 One does not
need to be an expert to tell that the victim was emotionally unstable. Even so, this was only one
of a variety of factors that was used by the jury to find forcible compulsion.
The mainstay of the Defendant's claim seems to be that, under the facts at trial, it
was just as likely that the victim consented as that he was forcibly compelled. We cannot agree.
It is true that the victim did not offer physical resistance, apart from fleeing, nor did he
constantly reiterate that he disapproved of the Defendant's conduct, apart from telling the
Defendant that he objected after the initial, uninvited sexual advance. However, the trial
testimony included the following factors which could be viewed by the jury to support a verdict
of guilty:
• Respective age and physical strength. At the time, the Defendant was in his 50s while
14
the victim was only 16 years old. The Defendant was larger than the victim 15 and
worked in construction, adding to his physical strength.
• Planning and deception. The Defendant initially solicited the victim's presence by
representing to his mother that he was trained in therapeutic methods, that he mentored
other youth and that he would offer the victim work in his business and odd jobs to help
11
N.T., 8/19/13 at 50 (probation and court fines), 102 ("Send me back to juvvie now").
12
N.T., 8/19/13 at 61-62.
13
N.T., 8/19/13 at 102.
14
N.T., 8/19/13 at 59 (victim's age).
15
N.T., 8/19/13 at 82.
8
Circulated 04/09/2015 02:17 PM
pay off the victim's court costs.16 The victim's mother was given the impression that
another boy, whom she knew because he was a neighbor and a friend of her son, would
17
also be present while her son was with the Defendant. The neighbor boy was initially
present that day, but the Defendant returned later to pick up the victim after the neighbor
boy had left. 18
• Isolation. The Defendant isolated the victim by bringing him to the Defendant's house,
at night and in a relatively rural setting with few neighbors. 19 The victim was not
familiar with the area and had never been there before.i" The Defendant's trailer was
small and cluttered, making it difficult for the victim to leave without the Defendant's
interference. 21
• Purported authority. The Defendant told the victim that he knew a simple therapy for
22
dealing with anger. The Defendant did not provide details, but represented that this
involved caffeine, sugar, smoking and massage. The Defendant engaged in an repetitive
ruse that therapy was being performed, directing the victim where to go, how to lay,
when to take clothes off and put them back on, and questioning him on whether he was
feeling the proper 'tingling' in his fingers. 23 The victim testified that he had previously
been to a chiropractor and the massage itself was similar to what a chiropractor would
do.24 The Defendant's authority over the victim was also endorsed by the victim's
mother, who had consented to allow her son to do work for the Defendant.
16
N.T., 8/19/13 at 51-52.
17
N.T., 8/19/13 at 51, 54.
18
N.T., 8/19/13 at 63-64.
19N.T.,
8/19/13 at41-42.
20
N.T., 8/19/13 at 83.
21
N.T., 8/19/13 at 67.
22N.T.,
8/19/13 at 62.
23
N.T., 8/19/13 at 71-82.
24
N.T., 8/19/13 at 93.
9
Circulated 04/09/2015 02:17 PM
• Physical force and unsolicited sexual conduct. During one of these massages, the
Defendant used his legs to pin the victim's arms.25 He then grabbed the victim's penis
without informing the victim or asking for his consent. The Defendant then proceeded to
put the victim's penis in his mouth. Afterwards, he asked if the victim wanted more to
which the victim responded "no."26 The Defendant continued with the charade that this
was a medical treatment. The victim testified that he did not ask to go home because he
was smaller than the Defendant and he was scared of what the Defendant would do. 27
The Defendant also inserted his penis into the victim's mouth.
• Corroborating circumstances and evidence of a guilty mind. The victim texted his
girlfriend to call his mother because he had just been raped.28 The victim looked for an
opportunity to escape and eventually ran barefoot to a neighbor's house in February
weather, leaving his shoes behind because he would have had to have gone past the
Defendant to retrieve them.29 The victim sat with his knees clutched to his chest,
30
crying. He told the lady who lived there that he had been raped by the Defendant; he
started to explain the 'massage therapy' but was interrupted by the need to vomit.31 The
Defendant was observed around the exterior of the neighbor's house, apparently looking
for the victim with a flashlight.32 Although he knew that the victim's mother was coming
to the house to retrieve him, the Defendant started to leave in his car.33 However, the
Defendant was stopped by the state police. The Defendant told the state police that the
25
N.T., 8/19/13 at 80-81.
26N.T.,
8/19/13 at 81.
27
N.T., 8/19/13 at 82.
28
N.T., 8/19/13 at 117.
29
N.T., 8/19/13 at 83.
30
N.T., 8/19/13 at 37.
31
N.T., 8/19/13 at 37-39.
32
N.T., 8/19/13 at 39-40.
33
N.T., 8/19/13 at 123-126 (defendant leaving scene and being stopped by police).
10
Circulated 04/09/2015 02:17 PM
victim had just left his house; he neglected to mention any sexual contact between
himself and the victim or to explain what precipitated the victim's flight. The
Defendant's DNA was found on the victim's penis, corroborating the victim's version of
events.34
• Furtherdeception and isolation. At 10:00p.m., the victim's mother had returned from
work and found that her son was not at home. She called the Defendant three times and
each time the Defendant represented that the victim was unavailable for various reasons,
i.e. he was in the bathroom, he was smoking a cigarette, he was outside. Eventually, she
grew suspicious and told the Defendant she was coming to pick her son up. 35 The
Defendant asked if the victim could spend the night, to which she replied "no. "36 On the
way to the Defendant's house, she got a call from the Pennsylvania State Police
informing her that her son had been assaulted and was on the way to the hospital."
Considering all the above circumstances, the evidence supports a finding of
forcible compulsion. To summarize some relevant facts, the 16 year old victim told the
Defendant that he did not want sexual contact, and the Defendant continued despite this
statement. The Defendant planned this sexual encounter, deceiving the victim and his mother
into believing he would only offer mentoring and chores. After isolating the victim, the
Defendant initiated sexual contact, without seeking consent, and employed force in holding the
victim's arms down. The subsequent flight of the Defendant adds to the other support for his
guilty mind.
34
N.T., 8/19/13 at 201-02.
35
N.T., 8/19/13 at 52-53.
36 .
N.T., 8/19/13 at 57.
37
N.T., 8/19/13 at 53.
11
Circulated 04/09/2015 02:17 PM
It required significant naivete for the victim to believe that the Defendant's
proposed treatment was good faith therapy. However, this victim was a particularly vulnerable
sixteen year old. The victim's age, lack of judgment and emotional vulnerability are exactly
what the Commonwealth proposed made him a target for the Defendant and gave the Defendant
the tools to manipulate him.
In sum, the evidence at trial was sufficient to find forcible compulsion and we
decline to dismiss the jury's verdict. 38
2) Weight of the Evidence
It is within the trial court's discretion to grant relief based upon the weight of the
evidence. Com. v. Cousar, 928 A.2d 1025, 1035-36 (Pa. 2007). The jury generally retains the
authority to believe all, part, or none of the evidence and to determine the credibility of the
witnesses. See id. In deciding a weight of the evidence claim, however, the trial court need not
view the evidence in the light most favorable to the verdict winner. Com. v. Vogel, 461 A.2d
604, 609 (Pa. 1983). Instead, the court may weigh the evidence and in so doing evaluate for
itself the credibility of the witnesses. Id. If the trial court concludes that, despite the abstract
sufficiency of the evidence to sustain the verdict, the evidence preponderates sufficiently heavily
against the verdict that a serious miscarriage of justice may have occurred, we may set aside the
verdict, grant a new trial, and submit the issues for determination by another jury. Id.
However, a new trial should not be granted because of a mere conflict in the
testimony or because the trial court on the same facts would have arrived at a different
38
We note that we substantially discussed this issue in our omnibus opinion dated June 6, 2013 dealing with the
Defendant's challenge to the prima facie case. In our omnibus opinion, we did not consider how the Defendant
pinned the victim's arms prior to initiating sexual contact. Obviously, that fact adds support to our decision here.
On the other hand, we do not consider the victim's prior testimony that the Defendant would repeatedly look at a
drawer of knives in the kitchen and that the victim took this as an implied threat. While introduced into evidence for
the omnibus hearing, this testimony was not repeated by the victim at trial.
12
Circulated 04/09/2015 02:17 PM
conclusion. Com. v. Widmer, 744 A.2d 745, 752 (Pa 2000). The court must do more than
reassess the credibility of the witnesses and allege that he would not have assented to the verdict
ifhe were a juror. Id. The court does not sit as the thirteenthjuror. Id. Rather, the role of the
court is to determine that "notwithstanding all the facts, certain facts are so clearly of greater
weight that to ignore them or to give them equal weight with all the facts is to deny justice." Id.
(citation omitted).
Again, the Defendant alleges that "critical inconsistencies" undermine the verdict.
He enumerates the previously alleged confusion as to who was the rapist, i.e. "Billy," and goes
on to claim that the Defendant's 'therapeutic' method could not possibly compel the victim to
engage in sexual contact. Moreover, the Defendant suggests that the victim actually consented to
the conduct, rather than being compelled to it.
We heard the testimony at trial and the evidence presented by both sides and we
do not agree that the verdict was against the weight of the evidence.. As in many cases of this
nature, the jury undoubtedly had a difficult job in deciding who to believe and how to interpret
the interaction between the Defendant and the victim. This was a difficult case for the jury to
decide, particularly because it dealt with the unusual subject of a forcible compulsion that was
largely non-physical. We are also well aware of the content of the Defendant's cross-
examination of the victim, which solicited that the victim did not fight the Defendant, that the
victim complied with the Defendant's directions 'voluntarily' and that the victim followed the
Defendant's directions without physical restraint. The cross-examination also questioned why
the victim would remain in this encounter ifhe objected to it. That being said, however, these
issues were answered by a plenitude of other evidence which explained the surrounding
circumstances of the situation and allowed the jury to reasonably determine that the victim was
13
Circulated 04/09/2015 02:17 PM
forcibly compelled. To a large extent, this dispute simply involved credibility determinations.
We have already discussed the trial evidence at length in our examination of sufficiency and will
not repeat that examination here.
In sum, considering all the evidence at trial as well as the arguments presented by
the Defendant, we do not believe this case cries out for equitable relief and we will deny his
claim.
3) Mistrial
A motion for a mistrial is within the discretion of the trial court. Com. v. Tejeda,
834 A.2d 619, 623 (Pa. Super. Ct. 2003) (citations omitted). A mistrial is required only when an
incident is of such a nature that its unavoidable effect is to deprive the appellant of a fair and
impartial trial. Id.; see also Com. v. Brown, 786 A.2d 961, 972 (Pa. 2001) ( defendant has the
right to have his case heard by a fair, impartial, and unbiased jury). It is within the trial court's
discretion to determine whether a defendant was prejudiced by the incident that is the basis of a
motion for a mistrial. Tejeda, 834 A.2d at 623. After the jury views potentially prejudicial
misconduct, the trial court may implement any appropriate remedy, including offering a remedial
instruction, removing the responsible person or declaring a mistrial. See Com. v. Sanchez, 36
A.3d 24, 47-48 (Pa. 2011) (discussing same for spectator misconduct).
This trial involved the less-than-shocking revelation that the testifying
complainant was extremely angry at the Defendant. This came in the form of a short outburst
from the victim. In any criminal case involving an alleged victim, jurors could reasonably
assume that the victim is angry. Nevertheless, we issued a curative instruction at the time that
the jury was to disregard the victim's outbursts and conduct.39 See Com. v. Philistin, 774 A.2d
741, 743 (Pa. 2001) (prejudice that might result from a spectator outburst can be cured through a
39
N.T., 8/19/13 at 105.
14
Circulated 04/09/2015 02:17 PM
remedial instruction to the jury). After closing arguments, we reiterated this instruction
regarding the victim's outbursts and also told the jury that they were not to allow emotion to
prejudice their determination of the facts. 40 The law presumes that the jury will follow this
Court's instructions and neither do we believe that the jury became unfairly prejudiced against
the Defendant simply because they knew the victim was angry at him.
The Defendant has made absolutely no effort to explain how he was prejudiced by
this event. See Com. v. Styles, 431 A.2d 978, 981 (Pa. 1981) (affirming denial of motion for
mistrial where defendant made no showing of prejudice). Moreover, the victim's angry outburst
might have as easily been used by the defense to undermine the victim's testimony or suggest
some other motive for accusing the Defendant. The jury's view of the victim's outburst was
only another opportunity to assess the genuineness of the victim's anger and, as a consequence,
his credibility.
In the Defendant's brief, for the first time, he also complains that the victim was
hesitant to answer questions and characterized the sexual encounter with the Defendant as
'disgusting.' The Defendant did not raise these grounds at the time of trial, or even in his post-
sentence motion. Instead, the Defendant's mistrial motion was based upon the threats and angry
gesturing of the victim.41 The Defendant's attempt to add additional arguments to his motion for
mistrial is essentially a different motion for mistrial. This new motion is untimely and prevents
us from dealing with any supposed prejudice through curative instructions. See Pa.R.Crim.P.
605(B) (motion shall be made when the prejudicial event is disclosed); see also Com. v. Boring,
684 A.2d 561, 568 (Pa. Super. Ct. 1996) (denying motion for mistrial as untimely because it
occurred after relevant testimony had concluded).
40
N.T., 8/20/13 at 38-39.
41
N.T., 8/19/13 at 102-03; ~ also Def. 's Post-Sentence Motion, 3/24/14 at ,r4.
15
Circulated 04/09/2015 02:17 PM
Thus, we will deny the Defendant's motion.
4) Colloquy on Right to Testify
As discussed above, this claim was waived by the Defendant and will be
dismissed.
5) Amendment of Information
As discussed above, the Defendant indicated this claim depends on the sufficiency
of evidence. We have already disposed of the sufficiency claim and we will not separately
address the amendment of the information.
6) Illegal AggravatingFactors
The Defendant claims that this Court improperly considered certain aggravating
factors in sentencing him because those factors are already represented in the elements of the
offense and the offense gravity score.42
The sentencing statute provides that "the court shall follow the general principle
that the sentence imposed should call for confinement that is consistent with the protection of the
public, the gravity of the offense as it relates to the impact on the life of the victim and on the
community, and the rehabilitative needs of the defendant." 42 Pa.C.S.A. § 972l(b). The statute
also directs us to consider the sentencing guidelines in imposing sentence. Id. The guidelines
and the Sentencing Code are designed to rein in unfettered judicial discretion in sentencing.
Com. v. Mitchell, 883 A.2d 1096, 1107 (Pa. Super. Ct. 2005). The guidelines include
recommendations as to the appropriate sentence based, in part, on the presence of aggravating
and mitigating circumstances. 204 Pa.Code§ 303.13. But while the guidelines suggest the
consideration of aggravating and mitigating circumstances, those terms are not defined. See id.
42
Def.'s Post-Sentence Motion, 3/24/14 at 111. The Defendant did not file a motion for the sentencing transcript
and said transcript is not present in the record at this time.
16
Circulated 04/09/2015 02:17 PM
A sentencing court may not deviate from a standard range sentence based solely
upon criterion already incorporated into the sentencing guidelines. Com. v. Darden, 531 A.2d
1144, 1148-49 (Pa. Super. Ct. 1987).
At sentencing, we found three aggravating factors.
First, that the Defendant was in a position of trust. The Defendant was given
supervision of the victim by the victim's mother, allegedly to employ the victim and to engage in
mentoring. The trial record supports this. Being in a position of trust is clearly not an element of
the crime and we believed it to be an appropriate aggravating factor in considering the
Defendant's sentence.
Second, that the Defendant sought to take advantage of a youthful victim to
sexually assault him. 43 This is approximately the wording employed in the Pre-Sentence
Investigation and the way the aggravator was discussed at the sentencing hearing. We did not
understand this wording to mean that the Defendant engaged in conduct which constituted some
form of sexual assault. By definition, that is the offense itself and is necessarily considered in
the sentencing guidelines. As such, we do not believe it could constitute a legitimate aggravator.
See Darden, 531 A.2d at 1148-49. Rather, we viewed this aggravator as having to do with the
Defendant's planning to commit this crime and the predatory nature of what he planned to do,
i.e. the targeting of a vulnerable youth.44 This is not an element of the crime and not all rapes
necessarily include this type of behavior. This conduct certainly worsens the Defendant's
offense and we properly considered it as an aggravator in sentencing.
43
The Defendant was convicted of Involuntary Deviate Sexual Intercourse by Forcible Compulsion, Unlawful
Contact with a Minor, etc. Here, we use rape and sexual assault in a colloquial sense.
44
We use the common meaning of predatory and do not mean to revisit the Sexual Offender Assessment Board's
opinion and recommendation.
17
Circulated 04/09/2015 02:17 PM
Third, and finally, we considered the victim's suffering after being raped by the
Defendant. This particular victim was already a 'troubled youth' prior to being raped by the
Defendant and his subsequent suffering from this encounter has done him more harm. Every
victim suffers and is harmed, in a near permanent way, from such a violating and severe betrayal
by a fellow human being. However, we viewed the inherent seriousness of rape alongside the
particular suffering of this victim in considering how this should aggravate the Defendant's
sentence.
In sum, we properly considered these aggravators in determining the Defendant's.
sentence.
7) Excessive Sentence and Commonwealth's Motion for Reconsideration
Finally, both the Commonwealth and the Defendant ask us to modify our sentence
because it is either too lenient, or too harsh. We carefully considered the appropriate sentence in
this case, including the aggravating factors we have just discussed, and we believe that removing
the Defendant from society for six to twelve years is appropriate in balancing the protection of
the public, the gravity of the offenses and the rehabilitation of the Defendant. We see no reason
to revisit that sentence now. Considering all the evidence at the sentencing hearing and trial,
including the Defendant's prior record score, background and character witnesses, we remain
satisfied that the sentence was appropriate.
Accordingly, we enter the following order:
18
Circulated 04/09/2015 02:17 PM
COURT OF COMMON PLEAS OF MONROE COUNTY
FORTY-THIRD JUDICIAL DISTRICT
COMMONWEALTH OF PENNSYLVANIA
COMMONWEAL TH OF PENNSYLVANIA NO. 505 CRIMINAL 2012
v.
ROBERT ENDRIKAT,
Defendant POST-SENTENCE MOTIONS
ORDER
't\;t
AND NOW, this.!:!--- day of June, 2014, after hearing and consideration of the
Defendant's Post-Sentence Motions and the Commonwealth's Motion for Reconsideration, said
Motions are DENIED. Pursuant to Pa.R.Crim.P. 720(8)(4), this order also serves to notify the
Defendant of the following:
(a) the Defendant has thirty (30) days from the date of this order to file a notice of appeal
to the Superior Court.
(b) the Defendant has the right to assistance of counsel in the preparation of the appeal;
(c) the Defendant has the rights, if indigent, to appeal in forma pauperis and to proceed
with assigned counsel as provided in Pa.R.Crim.P. 122; and
(d) the Defendant has the qualified right to bail under Pa.R.Crim.P. 521(8).
BY THE COURT:
STEPHEN M. HIGGINS, JUDG ·
: ;;;;:) ...,,..
; 0 ..:... :::ti
1. rr· ;,,::
cc: Michael Rakaczewski, Esq., assistant district attorney
""'t) 0
Donald Leeth, Esq., defense counsel ::::3 0
c:
Clerk of Courts w ;:.;
...,... -i
l> N
en
~c '"-'
19
r:
| {
"pile_set_name": "FreeLaw"
} |
236 Ind. 529 (1957)
141 N.E.2d 109
JOSEPH, PIERCE
v.
STATE OF INDIANA.
No. 29,231.
Supreme Court of Indiana.
Filed March 18, 1957.
Rehearing denied April 30, 1957.
*532 Waldo C. Ging, Stephen A. Free, of Greenfield, and William S. Isham (of counsel), of Fowler, for appellants.
*533 Edwin K. Steers, Attorney General, Owen S. Boling, George B. Jeffrey, and Robert S. Baker, Deputy Attorneys General, for appellee.
BOBBITT, J.
Appellants were indicted for murder in the first degree in the year 1935, tried by jury on change of venue to Hancock County in February, 1936, found guilty as charged and sentenced to the Indiana State Prison for life. On June 29, 1953, the Hancock Circuit Court sustained appellants' belated motion for a new trial. Thereafter, in November of 1953, they were retried on the original indictment and the jury failed to agree. In January, 1954, appellants were tried for the third time, and on this trial the jury found them guilty of murder in the second degree. This appeal arises out of the third trial.
Errors are assigned as follows:
"1. That the Court erred in denying defendants' separate and several motion for the personal presence and appearance in the Hancock County Circuit Court of defendants during the hearing and argument of the motion for new trial herein and in refusing to issue the necessary order therefor timely requested by defendants, in contravention of Article I, Section 13, Indiana Constitution, and the Fourteenth Amendment of the United States Constitution.
"2. That the Court erred in overruling the motion for new trial."
First: We will first consider appellants' assertion that because they were prevented by the rules of the Indiana State Prison from filing a timely motion for a new trial and from prosecuting an appeal, at that time, from the original judgment, they were denied their constitutional right to due process and, therefore, must now be discharged.
We do not concur with appellants that unless they are permitted a review of the judgment which they *534 sought to have reviewed in 1936, when their papers were allegedly suppressed by the prison authorities, that they must now be discharged.
On February 14, 1953, appellants, upon petition previously filed, were granted the right to file a belated motion for a new trial; and on March 12, 1953, a motion for a new trial was filed. Such motion was sustained and a new trial granted on June 29, 1953.
A timely review and reversal of the original judgment of commitment would have resulted in a new trial for appellants, hence, the same legal result was reached by the granting of their petition for a new trial on June 29, 1953.
If, on the hearing on the belated motion for a new trial, the court had overruled such motion instead of granting it, appellants' appeal would then have been from the original judgment. Carrying this reasoning to its next logical step, if, on such an appeal, this court would have reversed the judgment and granted a new trial, appellants would then have been in the identical situation in which they found themselves when the Hancock Circuit Court granted them a new trial on their belated motion therefor.
The mere fact that they were not retried for seventeen years from the date of the original judgment does not entitle them to a discharge. When the judgment upon which appellants were originally sentenced was set aside by the granting of a new trial upon the belated motion therefor, they were subject to prosecution on the original indictment; Slack v. Grigsby (1951), 229 Ind. 335, 344, 97 N.E.2d 145; in the same manner and for the same reasons that they could have been retried had they been granted a new trial upon timely motion therefor.
If the appellants were denied an appeal by acts of the authorities of the Indiana State Prison until the *535 statutory time for appeal had expired, that fact would not nullify the judgment lawfully rendered against them by the Hancock Circuit Court. State ex rel. Cook v. Howard, Warden (1946), 223 Ind. 694, 699, 64 N.E.2d 25.
The effect of the granting of the motion for permission to file a belated motion for a new trial was to extend the time for appeal. The sustaining of the belated motion for a new trial acknowledged error in the original trial and furnished to appellants the same relief they might have secured by an appeal timely filed.
Since appellants have been accorded the same relief a new trial as they would have received by a timely appeal, they were, in effect, granted "the type of appeal generally afforded those convicted of crime" in Indiana. See: Dowd v. United States ex rel. Cook (1951), 340 U.S. 206, 95 L.Ed. 215, 219, 71 S.Ct. 262.
These appellants have been accorded a new trial of the issues and a timely appeal from the judgment of the trial court in that trial. The record here does not show that their substantial rights were prejudiced by any delay. Pitts v. State (1939), 216 Ind. 168, 23 N.E.2d 673; Blanton v. State (1954), 233 Ind. 51, 54, 115 N.E.2d 122, 116 N.E.2d 631; Henderson v. State (1954), 233 Ind. 598, 602, 122 N.E.2d 340.
It is worthy of note, however, that the record does not show that their reason for not filing a motion for a new trial was because they were in prison and "under legal disability, and without funds, they were unable to secure a lawyer to advise them the steps or procedure necessary to file a belated motion for a new trial after the expiration of statutory time until the recent decision of the Supreme Court of the State of Indiana in the case of Walker v. State [1948, 226 Ind. 552], 82 N.E.2d 245, which decision pointed the necessary steps *536 available to present and file a belated motion for a new trial after the expiration of the statutory time in order to perfect the record, in order to appeal."
There is no time limitation on prosecution for murder in Indiana and if, under the factual situation shown by the record here, appellants were to be discharged the result would be to impose a limitation within which an accused could be prosecuted for murder.
Society is entitled to some consideration in dealing with crime. The loss of evidence and the death of witnesses may affect the State as well as the defendant. Due process does not require that the prisoner may sit idly by and await the death of State witnesses or the loss of material evidence, then petition the trial court for a belated motion for a new trial and, if unsuccessful at such trial, secure his discharge by contending in this court that his constitutional rights were violated because of such delay, or because he was not granted a timely appeal from a judgment which was subsequently set aside by the granting of a belated motion for a new trial.
Due process does not, on the record in this case, require that appellants be discharged.
Second: Did the trial court err in denying defendants-appellants' motion to be personally present in the court room during the hearing and argument on their motion for a new trial?
Appellants rely upon State ex rel. Cutsinger v. Spencer, Judge (1941), 219 Ind. 148, 41 N.E.2d 601, and State ex rel. White v. Hilgemann, Judge (1941), 218 Ind. 572, 34 N.E.2d 129, for support of their assertion that the motion for a new trial is a part of, or a continuation of, the original trial.
State ex rel. White was an action by a poor person to obtain counsel, at the expense of the county, to perfect and present an appeal of a judgment rendered *537 against him at the conclusion of his trial for murder in the first degree. This case lends no support to appellants' position here, but, on the contrary, the language of this court in State ex rel. White v. Hilgemann, Judge, supra (1941), 218 Ind. 572, 34 N.E.2d 129, at page 577 of 218 Ind., as follows:
"The Batchelor case [Batchelor v. State, 189 Ind. 69, 125 N.E. 773] deals with the right to counsel before and during the trial, but the reasoning supports the view that the defendant is entitled to have counsel to advise him and represent him on appeal.",
clearly recognizes that the "trial" and the "appeal" are separate proceedings.
State ex rel. Cutsinger v. Spencer, Judge, supra (1941), 219 Ind. 148, 41 N.E.2d 601, was also an action for mandate seeking to compel the trial court to furnish relator, at the expense of the county, a certified copy of the record in a criminal proceeding, for use in the preparation and filing of a petition for writ of error coram nobis.
The statement on pages 152 and 153 of 219 Ind., upon which appellants also rely, and which is as follows:
"After he has been convicted, and the judgment has become final, and it has been determined upon appeal that there was no prejudicial error in the trial, or when the time is past and the right to a review for error has been waived, the defendant is no longer `the accused,' and the `criminal prosecution(s)' is ended.";
is dicta which must be considered in connection with the facts and circumstances in that case. There, the relator had been convicted, was serving his sentence in the Indiana State Prison, and the time for taking an appeal had expired, thereby waiving the right to review for error. Certainly, under such circumstances *538 the defendant is no longer "the accused." However, this case cannot be considered as authority for the statement, that a defendant who takes the proper steps to appeal from a judgment of conviction remains the accused after the jury has found him guilty and the court has entered judgment upon the verdict. At this point the defendant stands convicted and ceases to be the "accused" within the meaning of Article I, Section 13 of the Constitution of the State of Indiana.
Insofar as State ex rel. Cutsinger v. Spencer, Judge, supra (1941), 219 Ind. 148, 41 N.E.2d 601, purports to hold that a defendant continues to be the accused person referred to in Section 13 of Article I of the Constitution of the State of Indiana until his case has been affirmed on appeal, it is disapproved.
Ex Parte Huffman (1914), 181 Ind. 241, 104 N.E. 511, upon which appellants rely to support their alleged right to be present in person at the argument on their motion for a new trial, was an action to be admitted to bail during the pendency of petitioner's motion for a new trial. No question of the petitioner's right to be present at the presentation of his motion for a new trial was raised in this case, and the following language in the opinion, at page 244 of 181 Ind.,
"This motion may be filed and presented by the defendant in person. Section 13, of our Bill of Rights (Constitution, Art. 1, § 13), guarantees the accused the right `to be heard by himself,' and this right continues until the disposition of a motion for a new trial, where such a proceeding is provided for.",
is pure dicta unsupported by authority or reason. Insofar as this dicta purports to hold that Article I, Section 13 of the Constitution of the State of Indiana guarantees an accused the right to be present in person *539 at the time of the filing, or during the presentation of, or ruling upon, his motion for a new trial, it is disapproved.
The second clause of Article I, Section 13 of the Constitution of the State of Indiana, provides that in all criminal prosecutions the accused shall have the right "to be heard by himself and counsel."
Acts 1905, ch. 169, § 222, p. 584, being § 9-1801, Burns' 1956 Replacement, provides:
"No person prosecuted for any offense punishable by death, or by confinement in the state prison or county jail, shall be tried unless personally present during the trial."
This section merely declares the rule at common law. Dean v. State of Indiana (1955), 234 Ind. 568, 570, 130 N.E.2d 126.
A motion for a new trial is not a part of the prosecution of a criminal case, rather, it is a proceeding by which the defendant seeks to vacate the previous trial and escape all of its results, State v. Balsley (1902), 159 Ind. 395, 397, 398, 65 N.E. 185; and to afford the trial court an opportunity to correct errors, if any, made in the trial.
Only a single trial was allowed at common law and a motion for a new trial was unknown. Ewbank's Indiana Criminal Law, Symmes ed., § 490, p. 312; Pollock & Maitland, History of English Law, Vol. II, 2d. ed., p. 664; Orfield, Criminal Procedure from Arrest to Appeal, pp. 494-498.
Under a statute which provides that, "if the indictment be for a felony, the defendant must be present, and shall remain in actual custody during the trial;" Cr. Code Pract. § 183, (our italics) the Kentucky Court of Appeals has, in numerous cases, held that the words "during the trial" embrace all stages of the trial, which, as declared, "`begins with the swearing of the jury *540 and ends when the verdict is returned.'" Puckett v. Commonwealth of Kentucky (1923), 200 Ky. 509, 511, 512, 255 S.W. 125, 34 A.L.R. 96.
Kentucky also has a constitutional provision similar to Article I, Section 13 of the Constitution of the State of Indiana. The reasoning by which the Kentucky Court arrived at the above conclusion is sound, and we think applies with equal force to our statute.[1]
We recognize that a defendant must be present at trial, verdict, and sentence. Wharton's Criminal Procedure, 10th ed., Vol. II, § 1485, p. 1948. However, the right to be present at the time sentence or judgment is pronounced is a common law right, separate and apart from the constitutional or statutory right to be present at the trial. Ball v. United States (1891), 140 U.S. 118, 35 L.Ed. 377, 11 S.Ct. 761; 15 Am. Jur., Criminal Law, §§ 454-456, pp. 113-114; Wharton's Criminal Procedure, 10th ed., Vol. II, § 1486, p. 1949.
A trial consists of "`The examination before a competent tribunal, according to the laws of the land, of the facts put in issue in a cause, for the purpose of determining such issue.'" Bush v. State (1920), 189 Ind. 467, 473, 128 N.E. 443.
Under this theory of a trial the accused has a right to be present when issues of fact are tried, but when matters of law are presented his presence is not required, unless the trial court deems it necessary. Bishop's New Crim. Proc., 2d ed., Vol. I, § 269, p. 235; Wharton's Criminal Procedure, 10th ed., Vol. II, § 1484, p. 1945.
The motion for a new trial herein is concerned with questions of law, hence, the defendants-appellants *541 had no right to be present at the argument and hearing upon such motion, if they were represented by counsel and their substantial rights protected. The record shows that they were represented by counsel and fails to disclose that any of their substantial rights were violated.
The ruling on a motion for a new trial in a criminal case is not part of the trial of the accused as contemplated by the statutory and constitutional provisions in this State. Lillard v. State (1898), 151 Ind. 322, 326-327, 50 N.E. 383; Reed v. State (1897), 147 Ind. 41, 46 N.E. 135; Carmen et al. v. State (1935), 208 Ind. 297, 309, 196 N.E. 78.
A motion for a new trial may be presented, argued and ruled upon in the absence of the accused, if he is represented by counsel and is awarded all the substantial rights which the law accords him. Reed v. State, supra (1897), 147 Ind. 41, 46 N.E. 135; Lillard v. State, supra (1898), 151 Ind. 322, 50 N.E. 383; Selke v. State (1937), 211 Ind. 232, 236, 6 N.E.2d 570; State v. Brown (1876), 63 Mo. 439, 444; Ward v. Territory of Oklahoma (1899), 8 Okla. 12, 56 Pac. 704, 707; Wharton's Criminal Procedure, 10th ed., Vol. II, § 1484, p. 1946.
Cf. Dillon v. State (1952), 231 Ind. 396, 108 N.E.2d 881, where it was held that appellant's constitutional rights were not violated by the refusal of the trial court to order his return for hearing on his petition for writ of error coram nobis.
Third: Appellants assert that the verdict of the jury is contrary to law for the reason that because of the lapse of more than seventeen years time between the time of the returning of the indictment and the date of the present trial, certain evidence was missing and certain witnesses could not *542 be found who would have been available in 1936 had appellants received a new trial at that time.
An examination of the transcript at the pages cited by appellants in their brief, discloses that the missing evidence of which they complain consisted of guns which were exhibits at the original trial, and that the witnesses who were unavailable were among those who had been subpoenaed as witnesses for the State. Appellants have failed to state at any place in their brief what evidence was missing, what witnesses were unavailable, and what the testimony would have been had the witnesses been present to testify.
We cannot see how appellants could have been harmed by the absence of State's witnesses, or by the failure of the State to produce certain guns which were in evidence at the first trial.
Appellants have failed to show where their substantial rights were in any way prejudiced by the absence of witnesses or the unavailability of evidence. No cause for reversal is here shown. Henderson v. State, supra (1954), 233 Ind. 598, 602, 122 N.E.2d 340.
Fourth: It is also asserted that there is no evidence to prove the corpus delicti.
Proof of the corpus delicti means proof that the specific crime charged has actually been committed by someone. Taylor v. State (1957), 236 Ind. 415, 140 N.E.2d 104; Hunt v. State (1956), 235 Ind. 276, 133 N.E.2d 48, 49, 50.
An examination of the evidence discloses that Detectives Chatham and Quinnette were assigned to make an investigation of an apartment in Indianapolis for stolen property and they were looking for a man by the name of Coleman for questioning concerning such property.
When Detective Chatham knocked at the door of the *543 apartment it was opened from within and he stepped into the room followed immediately by Detective Quinnette. Upon entering the room the detectives saw two men standing facing them who later they learned to be appellants herein, Donald Joseph and Paul Pierce.
Detective Chatham inquired which one of the two men was Mr. Coleman, whereupon both men replied, "I am." Chatham then said, "We are from the Detective Office and I'd like to talk to you a minute." At that time appellant Pierce said, "Stick them up, you son of a " and the shooting started, the first shot being fired by appellant Pierce. At that time he was approximately two feet in front of Detective Quinnette who then returned the fire. During the shooting Detective Quinnette fell to the floor. After emptying his gun at Detective Quinnette, appellant Pierce ran into the bedroom where he secured another gun.
Appellant Pierce was taken to the City Hospital into the room of Detective Quinnette who raised up off of his bed and pointed his finger at Pierce and said, "You shot me without giving me a chance."
An officer of the Indianapolis Police Department and a witness for the State testified that while he and appellant Pierce were returning from the City Hospital in Indianapolis, "I asked Paul Pierce if Quinnette and Chatham identified themselves as detectives, what made him shoot so quick?" He replied, "I would have shot any damn cop that would have walked in that doorway."
In a statement by appellant Pierce, dated December 10, 1935, and introduced as State's Exhibit No. 6, appears the following:
"While myself and Orville Quinnette were shooting at each other I saw Orville Quinnette fall to the floor between the davenport and wall. And about this time I spun around. And fell to one knee. And Russell Chatham and Donald Joseph were on the davenport fighting. After I emptied my 38 caliber *544 Smith and Wesson revolver No. 45969 at Orville Quinnette I ran back into a small bed room. And grabbed a brief case. Took a 38 caliber Colts revolver out of this brief case. Then throwed the brief case out into the living room. And I fired another shot. And I think this shot hit Russell Chatham. I fired this shot while I was in the living room. And while Russell Chatham and Donald Joseph were out in the hall fighting. And Donald Joseph must of got away from Russell Chatham. And came back into the apartment and I told Donald Joseph to grab the brief case which I had thrown on the floor in the living room. And we both ran out the back way of this apt. house."
The Superintendent of the Indianapolis City Hospital who was a physician, testified that he operated on Orville Quinnette and removed a bullet and a piece of cloth from his abdominal cavity, and that Orville Quinnette died on December 18, 1935 as a result of peritonitis caused by a foreign body entering the abdomen of Quinnette such as the bullet and piece of cloth.
We believe this evidence sufficient to establish that someone shot Detective Quinnette and that he died as a result thereof. Hunt v. State (1939), 216 Ind. 171, 178, 23 N.E.2d 681.
Fifth: Appellants further assert that their rights under the law of Indiana and under the Fourteenth Amendment of the Constitution of the United States were violated because the State police who had apprehended them released them to the Indianapolis Police Department instead of delivering them to the County Sheriff at the Marion County jail, and rely upon Dearing v. State (1951), 229 Ind. 131, 95 N.E.2d 832, to support their position.
Dearing v. State, supra, was an appeal from a denial of a writ of error coram nobis. The only questions properly presented in that case were the validity of the *545 bench warrant upon which appellant Dearing was arrested, and his right to counsel at all steps of the proceedings against him. Further, appellants in the case at bar were arrested on December 10, 1935, but were not indicted until December 18, 1935, hence, the sheriff had no warrant for their arrest at the time they were released to the Indianapolis Police Department on December 10, 1935. This was not the situation in the Dearing case, and assuming that it did make law which required the State Police to release prisoners only to County Sheriffs, a matter which we do not decide, that case lends no support to appellants' position under the circumstances here.
Both appellants were, at the time of their apprehension by the State Police, fugitives from justice. They had, on or about October 5, 1935, escaped from the Indiana State Prison. Under the circumstances as shown by the record, their substantial rights could not have been prejudiced by their release to the Indianapolis Police Department.
Appellants have failed to point out in the argument section of their brief wherein their rights under the Fourteenth Amendment were violated by their release to the Indianapolis Police Department, hence this question is waived. Jordan v. State (1953), 232 Ind. 265, 267, 110 N.E.2d 751.
Sixth: Appellants further assert that the trial court erred in admitting, over their objection, certain exhibits offered by the State and consisting of statements or confessions made by appellants to officers of the Indianapolis Police Department while in their custody. Such statements were prima facie in evidence and the burden of showing their incompetency rested upon appellants. Eiffe v. State (1948), 226 Ind. 57, 77 N.E.2d 750; Pearman v. State (1954), 233 Ind. 111, 117 N.E.2d 362, 364.
*546 It is contended that such statements or confessions were made through fear, coercion and mistreatment. The record shows that on each occasion when appellants objected to the admission of any statement or confession, the trial court excused the jury and conducted a hearing on their admissibility. It further shows that the evidence adduced at these hearings was in sharp conflict. Appellants admit, in their brief, that there was "considerable conflict" in this evidence. There was sufficient evidence of probative value to sustain the ruling of the court in each instance. Under such circumstances this court will not weigh the evidence. Pearman v. State, supra (1954), 233 Ind. 111, 117 N.E.2d 362, 365.
While we do not deem it necessary to further extend this opinion by a recital of the testimony of the police officers and reputable physicians who treated appellants' gun wounds, we have examined the record and find substantial evidence sufficiently abundant to sustain the finding of the trial court in each instance.
Appellants have failed to sustain their burden of proof and we must conclude that such statements and confessions were properly admitted in evidence. In our opinion there was sufficient evidence to sustain the verdict of the jury, and appellants have failed to show that it was contrary to law. Hence, the judgment of the trial court must be affirmed.
Judgment affirmed.
Achor, C.J., Arterburn, Emmert and Landis, JJ., concur.
NOTE. Reported in 141 N.E.2d 109.
NOTES
[1] Acts 1905, ch. 169, § 222, p. 584, being § 9-1801, Burns' 1956 Replacement.
| {
"pile_set_name": "FreeLaw"
} |
75 B.R. 923 (1987)
In re Michael TERZIAN, Debtor.
In re ALPHA OMEGA TRAVEL, LTD., Debtor.
Rasendu SANGHUI and Maharaj Travels, Inc., Plaintiffs,
v.
ALPHA OMEGA TRAVEL, LTD. and Michael K. Terzian, Defendants.
Bankruptcy Nos. 86 B 12180 (TLB), 86 B 12179 (TLB), Adv. No. 87-5017A.
United States Bankruptcy Court, S.D. New York.
July 16, 1987.
*924 Manojkumar D. Patel, New York City, for plaintiffs.
Weiner & Silverman, by Bruce Weiner, New York City, for defendants.
DECISION AND ORDER ON PLAINTIFFS' MOTIONS TO AMEND COMPLAINT, GRANT DEFAULT JUDGMENT AND LIFT THE AUTOMATIC STAY AND DEFENDANT'S MOTION TO DISMISS COMPLAINT
TINA L. BROZMAN, Bankruptcy Judge.
We are asked by plaintiffs for a default judgment denying the individual defendant a discharge and by that defendant for an order dismissing the complaint. As best as we can surmise from the moving and opposition papers and the oral argument on these motions, the salient facts are undisputed.
I.
On November 18, 1986, voluntary chapter 7 petitions were filed on behalf of Alpha Omega Travel, Ltd. ("Alpha Omega") and Michael K. Terzian ("Terzian"). Terzian is the sole shareholder of Alpha Omega. Ranendu Sanghui and Maharaja Travels, Inc. are the plaintiffs in this action ("Plaintiffs"); Maharaja Travels, Inc. was a scheduled creditor of Alpha Omega; neither plaintiff was a scheduled creditor of Terzian.
On November 26, 1986, the Clerk of the Bankruptcy Court notified the creditors in the Terzian bankruptcy that February 17, 1987 would be the last date to file both an objection to the debtor's discharge and a complaint to determine the dischargeability of a debt pursuant to 11 U.S.C. § 523(c). Since the Plaintiffs were not scheduled creditors in the Terzian bankruptcy, they were not mailed this notice. However, Manojkumar D. Patel ("Patel"), attorney for the Plaintiffs, admits having received actual notice of the Terzian bankruptcy in early December 1986.
The plaintiffs came to know about this bankruptcy petition on or about December 9, 1986 when the civil suit of the plaintiff against the defendants [sic] came to Trial Calendar in the civil court of New York County.
Aff. of Patel at ¶ 6. The suit Patel refers to is one commenced by one of the Plaintiffs against Alpha Omega (the "State Court Action").
Armed with knowledge of the bankruptcies, the Plaintiffs filed a complaint on January 20, 1987 against both debtors. A summons was issued on that date. Plaintiffs objected to the discharge of both debtors, requested dismissal of the petitions, and sought judgment in the amount of $9,785.55. The complaint was served by mail on Alpha Omega, Terzian and the chapter 7 trustee of Alpha Omega. Service was never made on Terzian's attorney.[1]
No answer was filed. On March 11, 1987, Plaintiffs filed a motion which was inartfully drafted but which appears to seek a default judgment, an amendment to the complaint to request that the Plaintiffs' claims be declared nondischargeable (the original complaint having only objected to discharge) and modification of the automatic stay to allow the continued prosecution of the State Court Action against Alpha Omega.
The Debtors opposed all relief and cross moved for dismissal of the adversary proceeding on the grounds that 1) only one summons was issued and one filing fee *925 paid with respect to the complaint against both debtors; 2) the debtors' attorneys were never served pursuant to Federal Rule of Bankruptcy Procedure 7004(b)(9); and 3) Plaintiffs either have no standing with respect to the Terzian bankruptcy since they are not creditors in that case or should be estopped from asserting they have standing since they only sued Alpha Omega in State Court and not Terzian.
On May 5, 1987 this court entertained oral argument and at that time dismissed the complaint as to Alpha Omega because Plaintiffs sought relief against Alpha Omega which was given to them by operation of law, specifically, denial of Alpha Omega's discharge. See 11 U.S.C. § 727(a)(1).[2] No appeal was taken from the order dismissing the adversary proceeding as against Alpha Omega. The motions with respect to Terzian were taken under advisement. We did not rule on May 5, 1987 on the request to lift the automatic stay as to Alpha Omega and accordingly deal with it here.
II.
The first hurdle to resolution of these motions is whether we may entertain Terzian's motion to dismiss the adversary proceeding. That question arises because Terzian's challenge, although made in his first response to the complaint, was made after his time to answer would ordinarily have expired.
Fed.R.Bankr.P. 7012(a) provides that "[i]f a complaint is duly served" the defendant shall serve an answer within 30 days after the issuance of the summons. Due service by mail upon a defendant debtor is made by service upon the debtor at the address listed in his petition and, if he is represented by an attorney, by service upon the attorney at his post-office address. Fed.R.Bankr.P. 7004(b)(9). As Terzian's petition makes clear, he was represented by an attorney. And, as Plaintiffs admit, they never served that attorney with a copy of the complaint against Terzian. Accordingly, the complaint was not "duly served" and Terzian had no obligation to respond any earlier than he did. Harlow v. Palouse Producers, Inc. (In re Harlow Properties, Inc.), 56 B.R. 794, 799 (Bankr. 9th Cir.1985); First Tennessee Bank v. Brown, 7 B.R. 486 (Bankr.N.D.Ga.1980) (applying former Fed.R.Bankr.P. 704); see also Leab v. Streit, 584 F.Supp. 748, 760 (S.D.N.Y.1984) (defendant did not waive objection to jurisdiction over his person when he failed to respond to complaint within 20 days of its technically defective service upon him); 2A J. Moore, Moore's Federal Practice, ¶ 12.06[2] at 12-37 (2d ed. 1986). Thus we may consider Terzian's motion to dismiss.
III.
Without any support whatsoever and notwithstanding that the facts are undisputed, Plaintiffs assert that service of process was proper. They also argue that it was up to Terzian to provide his attorney with a copy of the complaint. Transcript of hearing on May 5, 1987 at page 28. The error in these arguments is exposed by Fed.R.Bankr.P. 7004(b)(9) which states clearly and unequivocally that the debtor's attorney must also be served.
That service was not properly made here is beyond dispute. The more difficult question is whether the defect warrants dismissal of the complaint. We recognize the rule in this circuit that until service is completed, the action remains pending in an inchoate state. Messenger v. United States, 231 F.2d 328, 329 (2d Cir.1956); see International Controls Corp. v. Vesco, 556 F.2d 665, 669 (2d Cir.1977), cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 *926 L.Ed.2d 758 (1978). The mere lapse of time between the date the complaint was filed and the date of effective service does not cause the complaint to abate. Grammenos v. Lemos, 457 F.2d 1067, 1071 (2d Cir.1972) (citing Messenger, supra.). This does not mean, however, that service can be made at any time.
Fed.R.Bankr.P. 7004(f) provides that service shall be made by delivery of the summons and complaint within 10 days following issuance of the summons. The rule allows another summons to be issued and served when the prior one is not timely delivered or mailed. But the rule does not contain any time by which service must be completed, failing which the complaint may be dismissed. Nor does the rule limit the number of summonses a plaintiff may receive for the purpose of curing defective service. Client's Security Fund v. Dahowski (In re Dahowski), 48 B.R. 877, 881 (Bankr.S.D.N.Y.1985). The decisional law establishes, however, that plaintiffs are required to use diligence in making service of process. Williston Cooperative Credit Union v. Horob (In re Horob), 54 B.R. 693, 696 (Bankr.D.N.D.1985) and cases cited therein. Courts may dismiss an action where there is substantial delay between the filing of the complaint and service of the summons. See 6 W. Norton, Bank. L. & Practice Rule 7004(f) at 354 (1984); In re Dahowski, supra, 48 B.R. at 884-85.
The purpose of the bankruptcy laws is to secure the prompt administration of a debtor's estate within a limited period of time. To this end, complaints objecting to discharge or to dischargeability of a debt must be filed not later than 60 days following the first date set for the meeting of creditors. See Fed.R.Bankr.P. 4004(a) and 4007(c). The Dahowski court reasoned that Fed.R.Bankr.P. 7004(f) was designed to advance this purpose by limiting the time period for effecting service of such a complaint. In re Dahowski, 48 B.R. at 880. The Dahowski court stated that "it would be abusive for the reissuance of summonses to be allowed to continue indefinitely under 7004(f)." In re Dahowski, at 881.
Fed.R.Civ.P. 4(j) is helpful in determining whether Plaintiffs' complaint should be dismissed. It has been suggested that where the Bankruptcy Rules are vague, bankruptcy courts may look to the Federal Rules of Civil Procedure to fill the void. 6 W. Norton, Bankr. L. & Practice Rule 7004(f) at 354 (1984); Dahowski, supra 48 B.R. at 884; Prudential-Bache Securities, Inc. v. Riposo (In re Riposo) 59 B.R. 563 (N.D.N.Y.1986). Rule 4(j) gives the plaintiff 120 days to make proper service. After that time, the plaintiff has the burden of explaining why service has not been completed. If good cause is shown, the court can refrain from dismissing the action and allow the plaintiff additional time to serve the complaint. Geller v. Newell, 602 F.Supp. 501 (S.D.N.Y.1984); Burks v. Griffith, 100 F.R.D. 491 (N.D.N.Y.1984). On the other hand, if the plaintiff fails to justify insufficient service, the complaint may be dismissed. "[C]ourts have broad discretion to dismiss the action or retain the case but quash the service that has been made on defendant." Montalbano v. Easco Hand Tools, 766 F.2d 737, 740 (2d. Cir. 1985) quoting 5 C. Wright & A. Miller Federal Practice and Procedure § 1354, at 585 (1969) (footnote omitted). While the preference may ordinarily be to preserve the action, the decision whether to dismiss an action for incomplete service must be made upon careful consideration of the facts of each particular case.
In the instant case, six months have lapsed since issuance of the summons. Plaintiffs have never served Terzian's attorney or indicated that they intend to do so. Six months is more than enough time for the completion of service of process.[3]
Several courts in this circuit have held that dismissal is proper where the plaintiff has failed to show good cause for the delay or insufficiency. Montalbano v. Easco Hand Tools, supra, 766 F.2d 737; Burks v. *927 Griffith, supra, 100 F.R.D. 491; see Sturm v. Schrank, 43 B.R. 755 (S.D.N.Y. 1984). In Montalbano, service was insufficient after 120 days lapsed and plaintiff made no attempt to cure the improper service. The court said that it was proper to hold plaintiff to the 120 day time limit of Rule 4(j) "especially since [the plaintiff] has not exactly bent over backward to effect service."[4] This court finds that dismissal is proper in the present case because of Plaintiffs' continuing failure to comply, or attempt to comply, with the rules and because they have offered no justification whatsoever for their failure to effect proper service. This is not a case like Geller v. Newell, supra, 602 F.Supp. 501, where service was completed 14 days after the 120-day time limit and where plaintiff had made diligent efforts to timely serve the complaint, justifying retention of the case. Nor is this a case like Romandette v. Weetabix Company, Inc., 807 F.2d 309 (2d Cir.1986) where an incarcerated pro se litigant proceeding in forma pauperis permissibly relied on the United States Marshals to effect service and service was not properly made. Plaintiffs here have simply chosen to ignore the rules regarding service. We note implicit support for our construction of the rules as well in the proposed amendments to Fed.R.Bankr.P. 7004(a) which make the 120 day limit of Fed.R.Civ.P. 4(j) applicable to adversary proceedings in bankruptcy.
The purpose of any time limit for service is to prevent inaction with respect to service and to assure speedy adjudication of cases. We are particularly sensitive to this goal in the context of objecting to a debtor's discharge. Plaintiffs' inaction has worked to impede this goal. Under the circumstances, we feel compelled to dismiss the complaint.[5]
IV.
As a final matter, we see no reason to lift the automatic stay to permit continuation of the State Court Action. The bankruptcy case is the proper place for assertion of Plaintiffs' claim; it may well even be that Alpha Omega's bankruptcy trustee will not object to its allowance, obviating the need for any further litigation.
Accordingly, the complaint is dismissed as against Michael K. Terzian and Plaintiffs' motion is denied.
IT IS SO ORDERED.
NOTES
[1] In fact, he never learned of the action until a chance encounter with his client on March 2, 1987, the date of the scheduled pre-trial conference. Affirmation of Bruce Weiner, Esq. at ¶ 5.
[2] Plaintiffs' request in the adversary proceeding for a dismissal of Alpha Omega's petition was procedurally defective because such relief can only be granted by motion on notice to all creditors, see 48th Street Steakhouse, Inc. v. Rockefeller Center, Inc. (In re 48th Street Steakhouse, Inc.), 61 B.R. 182, 186 n. 8 (Bankr.S.D.N. Y. 1986), aff'd, 77 B.R. 409 (S.D.N.Y. 1987). Moreover, Plaintiffs' argument that the petition should be dismissed because an earlier petition had been dismissed pursuant to 11 U.S.C. § 707(a) was unpersuasive. The order of dismissal of that petition does not indicate that the dismissal was with prejudice to a subsequent filing.
[3] One commentator observes that the 120-day time limit seems to be more than enough time to complete service. Siegel, Practice Commentaries U.S.C.A. Rule 4, at 54 (West Supp.1985) citing Grammenos v. Lemos, supra, 457 F.2d 1067 (2d Cir.1972).
[4] Other authorities suggest that dismissal is mandatory after expiration of the 120-day time period absent a showing of good cause. Service Under Amended Rule 4, 96 F.R.D. 81, at 114; Shuster v. Conley, 107 F.R.D. 755, 757 (W.D.Pa. 1985).
[5] We give short shrift to Terzian's argument that the complaint must be dismissed because of Plaintiffs' failure to pay two filing fees and commence two adversary proceedings. Payment of a filing fee is not a prerequisite to commencement of an action. See generally Parissi v. Telechron, Inc., 349 U.S. 46, 75 S.Ct. 577, 99 L.Ed. 867 (1955) (paying filing fee for notice of appeal outside the statutory time frame was not fatal to appeal which was filed within proscribed time period). It is well established that a civil action is commenced in federal court by the filing of a complaint. Fed.R.Civ.P. 3; Messenger v. United States, 231 F.2d 328, 329 (2d Cir.1956); Bartholomeo v. Parent, 71 F.R.D. 86, 87 (E.D.N.Y.1976).
Having determined that the complaint should be dismissed, we need not reach the standing issue raised by Terzian.
| {
"pile_set_name": "FreeLaw"
} |
772 F.Supp. 513 (1991)
FRANK BRISCOE COMPANY, INC., a corporation, Plaintiff,
v.
COUNTY OF CLARK, a political subdivision of the State of Nevada, et al., Defendant.
No. CV-S-80-135-RDF.
United States District Court, D. Nevada.
July 31, 1991.
*514 Morton R. Galane, R.L. Rickdall, Las Vegas, Nev., William Beadie, St. Paul, Minn., for plaintiff.
A. Wayne Lalle, Jr., Washington, D.C., Victor W. Priebe, Las Vegas, Nev., for Clark County.
ORDER GRANTING PLAINTIFF'S MOTION FOR DECLARATORY JUDGMENT AND DENYING DEFENDANT'S MOTION FOR SUMMARY AND DECLARATORY JUDGMENT
ROGER D. FOLEY, District Judge.
INTRODUCTION
This Order is the latest decision in a case filed in 1980 between Frank Briscoe Company, Inc. ("Briscoe") and Clark County ("the County"). Currently pending before this court are Briscoe's Motion for Declaratory Judgment (doc. no. 1560), and the County's Motion for Declaratory and Summary Judgment (doc. no. 1561). These Motions involve Briscoe's standing to maintain this action against the County, and the County's liability to Briscoe.
This court heard oral arguments on these Motions on July 15, 1991. After considering these oral arguments and the parties' well-briefed Motions, this court renders the following decision.
FACTS
These parties have enjoyed a long and tumultuous relationship with this court that began when Briscoe initiated an action against numerous defendants including the County in 1980. Originally, Briscoe, the prime contractor, sought declaratory and injunctive relief for disputes that arose during the construction of an advanced waste water treatment plant in Clark County, Nevada. The County counterclaimed against Briscoe for breach of contract, and Briscoe responded with its own breach of contract counterclaim against the County.
In 1983, Howard Electrical and Mechanical Company, Inc. ("Howard"), a Briscoe subcontractor on the advanced waste water treatment plant project, filed suit in this court against Briscoe for damages incurred during the construction of the water treatment facility. (doc. 1560, exh. A at 1). Additionally, Howard instituted arbitration proceedings against Briscoe. Subsequently, Briscoe filed an action against Howard in the United States District Court for the District of New Jersey.
*515 Originally, Briscoe sought indemnification from the County for the claims of its subcontractors, including Howard. However, this court in an Order issued after the trial between Briscoe and the County began held that the contract between Briscoe and the County precluded the County's indemnification of Briscoe. (doc. no. 1561, exh. D at 12).
The day after this court issued its decision and five months into the trial Briscoe revealed to the court and opposing counsel a liquidating agreement signed by Briscoe and Howard on November 14, 1985.[1] The agreement provided that Briscoe would pursue Howard's claim against the County[2]; pay ninety-two percent (92%) of the litigation costs; remit a portion of the recovery, if any, to Howard;[3] and dismiss its New Jersey action against Howard. In return, Howard agreed to dismiss both of its pending actions against Briscoe, and accept its portion of the recovery from the County in full settlement of its claims against Briscoe. The following liquidating agreement provisions are important to the disposition of this case:
(1) Howard acknowledged that sole responsibility for its claims of, inter alia, increased costs, additional and extra work, impacts and delays rested with the County. However, because Howard was not in privity with the County, Briscoe agreed to assert Howard's claim against the County, and for that purpose, Briscoe acknowledged its liability for Howard's claims;
(2) the parties limited Briscoe's liability to Briscoe's obligation to present and pursue Howard's claims, and to remit a portion of the recovery to Howard;
(3) the parties agreed that Howard would bear the cost and responsibility of furnishing Briscoe with internal research, data, other evidence, witnesses and experts, and would pay eight percent (8%) of the litigation costs;
(4) Howard assigned to Briscoe "all of its rights, title of interest in and to any judgment, award or settlement amount allocated or determined as attributable" to Howard's claims (doc. no. 1560, exh. A); and
(5) the parties agreed to allocate any recovery from the County in the following manner: Howard would receive nine and one half percent (9.5%) of the first $20,000,000, and five percent (5%) of any amount above $20,000,000.
About two weeks after this court denied Briscoe's indemnification claim, Briscoe moved this court for permission to amend its Complaint to allege subcontractor damages. In support of its Motion, Briscoe maintained: "Briscoe is obligated to Howard to pursue these claims of damage against the County Defendants, and remains liable to Howard to the extent these claims of damage are recovered from the County Defendants." (doc. no. 1561, exh. A at 2). Although this court granted Briscoe leave to amend, the court severed Howard's claims against the County from the rest of Briscoe's case, and reserved the subcontractor's claims until a later trial.
In September 1986, a final judgment was entered against the County for $16,240,000 plus pre-judgment and post-judgment interest. After exhausting post-trial motions and other avenues of appeal, the County *516 finally paid Briscoe $28,310,257.63. However, Briscoe initially refused to pay Howard any part of this settlement arguing that Howard was not entitled to any recovery until the completion of the trial on Howard's claim. (doc. no. 1560, exh. A at 1). In response, Howard initiated an action against Briscoe in this court in July 1989. Subsequently, on January 31, 1990, Briscoe and Howard entered into a second agreement in which Briscoe agreed to remit $1,331,523.15 to Howard the portion of the $28,310,257.63 recovery allocated to Howard under the November 1985 liquidating agreement. Additionally, the parties agreed that Howard would receive five percent (5%) of any additional monies Briscoe recovered on Howard's claims less Howard's share of litigation cost.[4] Now, pursuant to the November 1985 liquidating agreement, Briscoe seeks to prosecute Howard's claim against the County.
DISCUSSION
1. Motion for Summary Judgment:
A. The Standard for Summary Judgment:
A motion for summary judgment will be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The nonmoving party has the burden of "showing that there is a genuine issue for trial" by presenting specific facts beyond the pleadings. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), cert. denied, 484 U.S. 1066, 108 S.Ct. 1028, 98 L.Ed.2d 992 (1988). There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a reasonable jury to find by a preponderance of the evidence in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Conversely, "the moving party is `entitled to a summary judgment as a matter of law' [if] the nonmoving party [fails] to make a sufficient showing on an essential element of its case with respect to which she has the burden of proof." Celotex 477 U.S. at 323, 106 S.Ct. at 2552.
B. Analysis:
The County argues that Briscoe lacks standing to bring this claim. Specifically, the County contends that the November 1985 liquidating agreement contains an assignment of Howard's claim to Briscoe.[5] However, the County asserts, the rights of an assignee cannot rise higher than those of the assignor. In this case, Howard, the assignor, could not bring a claim against the County because privity did not exist between the parties. Therefore, the County states, Briscoe, as the assignee, is not entitled to bring a claim. This argument is unpersuasive.
"Although the no-privity rule has barred subcontractors from recovering directly against the government, subcontractors' claims have long been recoverable by prime contractors through representative suits."[6] Kates, Facilitating Subcontractor's Claims Against the Government Through the Prime Contractor as the Real Party In Interest, 52 Geo.Wash. L.Rev. 146 (1983) (citing Stout, Hall and Bangs v. United States, 27 Ct.Cl. 385 (1892); Consolidated Eng'g Co. v. United States, 98 Ct.Cl. 256 (1943)). There are some limitations on this general rule. Specifically, the Severin doctrine states that a prime contractor may recover damages on behalf of its subcontractor only if the prime contractor suffered actual damages. *517 Severin v. United States, 99 Ct.Cl. 435 (1943), cert. denied, 322 U.S. 733, 64 S.Ct. 1045, 88 L.Ed. 1567 (1944).[7] A prime contractor suffers actual damages if the prime contractor (1) has reimbursed its subcontractor for the subcontractor's damages; or (2) if the prime contractor remains liable for such reimbursement in the future. J.L. Simmons Co. v. United States, 304 F.2d 886, 888, 158 Ct.Cl. 393 (1962). Therefore, if a prime contractor has agreed to reimburse its subcontractor for damages the subcontractor suffered at the hands of the government, but only as and when the former receives payment for them from the government, a prime contractor may bring a suit on behalf of its subcontractor. J.L. Simmons 304 F.2d at 889 (emphasis supplied).
Because the Severin doctrine produced harsh results, the Court of Claims placed limitations on its application. Folk Constr. Co. v. United States, 2 Cl.Ct. 681, 685 (1983). Therefore, "a prime contractor is precluded from maintaining a suit on behalf of its subcontractor only when a contract clause or release completely exonerates the prime contractor from liability to its subcontractor." Folk at 685 (citing J.L. Simmons). In other words, the subcontract or release must expressly negate any liability of the prime contractor to the subcontractor. Id. Furthermore, the government has the burden of establishing that the prime contractor has no liability to its subcontractor. Id.
Typically, to determine if the prime contractor remains liable to the subcontractor, the court analyzes the prime contractor's obligations to prosecute the claims of the subcontractor against the owner. For example, in J.L. Simmons, the agreement between the prime contractor and the subcontractor provided that the subcontractor "waives, releases and discharges any and all liens, claim or right of lien ..." against the prime contractor except the prime contractor's obligation to bring the subcontractor's claims against the government. J.L. Simmons 304 F.2d at 887. Additionally, the agreement provided that the prime contractor would bear the litigation costs except that the subcontractor would provide witnesses and document preparation, and would pay a contingent fee to the attorney. Also, the agreement provided that if the prime contractor recovered anything on the claim, the subcontractor would receive seventy-five percent (75%) of the amount that remained after the deduction of attorney's fees and expenses. J.L. Simmons 304 F.2d at 888. Finally, the agreement provided that such a recovery (if an amount had indeed been recovered) would "operate as a full and complete release of any and all liability" of the prime contractor. Id.
In their analysis, the court noted that the agreement did not act as a complete exoneration of the prime contractor. Specifically, the court found that the agreement did not contain any clause that expressly negated the prime contractor's liability to the subcontractor for the claims being asserted *518 against the owner. In fact, the court stated, such claims were expressly exempted from the waiver and release. Additionally, the court stated that the agreement did not contain an express exculpatory clause for the subcontractor's claims against the owner. The court concluded:
We have indicated that plaintiff's liability is not expressly negated in any event. Rather, the releases simply purport to set forth the manner in which plaintiff's liability is to be extinguished. Certainly implicit, at least, in these provisions would seem to be a recognition on the part of the parties that plaintiff is liable for these claims. Otherwise, there would be no reason for the parties to go to the trouble of providing a method for extinguishing a non-existing liability. Consequently, we have here a situation where plaintiff's liability for these claims was recognized and expressly preserved at the time the releases were entered into.
J.L. Simmons 304 F.2d at 890 (emphasis in original).
Therefore, the court concluded, "the releases neither exonerate plaintiff from liability ab initio nor subsequently, but do impose certain obligations on plaintiff which it must fulfill before its duty to reimburse these subcontractors for the damage allegedly caused by the Government is extinguished." Id.
In Folk, 2 Cl.Ct. 681, a case decided twenty years after J.L. Simmons, the United States Claims Court demonstrated that its analysis of prime contractor liability had not changed. In Folk, an agreement between the prime contractor and the subcontractor provided that the subcontractor "fully and finally" released the prime contractor from all claims of damages "except to the extent such claims are not released herein." Folk at 685. Specifically, the agreement required that the prime contractor "cooperate" in the prosecution of the subcontractor's claims. The court held that the prime contractor's "continuing obligation to cooperate in the prosecution of [the subcontractor's] suit is an integral part of the release." Id. at 685. Therefore, the court held, the release was not complete and unconditional. Id.
Such analysis has also found its way into the United States District Courts. For example, in Cable Belt Conveyors v. Alumina Partners of Jamaica, 717 F.Supp. 1021 (S.D.N.Y.1989), the prime contractor and the subcontractor entered into an agreement in which both parties released each other from any claim they might have against each other. Additionally, the parties agreed that the prime contractor would pursue a claim against the owner on behalf of the subcontractor. If there was any recovery, the prime contractor would retain one-third (33.3%) of the award, and the subcontractor would receive two-thirds (66.7%) of the recovery. The Cable Belt court expressly adopted the language in J.L. Simmons, and pronounced that "a liquidating agreement, under which the general contractor consents `to reimburse its subcontractor for damages it has suffered at the hands of the [owner] but only as and when the former received payment from the [owner]' will not eliminate the owner's liability." Cable Belt at 1024. The court reviewed the obligations of the prime contractor to bring a claim against the owner on behalf of the subcontractor, and found that the agreement did not exonerate the prime contractor. Rather, the agreement merely limited the prime contractor's "liability to approximately two-thirds of what it can recover from [the owner]" Id. at 1026.
In the present case, Howard released and discharged Briscoe "from any and all [present and future] obligations, debts, claims, and demands" except for the obligations enumerated in the agreement. Specifically, the agreement obligated Briscoe to (1) present and pursue Howard's claims against the County; (2) bear ninety-two percent (92%) of the litigation cost associated with Howard's claim; (3) cooperate fully and completely with Howard in the presentation of Howard's claims; and (4) pay Howard an allocated portion of the recovery. (doc. no. 1561, exh. A). The liquidating agreement did not contain any provision that either negated Briscoe's liability, or exonerated Briscoe from liability.
*519 Clearly then, this agreement does not operate as a complete and unconditional release. Therefore, this court finds that, like the agreements in J.L. Simmons, Folk, and Cable Belt, the liquidating agreement between Briscoe and Howard merely sets forth the manner in which Briscoe's liability is to be extinguished. Accordingly, Briscoe may prosecute Howard's claim against the County.
However, the County's argument contains a twist that remains unaddressed by the preceding discussion. The crux of the County's argument is that the liquidating agreement contained an impermissible assignment of Howard's claim to Briscoe, and therefore, Briscoe does not have standing to prosecute Howard's claims. As previously discussed, the disputed provision assigns to Briscoe all of Howard's rights and title of interest in any judgment, award or settlement from the claim against the County. This court finds this argument unpersuasive.
The assignment explicitly limits itself to the proceeds of any judgment, award or settlement. While Briscoe cited this court to several decisions that distinguish between an impermissible assignment of a claim, and a permissible assignment of proceeds, the County failed to provide any authority for their proposition that Howard could not assign the proceeds. Rather, the County urges this court to review the entire liquidating agreement in total and find that the broad discretion afforded Briscoe in the presentation of Howard's claims indicates that the assignment is not merely for proceeds, but indeed operates as an assignment of a claim. However, case law indicates that courts have authorized agreements that afforded prime contractors broad discretion in the presentation of subcontractors' claims. See J.L. Simmons 304 F.2d at 887-888 (The agreement between the prime contractor and the subcontractor provided that the prime contractor controlled the selection of attorneys for the presentation of all claims, and therefore implicitly controlled the presentation of all claims.).
Additionally, the case law overwhelmingly holds that a prime contractor can prosecute a subcontractor's claim against the owner in the absence of privity provided the prime contractor retains some obligation to prosecute the subcontractor's claim. The liquidating agreement in this case contains such an obligation. Accordingly, it would be pointless to assign Howard's claim to Briscoe.[8]
*520 For these reasons, this court finds that the assignment of Howard's entitlement and title of interest in any judgment, award or settlement does not amount to an improper assignment of Howard's claim: Briscoe has standing to bring Howard's claim. Accordingly, the County's Motion for Summary Judgment is denied.
2. Motions for Declaratory Judgment:
Pursuant to an Order issued by this court on October 10, 1990, (doc. no. 1556), Briscoe and the County both filed motions for declaratory judgment.[9] The issue addressed in these motions, as accurately framed by Briscoe is, "[i]n what way, if any, does the liquidating agreement between Briscoe and Howard affect the amount of the liability of the County to Briscoe." (doc. no. 1560 at 5).
The County seeks a declaratory judgment that limits Briscoe's maximum recovery from the County to Briscoe's obligation to pay Howard under the liquidating agreement. In support of this position and in reliance on Severin and subsequent cases the County focuses on (1) the difference in Briscoe's liability to Howard pursuant to the subcontract and the liquidating agreement; and (2) the theory that "no damages have accrued to Briscoe unless Briscoe is liable for the Howard damages." (doc. no. 1561 at 21).
According to the County, the subcontract obligated Briscoe to remit Howard's proportionate share of any recovery Briscoe receives from the County.[10] Therefore, the County states, Briscoe represented in its Second Amended Complaint, that Briscoe "remains liable to Howard to the extent these claims of damage are recovered from the County Defendants." (doc. no. 1561, exh. A at 2).
However, the County argues, "Briscoe severely limited its obligations to Howard under the Subcontract when it entered into the Liquidating Agreement in November 1985." (doc. no. 1561 at 10). Specifically, the County contends, the liquidating agreement limits Briscoe's liability to nine and one half percent (9.5%) of the first $20,000,000 recovered from the County, and five percent (5%) of the rest of the recovery. As such, the County argues, Briscoe is no longer liable to Howard to the extent Briscoe recovers against the County. Indeed, the County notes, at this time, Briscoe remains liable to Howard for only five percent (5%) of the presently pending 5.5 million dollar claim. Therefore, the County contends, under the Severin doctrine, Briscoe may only maintain this action for the monetary amount that it is liable to Howard, and this court should limit the County's liability to the amount that Briscoe will pay to Howard pursuant to the liquidating agreement.
Briscoe counters that the liquidating agreement "merely places a maximum limit on the amount which Briscoe and Howard may recover from one another" (doc. no. 1560 at 5) (emphasis in original), and Briscoe contends, there is no case law that prohibits the prime contractor and the subcontractor from entering a contract that details how the money will be shared between them once the prime contractor recovers against the owner.
The combined efforts of the parties and this court reveal two cases that involve an agreement that obligates the prime contractor to remit less than full recovery to the subcontractor. However, neither court addressed an argument similar to the County's position. Although, the County presents this court with a novel question, *521 this court finds that the County's argument cannot withstand close scrutiny.
As previously discussed, in J.L. Simmons, 304 F.2d 886, the agreement between the prime contractor and the subcontractor obligated the prime contractor to bring an action against the government on behalf of the subcontractor. The agreement also provided that the subcontractor would receive seventy-five percent (75%) of the amount recovered by the prime contractor after the deduction for attorney's fees and expenses. J.L. Simmons 304 F.2d at 888.
Importantly for our purposes, the court did not analyze the prime contractor's liability to the subcontractor in terms of monetary liability (i.e., the recovery allocated to the subcontractor). Rather, the court confined its analysis to the prime contractor's obligation to bring a claim against the owner on behalf of the subcontractor. After the court satisfied itself that the agreement imposed certain obligations on the prime contractor in the presentation of the subcontractor's case, the court held that the prime contractor was "presently subject to liability on these claims and will continue to be so until liability is extinguished in accord with the method agreed to by the parties." J.L. Simmons 304 F.2d at 890.
In Cable Belt, 717 F.Supp. 1021, the prime contractor and the subcontractor also entered into an agreement that obligated the prime contractor to prosecute the subcontractor's claims against the owner. The agreement specified that the prime contractor would receive one-third (33.3%) and the subcontractor would receive two-thirds (66.7%) of any recovery. As in J.L. Simmons, the court did not address the division of recovery when it addressed the existence of the prime contractor's liability to the subcontractor. Rather, the court focused on the prime contractor's obligations to prosecute the subcontractor's claim against the owner, and, like the court in J.L. Simmons, found that the agreement "simply `set forth the manner in which [the prime contractor's] liability is to be extinguished.'" Cable Belt at 1027 (quoting J.L. Simmons).[11]
These cases clearly demonstrate that, contrary to the County's assertions, a prime contractor's liability to its subcontractor and therefore, the prime contractor's right to recover on the subcontractor's claims is not connected to the agreed division of the recovery. Indeed, the allocation schemes did not even warrant mention in the cases discussed, and for good reason: courts are rarely suited to analyze the value of consideration given and received. Although the subcontractor will obtain only a portion of the recovery, it may receive benefits that are impossible to quantify. Therefore, to avoid this legal quagmire, courts developed an analysis that emphasizes the prime contractor's obligations to prosecute the subcontractor's claim. Once a court satisfies itself that the prime contractor retains obligations under the agreement with the subcontractor, the prime contractor may initiate an action on behalf of the subcontractor: The division of the recovery is not important.
Undaunted by this unfavorable case law, the County argues that, although courts indulged in a limited analysis for agreements that provided for the prime contractor's retention of up to thirty-three percent (33.3%) of the recovery, a similar analysis is *522 unwarranted for an agreement that requires the prime contractor to remit only nine and one half percent (9.5%) of the first $20,000,000, and five percent (5%) of any additional recovery. However, the County provides no authority for its argument, and absent such authority, this court is unwilling to set forth an arbitrary determination of permissible and impermissible allocation schemes.
The County's argument that Briscoe will receive a windfall under the terms of the liquidating agreement is equally unavailing. The issue for the County is the existence of its liability; it is not an issue of who ultimately receives the recovery. Briscoe and Howard, two experienced and sophisticated business entities, offered and received valuable consideration to enter into the liquidating agreement. Both the County and this court are in a poor position to analyze the value of such consideration, and to make any determinations of the existence of excess or unfairness. As such, the County cannot argue windfall to prematurely limit its own liability. For these reasons, the County's Motion for Declaratory Judgment is denied.
CONCLUSION
Based on the preceding discussion, IT IS ORDERED that Briscoe's Motion for Declaratory Judgment (doc. no. 1560) is GRANTED;
IT IS FURTHER ORDERED that the County's Motion for Declaratory and Summary Judgment (doc. no. 1561) is DENIED.
NOTES
[1] In a liquidating agreement, a general contractor agrees "to reimburse its subcontractor for damages [the subcontractor] suffered at the hands of the [owner] but only as and when the former receives payment from the [owner]." Cable Belt Conveyors v. Alumina Partners of Jamaica, 717 F.Supp. 1021, 1024 (S.D.N.Y.1989).
[2] In the liquidating agreement, Howard represented the value of its claim against the County at $7,500,000. However, Briscoe now asserts that the value of the Howard claim is $5,464,403.50, not including pre-judgment interest. (doc. no. 1563 at 2).
[3] The liquidating agreement provides that Howard will share in the recovery against the County even if no recovery is specifically awarded for Howard's claim. Therefore, as long as Briscoe recovers against the County for its claims, the parties contemplated that Howard would share in the award.
Additionally, when Briscoe and Howard entered into the liquidating agreement, they based their allocation formula on the total pending claim against the County $66,512,013.41 plus interest. (doc. no. 1562 at 10). As such, Briscoe asserts that Howard stood to recover in excess of $6,000,000.
[4] In this second agreement, Howard represented that the value of its claim was in excess of $6,000,000.
[5] The language that the County contends is an assignment states: "Howard does hereby assign to Briscoe all its rights, title of interest in and to any judgment, award or settlement amount allocated or determined as attributable to [Howard's] claims...." (doc. no. 1560, exh. A at 5).
[6] According to Kates, in a representative suit, the prime contractor prosecutes the subcontractor's claims against the government.
[7] The Severin doctrine applies to breach of contract claims against the federal government. However, several states have adopted the doctrine for cases involving state government entities. See University of Alaska v. Modern Const., Inc., 522 P.2d 1132 (Alaska 1974); D.A. Parrish & Sons v. County Sanitation Dist. No. 4, 174 Cal.App.2d 406, 344 P.2d 883 (1959); Kensington Corp. v. State, 74 Mich.App. 417, 253 N.W.2d 781 (1977); St. Paul Dredging Co. v. State, 259 Minn. 398, 107 N.W.2d 717 (1961); Ukrainian Nat. Urban Renewal Corp. v. Joseph L. Muscarelle, Inc., 151 N.J.Super. 386, 376 A.2d 1299 (A.D.1971); Tully & DiNapoli, Inc. v. State, 51 Misc.2d 11, 272 N.Y.S.2d 667 (N.Y.Ct.Cl.1966). But see Department of Transp. v. Claussen Paving Co., 246 Ga. 807, 273 S.E.2d 161 (1980) (Contrary to federal law, the court placed the burden of proving the prime contractor's liability to the subcontractor on the prime contractor.); Walter Kidde Constructors, Inc. v. Conn., 37 Conn.Sup. 50, 434 A.2d 962 (1981) (The court found that the prime contractor could not prove its liability to the subcontractor because a state governmental immunity statute prohibited the prime contractor's prosecution of the subcontractor's claim). Both Claussen and Walter Kidde run counter to federal and state case law. As such, these state cases are not persuasive authority for this court.
Nevada courts have yet to address the applicability of the Severin doctrine to breach of contract claims against Nevada counties. However, as the following discussion demonstrates, even if this court assumes that Severin applies, this court finds that Severin does not bar Briscoe's present action.
[8] This court notes that, even if no liquidating agreement existed between Briscoe and Howard, we would reach the same conclusion. Specifically, a representative suit (as defined on p. 7) is justified "by the theory that the subcontractors' claims are a component of the prime contractor's claims against the government." Kates, supra, p. 7 at 1. Therefore, in United States v. Blair, 321 U.S. 730, 737-738, 64 S.Ct. 820, 824, 88 L.Ed. 1039 (1944), the Supreme Court stated:
Clearly the subcontractor could not recover this claim in a suit against the United States, for there was no express or implied contract between him and the Government. (citation omitted). But it does not follow that [the prime contractor] is barred from suing for this amount. [The prime contractor] was the only person legally bound to perform his contract with the Government and he had the undoubted right to recover from the Government the contract price for the tile, terrazzo, marble and soapstone work whether that work was performed personally or through another. This necessarily implies the right to recover extra costs and services wrongfully demanded of [the prime contractor] under the contract, regardless of whether such costs were incurred or such services were performed personally or through a subcontractor. [The prime contractor's] contract with the Government is thus sufficient to sustain an action for extra costs wrongfully demanded under that contract. (citation omitted).
Subsequently, the United States Court of Claims reconciled Severin and Blair stating that a prime contractor may not recover on behalf of the subcontractor if the subcontract expressly negates the prime contractor's liability to the subcontractor. However if the subcontract is silent on the issue of nonliability, the prime contractor may recover on behalf of the subcontractor. Donovan Constr. Co. v. United States, 149 F.Supp. 898, 900, 138 Ct.Cl. 97 (1957).
As these cases demonstrate, a liquidating agreement is not a condition precedent to the maintenance of a representative suit. Rather, a representative suit may proceed when the subcontractor has not released the prime contractor from liability for the government's breaches of the prime contract. See Kates, supra, p. 7.
[9] The Order stated in pertinent part: "ORDERED that the County of Clark and the Frank Briscoe Company, Inc. shall file simultaneous motions for declaratory judgment with appropriate points and authorities dealing with the issues mentioned in the respective Status Reports." (doc. no. 1556 at 1).
[10] The ninth paragraph of the subcontract provides that if the owner delays the subcontractor, and if the prime contractor receives damages or other compensation for the delays, the "Subcontractor shall receive his proportionate share thereof ... reduced by Subcontractor's proportionate share of contractor's expense in connection with such recovery including professional and counsel fees and other costs and expenses." (doc. no. 1561, exh. B at 2).
[11] Importantly, the Cable Belt court cites with approval several cases that seemingly require the prime contractor to remit full recovery to the subcontractor. For example, the court quotes from Barnard-Curtiss Co. v. United States, 301 F.2d 909, 157 Ct.Cl. 103 (1962): "In order to recover this amount from [the owner, the general contractor] must first show that it is liable to the subcontractor for the amount." Additionally, the court cites Lambert Houses Redevelopment v. HRH Equity Corp., 117 A.D.2d 227, 502 N.Y.S.2d 433, 435 (1986): "Agreements liquidating the general contractor's liability in such amounts as can be recovered against the party who allegedly caused the injury have been uniformly upheld." Despite this language, the court still did choose to not address the allocation of the recovery.
Cable Belt's use of these cases deflates the County's assertions that (1) a proper liquidating agreement allocates the full recovery to the subcontractor; and (2) the prime contractor is liable to the subcontractor only to the extent the prime contractor remits the recovery to the subcontractor.
| {
"pile_set_name": "FreeLaw"
} |
UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
TOYOAKI NOGAMI, DOCKET NUMBER
Appellant, DC-315H-15-0134-I-1
v.
DEPARTMENT OF THE INTERIOR, DATE: May 20, 2015
Agency.
THIS FINAL ORDER IS NO NPRECEDENTIAL 1
Toyoaki Nogami, Falls Church, Virginia, pro se.
Toye Olarinde, Esquire, Washington, D.C., for the agency.
BEFORE
Susan Tsui Grundmann, Chairman
Mark A. Robbins, Member
FINAL ORDER
¶1 The appellant has filed a petition for review of the initial decision, which
dismissed his involuntary resignation appeal for lack of jurisdiction. Generally,
we grant petitions such as this one only when: the initial decision contains
erroneous findings of material fact; the initial decision is based on an erroneous
interpretation of statute or regulation or the erroneous application of the law to
1
A nonprecedential order is one that the Board has determined does not add
sign ificantly to the body of MSPB case law. Parties may cite nonprecedential orders,
but such orders have no precedential value; the Board and administrative judges are not
required to follow or distinguish them in any future decisions. In contrast, a
precedential decision issued as an Opinion and Order has been identified by the Board
as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
2
the facts of the case; the judge’s rulings during either the course of the appeal or
the initial decision were not consistent with required procedures or involved an
abuse of discretion, and the resulting error affected the outcome of the case; or
new and material evidence or legal argument is available that, despite the
petitioner’s due diligence, was not available when the record closed. See Title
5 of the Code of Federal Regulations, section 1201.115 (5 C.F.R. § 1201.115).
After fully considering the filings in this appeal, and based on the following
points and authorities, we conclude that the petitioner has not established any
basis under section 1201.115 for granting the petition for review. Therefore, we
DENY the petition for review and AFFIRM the initial decision, which is now the
Board’s final decision. 5 C.F.R. § 1201.113(b).
DISCUSSION OF ARGUMENTS ON REVIEW
¶2 Effective November 3, 2013, the appellant received a career-conditional
appointment to a Civil Engineer position in the competitive service subject to a
1—year probationary period ending on November 3, 2014. Initial Appeal File
(IAF), Tab 8 at 10. The appellant had no prior federal or military service. Id.
The agency informed the appellant that it was terminating his appointment during
his probationary period, and he resigned effective November 1, 2014. Id. at
12-13, 16. The appellant filed an appeal alleging that his resignation was
involuntary and requesting a hearing. IAF, Tab 1 at 2, 5-7. He challenged the
basis for his proposed termination, and he submitted documents in support of his
appeal. See id. at 5-55. He also claimed race discrimination and whistleblower
retaliation. Id. at 6.
¶3 The administrative judge informed the appellant of his burden of proving
jurisdiction and ordered him to file evidence or argument concerning whether the
Board had jurisdiction over his appeal, having informed the appellant of the
applicable jurisdictional criteria. IAF, Tab 2 at 3-5. After the deadline for
responding to the administrative judge’s order, the appellant filed an additional
3
copy of the attachments to his appeal without addressing the jurisdictional issue.
IAF, Tab 6. In response, the agency filed a motion to dismiss the appeal for lack
of jurisdiction. IAF, Tab 7.
¶4 Without holding a hearing, the administrative judge dismissed the appeal
for lack of jurisdiction finding that the appellant failed to make a nonfrivolous
allegation of jurisdiction over his appeal. IAF, Tab 9, Initial Decision (ID) at 4.
In reaching her decision, the administrative judge found that the appellant had no
right of appeal because he was a probationary employee when he resigned in lieu
of termination, and he submitted no evidence or argument that his proposed
termination was the product of discrimination based on partisan political reasons
or marital status. ID at 3. The administrative judge further found that the
appellant’s discrimination allegation, standing alone, was not appealable to the
Board. ID at 3-4. The administrative judge did not address the appellant’s
whistleblower reprisal claim in dismissing the appeal.
¶5 The appellant filed a petition for review arguing that his resignation during
his probationary period was involuntary because the agency forced him to choose
between resignation and termination. Petition for Review (PFR) File, Tab 1 at 4.
He also disputes the merits of his proposed termination, arguing that the agency’s
criticism of his work was “based on misunderstanding, distortion or fabrication,”
and he reasserts his claims of race discrimination and whistleblower retaliation.
Id. at 6-10. The appellant does not claim that he qualifies as an “employee”
within the meaning of 5 U.S.C. § 7511(a)(1), with a statutory right of appeal to
the Board. See id. at 4. The agency filed a response in opposition to the
appellant’s petition for review. PFR File, Tab 3.
¶6 The Board’s jurisdiction is limited to those matters over which it has been
given jurisdiction by law, rule, or regulation. Maddox v. Merit Systems
Protection Board, 759 F.2d 9, 10 (Fed. Cir. 1985). In order to establish Board
jurisdiction under 5 U.S.C. chapter 75, an individual must, among other things,
show that he satisfies one of the definitions of “employee” in 5 U.S.C.
4
§ 7511(a)(1). Walker v. Department of the Army, 119 M.S.P.R. 391, ¶ 5 (2013).
For an individual in the competitive service, this means that he must either: (1)
not be serving a probationary or trial period under an initial appointment, or (2)
have completed 1 year of current continuous service under other than a temporary
appointment limited to 1 year or less. Id.; see 5 U.S.C. § 7511(a)(1)(A).
Individuals in the competitive service who do not satisfy either definition may
nevertheless have the right to appeal a termination to the Board under 5 C.F.R.
§ 315.806. Walker, 119 M.S.P.R. 391, ¶ 5. However, the Board’s jurisdiction
over termination appeals under that section is limited to situations in which: (1)
the employee was discriminated against based on his marital status; (2) the
agency action was based on partisan political reasons; or (3) the agency action
was based (in whole or part) on pre-appointment reasons and the agency did not
follow the procedures of 5 C.F.R. § 315.805. Id. There is no statutory
requirement that the Board hold a hearing on the threshold issue of jurisdiction.
Walker, 119 M.S.P.R. 391, ¶ 6. Nevertheless, if an appellant makes a
nonfrivolous allegation of jurisdiction, and the Board cannot make a
determination based on the documentary evidence, the Board should hold an
evidentiary hearing to resolve the jurisdictional question. See id.
¶7 Here, the appellant does not allege that he has a statutory right of appeal
because he qualifies as an “employee” under 5 U.S.C. § 7511(a)(1). Moreover,
he does not allege that he has a regulatory right of appeal because the agency
terminated him for pre-appointment reasons or because his termination was for
partisan political reasons or due to marital status discrimination. Accordingly, we
agree with the administrative judge’s finding that the Board has no jurisdiction to
review the appellant’s claim that his resignation was involuntary. See Link v.
Department of the Navy, 3 M.S.P.R. 187, 189 (1980) (the appellants’ alleged
involuntary resignations during their probationary periods provided them with no
greater right of appeal to the Board than they would have had if they had been
terminated); ID at 3. We also agree with the administrative judge’s finding that,
5
absent an otherwise appealable action, the Board has no jurisdiction to adjudicate
the appellant’s claim of race discrimination. 2 ID at 3-4; PFR File, Tab 1 at 9;
IAF, Tab 1 at 6; see Wren v. Department of the Army, 2 M.S.P.R. 1, 2 (1980),
aff’d sub nom. Wren v. Merit Systems Protection Board, 681 F.2d 867 (D.C. Cir.
1982).
NOTICE TO THE APPELLANT REGARDING
YOUR FURTHER REVIEW RIGHTS
You have the right to request review of this final decision by the United
States Court of Appeals for the Federal Circuit.
The court must receive your request for review no later than 60 calendar
days after the date of this order. See 5 U.S.C. § 7703(b)(1)(A) (as rev. eff. Dec.
27, 2012). If you choose to file, be very careful to file on time. The court has
held that normally it does not have the authority to waive this statutory deadline
and that filings that do not comply with the deadline must be dismissed. See
Pinat v. Office of Personnel Management, 931 F.2d 1544 (Fed. Cir. 1991).
If you want to request review of the Board’s decision concerning your
claims of prohibited personnel practices under 5 U.S.C. § 2302(b)(8),
(b)(9)(A)(i), (b)(9)(B), (b)(9)(C), or (b)(9)(D), but you do not want to challenge
the Board’s disposition of any other claims of prohibited personnel practices, you
may request review of this final decision by the United States Court of Appeals
for the Federal Circuit or any court of appeals of competent jurisdiction. The
2
We similarly find that the Board lacks jurisdiction over the appellant’s affirmative
defense of whistleblower retaliation absent an otherwise appealable action. See Barrios
v. Department of the Interior, 100 M.S.P.R. 300, ¶ 5 (2005). In addition, there is no
indication in the record that the appellant first filed a whistleb lower complaint with the
Office of Special Counsel (OSC) to provide the Board with jurisdiction over the appeal
as an individual right of action (IRA) appeal. Should the appellant wish to pursue a
claim of whistleblower retaliation concerning his resignation, he may do so by filing a
complaint with OSC. See 5 U.S.C. § 1214(a); Morales v. Social Security
Administration, 108 M.S.P.R. 583, ¶¶ 6-7 (2008) (an appellant must exhaust his
administrative remedies with OSC before filing an IRA appeal with the Board).
6
court of appeals must receive your petition for review within 60 days after the
date of this order. See 5 U.S.C. § 7703(b)(1)(B) (as rev. eff. Dec. 27, 2012). If
you choose to file, be very careful to file on time. You may choose to request
review of the Board’s decision in the United States Court of Appeals for the
Federal Circuit or any other court of appeals of competent jurisdiction, but not
both. Once you choose to seek review in one court of appeals, you may be
precluded from seeking review in any other court.
If you need further information about your right to appeal this decision to
court, you should refer to the federal law that gives you this right. It is found in
Title 5 of the United States Code, section 7703 (5 U.S.C. § 7703) (as rev. eff.
Dec. 27, 2012). You may read this law as well as other sections of the United
States Code, at our website, http://www.mspb.gov/appeals/uscode.htm.
Additional information about the United States Court of Appeals for the Federal
Circuit is available at the court’s website, www.cafc.uscourts.gov. Of particular
relevance is the court’s “Guide for Pro Se Petitioners and Appellants,” which is
contained within the court’s Rules of Practice, and Forms 5, 6, and 11.
Additional information about other courts of appeals can be found at their
respective websites, which can be accessed
through http://www.uscourts.gov/Court_Locator/CourtWebsites.aspx.
If you are interested in securing pro bono representation for your court
appeal, you may visit our website at http://www.mspb.gov/probono for
information regarding pro bono representation for Merit Systems Protection
Board appellants before the Federal Circuit. The Merit Systems Protection Board
7
neither endorses the services provided by any attorney nor warrants that any
attorney will accept representation in a given case.
FOR THE BOARD: ______________________________
William D. Spencer
Clerk of the Board
Washington, D.C.
| {
"pile_set_name": "FreeLaw"
} |
65 F.3d 962
314 U.S.App.D.C. 218
NOTICE: D.C. Circuit Local Rule 11(c) states that unpublished orders, judgments, and explanatory memoranda may not be cited as precedents, but counsel may refer to unpublished dispositions when the binding or preclusive effect of the disposition, rather than its quality as precedent, is relevant.John Paul TURNER, Appellant,v.Howard M. CULLUM, Secretary of Health and Human Resources;Commonwealth of Virginia, Office of the Governor.
No. 94-5350.
United States Court of Appeals, District of Columbia Circuit.
Aug. 16, 1995.
Before: Silberman, Sentelle, and Tatel, Circuit Judges.
JUDGMENT
PER CURIAM.
1
This appeal was considered on the record from the United States District Court for the District of Columbia and on the brief filed by appellant. The court has determined that the issues presented occasion no need for an opinion. See D.C. Cir. Rule 36(b). It is
2
ORDERED AND ADJUDGED that the district court's orders filed October 6, 1994 and November 4, 1994, be affirmed substantially for the reasons stated therein.
3
The Clerk is directed to withhold issuance of the mandate herein until seven days after disposition of any timely petition for rehearing. See D.C. Cir. Rule 41.
| {
"pile_set_name": "FreeLaw"
} |
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-6364
UNITED STATES OF AMERICA,
Plaintiff – Appellee,
v.
KEVIN LAMONT WALKER,
Defendant – Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Newport News. Rebecca Beach Smith,
District Judge. (4:05-cr-00005-RBS-JEB-1)
Submitted: August 26, 2010 Decided: September 1, 2010
Before KING and DUNCAN, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
Kevin Lamont Walker, Appellant Pro Se. Howard Jacob Zlotnick,
Assistant United States Attorney, Newport News, Virginia, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Kevin Lamont Walker seeks to appeal the district
court’s order denying his Fed. R. Civ. P. 60(b) motion for
reconsideration of that court’s denial of his § 3582 motion.
This Court reviews the denial of a motion for relief from
judgment pursuant to Rule 60(b) for an abuse of discretion. MLC
Automotive, LLC v. Town of Southern Pines, 532 F.3d 269, 277
(4th Cir. 2008). This Court may not review the merits of the
underlying order, but instead “may only review the denial of the
motion with respect to the grounds set forth in Rule 60(b)."
Id. (internal quotation marks omitted).
Having reviewed the record, we conclude that the
district court did not abuse its discretion and affirm the
district court order denying the R. 60(b) motion. United
States v. Walker, No. 4:05-cr-00005-RBS-JEB-1 (E.D. Va. Feb. 12,
2010). We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
before the court and argument would not aid the decisional
process.
AFFIRMED
2
| {
"pile_set_name": "FreeLaw"
} |
594 F.3d 571 (2010)
UNITED STATES of America, Plaintiff-Appellee,
v.
Melissa CHRISTIANSEN, Defendant-Appellant.
No. 09-1925.
United States Court of Appeals, Seventh Circuit.
Argued November 4, 2009.
Decided February 2, 2010.
*572 Elizabeth Altman (argued), Office of the United States Attorney, Madison, WI, for Plaintiff-Appellee.
*573 Michael W. Lieberman (argued), Assistant Federal Public Defender, Federal Defender Services, Madison, WI, for Defendant-Appellant.
Before CUDAHY, FLAUM, and EVANS, Circuit Judges.
EVANS, Circuit Judge.
Most sentencing appeals involve long (or at least medium length) prison terms. So, an appeal like the one in this case, involving a short four-month sentence, is fairly uncommon. And although the four-month sentence was imposed after the district court determined that the advisory guideline range was four to ten months based on two enhancements that are now challenged on appeal, the sentence could have easily still been a four-month term (the range would have been zero to six months) without the two challenged add-ons. Very interesting.
Melissa Christiansen was charged in a 16-count indictment with wire fraud for defrauding several people out of money and property by posing as an expectant mother willing to give her child up for adoption. Christiansen pled guilty to four counts of the indictment. At sentencing, the district court applied both the "vulnerable victim" and "mass-marketing" sentence enhancements to Christiansen's advisory guideline rangein addition to a two-point reduction for acceptance of responsibility. The district court found a total offense level of nine with a criminal history category of one, creating an advisory guideline of four to ten months. On appeal, Christiansen argues that neither enhancement should have applied and that the court failed to properly consider the positive changes she has made in her life (under the § 3553(a) factors) when imposing the sentence.
From June 2003 until November 2006, Christiansen pretended to be a pregnant woman looking to place her unborn child with adoptive parents. She posted and responded to numerous advertisements on www.myspace.com and www.surromoms online.com. In December of 2006, one of Christiansen's victims contacted the Pierce County, Wisconsin, sheriff's department with information regarding Christiansen's scheme and the names of others who were in contact with her. The resulting FBI investigation revealed four victims whose communication with Christiansen affected interstate commerce enough to allow federal prosecution.
Christiansen's first victim, Renee Brown, responded to an advertisement on www.surromomsonline.com. Christiansen explained to Ms. Brown that she was pregnant with a boy and was planning to give him up for adoption. Christiansen also said that the boy's father had agreed to give up his parental rights. After exchanging messages and speaking on the telephone, Christiansen informed Ms. Brown and her husband that she had chosen them to adopt her unborn baby boy. Shortly thereafter, the Browns left their Texas home and visited Christiansen in Wisconsin. Ultimately, the Browns paid Christiansen some $1,393 to cover various "costs" incurred. Later, Christiansen explained to the Browns that the baby's father refused to terminate his parental rights. She also asked them to send her more money for formula and diapers. They declined.
Crystal Rogers, a second victim, posted an advertisement on www.surromoms online.com explaining her desire to adopt a child. She was unable to have a child of her own after undergoing a hysterectomy. Christiansen responded to the ad and the two exchanged messages. After Rogers sent Christiansen some calling cards, they *574 began to talk on the phone. Rogers also gave Christiansen two air conditioners, a $200 money order, and $200 through Western Union. Christiansen's con began to unravel when Rogers planned a trip to Wisconsin to meet her at an ultrasound appointment. One day before the alleged ultrasound she told Rogers that the baby had been stillborn. Three months later, she confessed to Rogers that she had not been pregnant.
The third victim, Jenny Sumner, lived in Virginia with her life partner. After she responded to Christiansen's advertisement on www.surromomsonline.com, she and Christiansen exchanged e-mails regarding the potential adoption of Christiansen's unborn child. Sumner and her partner then traveled to meet Christiansen at an ultrasound appointment, but while they were on their way, Christiansen left them a voice mail claiming she had miscarried.
Marie Arquillo, Christiansen's fourth victim, turned out to be the wrong woman to scam. Christiansen responded to Arquillo's advertisement on www.surromoms online.com by telling her that she was pregnant with a girl and going to give the child up for adoption. Arquillo spent $20,000 in legal fees trying to formalize the adoption before realizing she had been duped. Arquillo then created a MySpace page to warn other potential victims of Christiansen's con. She also informed local law enforcement about the ploy.
Two months later, Christiansen appeared on the Dr. Phil show where three of her victims confronted her, and she admitted that she had lied to them. In exchange for appearing on the show, Christiansen was able to enroll in a 150-day drug treatment programwhich she completed. Christiansen had been an active drug and alcohol user for over 15 years but has remained clean since she completed the program. She continues to attend a 12-step program on a weekly basis.
About two years after her last con, a grand jury indicted Christiansen for wire fraud. In her presentence investigation report (PSR), the United States Probation Office recommended that Christiansen's advisory guideline range be increased by two points for mass-marketing and be decreased by two points for acceptance of responsibility. The probation office considered a two-level vulnerable-victim enhancement but decided it did not apply. Christiansen objected to the inclusion of the two-level increase for mass-marketing. The government objected to the failure to include the two-level vulnerable-victim enhancement. At sentencing, the district court overruled Christiansen's objection, sustained the government's objection, and decided that both enhancements applied.
We review the district court's application of the vulnerable-victim enhancement for clear error. See United States v. Sims, 329 F.3d 937, 943-44 (7th Cir.2003) (citing United States v. Rumsavich, 313 F.3d 407, 411 (7th Cir.2002); United States v. Parolin, 239 F.3d 922, 926 (7th Cir. 2001)). As we noted in United States v. Rumsavich, vulnerability is the type of fact which the trial court is uniquely well-positioned to assess because the trial judge can observe the demeanor of the defendant and witnesses and has "an opportunity to review and analyze each of the documents and exhibits and hear the testimony while observing the mental, physical, and emotional states of the victims in order to assist him with assessing the damages inflicted upon them." 313 F.3d 407, 411 (7th Cir.2002) (citing United States v. White, 903 F.2d 457, 463 (7th Cir.1990)). Applying the vulnerable-victim enhancement is proper when "the defendant knew or should have known that a victim of the offense was a vulnerable victim." U.S.S.G. *575 § 3A1.1(b)(1). A "vulnerable victim" is "a person (A) who is a victim of the offense of conviction ...; and (B) who is unusually vulnerable due to age, physical or mental condition, or who is otherwise particularly susceptible to the criminal conduct." U.S.S.G. § 3A1.1 Application Note 2. Adoption fraud victims, we assume, are not unusually vulnerable because of any of the specific attributes listed"age, physical or mental condition"so they must fit under the "otherwise particularly susceptible to the criminal conduct" subset.
We need not reach the question of whether victims of adoption fraud are vulnerable as a group because the government only needs to prove that one victim was vulnerable in order for the enhancement to apply.[1]United States v. Paneras, 222 F.3d 406, 414 (7th Cir.2000). The United States Sentencing Commission Guidelines Manual explains when to apply the vulnerability enhancement: "The adjustment would apply, for example, in a fraud case in which the defendant marketed an ineffective cancer cure or in a robbery in which the defendant selected a handicapped victim. But it would not apply in a case in which the defendant sold fraudulent securities by mail to the general public and one of the victims happened to be senile." U.S.S.G. § 3A1.1 Application Note 2. For example, the Eighth Circuit, in United States v. Stover, found that the vulnerable victim enhancement did not apply in part because it found "no evidence that defendants offered their services selectively rather than to the general public at-large. Moreover, the evidence indicates that defendants vigorously pursued the business of anyone who was willing to pay their fees, without any genuine regard for how unfortunate the clients' particular circumstances were." See 93 F.3d 1379 (8th Cir.1996). In contrast, the particular susceptibility of Christiansen's victims was not merely incidental to a scheme where she was willing to defraud anyone who responded to her advertisements. Instead, she became intimately familiar with her marks before she let them continue in her scheme because she wanted to ensure she only preyed upon the most vulnerable. For example, she had Arquillo's friends and relatives write letters of reference explaining why she should choose Arquillo to be the adoptive mother of her child. One of the letters chronicled the heartbreak Arquillo felt after two of her babies died and the frustration she felt when her attempts to undergo a traditional adoption failed. After learning about Arquillo's particular vulnerability, Christiansen "chose" her to be the adoptive mother of her unborn baby. In order to receive what she wanted from her scheme, Christiansen did not seek just any prospective parents, she sought desperate prospective parents without options. She wanted the prospective parents to need her.[2]
Similarly, Christiansen chose Sumner as a victim because she was particularly susceptible. In the first e-mail Sumner sent to Christiansen, she wrote, "For many years we tried to have our own baby through artificial insemination, but never *576 succeeded. All we had was doctors, sperm donors, medical bills, surgeries, pills and shots to help the process along and many tears of disappointment." In Sumner, Christiansen again found exactly what she wanted: someone who needed Christiansen in order to make her dream of having a baby come true. Therefore, since Christiansen knew that at least two of her victims were particularly susceptible to her fraud, the district court correctly applied the vulnerable-victim enhancement.
U.S.S.G. § 2B1.1(b)(2)(A) calls for a two-level enhancement if the underlying fraud offense "was committed through mass-marketing." The commentary to the mass-marketing enhancement explains that "mass-marketing" includes "a plan, program, promotion, or campaign that is conducted through solicitation by telephone, mail, the Internet, or other means to induce a large number of persons to (i) purchase goods or services; (ii) participate in a contest or sweepstakes; or (iii) invest for financial profit." U.S.S.G. § 2B1.1 Application Note 4(A). Christiansen does not contest that she had a plan that was conducted through the Internet. She argues, however, that there is no evidence to support a finding that she designed her scheme to induce a "large number" of victims. But the fact that Christiansen posted an online advertisement that was open to the public shows that she designed her scheme to induce a large number of victims. If she was interested in only inducing a small number of people, she likely would have only responded to the advertisements that already existed. Christiansen also argues that her adoption scheme did not fit into any of the three categories listed in the guidelines. But her adoption scheme fits into the first category because she was providing a service by offering to be a surrogate mother. Additionally, she intended to induce her victims to "purchase" that service. To purchase means "to obtain by paying money or its equivalent" or "to obtain by labor, danger, or sacrifice." Merriam-Webster's Collegiate Dictionary 1010 (11th ed.2004). Ostensibly, Christiansen placed advertisements to give her child up for adoption. In reality, however, she was not giving anything away. Instead, she was inducing her victims to purchase her services, either by paying money or its equivalent, or by labor or sacrifice. Brown and her husband sent Christiansen $1,000 in cashier's checks. They also paid her phone bill. Rogers gave her two air conditioners, a $200 money order, and $200 through Western Union. She caused Arquillo and her husband to obtain a $20,000 second mortgage to cover legal fees and induced Sumner and her partner to spend money traveling to visit Christiansen, only to be told that the baby was lost during a miscarriage. All four of her victims attempted to purchasethrough money, labor, or sacrificeChristiansen's service as a surrogate mother. So the court properly applied the mass-marketing enhancement.
Finally, Christiansen argues that her case should be remanded for resentencing because the court failed to adequately consider all relevant factors under 18 U.S.C. § 3553(a). Christiansen is correct that a district court must give meaningful consideration to the factors listed in § 3553(a), which include the history and characteristics of the defendant, the nature and circumstances of the offense, the seriousness of the offense, the promotion of respect for the law, just punishment for the offense, the promotion of respect for the law, deterrence to criminal conduct, and protection of the public from further crimes by the defendant. United States v. Williams, 425 F.3d 478, 480 (7th Cir.2005). Although the court is not required to discuss *577 every factor set forth under § 3553(a), it must articulate the particular factors it considered in sentencing. United States v. Dean, 414 F.3d 725, 729 (7th Cir.2005). Further, "[W]hen a court has `passed over in silence the principal argument made by the defendant even though the argument is not so weak as not to merit discussion' we do not have the assurance we need to satisfy ourselves that the defendant's individual circumstances have been thoroughly considered." United States v. Harris, 567 F.3d 846, 854 (7th Cir.2009).
In particular, Christiansen argues that the district court did not consider her "history and characteristics" in determining an appropriate sentence. She seized upon the court's statement, "[W]hat I'm sentencing for now is not the person you are now.... [I]t's intended to respond to the very bad crime that you committed." Christiansen alleges that this statement shows that the court failed to consider the positive changes Christiansen had made in her life. As we have noted, Christiansen did make positive changes in her life. She no longer uses drugs and alcohol. She is married and working towards a college degree. Indeed, the court stated, "[Y]ou have made greater effort to change than almost anyone I've seen in the courtroom...." Contrary to Christiansen's claim, however, the court clearly considered her history and characteristics in determining the appropriate sentence. The court stated, "You completed inpatient substance abuse treatment in 2007. You were married in 2008, and you've enrolled in college courses.... However, after considering the nature and circumstances of your offenses of conviction, I'm not persuaded that a sentence of probation would be sufficient to promote the statutory purpose of sentencing." The judge's statement, "what I'm sentencing for now is not the person you are now. [I]t's intended to respond to the very bad crime that you committed," simply meant that if the judge was determining Christiansen's sentence solely based on the person she is now, she likely would not have received any jail time. Instead of improperly only considering Christiansen's history and characteristics, however, the judge appropriately considered her history and characteristics along with the other relevant § 3553(a) factors, such as the nature and circumstances of the offense and the seriousness of the offense. Therefore, we hold that the district court properly considered the § 3553(a) factors.
For these reasons, the judgment of the district court is AFFIRMED.
NOTES
[1] Therefore, there is no need to distinguish United States v. Stoverthe case the defendant primarily relies uponbecause although it held that victims of adoption fraud were not vulnerable as a group, it explained that "[w]e further recognize that, given the proper set of facts, a person's infertility, if known to the defendant, might support a finding of particular susceptibility to adoption-related fraud." 93 F.3d 1379, 1388 (8th Cir.1996).
[2] During sentencing, Chief Judge Crabb noted, "I don't think you were necessarily in it for money ... you just wanted to be looked up to and appreciated and have people think I'm going to be nice to this woman because she has something that I want from her."
| {
"pile_set_name": "FreeLaw"
} |
447 F.2d 147
UNITED STATES of America, Plaintiff-Appellee,v.Horace Lemar EDWARDS and Ronald Clifton, Defendants-Appellants.
No. 30601 Summary Calendar.*
United States Court of Appeals, Fifth Circuit.
Aug. 25, 1971.
Victor Arditti, El Paso, Tex., (Court appointed), for Clifton.
Robert R. Bryan, Birmingham, Ala., amicus curiae.
Seagal V. Wheatley, U.S. Atty., Haskell Shelton, James E. Bock, Assts. U.S. Attys., for respondent-appellee.
Appeal from the United States District Court for the Western District of Texas; Ernest Guinn, Judge.
Before WISDOM,1 COLEMAN, and SIMPSON, Circuit Judges.
PER CURIAM:
1
A jury convicted Horace Lemar Edwards of unlawfully carrying a pistol and of armed robbery on a military reservation. The same jury convicted Ronald Clifton on two counts of robbery at the same location as well as unlawfully carrying a pistol thereon, 18 U.S.C., 13; Art. 1408 Vernon's Ann. Texas Penal Code. We reverse, and remand for a new trial.
2
The case for the prosecution rested upon identification furnished by the victims of the alleged robberies and upon the seizure of the weapons when the defendants were arrested. The defense was an alibi.
3
Edwards and Clifton seek reversal on the following grounds: (1) because Edwards inadvertently entered a plea of guilty to the weapon charge in the presence of the jury; (2) the defendants were not allowed the correct number of peremptory challenges in the selection of the jury; (3) Edwards was denied his request for a polygraph examination; (4) there was no probable cause for the arrest of the defendants, which lead to the discovery of the weapons in question; and (5) the trial judge committed plain error in certain of his charges to the jury.
4
As to the instructions given the jury this case is almost completely identical to the situation existing in United States v. Dillion, 5 Cir., 1971, 446 F.2d 598.
5
Dillion is, therefore, controlling. Reversal for a new trial cannot be avoided.
6
Reversed and remanded for a new trial.
7
*Rule 18, 5th Cir.; See Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al. 5 Cir., 1970, 431 F.2d 409, Part I.
1
Judge Wisdom participated in the decision placing this appeal on the Summary Calendar, and to reverse and remand the judgment of the District Court. He did not participate in the rendition of this opinion, see 28 U.S.C., 46(d)
| {
"pile_set_name": "FreeLaw"
} |
In the
United States Court of Appeals
For the Seventh Circuit
No. 08-4314
L ARRY JOHNSON,
Plaintiff-Appellant,
v.
K ARL S AVILLE,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 1:07-cv-02187—Amy J. St. Eve, Judge.
A RGUED M AY 28, 2009—D ECIDED JULY 29, 2009
Before E VANS, W ILLIAMS, and T INDER, Circuit Judges.
T INDER, Circuit Judge. Karl Saville, an officer of the
Illinois State Police (“ISP”), investigated charges that
Larry Johnson, an employee at an Illinois correctional
facility, had improper sexual relations with an inmate.
The results of Saville’s investigation led an Illinois
State’s Attorney to prosecute Johnson for criminal sexual
assault, but the trial judge found Johnson not guilty.
Following his acquittal, Johnson brought an action
2 No. 08-4314
against Saville under 42 U.S.C. § 1983, asserting a federal
due process claim and a supplemental claim of malicious
prosecution under Illinois law. The district court
granted summary judgment in favor of Saville on both
claims, and, on appeal, Johnson pursues only his
malicious prosecution claim. We affirm because Saville
acted with probable cause when pursuing criminal
charges against Johnson, which is a complete defense
to a malicious prosecution suit.
I. Background
From 1999 to 2004, Johnson worked as a youth super-
visor at the Illinois Youth Center (“IYC”) in Warrenville,
Illinois, a facility maintained by the Illinois Department
of Corrections (“IDOC”). In early September 2003,
Barnett Gill, another IYC youth supervisor, claimed that
a former IYC inmate, “A.M.,” accused Johnson of
improper sexual conduct. According to a report that Gill
prepared for the IYC Warden, A.M. called Gill and told
him that she and Johnson had sexual relations during
her time at the IYC. The IDOC began an investigation
and also referred the matter to the ISP, which assigned
Officer Saville to the case.
On September 6, 2003, IDOC investigators interviewed
A.M., who denied having sex with Johnson. However, in
a subsequent interview with Saville on September 14,
A.M. said that she had consensual sex with Johnson on
the night of December 21, 2002. On that night, A.M. was
working on a cleaning detail outside of her cell, allowing
her to accompany Johnson into a supply room where
No. 08-4314 3
the sexual encounter allegedly occurred. A.M. also told
Saville that Johnson frequently watched her strip for
him from outside of her cell door. Later, at Johnson’s
criminal trial, A.M. explained that she initially denied
having sex with Johnson because the IDOC investigators
scared her and threatened to send her back to the IDOC
if she was dishonest. By contrast, A.M. described Saville
and other ISP officers as non-threatening and “really nice.”
When he interviewed A.M., Saville did not know that
A.M. had previously denied having sex with Johnson to
the IDOC investigators.
Besides A.M.’s statement, Saville uncovered other
evidence of Johnson’s guilt. Saville interviewed A.M.’s cell
mate, “M.V.,” who said that she saw A.M. strip for
Johnson on multiple occasions. “T.M.,” another former
IYC inmate who occupied an adjacent cell, stated that
Johnson regularly stood outside of A.M.’s cell door and
talked to her. Both M.V. and T.M. confirmed that A.M.
told them about the sexual encounter with Johnson, and
several other current and former inmates told ISP officers
that they were aware of rumors of the encounter.
Still another former inmate, “C.C.,” told Saville that
she too had sexual relations with Johnson and stripped
for him.
Saville also obtained the IYC’s shift supervisor log for
the night of December 21, 2002. That log indicated that
A.M. was outside of her cell on a cleaning detail and that
Johnson was working as a supervisor, meaning that
Johnson had access to A.M. on the night in question.
On October 3, 2003, Saville interviewed Johnson, who
denied having sex with A.M. Saville then prepared a
4 No. 08-4314
report for the DuPage County State’s Attorney summariz-
ing the results of his investigation. The report indicated
that, according to the IYC’s records, Johnson was the
only person supervising A.M. on the night in question.
The report also stated that, although Johnson denied
having sex with A.M. during his interview, he confessed
to watching her strip from outside of her cell door.
Johnson denies making that confession.
The State’s Attorney decided to prosecute Johnson,
and Saville arrested Johnson for criminal sexual assault
on May 24, 2004. On June 17, 2004, Saville testified
before a grand jury as to the contents of his report, in-
cluding Saville’s claim that Johnson confessed to
watching A.M. strip. The grand jury returned an indict-
ment against Johnson and the case proceeded to a bench
trial. On December 29, 2005, the trial judge found
Johnson not guilty.
On April 20, 2007, Johnson brought a § 1983 action
against Saville in federal court, claiming that Saville
violated his due process rights under Brady v. Maryland,
373 U.S. 83 (1963), by giving false information to the
State’s Attorney and the grand jury. Johnson’s complaint
also set forth a claim of malicious prosecution under
Illinois law. On October 17, 2008, the district court
granted summary judgment in favor of Saville. The court
held that Johnson’s Brady claim failed because, with
respect to the allegedly false information in Saville’s
report and grand jury testimony, those falsehoods were
within Johnson’s knowledge and therefore not “sup-
pressed” for Brady purposes. The court also held that
No. 08-4314 5
Johnson failed to establish an essential element of his
malicious prosecution claim, that Saville lacked
“probable cause to arrest him.”
On October 29, 2008, Johnson moved the district court
to amend its findings to clarify that, in addition to his due
process and state-law malicious prosecution claims,
Johnson had preserved a malicious prosecution claim
based on the Fourth Amendment. The court denied
the motion, finding that Johnson forfeited his Fourth
Amendment malicious claim by failing to develop it in
his summary judgment brief.
On appeal, Johnson abandons his due process/Brady
claim but argues that the district court erred in
resolving his malicious prosecution claim on summary
judgment. Johnson contends that he has a triable
malicious prosecution claim under both Illinois and
federal law.
II. Analysis
We review de novo the district court’s grant of summary
judgment in favor of Saville, construing the evidence
and all reasonable inferences in favor of Johnson, the non-
moving party. Wheeler v. Lawson, 539 F.3d 629, 633 (7th
Cir. 2008) (citation omitted). Summary judgment is
proper if the evidence shows that there is no genuine
issue of material fact and that the moving party is
entitled to judgment as a matter of law. Id. at 634.
6 No. 08-4314
A. The Probable Cause Element of a Malicious
Prosecution Claim Under Illinois Law
In order to establish a claim of malicious prosecution
under Illinois law, the plaintiff must show “(1) the com-
mencement or continuance of an original criminal or
civil judicial proceeding by the defendant; (2) the termina-
tion of the proceeding in favor of the plaintiff; (3) the
absence of probable cause for such proceeding; (4) the
presence of malice; and (5) damages resulting to the
plaintiff.” Swick v. Liautaud, 662 N.E.2d 1238, 1242 (Ill.
1996) (quoting Joiner v. Benton Cmty. Bank, 411 N.E.2d
229, 232 (Ill. 1980)). “The absence of any one of these
elements bars a plaintiff from pursuing the claim.” Id.
It follows that the existence of probable cause is a “com-
plete defense” to a malicious prosecution suit. Cervantes
v. Jones, 188 F.3d 805, 810-11 (7th Cir. 1999). Probable
cause exists if the “facts and circumstances . . . would
excite the belief, in a reasonable mind, acting on the
facts within the knowledge of the prosecutor, that the
person charged was guilty of the crime for which he
was prosecuted.” Id. at 811 (quotation omitted); see also
Fabiano v. City of Palos Hills, 784 N.E.2d 258, 266 (Ill.
App. Ct. 2002) (“Probable cause is a state of facts that
would lead a person of ordinary care and prudence to
believe or to entertain an honest and sound suspicion
that the accused committed the offense charged.”).
Courts have often examined whether investigating
officers acted with probable cause when pursuing
criminal charges, making them immune from a malicious
prosecution suit. A common theme in these cases is
No. 08-4314 7
an allegation that officers or other complainants
fabricated the plaintiff’s confession. In Cervantes, a police
officer testified before the grand jury that the plaintiff
had all but confessed to murder, a confession that the
plaintiff denied. Cervantes, 188 F.3d at 808. Accepting
the plaintiff’s version for summary judgment purposes,
we nonetheless concluded that the officer had probable
cause to believe that the plaintiff was guilty of murder.
Id. at 814. An FBI profile of the killer matched the plain-
tiff, the plaintiff had the opportunity to commit the
crime and no corroborated alibi, and a polygraph
test indicated that the plaintiff lied when denying his
involvement in the murder. Id. at 811-13.
Though not an issue in the Cervantes murder case,
the credibility of the victim or complainant is another
common factor in the probable cause analysis. The officers
in Sang Ken Kim v. City of Chicago, 858 N.E.2d 569, 571
(Ill. App. Ct. 2006), took a battery victim’s statement that
her boyfriend attacked her while she was pregnant,
resulting in the death of her fetus. Applauding the
officers for corroborating the victim’s story with
medical evidence and third-party statements, the court
noted that the officers could have relied on the victim’s
statement alone, which is presumed reliable. Id. at 575-76.
Although the victim later recanted her accusation and
the officers had allegedly coerced the boyfriend’s con-
fession, the officers still had “ample probable cause”
to charge the boyfriend with murder. Id. at 578.
Similarly, in Logan v. Caterpillar, Inc., 246 F.3d 912, 926
(7th Cir. 2001), we concluded that the plaintiff’s ex-girl-
8 No. 08-4314
friend had probable cause to file a criminal complaint
accusing the plaintiff of burglarizing her new boy-
friend’s house. The ex-girlfriend received items known
to be stolen from the house in the mail, along with an
anonymous letter that she suspected was written by the
plaintiff. Id. at 917. Those suspicions, combined with
the girlfriend’s knowledge of the plaintiff’s jealousy and
past threats against the new boyfriend, were enough to
establish probable cause as a matter of law. Id. at 926.
The plaintiff’s claim that the girlfriend falsely told
the police that he confessed to breaking into the house
did not preclude summary judgment. Id. at 924, 926.
Contrast Fabiano, 784 N.E.2d at 270, in which the
court found a genuine issue of material fact as to
whether police officers had probable cause to prosecute
a day care provider for sexual abuse. Although several
three- to four-year-old children made accusations
against the plaintiff, those accusations were suspect
because they appeared only after the officers began a 17-
day investigation of the day care center and interviewed
more than 100 children. Id. at 264, 268. Additionally, the
children’s statements lacked specific details, and the
officers failed to corroborate each child’s statement by
comparing it with statements from other children. Id.
at 268.
Comparing the evidence available to Saville in this
case with that in the above cases, we conclude that
Saville had probable cause to believe that Johnson was
guilty of criminal sexual assault. Like the victim in Kim,
A.M. told Saville that Johnson had sex with her, a claim
No. 08-4314 9
that she maintained throughout Johnson’s criminal trial.
This statement from “the putative victim . . . who it
seems reasonable to believe” is ordinarily sufficient to
establish probable cause. Sheik-Abdi v. McClellan, 37 F.3d
1240, 1247 (7th Cir. 1994) (quotation omitted); see also
Kim, 858 N.E.2d at 575 (“Where the victim of the crime
supplies the police with the information forming probable
cause, there is a presumption that this information is
inherently reliable.” (quotation omitted)). Moreover,
“instead of only relying on the presumption that [A.M.’s]
information was reliable,” Kim, 858 N.E.2d at 575, Saville
corroborated A.M.’s story with the statements of two
other inmates that Johnson had sex with A.M. and
watched her strip. Many more inmates heard rumors
that Johnson and A.M. had sexual relations, while one
inmate told Saville that she engaged in similar sexual
conduct with Johnson. These fellow inmates’ claims of
the specific abuse under investigation have far more
corroborative value than the children’s general allega-
tions that the court in Fabiano found deficient.
Like the plaintiff in Cervantes, Johnson also lacked an
alibi. The IYC’s shift supervisor log for the night in ques-
tion showed that A.M. was outside of her cell on a
cleaning detail and that Johnson was working as a super-
visor, meaning that the two had access to each other. This
opportunity to commit the crime, combined with the
multiple inmate statements described above, provided
Saville with more evidence of guilt than the suspicious
circumstances that we found sufficient in Logan. Saville
had probable cause to believe that Johnson had
improper sexual relations with A.M.
10 No. 08-4314
True, some facts surrounding the criminal case reduced
the reliability of A.M.’s accusation. A.M. changed her
story by, first, denying having sex with Johnson during
the IDOC interview and, then, admitting to the sexual
encounter during her interview with Saville. But that
inconsistency is immaterial because it is undisputed that
Saville did not know about A.M.’s previous denial to the
IDOC investigators. “The existence of probable cause
is measured based on the facts known to the officers at
the time of the arrest.” Kim, 858 N.E.2d at 577. Johnson,
while not disputing that Saville lacked knowledge of
A.M.’s previous denial, suggests that the IDOC investiga-
tors’ failure to obtain inculpatory information from
A.M. means that Saville must have browbeaten that
information out of her. A.M.’s testimony at Johnson’s
criminal trial, the only evidence in the record on this
point, refutes that charge. Although A.M. was reluctant
to admit to the sexual encounter to the IDOC investiga-
tors, who threatened her with reprisal, she found Saville
and other ISP officers to be nice and non-threatening.
Johnson also disputes that he lacked an alibi. He claims
that the IYC’s shift supervisor logs showed that A.M.
was “signed out” to the shift supervisor’s office on the
night in question. Since Gill was working in the office
at that time, Johnson continues, the logs suggest that it
was Gill and not Johnson who had sexual relations
with A.M.
Johnson fails to distinguish among the various logs
maintained at the IYC. The IYC’s “cottage logs” for A.M.’s
housing unit, which are distinct from the “shift supervisor
No. 08-4314 11
logs,” listed a phone extension to the shift supervisor’s
office next to A.M.’s name for the 8:30-9:00 time period.
According to the IYC Warden, this entry meant that any
IYC employee who needed to find A.M. during that
time would have to call the shift supervisor’s office.
Another youth supervisor coined the “signed out” lan-
guage upon which Johnson seizes, testifying that the
cottage logs showed that A.M. was “signed out” to the
shift supervisor’s office during the relevant time period.
The cottage logs are probably irrelevant to the probable
cause analysis because, although Saville referenced the
shift supervisor logs in his report to the State’s Attorney,
the record does not establish that Saville even knew about
the potentially exculpatory cottage logs. See Kim, 858
N.E.2d at 577. Moreover, even if within Saville’s knowl-
edge, the cottage logs have little exculpatory value. At
most, the logs establish that the shift supervisor was
responsible for knowing A.M.’s whereabouts during a
single thirty-minute window of A.M.’s cleaning detail.
The logs are not inconsistent with Saville’s report that,
on the night of the alleged sexual encounter, A.M. was
outside of her cell on a cleaning detail and Johnson was
working as a supervisor. So even taking the cottage
logs into account, Saville had substantial evidence of
Johnson’s guilt.
With respect to Johnson’s dispute that he never con-
fessed to watching A.M. strip as Saville claimed, we
accept Johnson’s version for summary judgment pur-
poses. As the above cases make clear, however, the fact
that the plaintiff disputes his confession does not
12 No. 08-4314
preclude summary judgment if the remaining, undisputed
facts establish probable cause as a matter of law. Logan,
246 F.3d at 926; Cervantes, 188 F.3d at 811. We conclude
that the undisputed facts in this case “would lead a
person of ordinary care and prudence to believe or to
entertain an honest and sound suspicion” that Johnson
was guilty of criminal sexual assault. Fabiano, 784 N.E.2d
at 266.
Finally, Johnson argues that the district court misap-
plied Illinois law by examining whether Saville had
“probable cause to arrest,” as opposed to “probable cause
to initiate a criminal prosecution.” According to Johnson,
the critical element of his malicious prosecution claim is
the absence of probable cause to prosecute, not the
absence of probable cause to arrest. The former is easier
to prove, Johnson continues, because an officer who
makes a split-second arrest may justifiably rely on less
reliable evidence than a prosecutor who initiates a
criminal prosecution.
Johnson’s argument touches on the commonsense
observation that the type of evidence that will support a
finding of probable cause depends on the nature of the
crime and the officer’s role in the criminal proceedings.
Courts assess probable cause based on “the totality of the
circumstances,” Cervantes, 188 F.3d at 813, and those
circumstances include the extent of the officer’s involve-
ment in the criminal case and, relatedly, the amount of
evidence available to the officer. So if an officer makes a
split-second, warrantless arrest of a riotous protester, the
court might simply ask whether the surrounding circum-
No. 08-4314 13
stances gave the officer “probable cause to arrest.” Penn v.
Harris, 296 F.3d 573, 577 (7th Cir. 2002). If, as here, an
officer conducts an extended investigation, interviews
the suspect, and allegedly lies to the grand jury in order
to obtain an indictment—while incidentally arresting
the suspect along the way—the court might frame the
inquiry as whether all of the available evidence pro-
vided “probable cause for the prosecution.” Cervantes, 188
F.3d at 810.
However, Johnson goes too far in suggesting that the
district court erred by referring to Saville’s probable
cause “to arrest” rather than probable cause “to prose-
cute.” Whether the officer simply makes an arrest or
conducts an extended investigation, the basic underlying
inquiry is the same: does all of the evidence available to
the officer support an objectively reasonable belief that
the suspect was guilty of the crime? Compare Penn, 296
F.3d at 576-77 (“Probable cause exists when, based on the
facts known, a reasonable person would believe a person
was guilty of committing an offense.”), with Cervantes,
188 F.3d at 811 (“Probable cause means the existence of
such facts and circumstances as would excite the belief,
in a reasonable mind, acting on the facts within the knowl-
edge of the prosecutor, that the person charged was
guilty of the crime for which he was prosecuted.” (quota-
tion omitted)). We, like the district court, have ex-
amined that evidence and conclude that Saville acted
with probable cause when investigating the charges
against Johnson, preparing his report for the State’s
Attorney, and testifying before the grand jury. That
gives Saville a complete defense to Johnson’s Illinois
malicious prosecution claim.
14 No. 08-4314
B. Federal Malicious Prosecution Claim
In addition to his state-law claim, Johnson asserts a
federal malicious prosecution claim grounded in the
Fourth Amendment. More specifically, Johnson invites
us to revisit Newsome v. McCabe, 256 F.3d 747 (7th Cir.
2001), which he characterizes as foreclosing his Fourth
Amendment malicious prosecution claim. We can think
of several reasons to decline Johnson’s invitation.
First, we agree with the district court that Johnson
forfeited his Fourth Amendment malicious prosecution
claim by failing to develop it in his summary judgment
brief. Johnson asks that we overlook forfeiture because
his theory of malicious prosecution was barred by
Newsome, so attempting to argue that theory to the
district court would have been futile. See Ienco v. City of
Chicago, 286 F.3d 994, 999 (7th Cir. 2002) (declining to
penalize a plaintiff “for failing to convincingly argue . . . a
cause of action at summary judgment” that was fore-
closed by prior circuit precedent). What Johnson fails to
acknowledge is that this exception to forfeiture applies
only when an “intervening change in the law” removes
the precedential bar. Id. Unlike the situation described in
Ienco, no intervening decision by this court has under-
mined Newsome; it is Johnson who, for the first time
on appeal, attacks Newsome and proposes a novel reading
of the Fourth Amendment. As Saville points out, the
novelty of Johnson’s Fourth Amendment claim makes
the case for forfeiture even more compelling. See Kunz
v. DeFelice, 538 F.3d 667, 681 (7th Cir. 2008) (“Especially
on a question that would require the application of a
No. 08-4314 15
novel legal theory to a new set of facts . . . the district
court must have the first opportunity to rule with the
benefit of full briefing and consideration.”).
Johnson suggests that the Supreme Court’s decision in
Wallace v. Kato, 549 U.S. 384 (2007), is an intervening
change in the law that undermines Newsome’s rationale.
All that the Court said in Wallace was that it has “never
explored the contours of a Fourth Amendment mali-
cious-prosecution suit under § 1983 . . . and . . . do[es] not
do so here.” Id. at 390 n.2. This footnote statement on
what the Court hasn’t decided does not require us to
reexamine circuit precedent. Moreover, Wallace was not
“intervening” with respect to Johnson’s lawsuit. Wallace
came down on February 21, 2007; Johnson filed his com-
plaint in the district court on April 20, 2007; Johnson did
not file his brief in opposition to summary judgment
until September 9, 2008. If Johnson thought that Wallace
gave a new, federal flavor to his malicious prosecution
claim, it required no clairvoyance to include that argu-
ment in his summary judgment brief to the district court.
Second, Johnson over-reads Newsome as foreclosing his
federal claim. We held in that case that the “due process
clause” does not support a constitutional tort of
malicious prosecution if state law provides a parallel
remedy. Newsome, 256 F.3d at 751. Newsome left open the
possibility of a Fourth Amendment claim against officers
who misrepresent evidence to prosecutors, provided
that the statute of limitations for such a claim has not
expired. See id. at 749-50. Circuit precedent did not neces-
sarily prevent Johnson from bringing a Fourth Amend-
16 No. 08-4314
ment claim based on Saville’s allegedly false report to
the State’s Attorney and grand jury testimony. See
McCullah v. Gadert, 344 F.3d 655, 659 (7th Cir. 2003) (recog-
nizing a Fourth Amendment wrongful arrest claim
against an officer who allegedly gave false information
in an incident report and at a preliminary hearing).
Finally, even if we reached the merits of Johnson’s
Fourth Amendment malicious prosecution claim, we do
not see how Johnson would prevail. Although Johnson’s
brief does not delineate the elements of the federal mali-
cious prosecution claim that he asks us to recognize, it is
likely that one such element would be the absence of
probable cause to initiate criminal proceedings. See Fox v.
DeSoto, 489 F.3d 227, 237 (6th Cir. 2007) (Although the
contours of a Fourth Amendment malicious prosecution
claim “remain uncertain . . . such a claim fails when
there was probable cause to prosecute . . . .”). Given our
holding that Johnson’s state-law malicious prosecution
claim fails because Saville acted with probable cause,
his federal claim would fail for the same reason.
III. Conclusion
Johnson’s malicious prosecution claim fails because he
has not shown a genuine issue of material fact as to
whether Saville acted with probable cause when pursuing
criminal charges against him. We A FFIRM the district
court’s grant of summary judgment in favor of Saville.
7-29-09
| {
"pile_set_name": "FreeLaw"
} |
39 F.3d 749
30 Fed.R.Serv.3d 920
Charles JONES, Plaintiff-Appellant,v.COLEMAN COMPANY, INCORPORATED, Dennis Aardsma, and MaryAardsma, Defendants-Appellees.
No. 93-3480.
United States Court of Appeals,Seventh Circuit.
Argued Feb. 24, 1994.Decided Nov. 4, 1994.
Timothy F. Kelly, Crotty & Chacon, Chicago, IL, Harvey Karlovac (argued), Munster, IN, for Charles Jones.
C. Roy Peterson, Peter F. Higgins, Nancy Shaw (argued), Lord, Bissell & Brook, Chicago, IL, for Coleman Co., Inc.
William Cremer, Edmund J. Siegert (argued), Tressler, Soderstrom, Maloney & Priess, Chicago, IL, for Dennis Aardsma, Mary Aardsma.
Before FAIRCHILD, CUDAHY and RIPPLE, Circuit Judges.
FAIRCHILD, Circuit Judge.
1
Plaintiff-appellant Charles Jones ("Jones") commenced this action to recover for injuries he obtained while operating a gas-powered electrical generator.1 The district judge granted summary judgment in favor of defendant-appellee Coleman Company, Inc. ("Coleman"), and, after appropriate consent of the parties, the magistrate judge subsequently granted summary judgment in favor of defendants-appellees Dennis and Mary Aardsma. Jones appeals.
I. BACKGROUND
2
In 1990, the Aardsmas were building a home in Lansing, Illinois. They hired Scheeringa & DeVries to provide carpentry services; Jones worked for that company. At the time of the incident in question, the construction site had no electricity. Mr. Aardsma borrowed a gas-powered electrical generator from his friend Roger Lange, who is in the roofing business, in order to provide electricity for the carpenters.
3
Prior to giving the generator to the carpenters, Mr. Aardsma used the generator for approximately fifteen minutes to power a sump pump to get water out of the basement foundation. Neither Mr. or Mrs. Aardsma had ever used a gas-powered electrical generator before.
4
About six days before the accident, one of the Aardsmas dropped the generator off at the construction site for the carpenters.2 The Aardsmas supplied a five gallon gas can for refueling purposes. The Aardsmas did not discuss operation of the generator with any Scheeringa & DeVries employee, and they were not asked about its operation. They had not discussed its operation with Lange.
5
The carpenters used the generator to power two saws for work on the garage and upper deck of the house. Jones had done construction work for approximately five years prior to the accident. He had used gas-powered generators previously when he worked for another construction company.
6
Jones noticed that the generator was leaking gas two days prior to the incident, when the generator was being transported from the construction site to Wayne Scheeringa's (his boss) house in Scheeringa's van. He mentioned the leak to his boss, but nothing more was said about it. No one mentioned any problems with the generator to the Aardsmas.
7
Two days before the accident, Jones asked Scheeringa for a funnel. As was explained at Jones' deposition,
8
Question: Had you had problems refueling the tank on the generator before Monday?
9
Answer: Told him [Scheeringa] there was, you know, it was--gas was splashing and it wasn't all going into the hole.
10
Question: And that was of some concern to you?
11
Answer: Yes.
12
Question: Why?
13
Answer: I don't know, I just didn't want--didn't feel right, you know.
14
Aug. 14, 1992 Jones Dep. at 72. No one asked the Aardsmas for a funnel.
15
On May 23, 1990, the generator was fueled, used, turned off, and refueled. The generator was again used, and stopped when it ran out of gas. Jones poured gas into the gas tank, using the gas can provided by the Aardsmas. He remembers spilling gas, but not how much. The gas spilled onto the motor and the ground, and it ignited. Scheeringa saw a fifteen foot "pillar of fire." Jones was burned on his hand and legs.
16
The house took approximately six months to complete. Mr. Aardsma was not present when the carpenters were working. Neither Aardsma saw the carpenters use the generator, or the generator itself once the carpenters began using it, because Scheeringa took the generator home each night, to prevent theft. The Aardsmas went to the property almost every weekday evening to see how far the workers had gotten. Mr. Aardsma did not meet Jones until the evening of the accident at the hospital.
17
Jones sued Coleman for failure to design, manufacture and distribute a non-defective generator, for failure to provide adequate warnings, and for breach of express and implied warranties. Jones sued Briggs & Stratton Corp. for failure to design, manufacture and distribute a non-defective generator motor, and for failure to provide adequate warnings. Jones sued the Aardsmas for failure to exercise reasonable care in maintaining the property in a safe condition and for failure to exercise reasonable care in providing equipment for his use.
18
On January 14, 1993, Judge Conlon denied the Aardsmas' motion for leave to file their motion for summary judgment as untimely, because she had set the deadline for filing dispositive motions for December 16. On January 19, 1993, Judge Conlon granted Coleman's motion for summary judgment. In February, the parties consented to proceed before a magistrate judge. After Briggs & Stratton settled with Jones, the Aardsmas were the only remaining defendants. They again sought leave to file a motion for summary judgment, which Magistrate Judge Guzman allowed. The magistrate judge subsequently granted the Aardsmas' motion for summary judgment.
II. DISCUSSION
19
A. Estoppel to Deny Manufacture of Generator
20
In response to Jones' allegation that "[i]n May, 1990, Dennis Aardsma and Mary Aardsma rented a generator designed, manufactured and distributed by Coleman Co., Inc.," Am.Compl. p 5, Coleman responded that it "has no knowledge sufficient to form a belief as to the truth or falsity of the allegations that Dennis Aardsma and Mary Aardsma rented a generator and defendant denies every remaining allegation of paragraph 5." Sept. 29, 1992 Answer to Am.Compl. p 5.3 Coleman denied Jones' allegations that Coleman owed him a duty to manufacture a non-defective generator and provide adequate warnings. Id. p 18. It also denied that it had given Jones implied and express warranties, and had breached those warranties. Id. pp 21-22, 24-25.
21
On December 3, Coleman filed a motion for summary judgment, and identified the correct manufacturer as Coleman Powermate, Inc. Coleman attached as an exhibit an affidavit by Jim Dixon, the Director of Quality and Warranty Operations at Coleman Powermate. Dixon inspected the generator on August 6, 1992, and concluded that Coleman Powermate manufactured it.4 He also states in his affidavit that he is familiar with Coleman, and that it does not manufacture generators.
22
Jones argues that Coleman is estopped from denying that it manufactured the generator, because Coleman misled Jones to believe that Coleman manufactured the generator until after the statute of limitations had expired. He contends that Coleman took an active role in the litigation. He also asserts that Coleman and Coleman Powermate are closely related (but does not elaborate on this relationship), and that Coleman simply waited too long to bring out the fact that it did not manufacture the generator. He concludes that Coleman should not be rewarded for defending the interests of a related corporation.
23
Jones asserts that "Coleman obviously knew from the beginning that it did not manufacture electrical generators, defective or not. (Answer to Complaint ... and Affidavit of Jim Dixon....)." Reply Br. at 2. Jones' citations to the record, however, only partially support his assertion.5
24
The most troubling aspect of Coleman's treatment of this case is that it devotes a portion of its brief to this court to the argument that the district court properly denied Jones' motion for leave to amend his complaint to name Coleman Powermate as a defendant (motion discussed below). We do not understand why Coleman would have any interest in opposing a motion to substitute Coleman Powermate as defendant-manufacturer, or in arguing that the amendment can not relate back to the filing of Jones' original complaint.
25
While some of the circumstances surrounding Coleman's actions are questionable, to say the least, Jones does not point to any case law which would support a conclusion that Coleman, which denied in its answer that it designed, manufactured or distributed the generator, and in fact did not do so, can now be held liable for Jones' injuries.B. Motion to Amend Complaint
26
Jones argues that Judge Conlon erred when she denied his motion for leave to amend his complaint to substitute Coleman Powermate for Coleman, and that the amendment relate back to the filing of his original complaint. If the amendment does not relate back, Jones' action against Coleman Powermate is barred by the statute of limitations.
27
Rule 15(c) of the Federal Rules of Civil Procedure provides that
28
An Amendment of a pleading relates back to the date of the original pleading when
29
....
30
within the period provided by Rule 4(m) for service of the summons and complaint, the party to be brought in by amendment (A) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (B) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.
31
Jones contends that Coleman Powermate knew of his lawsuit at the latest at the time its employee Jim Dixon inspected the generator (August 6, 1992), and that it had "constructive knowledge" because of its close relationship with Coleman. Again, Jones gives no hint of the nature of any relationship, other than similarity of name.
32
There is surely enough in the record to show that Coleman Powermate was the manufacturer, rather than Coleman. But for the running of the period of limitations and the question whether relation back is appropriate, leave to substitute Coleman Powermate would have been "freely given when justice so requires." Fed.R.Civ.P. 15(a). As a general proposition, it is more logical to look to Coleman Powermate than to Coleman to decide whether to plead the defense of limitations and whether to challenge the propriety of relation back.
33
Dixon, Coleman Powermate's "Director of Quality and Warranty Operations," inspected the generator and concluded that it was manufactured by Coleman Powermate, within the 120 days provided for in Rule 4(m). We know of no reason why Dixon's knowledge at that date would not be imputed to his employer. Whether that knowledge fulfilled the notice and knowledge requirements of subdivisions (A) and (B) of Rule 15(c)(3) may be open to question, but we think that the fact of Dixon's knowledge is a sufficient showing so that it was an abuse of discretion not to permit Coleman Powermate to be made a defendant. Once before the court, Coleman Powermate would have the opportunity to show that the requirements of subdivisions (A) and (B) had not been fulfilled.
C. Leave to File Summary Judgment Motion
34
After the dispositive motion deadline had passed, Judge Conlon rejected the Aardsmas' motion for leave to file a motion for summary judgment as untimely, and denied their motion for reconsideration. Subsequently, the parties consented to proceed before Magistrate Judge Guzman, who granted the Aardsmas leave to file their summary judgment motion.
35
Jones argues that Magistrate Judge Guzman abused his discretion because he did not have good cause to reverse Judge Conlon's previous decision to deny leave to file, relying on the final sentence of Rule 16(b) of the Federal Rules of Civil Procedure ("A schedule shall not be modified except upon a showing of good cause and by leave of the district judge or, when authorized by local rule, by a magistrate judge."). We find, however, that the change in circumstances whereby the issues involving the only remaining defendant are addressed by the motion, constituted "good cause" to allow the Aardsmas to file their motion for summary judgment.
36
A district court has discretion in managing its caseload. Here, there was no decision on the merits by Judge Conlon; she merely rejected the Aardsmas' motion for leave to file as untimely. During oral argument, Jones' attorney conceded that Judge Conlon, had she remained the presiding judge, would be free to revisit the issue as to whether the Aardsmas should be permitted to file their summary judgment motion. But Jones would have us focus on his belief that there is no indication that Judge Conlon would have changed her ruling.
37
The magistrate judge was the presiding judge at the time he acted, in his discretion, to allow the Aardsmas to file their motion for summary judgment. Similar situations frequently arise when an action is transferred from one judge to another. And, given the fact that (as we conclude in the following sections) the magistrate judge appropriately granted the Aardsmas' motion for summary judgment, judicial economy was served. To find that the magistrate judge erred would inappropriately infringe on his power to control the proceedings in his court.
D. Duty of Reasonable Care
38
Jones asserts that the Aardsmas should have known the generator was unreasonably dangerous, were in the best position to obtain information on the safe operation of the generator, and were under a duty to inquire about the safe use of the generator and inform Jones of its proper use.
39
Section 388 of the Restatement (Second) of Torts ("Chattel Known to be Dangerous for Intended Use") provides
40
One who supplies directly or through a third person a chattel for another to use is subject to liability to those whom the supplier should expect to use the chattel with the consent of the other or to be endangered by its probable use, for physical harm caused by the use of the chattel in the manner for which and by a person for whose use it is supplied, if the supplier
41
(a) knows or has reason to know that the chattel is or is likely to be dangerous for the use for which it is supplied, and
42
(b) has no reason to believe that those for whose use the chattel is supplied will realize its dangerous condition, and
43
(c) fails to exercise reasonable care to inform them of its dangerous condition or of the facts which make it likely to be dangerous.
44
Illinois follows Sec. 388 with respect to determining whether a duty to warn exists. Quinton v. Kuffer, 221 Ill.App.3d 466, 164 Ill.Dec. 88, 582 N.E.2d 296 (1991) (plaintiff (a welder), in making a stove out of a drum for defendant (a carpenter), used a torch on the drum, which caused an explosion; defendant, who had seen a label marked "flammable" on the drum, owed no duty to warn plaintiff) ("Although plaintiff did not recall if the drum had a label, defendant could reasonably expect that plaintiff would realize any danger in cutting into the drum with a torch and make inspection of the drum for any dangerous condition attendant in the welding operations in which he was experienced." Id. at 93, 582 N.E.2d at 301); see also Durbin v. St. Louis Slag Products Co., 206 Ill.App.3d 340, 151 Ill.Dec. 265, 564 N.E.2d 242 (1990) (evidence supported jury verdict that defendant, owner of a quarry, breached duty to warn plaintiff, a driver who received a dump trailer of rock from the quarry, that he had an unbalanced load, which resulted in the trailer crushing the truck cab and injuring plaintiff) ("A duty to warn against injury exists when there is unequal knowledge, actual or constructive, and the defendant, possessed of such knowledge, knows or should know that harm may or can occur." Id. at 274, 564 N.E.2d at 251); Vallejo v. Mercado, 220 Ill.App.3d 1, 162 Ill.Dec. 692, 580 N.E.2d 655 (1991) (plaintiff, who had never used a chain saw before, was injured by chain saw kickback; "defendant had duty to warn plaintiff of any dangers which were not open and obvious and of which defendant was aware" Id. at 700, 580 N.E.2d at 663).
45
There is no evidence that the Aardsmas knew (or had reason to know) that the generator presented any danger not inherent in any use of gasoline; when Mr. Aardsma operated the generator to power the sump pump he noticed no problems and no one brought any problems to the Aardsmas' attention. No one requested an operation manual or additional equipment (i.e. a funnel) from the Aardsmas. The Aardsmas borrowed the generator in order to lend it to Scheeringa; they could reasonably expect that it would be used by his knowledgeable workers. There is no indication that the Aardsmas knew that Jones would not realize a danger of which the Aardsmas knew; Jones had used similar generators before. The Aardsmas had no greater knowledge of danger than Jones. Jones therefore states no cause of action against the Aardsmas under Sec. 388.
E. Control of the Construction Site
46
Jones argues that the Aardsmas had the ability to exercise control over the construction site, and therefore are liable for providing the generator for his use. He asserts that they acted as general contractors, and cites evidence of control such as their selection of Scheeringa & DeVries and daily inspection of the site.
47
Section 414 of the Restatement (Second) of Torts ("Negligence in Exercising Control Retained by Employer") provides
48
One who entrusts work to an independent contractor, but who retains the control of any part of the work, is subject to liability for physical harm to others for whose safety the employer owes a duty to exercise reasonable care, which is caused by his failure to exercise his control with reasonable care.
49
Comment c to Sec. 414 states that "[i]n order for the rule stated in this Section to apply, the employer must have retained at least some degree of control over the manner in which the work is done. It is not enough that he has merely a general right to order the work stopped or resumed, to inspect its progress or to receive reports...." To be liable, the Aardsmas must have supervised Jones so that he was "not entirely free to do the work in his own way." Bezan v. Chrysler Motors Corporation, 263 Ill.App.3d 858, 201 Ill.Dec. 647, 651, 636 N.E.2d 1079, 1083 (1994). "[T]he duty to exercise control with reasonable care is not assumed merely from landowner status." Burger v. Prairie Development, Ltd., 218 Ill.App.3d 814, 161 Ill.Dec. 467, 475, 578 N.E.2d 1113, 1121 (1991).
50
There is no evidence that the Aardsmas controlled the manner in which Jones performed his work; any control was only to the extent that they chose his employer to perform carpentry work. The Aardsmas were never present when Jones was on the job. Nor is there evidence that the Aardsmas knew that Jones was working in a potentially hazardous manner. Jones has failed to present facts sufficient to establish a duty of the Aardsmas owed to Jones under Sec. 414.
51
Insofar as the district court denied Jones' motion for leave to file an amended complaint to substitute Coleman Powermate for Coleman, that denial is REVERSED and the cause is REMANDED with instructions to permit such amendment. After service has been effected on Coleman Powermate, Coleman Powermate will be free to raise the question of whether the amendment can relate back to the original filing of Jones' complaint. In all other respects, the judgments below are AFFIRMED. Each party will bear his or its own costs of appeal.
1
Jurisdiction is founded on diversity. Illinois law controls all substantive issues
2
Jones testified at his deposition that Mrs. Aardsma dropped off the generator, and that he did not meet Mr. Aardsma until the evening of the accident, at the hospital. Mr. Aardsma testified at his deposition that he dropped off the generator, and Mrs. Aardsma testified that she did not drop off the generator
3
In its brief, Coleman inaccurately states that it "generally denied that it designed, manufactured and distributed the generator, by specifically stating that 'it has no knowledge sufficient to form a belief as to the truth or falsity of the allegations' that it designed, manufactured and distributed the generator." Coleman Br. at 10
4
Dixon's affidavit does not indicate at whose request Dixon conducted the inspection
5
Nothing in the record shows that Coleman had never been in the business of manufacturing generators
| {
"pile_set_name": "FreeLaw"
} |
08-3567-pr
Abreu v. Nicholls
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUM M ARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUM M ARY ORDER
FILED ON OR AFTER JANUARY 1, 2007, IS PERM ITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUM M ARY ORDER IN A
DOCUM ENT FILED W ITH THIS COURT, A PARTY M UST CITE EITHER TH E FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUM M ARY ORDER”). A PARTY CITING A SUM M ARY ORDER
M UST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals for the Second Circuit, held at the
2 Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York,
3 on the 3rd day of March, two thousand ten.
4
5 PRESENT:
6 GUIDO CALABRESI,
7 ROBERT A. KATZMANN,
8 Circuit Judges,
9 DENNY CHIN,*
10 District Judge.
11 _______________________________________________
12
13 Carlos Abreu,
14
15 Plaintiff-Appellant,
16
17 v.
18 08-3567-pr
19 C.O. Nicholls,
20
21 Defendant-Appellee.
22 _______________________________________
23
24 FOR PLAINTIFF-APPELLANT: Carlos Abreu, pro se, Attica, New York.
25
26 FOR DEFENDANT-APPELLEE: Norman Corenthal, Assistant Corporation Counsel,
*
Denny Chin, of the United States District Court for the Southern District of New
York, sitting by designation.
1
1 for Michael A. Cardozo, Corporation Counsel of the
2 City of New York, New York, New York.
3
4
5 Appeal from the United States District Court for the Southern District of New York (Batts, J.).
6
7
8 UPON DUE CONSIDERATION, it is hereby ORDERED, ADJUDGED, AND
9 DECREED that the judgment of said District Court be and hereby is AFFIRMED in part and
10 VACATED and REMANDED in part for further proceedings consistent with this order.
11
12 Appellant Carlos Abreu appeals from the district court’s judgment granting summary
13 judgment for Correctional Officer Nicholls and dismissing his 42 U.S.C. § 1983 complaint. We
14 assume the parties’ familiarity with the facts, proceedings below, and specification of issues on
15 appeal.
16 I. Vacatur of Default Judgment
17 The District Court did not err in vacating its initial default judgment or in denying
18 Abreu’s motion for default judgment. Resolution of a motion to vacate a default judgment is
19 addressed to the sound discretion of the district court, bearing in mind that (1) this Court has
20 expressed a strong preference for resolving disputes on the merits; (2) a default judgment is the
21 most severe sanction which the court may apply; and (3) all doubts must be resolved in favor of
22 the party seeking relief from the default judgment. New York v. Green, 420 F.3d 99, 104 (2d Cir.
23 2005). Under Fed. R. Civ. P. 55(c), the district court may set aside an entry of default for “good
24 cause.” This Court has relied on three factors for assessing whether good cause has been shown
25 under Rule 55(c): (1) whether the default was willful; (2) whether setting aside the default would
26 prejudice the adversary; and (3) whether a meritorious defense is presented. Powerserve Int’l,
27 Inc. v. Lavi, 239 F.3d 508, 514 (2d Cir. 2001).
2
1 The magistrate judge correctly concluded that the affidavit and memorandum submitted
2 by Nicholls demonstrated that her initial default had not been willful, and that she had presented
3 a meritorious defense. In addition, the magistrate judge correctly concluded that setting aside the
4 initial default judgment and refusing to re-enter default judgment did not prejudice Abreu. See
5 Davis v. Musler, 713 F.2d 907, 916 (2d Cir. 1983) (“delay alone is not a sufficient basis for
6 establishing prejudice . . . [r]ather, it must be shown that delay will result in the loss of evidence,
7 create increased difficulties of discovery, or provide greater opportunity for fraud and collusion”
8 (quotation marks omitted)).
9 II. Summary Judgment
10 We find that the District Court erred by dismissing Abreu’s excessive force claim at
11 summary judgment. This Court reviews an order granting summary judgment de novo and asks
12 whether the district court properly concluded that there were no genuine issues of material fact
13 and that the moving party was entitled to judgment as a matter of law. See Miller v. Wolpoff &
14 Abramson, L.L.P., 321 F.3d 292, 300 (2d Cir. 2003). In determining whether there are genuine
15 issues of material fact, this Court is “required to resolve all ambiguities and draw all permissible
16 factual inferences in favor of the party against whom summary judgment is sought.” Terry v.
17 Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003) (quotation marks omitted). However, “conclusory
18 statements or mere allegations [are] not sufficient to defeat a summary judgment motion.” Davis
19 v. State of New York, 316 F.3d 93, 100 (2d Cir. 2002).
20 A claim of cruel and unusual punishment in violation of the Eighth Amendment has an
21 objective and a subjective component. See Wright v. Goord, 554 F.3d 255, 268 (2d Cir. 2009).
22 The subjective inquiry looks to whether the defendant prison official acted wantonly, which
3
1 “turns on whether force was applied in a good-faith effort to maintain or restore discipline, or
2 maliciously and sadistically to cause harm.” Id. (quotation marks omitted). The objective
3 inquiry is “contextual and responsive to ‘contemporary standards of decency.’” Hudson v.
4 McMillan, 503 U.S. 1, 8 (1992). Although the extent of injury is a relevant factor, it is not a
5 threshold requirement for an excessive force claim. Wilkins v. Gaddy, 559 U.S. __, No. 08-
6 10914, 2010 WL 596513, at *3 (February 22, 2010); see Hudson, 503 U.S. at 7. Where a prison
7 official acts “maliciously and sadistically,” “contemporary standards of decency always are
8 violated. This is true whether or not significant injury is evident.” Wright, 554 F.3d at 268-69
9 (quotation marks omitted). But even when a prison official acts maliciously or sadistically, “not
10 every push or shove . . . violates a prisoner’s constitutional rights.” Sims v. Artuz, 230 F.3d 14,
11 22 (2d Cir. 2000) (quotation marks omitted). “[T]he Eight Amendment’s prohibition against
12 cruel and unusual punishment does not extend to de minimis uses of physical force, provided that
13 the use of force is not of a sort repugnant to the conscience of mankind.” Id. (quotation marks
14 omitted, emphasis omitted).
15 For the purpose of this summary judgment dismissal, we assume that Nicholls’ actions
16 were maliciously and sadistically motivated, that their only purpose was to humiliate a new
17 inmate. The following events preceded the use of force at issue:
18 As Nicholls and another officer were looking through a door and laughing, the
19 waiting inmates tried to see what the officers were laughing about. Nicholls told the
20 inmates, “Don’t look over at us,” to which Abreu responded, “I’m just looking.”
21 Some moments later, Nicholls said to Abreu, “I told you not to look at me.”
22
23 Abreu v. Nicholls, No. 04 Civ. 7778(DAB)(GWG), 2007 WL 2111086, at *1 (S.D.N.Y. July 24,
24 2007) (magistrate report and recommendation). Accordingly, the extent, if any, of Abreu’s
4
1 injuries are immaterial.
2 The relevant question is whether Nicholls’ use of force was more than de minimis. As
3 recounted by the magistrate judge:
4 Nicholls then took out a rubber-headed “hammer” from an office desk and stood in
5 front of Abreu. Nicholls said, “Didn’t I tell you not to look at me,” to which Abreu
6 responded, “I’m not from this prison, I come from the state.” . . . Nicholls then
7 “began to press the hammer to [his] forehead.”
8
9 While the hammer was pressed to his head, Nicholls told Abreu, “Come on, do what
10 ever you want,” but Abreu did not respond because the other inmates urged him to
11 stay silent. Nicholls pressed the hammer into his head between one and five times
12 and his head went “half way” backwards. After one to two minutes, Nicholls
13 removed the hammer from his forehead and put it back into the desk.
14
15 Abreu, 2007 WL 2111086, at *1-2 (quoting Abreu Deposition, citations omitted).
16 Although it is well accepted that a mere push or shove is not actionable under the Eighth
17 Amendment, Nicholls’ use of force is of a different kind. The force used is not what one might
18 expect in a crowded prison corridor. Rather, the record supports a finding that it was a calculated
19 effort to apply a moderate amount of force in a way that threatened the use of significantly
20 greater force. Moreover, the corrections officer used a weapon–a rubber-headed hammer–and
21 pressed it against Abreu’s head with sufficient force to bend his head “‘half way’ backwards.”
22 We cannot say that this amount of force is de minimis as a matter of law, at least where, as
23 plausibly alleged, the context of the action was totally removed from any proper penal purpose
24 and the action was taken solely for the purpose of humiliating an inmate.
25 We affirm the award of summary judgment with respect to Abreu’s claim that his denial
26 of medical treatment constituted deliberate indifference in violation of the Eight Amendment and
27 his state law claims for substantially the same reasons stated by the magistrate judge in his
5
1 thorough and well-reasoned report and recommendation.
2 The judgment of the district court is hereby AFFIRMED in part and VACATED and
3 REMANDED in part.
4
5 FOR THE COURT:
6 Catherine O’Hagan Wolfe, Clerk
7
8
6
| {
"pile_set_name": "FreeLaw"
} |
983 F.2d 1073
NOTICE: Seventh Circuit Rule 53(b)(2) states unpublished orders shall not be cited or used as precedent except to support a claim of res judicata, collateral estoppel or law of the case in any federal court within the circuit.Arthur L. OLIVER, Plaintiff-Appellee,v.LOCAL 743, INTERNATIONAL BROTHERHOOD OF TEAMSTERS,CHAUFFEURS, WAREHOUSEMEN AND HELPERS, Defendant-Appellee.
No. 92-1319.
United States Court of Appeals, Seventh Circuit.
Argued Nov. 4, 1992.Decided Dec. 10, 1992.
Before BAUER, Chief Judge, CUDAHY, Circuit Judge and WOOD, JR., Senior Circuit Judge.
ORDER
I.
1
Arthur Oliver was an employee of the Central States, Southeast and Southwest Area, Health, Welfare and Pension Fund (Central States) and a member of Local 743 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers (I.B.T.). Central States terminated Oliver's employment in March 1989.1 Oliver proceeded to file a grievance with I.B.T. and a complaint with the Equal Employment Opportunity Commission (E.E.O.C.), alleging that his discharge was the product of racial discrimination. I.B.T., acting on Oliver's behalf, and Central States reached a settlement the day Oliver's grievance was to be arbitrated. Oliver would receive a $20,000 lump sum payment in return for withdrawal of his grievance with I.B.T. and his pending E.E.O.C. charges against Central States. Oliver agreed to accept the settlement only if I.B.T. promised to find him another, comparable job "right away." Br. of Appellant at 10. I.B.T. agreed to this condition, and Oliver's grievance was settled.
2
Oliver became dissatisfied with I.B.T.'s efforts to find him a new job. Oliver had apparently filed a charge with the E.E.O.C. against the union sometime prior to being terminated by Central States. In September 1989, an I.B.T. representative asked Oliver to drop this charge with the E.E.O.C. Oliver agreed to do so, if I.B.T. found him suitable employment. I.B.T. never did, and Oliver found a job on his own in January 1990. Oliver had no further contact with I.B.T. regarding this matter after September 1989. On September 23, 1989, Oliver received an E.E.O.C. determination letter rejecting his discrimination claim against I.B.T. On November 3, 1989, Oliver requested that his charges against I.B.T. be amended to include I.B.T.'s failure to "see to it that [he] got another job right away." Oliver filed a charge with the National Labor Relations Board (N.L.R.B.) on March 19, 1990, alleging that I.B.T. breached its duty to fairly represent him. This suit followed on May 14, 1990, alleging, inter alia, the same violation.
3
I.B.T. moved for summary judgment. Because Oliver had not pursued any internal union remedies, the district court granted I.B.T.'s motion, relying upon this court's decision in Tinsley v. United Parcel Serv., 635 F.2d 1288 (7th Cir.1980), vacated and remanded, 452 U.S. 934 (1981), decision on remand, 665 F.2d 778 (7th Cir.1981) (holding that failure to exhaust internal union remedies bars judicial relief). Oliver brought this appeal, and we now affirm.
II.
4
This case was argued principally over the continuing authority of Tinsley. It appears that Oliver unjustifiably failed to pursue all internal union remedies available to him, and that this suit is therefore barred pursuant to our holding in Tinsley. Tinsley has been criticized on the grounds that damages may not be recoverable through the internal process within the International Brotherhood of Teamsters. Indeed, the Ninth Circuit has rejected Tinsley for this reason. See Ghebreselassie v. Coleman Sec. Serv., 829 F.2d 892, 896 (9th Cir.1987), cert. denied sub nom. California Teamsters Pub., Professional & Medical Employees Union Local 911 v. Ghebreselassie, 478 U.S. 1234 (1988). We do not, however, regard this as an appropriate occasion to reexamine Tinsley, because the district court's judgment may be affirmed, in any event, on the ground that Oliver's claim was barred by the statute of limitations. We are not constrained by the district court's reasoning, and may affirm a summary judgment on any ground finding support in the record. Oyler v. National Guard Ass'n of the United States, 743 F.2d 545, 555 (7th Cir.1984).
5
The statute of limitations for unfair representation claims made pursuant to section 301 of the National Labor Relations Act is six months. Johnson v. Graphic Communications Int'l Union, 930 F.2d 1178 (7th Cir.), cert. denied sub nom. Padget v. Graphic Communications Int'l Union, 112 S.Ct. 184 (1991). The limitations period begins to run when the union fails or refuses to act, or from the time that the employee discovers, or in the exercise of reasonable diligence should have discovered, that the union would take no further action on his or her behalf. Adams v. Budd Co., 846 F.2d 428, 431 (7th Cir.1988), cert. denied, 488 U.S. 1008 (1989). Oliver's own actions suggest he knew, or should have known, that I.B.T. had ceased assisting him find new employment more than six months before this suit was filed.
6
Oliver maintains that from July 1989, the date his grievance against Central States was settled and I.B.T. promised to find him a new job, I.B.T. sent his resume to only a single employer. Oliver and I.B.T. communicated for the last time regarding this matter in September 1989. It thus appears that Oliver should have known sometime in October 1989 that I.B.T. had done for him all that it intended to do. We need not, however, speculate as to when Oliver realized that his union had abandoned him. On November 3, 1989, Oliver amended his E.E.O.C. charge against I.B.T. to include the union's failure to find suitable employment for him. We have previously held that the filing of an unfair labor practice charge with the N.L.R.B. is evidence the plaintiff knew that the union would take no further action on his or her behalf. See Adams, 846 F.2d at 431. See also Gustafson v. Cornelius Co., 724 F.2d 75, 77 (8th Cir.1983). We believe that Oliver's November 3 letter to the E.E.O.C. similarly establishes that as of that date, at the latest, Oliver knew I.B.T. would do nothing more for him. As a result, the limitations period began to run on November 3, 1989, and expired six months later on May 3, 1990. Oliver did not file this suit until May 14, 1990. Hence, either on the authority of Tinsley or because the suit is time-barred, the district court properly granted summary judgment in favor of I.B.T.
7
For the foregoing reasons, the judgment of the district court is AFFIRMED.
1
This case comes to us on appeal from the district court's granting of I.B.T.'s motion for summary judgment. For purposes of this appeal, I.B.T. accepts as true all well-plead factual allegations in Oliver's complaint. Br. of Appellee at 5 n. 2
| {
"pile_set_name": "FreeLaw"
} |
905 F.Supp. 1063 (1995)
Dan FORD
v.
CITY OF OAKWOOD, GEORGIA; H. Lamar Scroggs, individually and in his official capacity as Mayor; Donald Wood, individually and in his official capacity as Council Member; Ron McFarland, individually and in his official capacity as Council Member; Monte Robinson, Sr., individually and in his official capacity as Council Member; Denise McGee, individually and in her official capacity as Council Member; Clinton Newby, individually and in his official capacity as Council Member; and Jimmy McCauley, individually and in his official capacity as City Manager.
Civ. No. 2:95-CV-0008-WCO.
United States District Court, N.D. Georgia, Gainesville Division.
September 22, 1995.
*1064 David C. Ates, Kirwan Parks Chesin & Remar, Atlanta, GA, Steven Keith Leibel, and John T. Lueder, Steven K. Leibel & Associates, Atlanta, GA, for plaintiff/counter-defendant.
John Lewis Sapp, Richard Read Gignilliat, Elarbee Thompson & Trapnell, Atlanta, GA, for defendants and counterclaimant.
ORDER
O'KELLEY, District Judge.
The captioned case is before the court for consideration of defendant McCauley's motion for leave to amend counterclaim [20-1] and defendants Scroggs, Wood, McFarland, Robinson, McGee, Newby and McCauley's motion to dismiss [14-1].
I. Motion for Leave to Amend
Defendant McCauley's motion for leave to amend his counterclaim is unopposed. See L.R. 220-1(b)(1), NDGa. Accordingly, defendant McCauley's motion for leave to amend his counterclaim is hereby GRANTED [20-1].
II. Motion to Dismiss
Pursuant to Fed.R.Civ.P. 12(b)(6), defendants Scroggs, Wood, McFarland, Robinson, *1065 McGee, Newby and McCauley (hereinafter "defendants"), in their capacity as individuals, have moved the court to dismiss plaintiff's complaint on the grounds (1) that they are entitled to qualified immunity against plaintiff's claims under 42 U.S.C. § 1983; (2) that claims of age discrimination are not actionable under 42 U.S.C. § 1983; and (3) that they are not proper parties to plaintiff's Open Records Act claim.
A. Qualified Immunity
Qualified immunity protects public officials from liability and from trial if a plaintiff's complaint fails to state a violation of "clearly established statutory or constitutional rights of which a reasonable person would have known." Oladeinde v. City of Birmingham, 963 F.2d 1481, 1485 (11th Cir. 1992), cert. denied, 507 U.S. 987, 113 S.Ct. 1586, 123 L.Ed.2d 153 (1993) (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982)). In order to determine whether the constitutional right asserted by a plaintiff is "clearly established," the court must first determine whether the plaintiff has asserted a violation of a constitutional right at all. Wooten v. Campbell, 49 F.3d 696, 699 (11th Cir.1995) (quoting Siegert v. Gilley, 500 U.S. 226, 232, 111 S.Ct. 1789, 1793, 114 L.Ed.2d 277 (1991)). In making this determination, the court reviews the sufficiency of the factual allegations of the complaint, applying a heightened specificity requirement to section 1983 claims against public officials in their individual capacities. See Arnold v. Board of Educ. of Escambia County, Ala., 880 F.2d 305, 309 (11th Cir.1989) ("[I]n an effort to protect public officials from protracted litigation involving specious claims, we ... have tightened the application of Rule 8 to § 1983 claims.").
Plaintiff has alleged that he was discharged in retaliation for speech protected by the First Amendment. In assessing the validity of a retaliation claim, the court applies a four-part test. First, the court must determine whether the employee's speech related to a matter of public concern. Morgan v. Ford, 6 F.3d 750, 754 (11th Cir.1993), cert. denied, ___ U.S. ___, 114 S.Ct. 2708, 129 L.Ed.2d 836 (1994). If so, the court must weigh the employee's First Amendment interests against "the interest of the state, as an employer, in promoting the efficiency of the public services it performs through its employees." Id. (citations omitted). If the employee prevails on this balancing test, the court then determines whether the employee's speech played a substantial role in the state's employment decision. If the employee shows that the speech was a substantial motivating factor, the state must prove that it would have reached the same decision in the absence of the protected speech. Id.
In the instant case, plaintiff alleges that he brought certain information to the attention of the public and that he was subsequently discharged. Plaintiff further alleges that his public statements were substantial motivating factors for his termination. However, plaintiff has failed to plead facts connecting his speech and his subsequent termination. Plaintiff's conclusory allegations regarding the causal connection essential to his First Amendment claim are insufficient to meet the heightened specificity required for a section 1983 claim. See L.S.T., Inc. v. Crow, 49 F.3d 679, 684 (11th Cir.1995). Thus, defendants, in their capacity as individuals, are entitled to qualified immunity as to plaintiff's First Amendment claim under section 1983. Defendants' motion to dismiss plaintiff's claim for retaliatory discharge against defendants in their capacity as individuals is hereby GRANTED [14-1].
B. Age Discrimination
Plaintiff also alleges that defendants discriminated against him on the basis of his age, in violation of his equal protection rights. Plaintiff has asserted his claim for relief under 42 U.S.C. § 1983. Section 1983 does not in itself create any substantive rights; rather, it provides a statutory basis to receive a remedy for the deprivation of rights secured by other sources, including the United States Constitution. See Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 617, 99 S.Ct. 1905, 1916, 60 L.Ed.2d 508 (1979). Plaintiff has alleged a violation of his constitutional rights. Plaintiff's claim also falls within the scope of the remedies provided by the Age Discrimination in Employment Act (ADEA). Defendants argue *1066 that the ADEA is the exclusive remedy for age discrimination claims, and thus plaintiff's section 1983 claim should be dismissed.
The critical issue in determining whether the ADEA preempts section 1983 claims for age discrimination is that of congressional intent. Ring v. Crisp County Hospital Auth., 652 F.Supp. 477, 480 (M.D.Ga.1987). "When the remedial devices provided in a particular Act are sufficiently comprehensive, they may suffice to demonstrate congressional intent to preclude the remedy of suits under § 1983." Middlesex County Sewerage Auth. v. National Sea Clammers Ass'n, 453 U.S. 1, 20, 101 S.Ct. 2615, 2626, 69 L.Ed.2d 435 (1981). The ADEA provides a comprehensive scheme to prohibit employment discrimination on the basis of age. Based on the comprehensive scheme of the ADEA, the Fifth Circuit, in an opinion binding on this court, has ruled that complaints of age discrimination in federal employment must be brought pursuant to the ADEA. Paterson v. Weinberger, 644 F.2d 521, 525 (5th Cir.1981).[1]
In order to encourage compliance through mediation, the ADEA requires participation in a detailed administrative process prior to filing suit in federal court. Zombro v. Baltimore City Police Dept., 868 F.2d 1364, 1366 (4th Cir.1989), cert. denied, 493 U.S. 850, 110 S.Ct. 147, 107 L.Ed.2d 106 (1989). If section 1983 is available for age discrimination claims, the comprehensive administrative scheme established by the ADEA may be bypassed. Thus, the detailed framework of the ADEA evidences congressional intent to preclude suits for age discrimination under section 1983. See Zombro, 868 F.2d at 1369; Ring, 652 F.Supp. at 482; Frye v. Grandy, 625 F.Supp. 1573, 1576 (D.Md.1986).
After careful consideration, this court concludes that age discrimination claims are not actionable under section 1983. Accordingly, defendants' motion to dismiss plaintiff's age discrimination claim under section 1983 is hereby GRANTED [14-1].
C. Open Records Act Claim
Plaintiff alleges that defendants have denied him access to documents which constitute public records under O.C.G.A. § 50-18-70. Plaintiff's claim is based on state law, and thus, absent diversity of citizenship of the parties, is not within the original subject matter jurisdiction of this court. Pursuant to 28 U.S.C. § 1367, this court has supplemental jurisdiction over claims which are so related to other claims within the court's original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Although plaintiff's claims under section 1983 are clearly within this court's original jurisdiction, his Open Records Act claim is not so related to the section 1983 claims as to form part of the same case or controversy. The documents at issue in the Open Records Act claim may be relevant to plaintiff's federal claims. Nonetheless, the determinations which must be made regarding the documents' status and accessibility under Georgia law are not related to the issues underlying plaintiff's section 1983 claims. Accordingly, plaintiff's Open Records Act claim is not within the subject matter jurisdiction of this court. Pursuant to Fed.R.Civ.P. 12(h)(3), plaintiff's Open Records Act claim is hereby DISMISSED FOR LACK OF JURISDICTION.
III. Conclusion
To summarize:
(1) Defendant McCauley's motion for leave to amend his counterclaim is hereby GRANTED [20-1].
(2) Defendants' motion to dismiss plaintiff's First Amendment claim under section 1983 against them in their capacity as individuals is hereby GRANTED [14-1]. Plaintiff's First Amendment claim under section 1983 is hereby DISMISSED as it relates to defendants in their individual capacity.
(3) Defendants' motion to dismiss plaintiff's claim for age discrimination under section 1983 is hereby GRANTED [14-1]. Plaintiff's *1067 claim for age discrimination under section 1983 is hereby DISMISSED.
(4) Plaintiff's Open Records Act claim is hereby DISMISSED FOR LACK OF JURISDICTION.
IT IS SO ORDERED.
NOTES
[1] Paterson was decided on May 8, 1981. In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir.1981), the court adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981. Id. at 1209.
| {
"pile_set_name": "FreeLaw"
} |
33 F.2d 75 (1929)
SIMMONS CO.
v.
COMMISSIONER OF INTERNAL REVENUE.
No. 2322.
Circuit Court of Appeals, First Circuit.
May 31, 1929.
Phillips Ketchum and Merrill G. Hastings, both of Boston, Mass. (Herrick, Smith, Donald & Farley, of Boston, Mass., on the brief), for petitioner.
Allin H. Pierce, of Washington, D. C. (Mabel Walker Willebrandt, Asst. Atty. Gen., J. Louis Monarch and Andrew D. Sharpe, Sp. Asst. Attys. Gen., and C. M. Charest, General Counsel Bureau of Internal Revenue, of Washington, D. C., on the brief), for respondent.
Before BINGHAM and ANDERSON, Circuit Judges, and HALE, District Judge.
ANDERSON, Circuit Judge.
On December 15, 1924, the Commissioner of Internal Revenue notified the petitioner of deficiencies in its income and profits taxes for 1919 of $222,319.71, and for 1920 of $61,327.77. On appeal to the Board of Tax Appeals, the deficiencies for 1919 and 1920 were redetermined as $188,383.20 and $29,298.62, respectively. On appeal to this court, the main contentions are: That commissions paid by the taxpayer on the sale of its own capital stock are, under section 234(a) (1) of the Revenue Act of 1918, chap. 18, 40 Stat. 1057, 1077, "deductible as ordinary and necessary expenses incurred * * * in carrying on" its "trade or business"; and that, if not so deductible, such commissions should be included as part of its invested capital under section 326(a), 40 Stat. 1092. Thus included, they increase the amount on which the taxpayer is entitled to normal profits, and hence tend to reduce its tax.
The facts out of which this appeal grows are as follows: In 1917 the petitioner issued 20,000 shares of preferred stock ($2,000,000 par value), which were sold to bankers for $87.50 per share. The bankers sold this stock to the public at $95 per share. The corporation actually received $1,750,000. It charged the difference of $250,000 as an expense.
In August, 1919, the petitioner redeemed the entire 20,000 shares at $110, and made a new issue of 70,000 shares, paying the bankers $525,255 in connection with the sale of this stock. This sum was also charged as an expense. This stock was in part sold to the public at $97 per share, and in part exchanged for the old issue on terms not now material.
Deducting the discount of three points on 70,000 shares ($210,000), the net commission to the bankers was $315,255. This sum, petitioner strenuously urges, should be deducted from its gross income for 1919 as an "ordinary and necessary" expense within the meaning of section 234(a), supra.
1. The Board adhered to its previous rulings in the appeal of Charles H. Lilly Co., 2 B. T. A. 1058, and Emerson Mfg. Co., 3 B. T. A. 932; and held that bankers' commissions paid for a sale of shares were not deductible as "ordinary and necessary expenses in carrying on the business."
We think this ruling was right, for the reasons adequately stated in the Emerson Mfg. Co. Case, 3 B. T. A. 932. While expenses for organization or for obtaining additional capital are frequent in growing and successful enterprises, we think it clear that *76 they are not "ordinary and necessary expenses" in the productive operations of such concerns within the meaning of the tax laws.
If the language used seemed to us doubtful (as it does not), the practically contemporaneous construction by the Treasury Department in its regulations would require us to exclude expenses incident to the organization of a corporation and the sale of its capital stock as being within the fair meaning of "ordinary and necessary expenses incurred in carrying on the business" of such corporation. In effect, the regulations limit deductible expenses to the current operating expenses incurred in producing the income. See articles 21, 101, 582. The case in that regard falls under the familiar rule that contemporaneous construction given to an Act of Congress by the executive officers charged with its enforcement, though not controlling, is entitled to great weight. Baltzell v. Mitchell (C. C. A.) 3 F.(2d) 428, 430; compare National Lead Co. v. United States, 252 U. S. 140, 146, 40 S. Ct. 237, 64 L. Ed. 496, where the Supreme Court points out the addititonal weight attaching to such construction from the fact that Congress has, by subsequent legislation, given it implied approval. The construction that only operating expenses are deductible under section 234(a) (1) was being applied by the Treasury Department when Congress re-enacted the provision, in unchanged form, in the Revenue Acts of 1921, 1924, 1926, and 1928. 42 Stat. 254; 43 Stat. 283; 44 Stat. 41; 45 Stat. 799 (26 USCA §§ 986, 2023). See, also, Brewster v. Gage (C. C. A.) 30 F.(2d) 604, 606.
2. The petitioner's second contention (illustrated by its claim) that the payment of $150,000 as a commission for the sale of the first issue of $2,000,000 of preferred stock is "something in the nature of an intangible asset in some way or other associated with the dollars it was expended to secure" seems to us an untenable, far-fetched notion inconsistent with the plain meaning of the tax statutes.
We agree with the reasoning of the Board of Tax Appeals by which it reaches the conclusion that invested capital cannot be increased by commissions paid for the sale of its stock or by discount from par to the purchasers of the stock. Section 326(a) reads:
"That as used in this title the term `invested capital' for any year means; * * *
"(1) Actual cash bona fide paid in for stock or shares;
"(2) Actual cash value of tangible property, other than cash, bona fide paid in for stock or shares; * * *
"(3) Paid-in or earned surplus and undivided profits; not including surplus and undivided profits earned during the year;
"(4) Intangible property bona fide paid in for stock or shares prior to March 3, 1917; * * *
"(5) Intangible property bona fide paid in for stock or shares on or after March 3, 1917. * * *" 40 Stat. 1092.
By necessary implication, this enumeration of items of what is "invested capital" excludes commissions paid by a corporation for the sale of its own stock. Such commissions obviously decrease the amount of capital available for the business operations of the concern. They contrast with the ideas contained in "actual cash," "actual cash value of tangible property," "paid in or earned surplus and undivided profits." All these add to the resources of the corporation. Commissions paid for marketing stock simply diminish the net return from the stock issue. Financially, they are equivalent to an issue of stock at a discount from par; the par value must be carried as a liability without an off-setting, equal, amount of cash or property.
The statutory concept as to what is "invested capital" is clear. See LaBelle Iron Works v. United States, 256 U. S. 377, 41 S. Ct. 528, 65 L. Ed. 998; Willcuts v. Milton Dairy Co., 275 U. S. 215, 48 S. Ct. 71, 72 L. Ed. 247, reversing the Court of Appeals for the Eighth Circuit in 15 F.(2d) 814.
The language used in LaBelle Iron Works v. United States, 256 U. S. 377, 378, 41 S. Ct. 528, 65 L. Ed. 998, quoted with approval in Willcuts v. Milton Dairy Co., 275 U. S. 215, 219, 220, 48 S. Ct. 71, 72 L. Ed. 247, is conclusive against the petitioner's contention.
The decision of the Board of Tax Appeals is affirmed.
| {
"pile_set_name": "FreeLaw"
} |
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 06-2225
___________
June Kittler, *
*
Appellant, *
* Appeal from the United States
* District Court for the
* Eastern District of Arkansas.
1
Michael J. Astrue, Commissioner, *
Social Security Administration, * [UNPUBLISHED]
*
Appellee. *
___________
Submitted: May 3, 2007
Filed: May 14, 2007
___________
Before SMITH, GRUENDER, and SHEPHERD, Circuit Judges.
___________
PER CURIAM.
June Kittler appeals the district court’s2 order affirming the denial of
supplemental security income. Kittler alleged disability since January 2001 from
1
Michael J. Astrue has been appointed to serve as Commissioner of Social
Security, and is substituted as appellee pursuant to Federal Rule of Appellate
Procedure 43(c).
2
The Honorable H. David Young, United States Magistrate Judge for the
Eastern District of Arkansas, to whom the case was referred for final disposition by
consent of the parties pursuant to 28 U.S.C. § 636(c).
dizziness, chest pain, and pain and numbness in her left arm. Following a second
hearing upon an Appeals Council remand, an administrative law judge (ALJ) found
that (1) Kittler’s medically determinable impairments--mild mitral valve click and soft
systolic murmur, and possible ischemia in her legs--were severe, but not of listing-
level severity; (2) her allegations and testimony about the nature and severity of her
impairments were not entirely credible; (3) she had the residual functional capacity
(RFC) to perform a full range of light work; and (4) considering her age, education,
work experience, and RFC, the Medical Vocational Guidelines directed a finding of
not disabled. Having carefully reviewed the record, we affirm the denial of benefits.
See Gonzales v. Barnhart, 465 F.3d 890, 894 (8th Cir. 2006) (standard of review).
Because the ALJ gave multiple valid reasons for finding Kittler’s subjective
complaints not entirely credible, we defer to those credibility findings. See Guilliams
v. Barnhart, 393 F.3d 798, 801 (8th Cir. 2005) (deference to ALJ’s credibility
determination is warranted if it is supported by good reasons and substantial
evidence). The ALJ’s RFC determination is also supported by the record. See Stormo
v. Barnhart, 377 F.3d 801, 807 (8th Cir. 2004) (in determining RFC, ALJ should
consider medical records, observations of treating physicians and others, and
claimant’s own description of limitations). Finally, Kittler has failed to provide
evidence of bias. See Rollins v. Massanari, 261 F.3d 853, 857-58 (9th Cir. 2001)
(quasi-judicial administrative officers, such as ALJs, are presumed to be unbiased, but
presumption can be rebutted by showing conflict of interest or another specific reason
to disqualify ALJ).
Accordingly, we affirm.
______________________________
-2-
| {
"pile_set_name": "FreeLaw"
} |
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
_________________________________________
)
JOHN LOTT, )
)
Plaintiff, )
)
v. ) Case No. 16-cv-01546 (APM)
)
NOT-FOR-PROFIT HOSPITAL )
CORPORATION d/b/a/ UNITED MEDICAL )
CENTER & THE DISTRICT OF COLUMBIA, )
)
Defendant. )
_________________________________________ )
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
The District of Columbia established Defendant Not-For-Profit Hospital Corporation
(“NFPHC”) “as an instrumentality of the District government . . . which shall have a separate legal
existence within the District government.” D.C. Code § 44-951.02(a). Plaintiff John Lott is the
former Chief Compliance Officer of NFPHC. Among Plaintiff’s claims against his former
employer is one arising under the anti-retaliation provision of the federal Family and Medical
Leave Act (“FMLA”). In a motion for judgment on the pleadings, Defendant argues that it enjoys
sovereign immunity from suit as to Plaintiff’s FMLA claim. Its assertion of immunity is a
complicated one, but once recognized, Defendant maintains, the court also must decline to exercise
supplemental jurisdiction over Plaintiff’s remaining D.C.-law claims and therefore must dismiss
this action in its entirety.
For the reasons that follow, the court finds that NFPHC is not immune from suit for claims
arising under the anti-retaliation provision of the FMLA. The court therefore has subject matter
jurisdiction over Plaintiff’s FMLA claim, and it denies Defendant’s Motion for Judgment on the
Pleadings.
II. BACKGROUND
A. Factual Background
Plaintiff asserts a single federal claim of retaliation under the FMLA and four claims under
District of Columbia law: (1) a violation of the D.C. Whistleblower Protection Act, (2) retaliation
under the D.C. Human Rights Act, (3) retaliation under the D.C. Family and Medical Leave Act,
and (4) breach of contract. See Second Am. Compl., ECF No. 31, ¶¶ 76–119. Of greatest relevance
to Defendant’s motion is Plaintiff’s FMLA claim. As to that claim, Plaintiff alleges that he
engaged in protected activity when he repeatedly protested the firing of a co-worker, Sonia
Edwards, while she was on FMLA leave. See id. ¶¶ 95–98. Following Edwards’s termination,
Plaintiff met with Defendant’s then-Chief Executive Officer to inform him that the hospital “has
an obligation to be in compliance with the laws and that they cannot terminate individuals who are
on FMLA.” Id. ¶ 48. A day later, on June 9, 2015, Plaintiff asked the Executive Vice President
(“EVP”) to rescind Edwards’s termination, but the EVP refused to do so. See id. ¶ 49. On July
20, 2015, Plaintiff notified a newly-hired CEO that Edwards needed to be reinstated because she
was unlawfully terminated under the FMLA. See id. ¶ 60. Defendant terminated Plaintiff ten days
later on July 30, 2015. See id. ¶ 53.
Plaintiff claims he was fired in retaliation for his protected activity. See id. ¶¶ 99–100.
Plaintiff bases his claim on the close temporal proximity between his termination and his
“object[ion] to the violation of the FMLA laws of a co-worker.” See id. ¶ 100.
2
B. Procedural History
Defendant’s present motion for judgment on the pleadings is not its first to dismiss all
claims. Twice before, Defendant moved to dismiss all claims under Federal Rule of Civil
Procedure 12(b)(6), but ultimately the court determined that Plaintiff’s amended pleading stated
plausible claims. See Lott v. Not-For-Profit Hosp. Corp., 296 F. Supp. 3d 143 (D.D.C. 2017)
(granting motion to dismiss but permitting leave to amend); see also Lott v. Not-For-Profit Hosp.
Corp., 319 F. Supp. 3d 277 (D.D.C. 2017) (denying motion to dismiss Second Amended
Complaint). The day before the initial scheduling conference, Defendant filed the instant motion,
asserting sovereign immunity for the first time as to Plaintiff’s FMLA claim. See Def.’s Mot. for
Judgment, ECF No. 44, Def.’s Mem. in Support of Mot., ECF No. 44-1 [hereinafter Def.’s Mem.].
Notwithstanding Defendant’s latest effort to dismiss all claims, the court entered a scheduling
order because more than two years had passed since Plaintiff commenced this action. See
Scheduling Order, ECF No. 45. Discovery is scheduled to conclude on July 31, 2019. Id.
III. ANALYSIS
Defendant’s assertion of sovereign immunity requires an Erector Set to construct. It starts
with the foundational contention that, as an instrumentality of the District of Columbia
government, NFPHC enjoys the District’s sovereign immunity. See Def.’s Mem. at 8–10.
Defendant then contends that, as to Plaintiff’s FMLA anti-retaliation claim, neither Congress nor
the D.C. City Council has waived its immunity. As for Congress, Defendant correctly points out
that in Coleman v. Court of Appeals of Maryland, 566 U.S. 30 (2012), the Supreme Court held
that, although Congress properly abrogated the sovereign immunity of states and the District of
Columbia insofar as the FMLA grants employees certain rights and protections to take leave for
family care, such abrogation did not extend to the FMLA’s “self-care” provision, that is, the
3
portion of the FMLA that grants employees rights and protections to take leave due to their own
health problems. Def.’s Mem. at 6–7, 16–18. Because Plaintiff’s retaliation claim rests on the
self-care provision, Defendant posits, the holding of Coleman means that Plaintiff cannot maintain
his claim. Id.
That then leaves the D.C. City Council. As to it, Defendant maintains that the District’s
legislative body did not waive NFPHC’s immunity from suit as to claims under the FMLA like the
one advanced by Plaintiff. Defendant so argues even though NFPHC’s organic statute contains a
“sue and be sued” clause. See id. at 10–14.
For his part, Plaintiff does not challenge Defendant’s general contention that NFPHC is
imbued with the sovereign immunity of the District. See Pl.’s Opp’n to Def.’s Mot., ECF No. 47
[hereinafter Pl.’s Opp’n], at 3. Instead, he argues that the District waived NFPHC’s immunity
from suit by including a “sue and be sued” clause in the hospital’s organic statute (“NFPHC Act”).
Id. at 2–3 (citing D.C. Code § 44-951.06(1) (providing that “[t]he Corporation shall have the power
to [s]ue and be sued in its corporate name”)). 1 The court therefore turns to the disputed issue of
waiver. 2
A. Presumption of Waiver
The court begins with a threshold inquiry: whether the District should be presumed to have
waived sovereignty immunity as to NFPHC based solely on the “sue and be sued” clause. In
1
Courts often treat the issue of whether a government waived immunity as distinct from whether a government
conferred sovereign immunity to an instrumentality. See Watters v. Washington Metropolitan Area Transit Authority,
295 F.3d 36, 39–40 (D.C. Cir. 2002) (acknowledging that the District of Columbia conferred its respective sovereign
immunity on to WMATA before analyzing whether “WMATA’s sovereign immunity has been waived”); see also
George Hyman Construction Company v. Washington Metropolitan Area Transit Authority, et al., 816 F.2d 753, 759
(D.C. Cir. 1987) (“[W]e must determine whether WMATA has sovereign immunity from liability for prejudgment
interest absent a waiver and, if so, whether a waiver of that immunity in fact exists.”).
2
Because the question of immunity goes to the court’s subject matter jurisdiction, the court arguably should first
satisfy itself that the District in fact conferred its immunity upon the NFPHC. But because the court holds that the
hospital’s organic statute waives any immunity as to Plaintiff’s particular claim, the court need not reach that broader
issue.
4
Ogugua v. Not-For-Profit Hospital Corporation, this court found that the presumption of waiver
applies. See 217 F. Supp. 3d 76, 78–79 (D.D.C. 2016) (finding that NFPHC’s sue-and-be-sued
clause “establishes a presumption in favor of finding a full and complete waiver of sovereign
immunity”). The court rested this conclusion on cases addressing sovereign immunity for federal
instrumentalities whose organic statutes contained sue-and-be-sued clauses. See id. at 78 (citing
FDIC v. Meyer, 510 U.S. 471, 475 (1994)). The court now recognizes, with the benefit of more
thorough briefing, that its finding of a presumption of waiver in Ogugua was a mistake. 3 As
Defendant correctly points out, see Def.’s Mem. at 14–16, the presumption of waiver that applies
to a federal instrumentality based on a federal statutory sue-and-be-sued clause does not apply to
a state—or, in this case, a District—instrumentality unless the state law itself recognizes such a
presumption. For instance, in George Hyman Construction Co. v. Washington Metropolitan Area
Transit Authority (“WMATA”), the D.C. Circuit looked to Virginia law (at the parties’ urging),
and not federal law, to determine whether the transit agency’s sue-and-be-sued clause created a
presumption of waiver. 816 F.2d 753, 759–60 (D.C. Cir. 1987). The court held that, under
Virginia law, a sue-and-be-sued provision in a state instrumentality’s organic statute “[does] not
constitute a waiver of any sovereign immunity.” Id. at 760.
Here, Defendant insists that, like Virginia, the District of Columbia does not follow the
federal presumption of waiver. See Def.’s Mem. at 16. But the decisions upon which Defendant
relies—Grunley Construction Co. v. District of Columbia, 704 A.2d 288, 290 (D.C. Cir. 1997);
Chewning v. District of Columbia, 119 F.2d 459, 460 (D.C. Cir. 1941); and District of Columbia
v. Owens-Corning Fiberglas Corp., 572 A.2d 394 (D.C. 1989)—are inapposite. None of those
cases squarely address whether the presumption of waiver applies to an instrumentality of the
3
In Ogugua, “[d]efendant [did] not identify or otherwise acknowledge [the sue-and-be-sued] provision, let alone
attempt to rebut the presumption.” Ogugua, 217 F. Supp. 3d at 78.
5
District of Columbia. Rather, each of those cases involves the sue-and-be-sued provision in the
Act establishing the District of Columbia as a municipal government (“Establishing Act”), D.C.
Code § 1-102, which courts consistently have held does not waive the District’s sovereign
immunity. As the Supreme Court has recognized, the words “sue and be sued” can retain a
different meaning depending on their context. See People of Porto Rico v. Rosaly y Castillo, 227
U.S. 270, 275 (1913) (“Unquestionably the [sue-and-be-sued] provision, disconnected from its
context, would sustain the conclusion that there exists a general liability to be sued without
reference to consent. Indeed, the words ‘to sue and be sued’ are but a crystallized form of
expression resorted to for the purpose of aptly stating the right to sue and the liability to be sued,
which springs from a grant of corporate existence, private or public. But this does not solve the
question here arising, which is the meaning of the words in the act under consideration, for it may
be that like words may have one significance in one context and a different signification in
another.”). Thus, the fact that courts have interpreted the Establishing Act’s sue-and-be-sued
clause as not waiving the District’s sovereign immunity does not mean that, as a general matter,
District of Columbia law rejects the federal presumption of waiver for instrumentalities. The case
law is simply silent on that question. 4
Accordingly, the court cannot say that a presumption of waiver—or no presumption at
all—applies with respect to the sue-and-be-sued clause under the NFPHC Act. Ultimately,
however, the court need not predict whether the D.C. Court of Appeals would embrace the federal
presumption of waiver. Waiver as it relates to Plaintiff’s FMLA claim is plain on the face of the
NFPHC Act.
4
Indeed, to its credit, Defendant concedes that “the District of Columbia Court of Appeals has yet not issued a
controlling precedent on the precise questions of whether and under what circumstances a District government
instrumentality with a sue and be sued clause in its organic statute partakes of the District’s unwaived sovereign
immunity.” Def.’s Reply Mem. in Support of Mot., ECF No. 49, at 9.
6
B. Statutory Waiver
Under District of Columbia law, “[a] waiver of sovereign immunity must be ‘unequivocally
expressed in statutory text.’” Tucci v. District of Columbia, 956 A.2d 684, 695 (D.C. 2008)
(quoting Lane v. Pena, 518 U.S. 187, 192 (1996)). Waiver may be found “only where stated by
the most express language or by such overwhelming implications from the text as will leave no
room for any other reasonable construction.” Watters v. Washington Metropolitan Area Transit
Authority, 295 F.3d 36, 40 (D.C. Cir. 2002) (quoting Morris v. Washington Metro. Area Transit
Auth., 781 F.2d 218, 221 (D.C. Cir. 1986)).
The text of the NFPHC Act “leave[s] no room for any . . . reasonable construction” other
than that the District has waived NFPHC’s immunity against claims arising under federal and local
employment laws. The NFPHC Act makes clear that the District’s takeover of the hospital did not
in any way diminish the protections afforded to the hospital’s employees. The NFPHC Act
expressly states that, “[t]he employees of United Medical Center shall be transferred to [NFPHC]
with the same rights and obligations they enjoyed as employees of the United Medical Center.”
D.C. Code. § 44-951.10(a). The United Medical Center (“UMC”)—NFPHC’s predecessor—was
a private hospital that came into existence from a public-private partnership between the District
and Greater Southeast Community Hospital. See Direct Supply, Inc. v. Specialty Hospitals of
America, LLC, 878 F. Supp. 2d 13, 17 (D.D.C. 2012). As a private hospital, the nation’s
employment laws, including the FMLA, applied to UMC. See 29 U.S.C. §§ 2611(4)(A)(i),
2617(a)(1) (applying to businesses with fifty or more employees). 5 By ensuring that NFPHC
employees would possess “the same rights . . . they enjoyed as employees of [UMC],” the D.C.
Council made clear that, just as UMC was subject to suit under statutes that protect the rights of
5
If the court is mistaken about the FMLA applying to UMC, the court may reconsider this decision.
7
employees, so too is NFPHC. Surely, if the D.C. Council had intended to limit the hospital’s
potential liabilities from its employees—considering it exposed NFPHC to the sue-and-be-sued
provision and provided NFPHC employees with the same rights as they had under a private
employer—it would have said so. But NFPHC’s organic act contains no such language.
Furthermore, other statutory provisions show that the D.C. Council contemplated that
hospital employees would continue to enjoy the full panoply of rights of redress against their
employer. For example, the NFPHC Act provides that, “[s]ubject to federal and District law,
[NFPHC] shall assume and be bound by all personnel contracts and existing collective bargaining
agreements with labor organizations that represent employees transferred to [NFPHC].” D.C.
Code § 44-951.08(c). It is simply not reasonable to believe that the D.C. Council subjected
NFPHC to federal collective bargaining agreements, but not to the full protections of the FMLA.
Similarly, the NFPHC Act states that UMC employees would continue to be subject to the
personnel system of UMC, “[u]ntil [NFPHC] establishes a personnel system subject to applicable
laws.” D.C. Code § 44-951.08(b) (emphasis added). Once more, Defendant’s asserted non-wavier
cannot be squared with the fact that the D.C. Council contemplated that NFPHC’s personnel
policies would be “subject to applicable laws.” And, finally, the NFPHC Act contains a broad
provision that allows the hospital to retain outside counsel as needed for litigation: “[NFPHC]
may retain outside counsel . . . at its own expense to provide representation for [NFPHC] and its
officers and employees in actual or anticipated litigation related to their official duties and
functions or in any other legal proceeding, lawsuit, grievance, or arbitration filed against [NFPHC],
its officers, or its employees.” D.C. Code § 44-951.14(c). This provision demonstrates that the
District anticipated that NFPHC, as an entity engaged in a commercial enterprise, would need to
8
defend against a host of potential claims from a variety of litigants. This clear expectation to “be
sued” evidences the District’s waiver of immunity for NFPHC.
To be clear, the court does not hold that the NFPHC Act waives immunity as to all potential
claims against the hospital. The court need not go that far. See Watters, 295 F.3d at 40 (observing
that governments can provide “specific” and “partial” waivers of immunity to instrumentalities, as
opposed to a general waiver of immunity). The court’s narrow holding is simply this: the NFPHC
Act’s “sue and be sued” clause, when viewed in the context of the entire statute, “leave[s] no room
for any other reasonable construction” of the NFPHC Act, id., other than that NFPHC is not
immune from suit for claims arising under employment laws, such as the FMLA. Accordingly,
the court has subject matter jurisdiction over Plaintiff’s anti-retaliation FMLA claim.
IV. CONCLUSION
For the reasons set forth above, Defendant’s Motion for Judgment on the Pleadings is
denied.
Dated: March 7, 2019 Amit P. Mehta
United States District Judge
9
| {
"pile_set_name": "FreeLaw"
} |
NOT RECOMMENDED FOR PUBLICATION
File Name: 05a0618n.06
Filed: July 21, 2005
NO. 03-4173
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
WILLIAM H. PARRIES, II, )
)
)
Plaintiff-Appellant, )
)
) ON APPEAL FROM THE UNITED
v. ) STATES DISTRICT COURT FOR THE
) SOUTHERN DISTRICT OF OHIO
)
MAKINO, INC., )
)
)
Defendant-Appellee. )
______________________________________
BEFORE: DAUGHTREY and SUTTON, Circuit Judges, and FORESTER,*
District Judge.
MARTHA CRAIG DAUGHTREY, Circuit Judge. The plaintiff, William Parries,
appeals from the district court’s order granting summary judgment to his former employer,
Makino, Inc., in an action Parries filed charging violation of Title VII of the 1964 Civil Rights
Act, 42 U.S.C. §§ 2000e et seq., and intentional infliction of emotional distress under Ohio
state law. Parries was initially terminated in November 1999 but was reinstated by order
of an arbitrator in August 2000. In June 2001, he was terminated a second time. In his
complaint, Parries alleged that both actions were based on race discrimination and that the
*
The Hon. Karl S. Forester, United States District Judge for the Eastern District of Kentucky, sitting
by designation.
employer had illegally retaliated against him for filing a discrimination charge with the Ohio
Civil Rights Commission after his termination in 1999. The district court granted summary
judgment to Makino on all counts, finding that the plaintiff had not made out a prima facie
case of either discrimination or retaliation. On appeal, we conclude that the district court
correctly determined that the discrimination claim failed for lack of a prima facie case. But,
contrary to the district court’s determination, we also conclude that the plaintiff did succeed
in establishing a prima facie case of retaliation. What the plaintiff failed to do, however,
was to rebut the defendant’s legitimate business reason for his termination and, as a result,
we hold that summary judgment was appropriately entered in the defendant’s favor.
FACTUAL AND PROCEDURAL BACKGROUND
Parries began working for Makino, Inc., in 1990 and was employed there
continuously until his first termination in November 1999. He was one of very few African-
American employees among the union workforce at Makino. Parries believed that he had
experienced disparate treatment based on his minority status almost from the beginning
of his employment at Makino and, as a result, he filed his first complaint with the Ohio Civil
Rights Commission in March 1990 and lodged several more in the following years. This
case, however, deals solely with events leading to his terminations in 1999 and 2001, and
the only protected activity alleged as a basis for his retaliation claim is the charge he filed
with the Ohio Commission following his 1999 termination.
The facts in the record establish that in early 1998, Makino promoted Parries to the
position of electrical technician, which placed him under the direct supervision of Don
-2-
Hoerlein and Jeff Reichert. In September 1998, a different supervisor observed Parries
returning late from lunch break. That supervisor, Sisson, gave Parries a verbal warning
and placed a note in Parries’s file. Makino used a system of “progressive discipline” under
which an employee goes though three steps of discipline levels before being subject to
discharge. However, the note that Sisson wrote did not count as a formal discipline step,
and Parries was not aware of its existence. In November 1998, Reichert did place Parries
on the first level of discipline after observing him returning late from lunch. Parries said that
he had been talking with two other employees about a company meeting he attended
earlier in the day. In March 1999, Parries was placed on the second step of discipline when
he returned late from break time. Parries’s explanation was that he was a candidate for a
union leadership position and had been discussing contract issues with a fellow union
member.
A few days later, Parries missed work without informing his supervisor in advance.
Under Makino’s point-based attendance policy, an employee earned credit points for good
attendance and penalty points for any absences. Credits could be applied against
absences, but only if the employee called in within the first two hours of an absence.
Parries’s absence placed him over the ten-point limit and thus subjected him to discipline.
Because Parries had forgotten to call in the morning of his absence, Hoerlein refused
Parries’s post hoc request to apply his credit points. Hoerlein placed Parries on the third
disciplinary level for this infraction.
In October 1999, Parries was recorded as having committed three disciplinary
infractions that were not individually punished but that led up to a “last chance agreement.”
-3-
Specifically, on October 12, a Makino supervisor observed Parries clocking into work and
then returning to his car, parking, and re-entering the facility. The supervisor reported the
incident to Reichert, who gave Parries a verbal warning. Two days later, on October 14,
Parries returned five minutes late from break after spending the time discussing safety
issues with other union members. The next day, on October 15, Parries remained away
from his workstation for longer than permitted for a discussion with the union president,
who was a fellow employee. In response to these three incidents, Makino management
met with Parries and issued the “last chance agreement.” The agreement was in lieu, they
said, of the usual fourth step of discipline, which was permanent termination. The
agreement provided that “[a]ny violation of this ‘Last Chance Agreement’ will result in
disciplinary action, up to and including termination.” Parries declined to sign the document.
Invoking the terms of the “last chance agreement,” Makino terminated Parries a
month later, in November 1999. Earlier that month, Parries had lost his employee badge
and could not clock in and out of work in the usual fashion. Parries called his supervisor
on the phone to check in verbally for the first two days, but there is a dispute as to whether
he did so for the following three days. Although Parries maintained that he saw Reichert
on the floor and asked him to check him in, Reichert had no record of this. Reichert
concluded that Parries had violated the “last chance agreement” and contacted the
manager of labor relations at Makino, who decided to discharge Parries. In response,
Parries filed a claim of race discrimination and retaliation with the Ohio Civil Rights
Commission, which found that “probable cause d[id] exist” to credit Parries’s allegations of
discrimination.
-4-
Parries also challenged his termination in arbitration, and he won. The arbitrator
concluded that Parries had not violated the “last chance agreement” and ordered
reinstatement with back pay, which occurred on August 8, 2000. His new position was as
a unit assembler under the supervision of Hoerlein. Once again, Parries immediately
began to have run-ins with his supervisors. Twice in August, Hoerlein spoke to Parries
about making “loud noises” while at his work station. In November 2000, Hoerlein gave
Parries a five-day suspension after finding him away from his work-station without
permission. Makino later rescinded the suspension and instead gave Parries a “final
warning.” In response to this incident, Parries filed a retaliation claim with the Ohio Civil
Rights Commission. In December 2000, Parries again faced discipline, this time for
attempting to tape-record a meeting between the union and Makino management.
Although Parries claimed that the anti-recording policy was never made explicit, the
company insisted that he had been told in a previous meeting that he was not allowed to
make such tape-recordings. In January 2001, Parries received a “final warning” from Ed
Morris, the supervisor under whom he was then working, for improperly recording his
hours. Parries then filed yet another complaint with the Ohio Civil Rights Commission. In
March, Morris gave Parries two verbal and one written warning for his poor work
performance.
The situation came to a head in June 2001 when Parries entered into an argument
with Morris and Hoerlein about whether Hoerlein had given employees certain information
about their overtime hours. In the course of the argument, Parries called Hoerlein a liar
-5-
and told him to “get some balls.” Makino then terminated Parries’s employment, citing his
poor performance, repeated disciplinary problems, and insubordination.
DISCUSSION
A. The Discrimination Claims
“[A] plaintiff may establish a prima facie case of discrimination either by presenting
direct evidence of intentional discrimination by the defendant or by showing the existence
of facts which create an inference of discrimination.” Talley v. Bravo Pitino Rest., 61 F.3d
1241, 1248 (6th Cir. 1995) (citations omitted). Although Parries attempted, unsuccessfully,
to produce direct evidence of discrimination in regard to the defendant’s actions, the bulk
of the evidence in this case was aimed at “creat[ing] an inference of discrimination.” To
show an inference of discrimination, McDonnell Douglas Corp. v. Green, 411 U.S. 792
(1973), and Texas Department of Community Affairs v. Burdine, 450 U.S. 248 (1981),
mandate a showing that the plaintiff (1) was a member of a protected class; (2) was
discharged; (3) was qualified for the position; and (4) was replaced by a person outside
the class. There is no dispute in this case that Parries established the first three McDonnell
Douglas factors for both his 1999 and 2001 terminations. The district court found, however,
that Parries had not established that he had been replaced by a non-minority worker in both
instances and had therefore failed to make out a circumstantial case of discrimination.
Following Parries’s dismissal in 1999, Makino filled his position with outside
contractors. The record contains no information about their ethnicity or race because
-6-
Parries failed to produce any such evidence. Hence, Parries has not shown he was
replaced with a non-minority person, the fourth McDonnell Douglas element. Makino
maintains that Parries was not replaced at all, but rather that his position was eliminated.
Nevertheless, instead of showing the fourth McDonnell Douglas element, a plaintiff
may make out a prima facie case by showing “that a comparable non-protected person was
treated better.” Mitchell v. Toledo Hosp., 964 F.2d 577, 582-83 (6th Cir. 1992). To
establish disparate treatment, the plaintiff must show that he was similarly-situated in all
relevant aspects to the comparable worker. See Pierce v. Commonwealth Life Ins. Co.,
40 F.3d 796, 802 (6th Cir. 1994). In a discriminatory discipline or firing context, “similarly-
situated” means that “the individuals with whom the plaintiff seeks to compare his/her
treatment must have dealt with the same supervisor, have been subject to the same
standards and have engaged in the same conduct without such differentiating or mitigating
circumstances that would distinguish their conduct or the employer’s treatment of them for
it.” Mitchell, 964 F.2d at 583. Although the comparison need not involve identical
misconduct, the misconduct must be of comparable seriousness. See Hollins v. Atl. Co.,
Inc., 188 F.3d 652, 659 (6th Cir. 1999).
Parries passed through four stages of disciplinary action prior to his 1999
termination. He now contends that a showing of disparate treatment in even one of the
stages invalidates his final termination because the termination was built upon the
successive disciplinary measures. However, in reviewing the individual disciplinary actions
and the evidence of comparables produced, we cannot say that any one of the employer’s
actions meets the Mitchell similarly-situated standard. Viewed as a whole, the record of
-7-
discipline suggests that Parries, as one of the very few African-American employees, may
have been subjected to more intense scrutiny by his employers than were other, non-
minority workers, but the same evidence does not establish legally disparate treatment.
For example, the record shows that Parries was placed on the first level of discipline
on November 17, 1998, for returning half-an-hour late from his lunch break. Parries
contended that he was 15 minutes late because he started his lunch break late due to a
company meeting that ran long. Then, on his way back from lunch, two other employees
questioned him about the contents of the meeting. When Parries returned to his work
station, supervisor Reichert confronted him about being late. Parries complained that he
was written up but the two white employees with whom he had been conversing received
no discipline. However, Parries did not show that he was similarly-situated to his two co-
workers; he presented no evidence that Reichert was a supervisor of the two white men,
that they were not on an approved break, that Reichert saw the other men away from their
work stations, or even that they actually were away from their work stations while talking
to Parries.
The second disciplinary action occurred on March 15, 1999, when Parries was
written up for returning late from lunch after discussing union issues with co-workers as part
of his campaign for a union leadership position. Parries claimed that it was common
practice for union candidates to take a few minutes of work time to explain issues to their
co-workers. Parries submitted declarations from two co-workers alleging that they had
each engaged in campaigning on company time and had not been punished for it. Again,
however, Parries did not show that he was similarly-situated to those two co-workers
-8-
because there was no indication of who the workers’ supervisors were, whether the
supervisors were aware of the practice, when the co-workers’ campaigning occurred, or
whether it was done in a similar manner. To make out a case of disparate treatment, the
plaintiff must produce specific facts showing he and the non-minority employee engaged
in similar conduct. See Hardy v. Eastman Chem. Co., Docket No. 01-5361, 2002 WL
31553926 (6th Cir. Nov. 12, 2002). That requirement was not met in this instance.
Parries was placed on the third disciplinary level on March 22, 1999, after an
unscheduled absence caused him to exceed his allowable “absentee points” and he failed
to call in as required by company rules. As noted above, supervisor Hoerlein refused to
allow Parries to apply his good points retroactively and suspended Parries for three days.
In contrast, the plaintiff noted, a white co-worker, Brett Manning, similarly exceeded his
permissible absentee points in 1998 without calling in, yet Hoerlein allowed him to apply
his good points retroactively. According to Makino, the difference in treatment was due to
the fact that at the time he was permitted to apply the offset, Manning had been an
employee of Makino for only a few months and told supervisor Hoerlein that he had
misunderstood the absentee policy. Apparently Hoerlein had then explained the policy to
him and warned him not to engage in another infraction. By contrast, Parries had been a
Makino employee for almost ten years and was fully familiar with the policy. Although the
call is a close one, we cannot say that the district court erred in finding that Manning’s
status as a recent employee unfamiliar with the protocol constituted “differentiating or
mitigating circumstances that would distinguish [his] conduct or the employer’s treatment
of [him] for it.” Mitchell, 964 F.2d at 583. Indeed, in 1999 Manning exceeded his allowable
-9-
absentee points and was subjected to the usual discipline, a three-day suspension. Finally,
we are not persuaded by the testimony of another white co-worker, Kincaid, who testified
that some employees were allowed to apply good points to absences retrospectively,
because Kincaid was unable to give any details as to when or to whom this happened or
what supervisor was involved.
On October 18, 1999, Makino gave Parries a “last chance” warning as a result of
three additional minor infractions. For each one of these infractions, Parries offered
substantial evidence that a similarly-situated white employee was treated better. However,
Parries was disciplined for the combination of the three, not each individual incident.
Parries further argues that the so-called “last chance agreement” was itself evidence of
disparate treatment because it was an unprecedented discipline step that was not
countenanced or mentioned by the union contract. Not surprisingly, however, the district
court found that the agreement actually benefitted Parries because it was in lieu of
immediate termination and thus could not be used as evidence of negative disparate
treatment. The existence of the “last chance” warning did not insulate Makino from
arbitration; Parries requested arbitration after being fired under the “last chance agreement”
and won. Notably, although Parries succeeded in his effort to attain reinstatement, the
arbitrator’s order included a statement to the effect that the arbitrator had given “no weight
or substance to any claim of racial discrimination.” This determination squares with the
district court’s finding that the plaintiff failed to show disparate treatment in any of the
disciplinary steps leading up to his 1999 termination and thus has not made out a prima
facie case of racial discrimination with regard to that action by Makino.
- 10 -
We conclude that Parries likewise failed to make out a prima facie case for his 2001
termination under the four McDonnell Douglas elements. He undisputedly met the first
three elements but, as with the 1999 claim, did not adequately demonstrate that he was
replaced by a non-minority person. When Parries was fired in 2001, his duties were split
between two existing workers, both white, who were on a lower union labor grade. Eight
to ten months later, Makino promoted one of these employees, Greg Waites, to the higher
labor grade position Parries had formerly occupied. “Spreading the former duties of a
terminated employee among the remaining employees does not constitute replacement”
and, hence, the question is whether the delayed promotion of Waites constituted
replacement. Majewski v. Automatic Data Processing, Inc., 274 F.3d 1106, 1115 (6th Cir.
2001) (quoting Lilley v. BTM Corp., 958 F.2d 746, 752 (6th Cir. 1992)). The record
indicates that Waites took on many, but not all, of the plaintiff’s duties without any initial
change in position or employment status. That fact, together with the substantial delay in
Waites’s promotion, suggests that Waites was not promoted to “replace” Parries directly.
We cannot say that the district court erred in concluding that the plaintiff has failed to
demonstrate that promoting Waites after a long delay was tantamount to replacement.
As an alternative to the fourth McDonnell Douglas element, Parries attempted to
show that the second termination resulted from disparate treatment. In June 2001, Parries
was fired after engaging in a heated discussion with supervisors Morris and Hoerlein and
calling Hoerlein a liar who needed to “get some balls.” Under the union collective
bargaining agreement, Makino could terminate employees for offenses of “a serious
nature,” including insubordination, even if the employee has no prior disciplinary problems.
- 11 -
Parries argued that the “get some balls” statement was common shop talk and did not merit
termination, but he presented no evidence of fellow employees making similar comments
to management.
Parries also argued that, even if the final termination incident showed no disparate
treatment, Makino unfairly disciplined him in several incidents preceding his discharge.
Unlike the situation leading up to his 1999 termination, Parries was not explicitly placed on
escalating levels of discipline, but his disciplinary history clearly did play a role in Makino’s
decision to fire him in 2001. Even when these prior incidents are considered, however,
they do not support an allegation of disparate treatment. In November 2000, supervisor
Hoerlein suspended Parries for five days as a result of his being away from his workstation
without permission. This suspension was subsequently rescinded and Parries was given
back-pay, but he received a written final warning informing him that he was in violation of
the “last chance agreement.” Farmer, a white co-worker who was with Parries away from
the workstations, was given only a documented verbal warning placing him on discipline
level one. Farmer was not similarly situated, however, because Farmer did not have the
history of disciplinary problems that Parries had and was not subject to a “last chance”
warning. Hile, another white co-worker under Hoerlein’s supervision, testified that he was
out of his work area on the same day but was not disciplined. Hile claimed that someone,
he could not remember who, told him that Hoerlein had been looking for him and knew he
was away from his work station. There is no non-hearsay evidence, however, that Hoerlein
had knowledge of Hile’s infraction and, thus, no proof that Hile was similarly situated to
Parries.
- 12 -
In December 2000, Parries was suspended for three days after tape recording a
meeting with management. Parries claimed his punishment was unduly harsh, but he
provided no evidence of other similarly-situated employees being treated differently. In
January 2001, Parries was disciplined more harshly than some white co-workers for
improperly recording his hours but, again, failed to supply evidence that the co-workers
were similarly-situated in terms of disciplinary history, supervisor, or severity of misconduct.
Even if Parries had made out a prima facie case for his two terminations, he did not
provide sufficient evidence to show that Makino’s reasons for the terminations were
pretextual. “Once a plaintiff establishes a prima facie case of discrimination, the burden
shifts to the defendant to rebut the presumption of discrimination by providing evidence
showing that the plaintiff was terminated for a legitimate nondiscriminatory reason.” Smith
v. Leggett Wire Co., 220 F.3d 752, 758-59 (6th Cir. 2000). Because Makino presented a
race-neutral reason for firing Parries, i.e., his history of disciplinary problems, poor
performance, and insubordination, Parries was required to “produce sufficient evidence
from which the jury [could] reasonably reject the employer’s explanation.” Manzer v.
Diamond Shamrock Chems. Co., 29 F.3d 1078, 1083 (6th Cir. 1994). To make a showing
of pretext, “the plaintiff is required to show by a preponderance of the evidence either (1)
that the proffered reasons had no basis in fact, (2) that the proffered reasons did not
actually motivate his discharge, or (3) that they were insufficient to motivate discharge.” Id.
at 1084 (citations omitted). Parries did not challenged the factual accuracy of the
disciplinary infractions and thus did not dispute pretext under the first manner of showing.
In order to show pretext via the second method, “the plaintiff may not rely simply upon his
- 13 -
prima facie evidence but must, instead, introduce additional evidence of . . . discrimination.”
Id. at 1084. However, the record does not reflect the production of admissible evidence
above and beyond that required for a prima facie showing. The third manner of showing
pretext “ordinarily consists of evidence that other employees . . . were not fired even though
they engaged in substantially identical conduct.” Id. Given that Parries could not
demonstrate disparate treatment, he did not satisfy the third method because he failed to
show that any other employee who engaged in the same pattern of infractions was not
fired. See Warfield v. Lebanon Corr. Inst., 181 F.3d 723, 730-31 (6th Cir. 1999) (holding
that an employee fired for a series of incidents alleged to constitute misconduct must show
that a similarly-situated employee engaged in a comparably serious series of bad acts, not
merely similar individual acts).
We conclude that Makino’s motion for summary judgment was properly granted
because Parries did not establish a prima facie case of discrimination based on
circumstantial evidence, nor did he rebut as pretextual the employer’s legitimate business
reason for discharge.
B. The District Court’s Ruling on the Defendant’s Motion to Strike
In addition to attempting to demonstrate an inference of discrimination under the
McDonnell Douglas and Mitchell standards, Parries also argued that there was direct
evidence of racial animus underlying the 2001 termination. A plaintiff who can show direct
evidence of discrimination need not show the four McDonnell Douglas elements or satisfy
the Mitchell disparate treatment standard. See Talley, 61 F.3d at 1248. To meet his prima
- 14 -
facie burden in this manner, however, the plaintiff must present “credible, direct evidence
of discriminatory animus,” and the lower court must then specifically make a finding that the
plaintiff’s evidence is credible. See id.
In an attempt to produce such evidence, Parries proffered an unsworn declaration
by a former Makino employee, Brian Smith, who claimed to have heard supervisors Ed
Morris and Patrick Ruggiero use the term “nigger” in reference to Parries while he was
under their supervision. However, the Smith declaration fails to indicate when the
statements were made and under what circumstances. Moreover, the document was filed
after discovery was completed, and it was not covered by the description of Smith’s
expected testimony as summarized in the plaintiff’s witness list, filed pursuant to Federal
Rule of Civil Procedure 26.
In response, Makino filed a timely motion to strike Smith’s declaration, pointing out
that the plaintiff had “failed to properly disclose the subject matter of Mr. Smith’s testimony
in violation of his obligations under [Rule] 26 and this Court’s Scheduling Order.” The
district court did not rule on the merits of this motion explicitly. However, in ruling on the
summary judgment motions, the court announced that it was not relying on the Smith
declaration. Under these circumstances, we interpret the district court’s ruling as an implicit
grant of Makino’s motion to strike, based on a determination that the declaration was not
filed in a timely manner. While the better practice would have been to rule explicitly, we
cannot say that the district court committed an abuse of discretion in this regard. See
Wimberly v. Clark Controller Co., 364 F.2d 225, 227 (6th Cir. 1966).
- 15 -
C. The Retaliation Claim
In addition to his discrimination claims, plaintiff brought a Title VII retaliation claim
against defendant Makino. “To make a prima facie case of Title VII retaliation, a plaintiff
must prove: (1) he engaged in activity protected by Title VII; (2) this exercise of protected
rights was known to defendant; (3) defendant thereafter took adverse employment action
against the plaintiff; and (4) there was a causal connection between the protected activity
and the adverse employment action.” Ford v. Gen. Motors Co., 305 F.3d 545, 552-53 (6th
Cir. 2002). Notably in this case, Sixth Circuit precedent provides that “[t]he burden of
establishing a prima facie case in a retaliation action is not onerous, but one easily met.”
Nguyen v. City of Cleveland, 229 F.3d 559, 563 (6th Cir. 2000).
Makino does not dispute that Parries has shown the first three elements of this test.
Makino knew that Parries filed a claim of discrimination with the Ohio Civil Rights
Commission in the wake of his 1999 termination, and Makino then terminated Parries’s
employment in June 2001. The question remaining is whether Parries has shown sufficient
evidence to raise a genuine issue of material fact as to the causal connection between his
filing of the civil rights claim with the Ohio commission and his discharge. To establish the
causal connection required by the fourth prong, a plaintiff must “put forth some evidence
to deduce a causal connection between the retaliatory action and the protected activity and
requiring the court to draw reasonable inferences from that evidence, provided it is
credible.” Nguyen, 229 F.3d at 566 (quoting EEOC v. Avery Dennison Corp., 104 F.3d 858,
861 (6th Cir. 1997)). In making this determination, the court must view the evidence in the
- 16 -
light most favorable to the non-movant and must draw all reasonable inferences in the non-
movant’s favor. See Ford, 305 F.3d at 555.
The allegedly retaliatory behavior against Parries began almost immediately after
his reinstatement at work in August 2000. The Sixth Circuit has found timing to be a
relevant factor in a showing of causal connection. “Although ‘temporal proximity alone will
not support an inference in the face of compelling evidence’ to the contrary, ‘the proximity
in time between protected activity and adverse employment action may give rise to an
inference of a causal connection.” Ford, 305 F.3d at 554-55 (quoting Moon v. Transp.
Drivers, Inc., 836 F.2d 226, 229 (6th Cir. 1987)). The relevant measure of time is the
period between the resumption of work after the protected activity and the termination. See
Ford, 305 F.3d at 554-55. In Harrison v. Metropolitan Government, 80 F.3d 1107, 1119
(6th Cir. 1996), we held that a 15-month time gap was short enough to constitute “temporal
proximity.” Here, Parries was fired by Makino less than 11 months after resuming his
employment. Further, Parries claimed that the first retaliatory behavior occurred on August
16, 2000, a mere eight days after he returned to work.
As the district court noted, however, in order to show causal connection, a plaintiff
must demonstrate some evidence of retaliatory conduct in addition to temporal proximity.
See Nguyen, 229 F.3d at 566. Although the district court found that there was no such
additional evidence in the record, our review suggests that the plaintiff may have been
subjected to excessive scrutiny of his conduct and may have experienced “more frequent
disciplinary writeups . . . for trivial matters” than other Makino employees, which we have
held to constitute evidence of retaliatory conduct. Moore v. KUKA Welding Sys., 171 F.3d
- 17 -
1073, 1080 (6th Cir. 1999); see also Harrison, 80 F.3d at 1119 (“More important, however,
is the fact that study of the record in this case reveals an atmosphere in which the plaintiff’s
activities were scrutinized more carefully than those of comparably situated
employees. . .”). For example, in August 2000 supervisor Don Hoerlein twice “counseled”
Parries for making loud or strange noises while working. Parries contends that Hoerlein’s
accusations were false, but even if true, the incident suggests that Parries was being
disciplined for basically “trivial matters.” In November of the same year, Hoerlein
suspended Parries for five days for being away from his work station without permission.
Makino later rescinded the suspension and granted him back pay, issuing Parries merely
a “final warning” as his punishment.
We recognize that a jury could find that the close supervision Parries received after
his earlier discharge was simply the result of his history of disciplinary problems leading up
to the 1999 dismissal. On the other hand, he was reinstated following post-discharge
arbitration, and a jury might find that the ensuing level of scrutiny leading up to the
dismissal in 2001 was unjustified in terms of the relatively minor nature of the alleged
misconduct it revealed.
Moreover, the plaintiff identified another factor that is pertinent to the determination
of causal connection in the retaliation setting, and that is increased workload. See Ford,
305 F.3d at 555. Parries alleged that supervisor Ed Morris assigned him a
disproportionately high number of the difficult jobs and that this overload in his assignments
resulted in Parries’s poor work performance. However, the only evidence to support this
- 18 -
allegation came from the declaration of Brian Smith, which, as noted above, was not
considered by the district court.
Finally, Parries presented evidence that Makino supervisors discouraged the filing
of grievances and threatened to take retaliatory action against employees who filed them.
In a memo written by Ed Morris requesting that Parries be removed from his supervision
or fired, Morris cited Parries’s history of filing grievances as problematic behavior.
Similarly, supervisor Hoerlein warned white employee Farmer that the company would
“take care of the problem” if Farmer continued to file grievances. Although all of Farmers’s
grievances and some of Parries’s were not based on race and thus were not protected
actions, Parries asserts that this shows a willingness on the part of Makino to punish
employees for making grievances. Indeed, we have held that a supervisor’s comments
indicating an intent to run employees out of his department, combined with the fact that
several employees feared retaliation if they testified at a hearing, sufficiently established
a prima facie case of retaliation. See Harrison, 80 F.3d at 1119. While it appears that
Parries’s situation was not as compelling as the one in Harrison, we conclude that the two
situations are similar enough that Hoerlein’s threats could be considered evidence of
retaliation.
A finding that the plaintiff has established a prima facie case of retaliation does not
end our analysis, however. As with a claim of discrimination, the burden then shifts to the
defendant to “articulate a legitimate, non-discriminatory reason for the adverse action.”
Abbott v. Crown Motor Co., Inc., 348 F.3d 537, 542 (6th Cir. 2003). Makino met this
burden by establishing that Parries was terminated due to his history of disciplinary
- 19 -
problems and his unacceptable insubordination to Hoerlein in June 2001. The burden thus
shifted back to Parries, requiring him to demonstrate by a preponderance of the evidence
that the proffered reason was a mere pretext for a retaliatory animus. Ibid. We have
suggested that “caution should be exercised in granting summary judgment once a plaintiff
has established a prima facie inference of retaliation,” Singfield v. Akron Metro. Hous.
Auth., 389 F.3d 555, 564 (6th Cir. 2004), but we conclude that in this case, summary
judgment was appropriate. We have already held in conjunction with the plaintiff’s
discrimination claims that there was insufficient evidence to establish pretext. Parries
presented no additional evidence to indicate that the employer was engaging in pretext in
terms of the retaliation claim. It follows that summary judgment was proper on the latter
claim as well as the former.
CONCLUSION
For the reasons set out above, we AFFIRM the judgment of the district court.
- 20 -
| {
"pile_set_name": "FreeLaw"
} |
213 N.W.2d 459 (1973)
Application of the Valley State Bank of Canton for Approval of its Articles of Incorporation and for Authority to Engage in Business.
VALLEY STATE BANK OF CANTON and South Dakota State Banking Commission, Appellants,
v.
FARMERS STATE BANK OF CANTON, Respondent.
Nos. 11238-11244.
Supreme Court of South Dakota.
Argued September 18, 1973.
Decided December 20, 1973.
*461 M. T. Woods, Woods, Fuller, Shultz & Smith, Sioux Falls, for appellant, Valley State Bank of Canton.
Michael J. McGreevy, Asst. Atty. Gen., Pierre, for appellant, South Dakota State Banking Commission; Kermit A. Sande, Atty. Gen., on the brief.
Samuel W. Masten, Canton, for respondent, Farmers State Bank of Canton.
HALL, Circuit Judge.
On September 13, 1971, a "Notice of Intention to Organize and to File Articles of Incorporation with the State Banking Commission, for a State Bank under Chapter 51-17 SDCL" was filed with the State Banking Commission on behalf of appellant Valley State Bank of Canton, seeking a charter to open a banking service in Canton, South Dakota.
Pursuant thereto, the Banking Commission caused a "Notice of Hearing" to be published in the legal newspaper of Lincoln County, South Dakota, and notified banks in the vicinity of Canton including the respondent Farmers State Bank of Canton, the sole bank in Canton, of a hearing on the application of the Valley State Bank for a state chartered bank at Canton, South Dakota.
On December 21, 1971, the Banking Commission held an adversary, adjudicative-type *462 hearing to take testimony on appellant's application. Both appellant and respondent banks were allowed to present witnesses and conduct cross-examination. At the conclusion of the testimony, the respondent and appellant banks presented their proposed findings of fact and conclusions of law as required by the Banking Commission.
The Banking Commission subsequently issued its "FINDINGS OF FACT, CONCLUSIONS OF LAW, RULING ON PROPOSED FINDINGS, AND DECISION", which showed a unanimous approval of appellant Valley State Bank of Canton's application. Copies of the findings, conclusions, ruling and decision were transmitted by letter to the attorneys of record.
The record in this case reflects that the Banking Commission at all times strictly adhered to its own rules and SDCL 1-26-1 through 1-26-40, the Administrative Procedure Act (hereinafter referred to as APA), in regard to notice, conduction of hearings and rulings. The rules of procedure utilized by the Banking Commission were specifically adopted June 30, 1971, in compliance with the APA. The Banking Commission followed its rules as to a "contested case" and, at the time of the hearings, none of the parties objected to these procedures.
The Banking Commission's ruling of February 23, 1972, granted a charter to appellant Valley State Bank of Canton to operate a bank in Canton, and respondent Farmers State Bank of Canton filed a "Petition For Review In Circuit Court" in Lincoln County on March 17, 1972.
On the review granted by the Circuit Court, the Farmers State Bank of Canton basically contended: The Banking Commission was bound by the APA; the application of appellant for a charter involved a "`Contested case'" within the meaning of SDCL 1-26-1(2); the respondent was a proper party to appeal under the APA; the appeal was timely; and, the Banking Commission's approval of a charter for appellant bank was not based upon "substantial evidence" as defined by the APA and, therefore, clearly erroneous.
The appellants' resistance to the review by the Circuit Court was based on allegations that: The Banking Commission's action was not reviewable by the court because it involved a purely legislative function; the respondent was not a proper party to seek review; the Banking Commission was in no way controlled by the APA; the appeal was not timely; and, there was "substantial evidence" to support the Banking Commission's approval of the charter.
The Circuit Court, relying on the contentions of the respondent Farmers State Bank of Canton, set forth above, reversed the Banking Commission's approval of the charter for the Valley State Bank of Canton, thus framing the questions presented on this appeal.
The activities of granting or revoking bank charters are legislative functions which have been delegated to the Banking Commission. SDCL 51-16, 51-17. The enabling legislation effective at the time of the application of appellant Valley State Bank of Canton, however, in part provided:
"The commission shall have the power to adopt all necessary rules and regulations not inconsistent with the laws of this state, for the management and administration of banks * * * over which it has jurisdiction * * * and to regulate its own procedure and practice, which rules shall be promulgated pursuant to chapter 1-26." (emphasis added) SDCL 51-16-14; and
"The commission shall pass upon every application to organize a bank under the laws of this state * * * and the action of the commission on every such application shall be final, subject to chapter 1-26 * * *." (emphasis added) SDCL 51-16-15.
*463 Because of these provisions in our statutes, the Banking Commission is not free to perform its functions in total disregard of the APA. The Banking Commission's rules of procedure must be adopted pursuant to the APA and, once adopted, acquire the force and effect of law. Public Utilities Commission of California v. United States, 1958, 355 U.S. 534, 78 S.Ct. 446, 2 L.Ed.2d 470; Paul v. United States, 1963, 371 U.S. 245, 255, 83 S.Ct. 426, 9 L. Ed.2d 292; Springborg v. Wilson and Company, 1955, 245 Minn. 489, 73 N.W.2d 433; Verbeten v. Huettl, 1948, 253 Wis. 510, 34 N.W.2d 803; Davis, Administrative Law Text, 126, 127 (3rd Ed. 1972).
The Banking Commission rules 30 and 31, adopted June 30, 1971, have the force and effect of law in the present case. These rules bind the Banking Commission as well as those coming before it. Pursuant to the command of the legislature (SDCL 51-16-14 and 51-16-15), the Commission adopted the above-cited rules to govern the process of granting new bank charters in "`Contested case[s]'". Following these rules, the Banking Commission caused notice to be issued to competitive financial institutions which may be thereby affected. The rules followed established an adjudicative, adversary hearing prior to the Banking Commission's ruling. In this quasi-judicial setting, proposed findings of fact and conclusions of law were required to be presented by the appellant and respondent banks, named as parties of record in the action.
The Banking Commission's final decision and rulings were based upon the above adjudicative procedure, but it is now argued that the Commission was not required to follow such procedure and the rules followed did not bind the Commission in any manner. It is then concluded that the proscriptions and results of the Commission's own rules, and those of the legislature, may be avoided because the Commission operates under delegated legislative authority.
It is illogical to say that the competing respondent bank has an interest of such importance it should be presented at a quasi-judicial, adjudicative hearing but that there was no possibility the respondent bank could be adversely affected or aggrieved by the decision and, thus, not entitled to appeal. Such incongruous reasoning spawns arbitrary and capricious governmental activity.
The Banking Commission is not excluded from the provisions of the APA. SDCL 1-26-1(1). It cannot be contended that the issuance of a bank charter does not fall within the definition of "`License" as found in the APA. SDCL 1-26-1(3). Having been made a party of record, privy to an adjudicative hearing in which it was required to defend its interest against the appellant bank which was seeking a charter, the respondent became a "`Party'" within the meaning of SDCL 1-26-1(5) and the Banking Commission's rules 30 and 31. The phrase "required by law," found in SDCL 1-26-1(2), which establishes when the "`Contested case'" hearing is necessary, includes constitutional requirements of fair play, due process and agency rules, as well as the requirements of statutory law. It must then be concluded that this was a "`Contested case'" because the Banking Commission, by its own procedure establishing the rules which required the adjudicative hearing, sought to determine some of the "legal rights, duties, or privileges of a party" herein, the respondent Farmers State Bank of Canton. SDCL 1-26-1(2). See First Federal Savings & Loan Association v. Department of Banking, 1971, 187 Neb. 562, 192 N.W.2d 736, which adopted this reasoning; see also, Bryan v. Community State Bank of Bloomington, 1969, 285 Minn. 226, 172 N. W.2d 771; Hall v. Banking Review Board, 1961, 13 Wis.2d 359, 108 N.W.2d 543, adopting similar reasoning that the APA applies to granting bank charters contested by established banks and presents a "`Contested case'" which the APA controls. *464 The respondent, being a party to a "`Contested case'", within the meaning of our statutes, and by Banking Commission rules entitled to its hearing, was thus entirely proper in presenting its appeal before the circuit court.
The cases previous in time to the APA no longer control when and how administrative decisions are reviewed by the courts. Newport National Bank v. Providence Institution for Savings, 1967, 101 R. I. 614, 226 A.2d 137. When the Administrative Procedure Act was passed, it did not codify existing administrative law but rather adopted its own substantive and procedural rules which must be adhered to. The APA which applied under legislative enactment (SDCL 51-16-14 and 51-16-15) and which the Banking Commission felt was applicable, as revealed in the exactness with which it was followed, must be carried out to its fullest extent. It cannot be fragmented. Selective or arbitrary utilization of only a portion of its features, chosen on an indiscriminate basis by the agency, such as was apparently attempted here, is unacceptable. First Federal Savings & Loan Association v. Department of Banking, 1971, 187 Neb. 562, 192 N.W.2d 736.
Assuming, as appellants contend, that the legislature had not expressly controlled the Banking Commission with the APA and that the Banking Commission was not affected by its rules which ultimately established an adjudicatory contested-case hearing in the bank charter action, it is inconceivable that a competing bank could not be held to be an "interested person" who could be "aggrieved" by an adverse ruling allowing an additional banking facility in its area, within the meaning of SDCL 1-26-30. Thus, appeal would still be allowed. The statute on banking, SDCL 51-17-15, requires a "particular" determination of the adequacies of "existing bank * * * facilities" in the community and the "volume of bank transactions" in the area. The Banking Commission is specifically directed to act in the interest of "preserving the liquid position of banks; and preventing injurious credit expansions and contractions." SDCL 51-16-39. These are elements which indicate that the legislature meant to protect the "interests" of existing banks and, more importantly, the banking public from a collapse of the state's financial structure. A competing bank may be "aggrieved" if these factors are disregarded. It may even be destroyed.
We have said that banking is affected with a "public interest". Wall v. Fenner, 1956, 76 S.D. 252, 76 N.W.2d 722. This decision is still appropriate in its view that banking stability is a matter which concerns not only directors, stockholders and depositors of a bank, but also concerns every member of the community. Too many banks can be a source of financial weakness. Wall v. Fenner, supra. The establishment of an additional bank at the location in dispute may substantially prejudice existing banking facilities. The results could be devastating to an area.
Competing banking institutions are the only ones having sufficient interest, in harmony with the general public concern for the protection of savings and investments, to bring to the attention of our courts errors the Banking Commission has made in chartering an additional bank in a manner contrary to the legislative standards.
The result of these factors is commanding. The competitive banking institutions are "interested persons" who may be "aggrieved" by the Banking Commission's decision and thus able to appeal under SDCL 1-26-30. This is so, regardless of whether or not specifically named a party, as the respondent was in this case, or whether a hearing is by law required as reflected in SDCL 1-26-1(2). See First Federal Savings & Loan Association v. Department of Banking, 1971, 187 Neb. 562, 192 N.W.2d 736; Conestoga National Bank of Lancaster v. Patterson, 1971, 442 Pa. 289, 275 A.2d 6; Bryan v. Community State Bank of Bloomington, 1969, 285 *465 Minn. 226, 172 N.W.2d 771; Hall v. Banking Review Board, 1961, 13 Wis.2d 359, 108 N.W.2d 543, in all of which the courts ruled the APA did apply to bank agencies, and allowed competing banks the status of "aggrieved persons" so as to be able to appeal the granting of a new charter under the APA. See also, Note, South Dakota's Administrative Procedure Act and the Bank Charter ApplicationIs it a "Contested Case"? 17 S.D.Law Rev. 394 (1972).
The time for appealing the decision of the Banking Commission was properly computed on the basis of SDCL 1-26-31 by the respondent. Neither SDCL 21-33-3 nor 1-26-31 is exclusive of the other. One may appeal administrative action under either statute in the appropriate circumstances. Elk Point Independent School District No. 3 v. State Commission on Elementary and Secondary Education, 1971, 85 S.D. 600, 187 N.W.2d 666, which allowed an appeal under SDCL 1-26-1 through 1-26-40, even though no appeal was specifically allowed under the agency statute. These two statutes are now to be considered mutually, with any conflict being resolved in favor of the APA. SDCL 21-33-1 and 21-33-1.1.
The appellants place reliance upon the case of Camp v. Pitts, 1973, 411 U.S. 138, 93 S.Ct. 1241, 36 L.Ed.2d 106. Herein the United States Supreme Court ruled that the Federal Administrative Procedure Act did not make the issuance of a national bank charter a "`Contested case'" within the meaning of the APA because the national banking law made no reference to the APA and did not require a hearing to issue additional charters. The Supreme Court was careful to point out, however, that neither the National Bank Act nor the rules of the Comptroller of Currency required a hearing. The Court did not rule that appeal could not be taken from a ruling of the comptroller under the Federal APA and carefully pointed out that such could occur. The case now before this Court is distinguishable from Camp v. Pitts, supra, because the South Dakota legislature has said South Dakota's APA does apply to the Banking Commission, and the Banking Commission adopted a rule which resulted in an adjudicative hearing which would be used only in a "`Contested case'". In Camp v. Pitts, supra, the National Bank Act did not make the federal APA applicable, and the Comptroller of Currency had not adopted a rule requiring a hearing, and no hearing had been held.
We are left with the question of the standard of review to be applied to administrative action and whether the trial court, in this case, abused this standard of review.
The standard a court should utilize in the review of an administrative decision is established by SDCL 1-26-36. The relevant portion of this statute, applicable at the time of this case, provided that a court may reverse the administrative agency if its findings, inferences, conclusions, or decisions are "Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record". SDCL 1-26-36.
To be sustained, the Banking Commission's ruling must be supported by substantial evidence. Application of Ed Phillips & Sons Co., 1972, 86 S.D. 326, 195 N.W.2d 400. Substantial evidence is construed to be such relevant and competent evidence as a reasonable mind might accept as being sufficiently adequate to support a conclusion. McKinnon v. State Banking Commission, 1960, 78 S.D. 407, 103 N.W.2d 179, 182.
The courts should not substitute their determination of the weight of the evidence for that of the agency. SDCL 1-26-36. The legislature has recognized that the expertise required in some fields of legislative authority is better left to qualified administrators who have refined abilities in narrow areas, controlled only by general guidelines established by the legislature. Affiliated Distillers Brands Corp. v. Gillis, 1964, 81 S.D. 44, 130 N.W.2d 597. *466 The administrative agency must, however, lend credence to the guidelines established in the statutes which gave rise to its existence.
In the present case, the legislature has established elements which must be considered in an application for a bank charter. SDCL 51-17-15. Among these elements are the character, financial standing, responsibility and reputation of the proposed organizers, officers and stockholders of the applicant bank. SDCL 51-17-15(1), (2) and (3). To be established are: (1) The need of the community for additional banking facilities, with particular consideration of the adequacy of existing facilities; (2) The ability of the community to support an additional bank, as determined by consideration of the competition of other institutions, history, demand for credit, and the business of the community in relation to its size and stability; and (3) Other factors bearing on the relation of the proposed bank to the community.
Examining the whole record of the proceeding now before this court, we find that in 1969 the Banking Commission turned down a similar application for a bank charter in Canton. Since the 1969 disapproval, the only significant economic change found in the record is that Augustana Academy, an institution with a half-million-dollar annual volume has closed and a large John Deere implement dealer has moved out of Canton. Neither is now contributing to the city's economy. In addition, there have been three extensive crop losses as the result of hail. There has been a population decline in Canton and Lincoln County in general, except in the extreme northern region which borders Sioux Falls. A study published in December 1971, made by V. E. Montgomery of the University of South Dakota School of Business, concludes the economic picture of Canton is less than promising because of a population decline in Lincoln County, crop failures, and decline in farm earnings. Mr. Montgomery's study concludes the Canton area does not need and probably could not support an additional banking facility.
The appellant Valley State Bank of Canton countered this evidence with a Comprehensive Plan, which was more a prediction of what might or could happen from 1968 through 1990, rather than a study of the current economy in Canton. The appellant applicants intimated that there were people who would put their money in a new bank instead of investing it elsewhere, but failed to produce any evidence to support these claims. It was contended many people of Canton felt a new bank was necessary, but none was named nor reasons given, other than an alleged need for competition.
It thus appears that since 1969, when the prior charter application was disapproved, there has been nothing to change the economy of Canton which would now indicate Canton could support another bank. The hard facts of the V. E. Montgomery comprehensive study are not refuted by mere intimations. The legislature, in directing the factors to be covered in the investigation, intended that the ability of the community to sustain an additional bank be established by at least some evidence. SDCL 51-17-15.
There was no disagreement between the proponent and opponent that the present service produced by the respondent bank was adequate. There were no complaints, which reflected any substance, against the existing bank. Thus, the particular attention to be given to the adequacy of existing facilities, SDCL 51-17-15(4), could only arrive at one conclusion; the existing facilities totally met the needs of Canton.
The competition existing for the respondent Farmers State Bank of Canton is not inadequate or insignificant. Within Canton itself, there is a federal savings and loan association, which may soon be *467 given checking account authority and a federal credit union. Within 40 miles of Canton there are no less than 29 banking institutions. Many of the citizens of Canton work and bank in Sioux Falls. It is difficult to conclude that the close proximity of such a vast number of financial institutions does not produce the competition the legislature desired. This is especially true when everyone agreed the respondent bank was an excellent facility which met everyone's needs. There was no evidence that existing competition was inadequate.
Mere intimations that money is leaving and that a service can be provided are insubstantial factors with which to fulfill the guidelines of the legislature set forth in SDCL 51-17-15. This is especially true when considered in light of the Banking Commission's refusal to grant the charter in 1969 because of the poor economic picture and the history of banking failure in Canton.
Although the Banking Commission's decision should be affirmed if supported by the evidence, there does not appear to have been any credible, substantial evidence upon which to reach a conclusion that an additional banking facility at Canton was needed, or the community able to support it. The record is devoid of any indication of the economic factors which support the need for additional banks. There is no showing of potential depositors, the volume of transactions, the business and industrial activity of the area, or growth sufficient to warrant the issuance of an additional charter.
On the record presented, the Circuit Court was correct in reversing the Banking Commission's decision to approve a bank charter for the appellant Valley State Bank of Canton, and the circuit court's ruling is hereby affirmed.
All the Justices concur.
HALL, Circuit Judge, sitting for DUNN, J., disqualified.
| {
"pile_set_name": "FreeLaw"
} |
United States Court of Appeals
For the Eighth Circuit
___________________________
No. 14-1453
___________________________
In re: Richard Michael Heyl; Jennifer Heyl
lllllllllllllllllllllDebtors
------------------------------
Steve Conway
lllllllllllllllllllllAppellant
LorCon LLC #1
v.
Richard Michael Heyl
lllllllllllllllllllllAppellee
____________
Appeal from the United States Bankruptcy
Appellate Panel for the Eighth Circuit
____________
Submitted: October 7, 2014
Filed: October 22, 2014
[Published]
____________
Before LOKEN, MELLOY, and GRUENDER, Circuit Judges.
____________
PER CURIAM.
Steve Conway appeals the judgment of the Bankruptcy Appellate Panel (BAP),
which dismissed his appeal from an adverse ruling of the bankruptcy court.1 Like the
BAP, we conclude that Conway does not have standing, and dismiss this appeal.
Debtor Richard Heyl filed a voluntary Chapter 7 bankruptcy petition in August
2009. Through counsel, Conway’s company LorCon, LLC # 1 (LorCon) filed proof
of a claim against Heyl, listing LorCon as the creditor; and Conway and LorCon filed
an adversary proceeding in the bankruptcy court, seeking as relief a ruling that
LorCon’s claim was not dischargeable under 11 U.S.C. § 523(a)(2)(A). After trial on
the merits, the bankruptcy court denied Conway and LorCon’s requested relief.
Conway and LorCon did not appeal, but later moved for relief from judgment under
Fed. R. Bankr. P. 9024 and Fed. R. Civ. P. 60, which the bankruptcy court denied.
Conway and LorCon then appealed to the BAP. After their appellate counsel
withdrew, Conway voluntarily dismissed LorCon from the appeal, and proceeded pro
se. The BAP held that Conway lacked appellate standing, and dismissed his appeal.
In this court, Conway argues that he has standing to appeal the bankruptcy
court’s order, and he has filed motions to supplement the record with evidence to
demonstrate his standing. Heyl argues that the BAP correctly dismissed Conway’s
appeal for lack of standing, and emphasizes that the proof of claim filed in Heyl’s
bankruptcy proceeding demonstrated that LorCon (not Conway) was the creditor.
After careful review, we hold that Conway does not have standing to appeal the
bankruptcy court’s adverse ruling on LorCon’s claim. See Peoples v. Radloff, No.
13-2686, 2014 U.S. App. LEXIS 15994, at *5-7 (8th Cir. Aug. 20, 2014) (on appeal
1
The Honorable Kathy A. Surratt-States, Chief Judge, United States
Bankruptcy Court for the Eastern District of Missouri.
-2-
from decision of BAP, this court acts as second reviewing court; independently
reviewing standing issue). The proof of claim submitted in Heyl’s bankruptcy
proceeding showed that LorCon had a claim against Heyl’s bankruptcy estate, which
Conway merely sought to enforce. See 11 U.S.C. §§ 101(5), 501(a); Sears v. U.S.
Tr., 734 F.3d 810, 819 (8th Cir. 2013) (appellate standing in bankruptcy case is
determined by person-aggrieved doctrine, which limits standing to those who were
directly and adversely affected pecuniarily by bankruptcy court’s order). Conway,
who has not claimed to be a licensed attorney, cannot litigate on behalf of LorCon.
See Mo. Rev. Stat. §§ 347.069.1 (member, manager, employee, or agent of LLC is not
proper party to proceedings by or against LLC, except where object is to enforce such
person’s right against or duty or liability to LLC), .171 (member of LLC can bring
derivative action on behalf of LLC only if certain conditions are met, including
demand on and refusal of authorized persons to cause LLC to sue in its own right);
Lattanzio v. Comm’n On Massage Therapy Accreditation, 481 F.3d 137, 139-40 (2d
Cir. 2007) (per curiam) (LLC may appear in federal court only through licensed
counsel). Further, Conway has no standing in this bankruptcy appeal to litigate his
derivative interest in LorCon’s claim. Cf. Sears, 734 F.3d at 813, 820-21 (even sole
shareholders of closely held S corporation lacked standing to pursue bankruptcy
appeal, as their interest in litigation was merely derivative of corporation’s).
Conway’s supplemental exhibits submitted to this court do not alter our analysis. Cf.
Dakota Indus. v. Dakota Sportswear, Inc., 988 F.2d 61, 63 (8th Cir. 1993)
(acknowledging narrow interest-of-justice exception to general rule that appellate
court cannot consider evidence that was not contained in record below).
Accordingly, the appeal is dismissed. See Alexander v. Jensen-Carter, 711
F.3d 905, 908-09 (8th Cir. 2013) (dismissing bankruptcy litigant’s appeal for lack of
standing). Appellant’s motions to supplement the record are denied; appellee’s
motion to strike is granted.
______________________________
-3-
| {
"pile_set_name": "FreeLaw"
} |
Sledge v S.M.S. Gen. Contrs., Inc. (2017 NY Slip Op 04486)
Sledge v S.M.S. Gen. Contrs., Inc.
2017 NY Slip Op 04486
Decided on June 7, 2017
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on June 7, 2017
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Judicial Department
WILLIAM F. MASTRO, J.P.
JOHN M. LEVENTHAL
LEONARD B. AUSTIN
SHERI S. ROMAN, JJ.
2015-03720
(Index No. 11409/09)
[*1]James Sledge, appellant,
vS.M.S. General Contractors, Inc., et al., respondents, et al., defendants.
Edelman, Krasin & Jaye, PLLC, Westbury, NY (Kara M. Rosen of counsel), for appellant.
Purcell & Ingrao, P.C., Mineola, NY (Lynn A. Ingrao and Corey Pugliese of counsel), for respondents S.M.S. General Contractors, Inc., and S.M.S. General Contractors, Inc., doing business as Steve's Custom Rockers.
DECISION & ORDER
In an action to recover damages for personal injuries, the plaintiff appeals, as limited by his brief, from so much of an order of the Supreme Court, Suffolk County (Molia, J.), dated January 2, 2015, as granted that branch of the motion of the defendants S.M.S. General Contractors, Inc., and S.M.S. General Contractors, Inc., doing business as Steve's Custom Rockers, which was for summary judgment dismissing the causes of action alleging a violation of Labor Law § 200 and common-law negligence insofar as asserted against them.
ORDERED that the order is affirmed insofar as appealed from, with costs.
The plaintiff was an employee of RBJ Construction (hereinafter RBJ), the general contractor on a project involving the construction of an approximately 12,000 square-foot house. The plaintiff commenced this action to recover damages for personal injuries he allegedly sustained when he fell from a ladder on the second floor and landed on the first floor. The plaintiff alleged that an employee of the defendants S.M.S. General Contractors, Inc., and S.M.S. General Contractors, Inc., doing business as Steve's Custom Rockers (hereinafter together the defendants), who were hired to install sheet rock pursuant to a subcontract with RBJ, pulled some electrical extension cords that got tangled with the ladder, causing him to fall from the ladder.
The Supreme Court properly determined that the defendants were entitled to summary judgment dismissing the causes of action alleging a violation of Labor Law § 200 and common-law negligence insofar as asserted against them. The defendants established, prima facie, that they did not have authority to supervise or control the plaintiff's work or the area of the work site where the plaintiff was injured (see Thomas v Benton, 112 AD3d 812, 812-813; Lopes v Interstate Concrete, 293 AD2d 579, 579).
The defendants also demonstrated, prima facie, that they did not create the dangerous condition that allegedly caused the plaintiff's injury (see Palacios v 29th St. Apts, LLC, 110 AD3d 698, 699). A subcontractor "may be held liable for negligence where the work it performed created the condition that caused the plaintiff's injury even if it did not possess any authority to supervise [*2]and control the plaintiff's work or work area" (Poracki v St. Mary's R.C. Church, 82 AD3d 1192, 1195 [internal quotation marks omitted]; see Erickson v Cross Ready Mix, Inc., 75 AD3d 519, 523). An award of summary judgment in favor of a subcontractor on a negligence or Labor Law § 200 cause of action is improper "where the evidence raise[s] a triable issue of fact as to whether [the subcontractor's] employee created an unreasonable risk of harm that was the proximate cause of the injured plaintiff's injuries'" (Erickson v Cross Ready Mix, Inc., 75 AD3d at 523, quoting Marano v Commander Elec., Inc., 12 AD3d 571, 572-573). Here, the defendants demonstrated, prima facie, that their employees did not pull on the extension cords that got tangled with the ladder and caused the plaintiff to fall, as he alleged, and the plaintiff failed to raise a triable issue of fact in opposition.
Accordingly, the Supreme Court properly granted that branch of the defendants' motion which was for summary judgment dismissing the causes of action alleging a violation of Labor Law § 200 and common-law negligence insofar as asserted against them.
MASTRO, J.P., LEVENTHAL, AUSTIN and ROMAN, JJ., concur.
ENTER:
Aprilanne Agostino
Clerk of the Court
| {
"pile_set_name": "FreeLaw"
} |
831 F.2d 1059
U.S.v.Woods*
NO. 86-2698
United States Court of Appeals,Fifth Circuit.
SEP 30, 1987
1
Appeal From: W.D.Tex.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
| {
"pile_set_name": "FreeLaw"
} |
Filed 10/30/14 P. v. Servin CA3
NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Butte)
----
THE PEOPLE, C075889
Plaintiff and Respondent, (Super. Ct. No. CM039904)
v.
MATTHEW EVERETT SERVIN,
Defendant and Appellant.
This case comes to us pursuant to People v. Wende (1979) 25 Cal.3d 436 (Wende).
Having reviewed the record as required by Wende, we shall affirm the judgment.
We provide the following brief description of the facts and procedural history of
the case. (See People v. Kelly (2006) 40 Cal.4th 106, 110, 124.)
1
Defendant Matthew Everett Servin pleaded guilty to one count of second degree
robbery (Pen. Code, § 211) and admitted being armed with a firearm in the course of the
offense (id., § 12022, subd. (a)(1)). He was sentenced to state prison for four years—the
middle term of three years plus one year for the firearm enhancement. The court awarded
defendant presentence custody credit of 127 days—111 actual days served plus 16 days
for conduct credit. (Id., § 2933.1.) The court also imposed various fines and fees as set
forth in detail in the abstract of judgment.
The parties stipulated that a factual basis for the plea could be found in the
probation officer’s report. On November 1, 2013, Alisha N. and Andrea T. were sharing
a room at a Holiday Inn in Chico when defendant and two companions entered the room,
held the two women at gunpoint, stole personal property from each woman and then left.
The women immediately reported the robbery and Chico police officers responded to the
Holiday Inn. The women gave the officers physical descriptions from which the officers
were able to locate and detain defendant and his companions a short distance from the
inn. Both women identified defendant and his companions as the men who had robbed
them.
Appointed counsel filed an opening brief that sets forth the facts of the case and
asks this court to review the record to determine whether there are any arguable issues on
appeal. (Wende, supra, 25 Cal.3d 436.) Defendant was advised by counsel of the right to
file a supplemental brief within 30 days of the date of filing of the opening brief. More
than 30 days have elapsed and we have received no communication from defendant.
Having undertaken an examination of the entire record, we find no arguable error
that would result in a disposition more favorable to defendant.
2
DISPOSITION
The judgment is affirmed.
BUTZ , J.
We concur:
ROBIE , Acting P. J.
MURRAY , J.
3
| {
"pile_set_name": "FreeLaw"
} |
Case: 17-15564 Date Filed: 01/23/2019 Page: 1 of 5
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 17-15564
Non-Argument Calendar
________________________
D.C. Docket No. 1:13-cv-04219-MHC
WILLIE G. SMITH,
Plaintiff-Appellant,
versus
NATIONAL CREDIT SYSTEMS, INC.,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(January 23, 2019)
Before MARCUS, JILL PRYOR and ANDERSON, Circuit Judges.
PER CURIAM:
Willie G. Smith, proceeding pro se, appeals the district court’s denial of his
motion for relief from judgment for fraud upon the court in his debt reporting and
collection action brought pursuant to the Fair Credit Reporting Act, 15 U.S.C. §
Case: 17-15564 Date Filed: 01/23/2019 Page: 2 of 5
1681s-2, and the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e. In this
appeal, Smith argues that: (1) the district court abused its discretion when it denied
his motion for fraud on the court stemming from actions of the district court, the
Clerk’s Office, and National Credit Systems, Inc. (“NCS”), that had required him in
a prior appeal to file a motion to proceed in forma pauperis (“IFP”) on appeal after
he was permitted to proceed IFP in the district court proceedings; and (2) the district
court abused its discretion when it denied his later motion to recuse the district court
judge from any further proceedings in this case. After thorough review, we affirm
in part and dismiss in part.
We review the denial of a Federal Rule of Civil Procedure 60(b)(3) motion
for abuse of discretion. Cox Nuclear Pharmacy, Inc. v. CTI, Inc., 478 F.3d 1303,
1314 (11th Cir. 2007). We usually review a district court’s denial of a motion for
recusal for abuse of discretion. United States v. Bailey, 175 F.3d 966, 968 (11th Cir.
1999). However, we examine our own jurisdiction sua sponte and review
jurisdictional issues de novo. Adams v. Monumental Gen. Cas. Co., 541 F.3d 1276,
1277 (11th Cir. 2008).
First, we are unpersuaded by Smith’s claim that the district court abused its
discretion when it denied Smith’s motion for fraud upon the court, brought pursuant
to Federal Rule of Civil Procedure 60(b)(3). Rule 60(b)(3) provides relief from a
final judgment or order for fraud, misrepresentation, or misconduct by an opposing
2
Case: 17-15564 Date Filed: 01/23/2019 Page: 3 of 5
party. Fed. R. Civ. P. 60(b)(3). A motion under Rule 60(b)(3) must be brought
within one year after the entry of judgment. Fed. R. Civ. P. 60(c)(1).
Where relief from a judgment is sought for fraud on the court, the movant
must establish by clear and convincing evidence that the fraud occurred. Booker v.
Dugger, 825 F.2d 281, 283 (11th Cir. 1987). Fraud on the court constitutes fraud
which “defile[s] the court itself, or is a fraud perpetrated by officers of the court”
that prevents the court from impartially judging cases before it. Travelers Indem.
Co. v. Gore, 761 F.2d 1549, 1551 (11th Cir. 1985) (quotations omitted). A court
should deny a plaintiff’s motion “in the absence of such conduct.” Id. Additionally,
a plaintiff must give “clear and convincing probative facts” demonstrating the
existence of fraud upon the court and cannot rely solely on conclusory statements to
show evidence of fraud based on “information and belief.” Booker, 825 F.2d at 283-
84 (quotations omitted). A plaintiff cannot use this kind of motion “as a vehicle for
the relitigation of issues” or to address issues that could have been argued previously.
Travelers Indem., 761 F.2d at 1552.
Federal Rule of Appellate Procedure 24(a)(3) states:
A party who was permitted to proceed in forma pauperis in the district-
court action . . . may proceed on appeal in forma pauperis without
further authorization, unless:
(A) the district court -- before or after the notice of appeal is filed --
certifies that the appeal is not taken in good faith . . . and states in
writing its reasons for the certification or finding.
3
Case: 17-15564 Date Filed: 01/23/2019 Page: 4 of 5
Fed. R. App. P. 24(a)(3)(A).
Here, the district court did not abuse its discretion in denying Smith’s Rule
60(b)(3) motion. For starters, Smith’s motion was untimely because it was filed
more than one year after the district court entered judgment against him. Fed. R.
Civ. P. 60(c)(1). Further, the district court had the ability to certify that Smith’s first
appeal was taken in bad faith after Smith filed his first notice of appeal, and the
district court followed the proper standard in doing so because it stated in a written
order that his first appeal was frivolous. See Fed. R. App. P. 24(a)(3)(A).
Moreover, Smith’s arguments that the district court judge committed fraud
upon the court in making certain discovery rulings in the earlier case is nothing more
than an attempt to re-litigate old issues. As the record reveals, the district court
rejected this very argument when it granted NCS’s summary judgment motion. See
Travelers Indem., 761 F.2d at 1552. As for Smith’s other arguments challenging the
district court’s grant of NCS’s summary judgment motion, they do not qualify him
for relief because they also seek to litigate issues that could have been argued
previously. Id. In short, Smith has failed to provide clear and convincing evidence
that any fraud existed, and the district court did not err in denying his motion.
Booker, 825 F.2d at 283; Travelers Indem., 761 F.2d at 1551.
As for Smith’s appeal of the district court’s denial of the motion to recuse the
district court judge, we lack jurisdiction over it. Importantly, a notice of appeal must
4
Case: 17-15564 Date Filed: 01/23/2019 Page: 5 of 5
be filed within 30 days after the entry of judgment or order appealed from. Fed. R.
App. P. 4(a)(1)(A). When an appellant’s notice of appeal specifies a judgment, we
have “no jurisdiction to review other judgments or issues which are not expressly
referred to and which are not impliedly intended for appeal.” Whetstone Candy Co.
v. Kraft Foods, Inc., 351 F.3d 1067, 1079-80 (11th Cir. 2003) (quotations omitted).
However, an appeal of an order will be allowed even if not mentioned in the notice
of appeal if the order not mentioned was entered prior to or contemporaneously with
the order listed in the notice of appeal. KH Outdoor, LLC v. City of Trussville, 465
F.3d 1256, 1260 (11th Cir. 2006).
Here, we need not review the district court’s denial of Smith’s motion for the
recusal of the district court judge. As the record reveals, the recusal motion is outside
the scope of the notice of appeal he filed in this case -- indeed, the motion was filed
after he filed his notice of appeal, as was the order denying his motion. Whetstone
Candy, 351 F.3d at 1079-80; KH Outdoor, 465 F.3d at 1260. Accordingly, we lack
jurisdiction over the appeal of this order.
AFFIRMED in part, DISMISSED in part.
5
| {
"pile_set_name": "FreeLaw"
} |
650 So.2d 213 (1995)
DOLPHINS PLUS, INC., Appellant,
v.
Clarence HOBDY, Margaret Hobdy, Edward Hulse, Audrey Hulse, Leonard Latronico, Celia Rodriguez, Virginia Siedor, Kurt Winselmann, and Mary Winselmann, Appellees.
No. 93-1644.
District Court of Appeal of Florida, Third District.
February 15, 1995.
Donna E. Albert, Fort Lauderdale, for appellant.
Mattson & Tobin and Andrew M. Tobin, Key Largo, for appellees.
Before COPE, GODERICH and GREEN, JJ.
GREEN, Judge.
Appellees filed a complaint for declaratory and injunctive relief to declare the rights in and to an area depicted on a platted subdivision as a "boat basin." Appellees and appellant, Dolphins Plus, Inc. ("Dolphins Plus"), both moved for summary judgment. The trial court entered summary judgment in favor of appellees and this appeal ensued.
All of the parties to this case are owners of parcels of land located in the Key Largo Ocean Shores addition subdivision, Key Largo, Florida. Dolphins Plus is a volunteer nonprofit organization whose purpose is to care for and rehabilitate injured or sick marine mammals, conduct ongoing educational and research programs and provide in-water therapy to adults and children suffering from various handicaps. At issue here is a chain link fence erected by Dolphins Plus in the waters of the subdivision boat basin which Dolphins Plus uses as a stranding pen for injured marine mammals.[1] Dolphins Plus obtained a lease from the heirs of the subdivision developer to place the fence over the bay bottom of the basin and also obtained permits from Monroe County and the Department of Environmental Regulation of the State of Florida for the fence.
*214 Appellees seek a preliminary and permanent injunction for the removal of the fence arguing that 1) the fencing, and the use of the boat basin for purposes unrelated to mooring boats is in violation of the restrictions granted by the recorded plat and 2) unreasonably interferes with their use and enjoyment of the boat basin.
The relevant portions of the original Declaration of Restriction reads:
No structure, building, dock, ramp, barge or any other thing or condition shall be permitted to impede or obstruct navigation in the waterway; boat basins excepted;...
The trial court found the term "boat basin" to be unambiguous and, in reliance upon Webster's New Collegiate Dictionary (1985), found its common meaning to be an enclosed or partly enclosed water area wherein boats are docked or moored. The trial court then determined the developer intended that the waterways of the subdivision would be open for navigation of all boats, subject only to the structures and impediments to navigation that would be erected in the boat basins as contemplated under restriction number seven.
Dolphins Plus argues that the trial court erred in entering summary judgment because the granting of the lease raises genuine issues of material fact with respect to the intended uses to be made of the boat basin. We disagree.
We agree with the trial court that the term "boat basin" is not ambiguous. When the language of an instrument is clear and certain in meaning and the grantor's intention is reflected by the language employed, there is no room for judicial construction of the language nor interpretation of the words used. Ocean Beach Realty Co. v. City of Miami Beach, 106 Fla. 392, 143 So. 301, 302 (1932) ("If there is only one construction which will give full effect to all the words of the instrument, it should be followed.") Loveland v. CSX Transp., Inc., 622 So.2d 1120, 1121 (Fla.3d DCA 1993) (same); Saltzman v. Ahern, 306 So.2d 537 (Fla. 1st DCA 1975) (same). "[I]f there is no ambiguity in the language employed, then the intention of the grantor must be ascertained therefrom [that language]." Walters v. McCall, 450 So.2d 1139, 1142 (Fla. 1st DCA 1984) (citing Saltzman, 306 So.2d at 539). It is clear from the language in the plat that only those structures which are consistent with the mooring and/or docking of boats are permissible. Thus, a fence erected to serve as a stranding pen for ill or injured mammals is not consistent with such usage. The fact that the heirs of the developers subsequently gave Dolphins Plus a lease for this purpose does not alter this result because, as a matter of law, the lease alone was not sufficient to release or terminate the plat restriction. Harwick v. Indian Creek Country Club, 142 So.2d 128 (Fla. 3d DCA 1962) (agreement to allow apartment units unenforceable and void where the deed restriction required single family homes and all the property owners did not execute subsequent agreement); Tolar v. Meyer, 96 So.2d 554 (Fla. 3d DCA 1957) (written acquiescence by owner-subdivider to Dade County Commission could not bind or waive the rights of other parties to the agreement created by the restrictive covenants). See generally George W. Thompson, Thompson on Real Property, § 3173 (4th ed. 1962) ("a restriction imposed alike upon all the lots of a block or tract of land cannot be released to one purchaser or his grantee without the assent of the other purchasers, or their grantees, for whose benefit it was imposed.").
We need not address the remaining argument advanced by Dolphins Plus in light of this opinion.
Affirmed.
NOTES
[1] Lloyd Borguss, president of Dolphins Plus, owns a home on the boat basin at issue here. It is the area of the boat basin adjacent to his home which is being used to care for sick or injured whales.
| {
"pile_set_name": "FreeLaw"
} |
624 F.Supp.2d 923 (2008)
John W. MEYER, Plaintiff,
v.
UNITED AIRLINES, INCORPORATED, Defendant.
No. 08 C 0599.
United States District Court, N.D. Illinois, Eastern Division.
December 18, 2008.
*925 Charles Thomas Siedlecki, Siedlecki and Associates, Chicago, IL, for Plaintiff.
Brian M. Stolzenbach, Ada W. Dolph, Seyfarth Shaw LLP, Chicago, IL, for Defendant.
MEMORANDUM OPINION AND ORDER
VIRGINIA M. KENDALL, District Judge.
Plaintiff John W. Meyer ("Meyer") sued his employer, United Airlines, Incorporated ("United"), claiming that United: (1) retaliated against him for using leave under the Family and Medical Leave Act ("FMLA"), 29 U.S.C. § 2601 et seq.; (2) interfered with his substantive rights under the FMLA; and (3) retaliatorily discharged him under Illinois common law for complaining internally that United's maintenance procedures violated FAA safety regulations. Pursuant to Fed.R.Civ.P. 12(b)(6), United brings this Motion to Dismiss Count III of Meyer's Complaint. United argues that the express preemption *926 clause of the Federal Airline Deregulation Act ("FADA"), 49 U.S.C. § 41713, preempts Meyer's retaliatory discharge claim. Additionally, pursuant to Fed. R.Civ.P. 12(e), United requests a more definite statement as to Meyer's Count II. For the reasons stated, this Court denies United's Motion to Dismiss Count III and grants United's Motion for a More Definite Statement as to Count II.
PLAINTIFF'S ALLEGATIONS
United, a major international airline, employed Meyer as an aircraft mechanic. (Compl.śś 1-4.)[1] His duties included performing safety inspections of United's aircraft. (Compl.ś 60.) In October 2003, Meyer notified United of his need for FMLA leave to tend to his own serious health condition. (Compl.ś 7.) On March 16, 2004, United tendered FMLA papers to Meyer and requested medical certification of his condition. (Compl.ś 8.) Meyer's physician completed the medical certification, which noted that Meyer would require intermittent FMLA leave for conditions such as severe migraines, diverticulitis and esophageal reflux, and Meyer tendered the certification to United's staff physician, Dr. McGuffin. (Compl.śś 10-11.) Dr. McGuffin disagreed with Meyer's physician about the amount of intermittent leave Meyer would require, but performed no diagnostic tests or physical exams, and did not provide an independent opinion as to the amount or extent of intermittent leave Meyer would require to treat his conditions. (Compl.śś 12-13.) Additionally, United did not obtain second or third medical opinions, and it did not indicate that the medical certification contained any deficiencies. (Compl.ś 14, 17.) Later, United disciplined Meyer for the time he took off from work. (Compl.ś 18.)
In June 2005, Meyer informed United that he would again require intermittent FMLA leave to care for his pregnant wife who suffered from gestational diabetes. (Compl.ś 19.) On July 26, 2005, Meyer turned over a request for medical certification, but United's physician was unavailable to certify the paperwork. (Compl.ś 21.) On September 6, 2005, a United physician, Dr. Rosi, completed the certification form and returned it to Meyer, and United retroactively certified Meyer for FMLA leave for the period of July 18, 2005 through September 10, 2005. (Compl.śś 23-24.) However, United subsequently disciplined him for time that he took off. (Compl.ś 25.) On January 27, 2006, United terminated Meyer for the stated reason of "lack of dependability." (Compl.ś 27.)
Meyer alleges that United failed to advise him with respect to his rights under the FMLA, failed to respond to his requests made pursuant to the FMLA, substantially interfered with the exercise of his FMLA rights, restricted him in the use of his time while on FMLA leave, harassed him for exercising his FMLA rights, and ultimately retaliated against him for exercising his FMLA rights by disciplining and terminating him. (Compl.śś 29-46.)
Meyer also alleges that United terminated him in retaliation for notifying his supervisors that certain United maintenance procedures violated FAA safety regulations. (Compl.ś 61, 63.) When Meyer found defects in aircraft during his safety inspections, he had responsibility for correcting them before the end of his shift. (Compl.ś 62.) Joseph Moser, his supervisor, instructed Meyer to not make a record *927 of the defects that he could not correct before the end of his shift. (Compl.śś 63-64.) Meyer thought that such conduct violated FAA safety regulations, because he believed he had a duty to record all defects he discovered regardless of whether he could fix them before the end of his shift. (Compl.ś 63, 64.) He informed his supervisors of these beliefs but they took no corrective action. (Compl.ś 65.) Moran then threatened him and assigned him additional clean-up duties. (Compl.ś 65.) He alleges that after his complaints, United took no corrective action, the violations continued, and he suffered adverse job actions, including harassment and termination. (Compl.ś 78.)
STANDARD
When considering a motion to dismiss under Rule 12(b)(6), a court must accept as true all facts alleged in the complaint and construe all reasonable inferences in favor of the plaintiff. See Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). To state a claim upon which relief can be granted, a complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). A plaintiff need not allege all facts involved in the claim. See Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir.1994). However, in order to survive a motion to dismiss for failure to state a claim, the claim must be supported by facts that, if taken as true, at least plausibly suggest that the plaintiff is entitled to relief. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). Such a set of facts must "raise a reasonable expectation that discovery will reveal evidence" of illegality. Id. at 1965.
DISCUSSION
I. United's Motion to Dismiss Count III
As previously noted, Count III of Meyer's complaint alleges retaliatory discharge under Illinois common law. Meyer alleges that United terminated him because he complained to United supervisors that the airline's aircraft maintenance policies did not comport with FAA regulations; and therefore, its stated reason for his termination is pretextual. United counters that FADA's Whistleblower Protection Program ("WPP") preempts Meyer's state retaliatory discharge claim related to air safety. Alternatively, United argues that FADA preempts Meyer's state retaliatory discharge because the claim relates to the services of United, an air carrier. While the Seventh Circuit has addressed several cases related to FADA preemption of state laws, it has not yet decided whether FADA, as amended by the WPP, preempts state retaliatory discharge claims related to air safety against airlines.
In 1978, Congress enacted FADA in order to allow competitive market forces "to provide efficiency, innovation, and low prices; and, to decide on the variety and quality of, and determine prices for, air transportation services." 49 U.S.C. § 40101(a)(12). To ensure that the States would not undo federal deregulation with regulation of their own, FADA included an express preemption provision. See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378-79, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992). FADA's preemption provision provides:
Except as provided in this subsection, a State ... may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart.
*928 49 U.S.C. § 41713(b)(1). Based on the express language of the statute, FADA "expresses a broad preemptive purpose." Morales, 504 U.S. at 383, 112 S.Ct. 2031. Therefore, "States may not seek to impose their own public policies or theories of competition or regulation on the operations of an air carrier." Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 229 n. 5, 115 S.Ct. 817, 130 L.Ed.2d 715 (1995). As a result, to the extent that state laws relate to a price, route, or service of an air carrier, FADA preempts state laws of general applicability that do not even specifically address the airline industry, as well as state laws that are consistent with FADA's substantive requirements. See Morales, 504 U.S. at 384, 112 S.Ct. 2031; see also Wolens, 513 U.S. at 222, 115 S.Ct. 817.
In 1999, Congress amended the FADA to include the WPP. See 49 U.S.C. § 42121. In relevant part, the WPP provides:
No air carrier or contractor or subcontractor of an air carrier may discharge an employee .. because the employee... provided ... to the employer ... information relating to any violation or alleged violation of any order, regulation, or standard of the [FAA] or any other provision of Federal law relating to air carrier safety under this subtitle or any other law of the United States
....
49 U.S.C. § 42121. The Seventh Circuit has not yet addressed whether the WPP preempts state retaliatory discharge causes of action to the extent that the claims relate to airline safety. The appellate courts that have considered the issue have come to divergent conclusions. See Gary v. Air Group, Inc., 397 F.3d 183 (3d Cir.2005) (holding that the WPP does not preempt state law whistleblower claims when a pilot reported that another pilot may not have the proper qualifications to fly); Branche v. Airtran Airways, Inc., 342 F.3d 1248 (11th Cir.2003) (holding that the WPP does not preempt state law whistleblower claims when a maintenance employee reports a single FAA violation after it occurred); Botz v. Omni Air Int'l, Inc., 286 F.3d 488 (8th Cir.2002) (holding that the WPP preempts state law whistleblower claims related to air safety). Therefore, this Court must determine the preemptive effect, if any, of the WPP with respect to state retaliatory discharge claims that relate to air safety.
A. Preemptive Effect of FADA's WPP
With any preemption, "the ultimate touchstone" is Congressional purpose. Fed'n of Adver. Indus. Representatives, Inc. v. City of Chicago, 189 F.3d 633, 637 (7th Cir.1999). "[W]here federal law is said to bar state actions in fields of traditional state regulation ... [the Court works with] the assumption that the historic powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress." N.Y. State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995) (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947)) (internal quotations omitted). The Court begins its analysis with the plain wording of the express preemption clause because it is the wording that best reflects Congressional intent. See CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664, 113 S.Ct. 1732, 123 L.Ed.2d 387 (1993), superseded on other grounds by statute, Implementing Recommendations of the 9/11 Commission Act of 2007, Pub.L. No. 110-52, 121 Stat. 266 (2007), ("If the statute contains an express preemption clause, the task of statutory construction must in the first instance focus on the plain wording of the clause, which necessarily contains the best evidence *929 of Congress' preemptive intent."). The Court should not lightly infer preemption in the area of employment law, because it "falls within the traditional police power of the State." Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 21, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987); see also Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 252, 114 S.Ct. 2239, 129 L.Ed.2d 203 (1994).
In Botz, the Eighth Circuit held that the WPP expanded FADA preemption with respect to whistleblower claims. In that case, a flight attendant worked an assignment that she believed violated federal safety regulations because the flight required her to violate a restriction that limited a flight attendant's duty period to no longer than twenty hours. Botz, 286 F.3d at 490. After she reported the violation to her employer and refused the same flight assignment a few months later, the airline terminated her. Id. She filed suit against the airline under the Minnesota whistleblower statute, but the district court dismissed the claim on preemption grounds. Id. On appeal, the Eighth Circuit reasoned that "[t]he fact that the WPP now provides a comprehensive scheme for protecting the precise sort of air safety-related conduct Botz engaged in here is... powerful evidence of Congress's clear and manifest intent to pre-empt state-law whistleblower claims related to air safety." Botz, 286 F.3d at 496. Therefore, according to the Eighth Circuit, "the WPP makes it unmistakable that [state whistleblower claims related to air safety] are preempted." Id. at 498.
Subsequently, the Eleventh Circuit and the Third Circuits agreed that Botz went too far in expanding ADA preemption. See Gary, 397 F.3d at 190; Branche, 342 F.3d at 1263 n. 9. In Branche, an aircraft safety inspector reported to the FAA that when a plane landed with one of its engines running at a temperature that exceeded FAA guidelines, two under-qualified maintenance workers ran a risky diagnostic test on the engine by running the plane at high power to determine its air-worthiness. Branche, 342 F.3d at 1251-52. The airline terminated the safety inspector once it learned that he reported the incident to the FAA. Id. at 1252. The inspector sued the airline under Florida's Whistleblower Act, but the district court dismissed the action on preemption grounds. Id. On appeal, the Eleventh Circuit found that the WPP did not expand the scope of FADA preemption, noting "[i]n deciding preemption, whether before or after the enactment of the WPP, the question [the court] must answer remains the same: Is the state law in question `related to' air carrier `services'?" Id. at 1264. The Eleventh Circuit noted that under FADA's WPP provision, "it is the specifics of the retaliation claim ... that appropriately determine preemption. Thus, retaliation claims brought under state whistleblower statutes must be evaluated on a case-by-case basis to determine the connection between the action in question and airline services." Id. at 1263 n. 9.
In Gary, Ray Gary, a pilot who flew private jets for a small charter service, expressed his concerns that a newly-hired pilot did not have the proper qualifications, and therefore was unsafe and unqualified to pilot a commercial charter plane. Gary, 397 F.3d at 185. A few hours later, the company terminated Gary, and he sued under New Jersey's whistleblower act, the Conscientious Employee Protection Act. Id. In finding that the WPP did not preempt Gary's state claims, the Third Circuit found that "the WPP did not alter the [F]ADA analysis in any meaningful way" because the WPP does not expressly preempt state law whistleblower claims that relate to air safety, and because *930 courts should not lightly infer preemption in the employment context, an area that falls within the traditional police powers of the states. Id. at 190.
This Court finds that FADA's WPP provision does not preempt all state law retaliatory discharge claims that relate to air safety. First, FADA's express preemption language does not state that it preempts state retaliatory discharge claims that relate to air safety. Rather, as it did before enactment of the WPP, the statute continues to expressly state that it preempts state laws "related to a price, route, or service of an air carrier ...." 49 U.S.C. § 41713(b). The WPP amendment to FADA did not change the language of § 41713 to include retaliation claims relating to air safety, and therefore the express language of FADA's preemption provision does not support expanded preemption of all retaliatory discharge claims relating to air safety. The Eighth Circuit found powerful evidence of a clear Congressional intent to preempt state-law whistleblower claims related to air safety based upon the fact that Congress created the WPP, a comprehensive scheme for protecting air safety-related reporting. See Botz, 286 F.3d at 496. However, without express preemption language, this Court can detect no such clear and manifest intent. See Gary, 397 F.3d at 190 ("[W]e agree with the Eleventh Circuit's conclusion [in Branche] that Congress' silence renders its intent `ambiguous' at best and thus should not serve as a basis for expanding [F]ADA preemption."). Second, this Court remains hesitant to infer preemption, particularly when employment discrimination actions fall within the traditional police power of the States. See id. (quoting Branche, 342 F.3d at 1259). The WPP did not create an air safety exception to the requirement that a court "must examine the underlying facts of each case to determine whether the particular claims at issue `relate to' airline rates, routes or services." Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1433 (7th Cir.1996). Therefore, this Court adopts an interpretation of the WPP that remains true to the text of FADA: a cause of action under the WPP preempts a state retaliatory discharge cause of action when the claim relates to airline prices, routes, or services. Accordingly, this Court must now consider whether Meyer's claim relates to airline services to determine if FADA preempts his claim.
B. FADA Preempts Meyer's Retaliatory Discharge Claim
Two requirements for FADA preemption of a state law exist: "(1) [a] state must `enact or enforce' a law that (2) `relates to' airline [prices],[2] routes, or services, either by expressly referring to them or by having a significant economic effect upon them." Id. at 1432. "State common law counts as an `other provision having the force and effect of law' for purposes of" preemption analysis under § 41713(b)(1). United Airlines, Inc. v. Mesa Airlines, Inc., 219 F.3d 605, 607 (7th Cir.2000); see also Wolens, 513 U.S. at *931 233, 115 S.Ct. 817. With respect to the second requirement, courts have broadly interpreted the phrase "related to" to mean that "State enforcement actions having a connection with or reference to airline `rates, routes, or services' are preempted under 49 U.S.C. § 41713(b)." Morales, 504 U.S. at 384, 112 S.Ct. 2031. Therefore, "a claim is preempted if either the state rule expressly refers to air carriers' rates, routes, or services, or application of the state's rule would have a significant economic effect upon them ...." United, 219 F.3d at 609 (emphasis in original). As previously mentioned, courts examine the facts underlying the dispute to determine if the claims relate to airline prices, routes or services. See Travel All at 1433. The Seventh Circuit has also adopted a broad definition of "services" under the statute:
"[s]ervices generally represent a bargained-for or anticipated provision of labor from one party to another .... [This] leads to a concern with the contractual arrangement between the airline and the use of the service. Elements of the air carrier service bargain include items such as ticketing, boarding procedures, provision of food and drink, and baggage handling, in addition to the transportation itself." Id. at 1433. Despite the broad interpretation of FADA's preemption provision, courts have recognized that some state actions may affect airline prices, routes or services "is too tenuous, remote, or peripheral a manner to have preemptive effect." Morales, 504 U.S. at 390, 112 S.Ct. 2031 (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 100 n. 21, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983)); see also Travel All, 73 F.3d at 1431.
First, because the claim arises under Illinois common law, Meyer's cause of action qualifies as a provision having the force and effect of law under § 41713(b). The more difficult question is whether his claim relates to the services of United, an air carrier. Under the Seventh Circuit's approach, "`services' include all elements of the air carrier service bargain." Travel All, 73 F.3d at 1434. Meyer alleges that his retaliatory discharge claim relates to United's maintenance practices because permitting state retaliatory discharge claims to proceed against air carriers could have a significant prohibited economic effect on airlines.
Although that assertion is made, a more specific examination reveals that the impact would be tenuous. For example, Meyer alleges that he was retaliated against because he spent more time doing his airplane inspections than others. In order for his employment case to have an impact on the services of United, however, he would need to assert that the result of his case would have more than a tenuous impact on Defendant. If the Court were to assume, for example, that he correctly shows that he was retaliated against due to his more exacting work on the aircraft, what impact would that have on United? In the first instance, the back pay, wages, and damages that could come from one employee's employment case on the air carrier can only be described as minimal. In the second instance, even if he were to prove that he was retaliated against for that work, that would not automatically require United to change its practices in any manner regarding the amount of time that a particular employee spends on a particular aircraft. In truth, without injunctive relief being sought (which plaintiff does not seek here), the case would have no impact on the practices of United because no finding would be made regarding the way in which an aircraft should be maintained and serviced. The focus of the trial would be on whether United retaliated against him for that work. Here, Meyer *932 does not allege that United should be enjoined from requiring maintenance workers to work only a specific amount of time on each aircraft. The result that he is seeking, re-employment or damages for his discharge, do not directly relate to the manner in which United services its planes nor would that result have an impact on United other than in a remote and peripheral way. Because of this tenuous connection the FADA does not preempt Meyer's state common law retaliatory discharge claim.
II. United's Motion for a More Definite Statement as to Count II
Under Fed R. Civ. P. 12(e), a party may move for a more definite statement if the pleading is so vague or ambiguous that the party cannot reasonably prepare a response. Whether to grant a motion for a more definite statement falls within the discretion of the district court. See Hummel v. Wells Petroleum Co., 111 F.2d 883, 886 (7th Cir.1940). In general, federal pleading follows the "notice pleading" standard. See, e.g., Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Fed.R.Civ.P. 8(a)(2). However, under Fed.R.Civ.P. 9(f), "[f]or the purpose of testing the sufficiency of a pleading, averments of time and place are material and shall be considered like all other averments of material matter." "[T]he reason for `averments of time and place' is to make ascertainable whether a cause of action is barred by the statute of limitations, and that where so shown a complaint is properly dismissed on motion." Kincheloe v. Farmer, 214 F.2d 604, 605 (7th Cir. 1954). When a plaintiff's allegations span several years, some of which fall outside of the statute of limitations period, courts may grant a motion for a more definite statement regarding time. See Bankest Imports, Inc. v. ISCA Corp., 717 F.Supp. 1537 (S.D.Fla.1989); see also Nelson v. Long Lines Ltd., No. C02-4083-MWB, 2003 WL 21356081, at *6 (N.D.Iowa June 11, 2003).
In this case, the allegations that form the basis of Meyer's FMLA claims begin in October 2003. Because Meyer alleges that United willfully violated his rights under the FMLA, a three year statute of limitations period applies. See 29 U.S.C. § 2617(c). Therefore, any claims for interference with his substantive rights under the FMLA that occurred before May 28, 2005 would be time-barred. Count II of Meyer's complaint describes seven general ways that United interfered with his rights under the FMLA, spanning from October 2003 through January 27, 2006. (Compl.śś 7, 27, 56.) However, the allegations that form Count II do not claim when each of the different violations of the FMLA became ripe. Accordingly, with respect to Count II, Meyer's complaint is so vague or ambiguous that United cannot form a response. The allegations contained in Count II of Meyer's complaint could have occurred at any time between October 2003 and January 27, 2006. Under Kincheloe, United has a right to ascertain whether it has a valid statute of limitations defense to Meyer's allegations. Therefore, United's Motion for a More Definite Statement as to Count II is granted.
CONCLUSION AND ORDER
For the reasons stated herein, United's Motion to Dismiss Count III is denied and its Motion for a More Definite Statement as to Count II is granted.
So ordered.
NOTES
[1] Citations to Meyer's "First Amended Complaint" have been abbreviated to "Compl. ś ___"
[2] The second requirement in Travel All is that the law must "`relate to' airline rates, routes, or services ...." Travel All, 73 F.3d at 1432. In Wolens, the Supreme Court observed that Congress, in reenacting Title 49 of the U.S.Code, revised FADA's preemption statute, which previously read: "[N]o State ... shall enact or enforce any law, rule, regulation, standard, or other provision having the force and effect of law relating to rates, routes, or services of any air carrier ...." Wolens, 513 U.S. at 222-23, 115 S.Ct. 817. However, "Congress intended the revision to make no substantive change." Id. at 223 n. 1. Accordingly, this Court will continue to apply the requirements of Travel All, merely substituting the word "prices" for "rates".
| {
"pile_set_name": "FreeLaw"
} |
566 S.E.2d 668 (2002)
FITZ
v.
The STATE.
No. S02A0934.
Supreme Court of Georgia.
July 15, 2002.
*670 R. Andrew Fernandez, Atlanta, for appellant.
Paul L. Howard, Jr., Dist. Atty., Elizabeth A. Baker, Marc A. Mallon, Asst. Dist. Attys., Bettieanne C. Hart, Deputy Dist. Atty., Thurbert E. Baker, Atty.Gen., Tammie JoAnn Philbrick, Asst. Atty. Gen., for appellee.
*669 THOMPSON, Justice.
Victorino Fitz and six others were charged in an 18-count indictment with multiple felony offenses in connection with the shooting deaths of Manuel Martinez, Darrell Gibbs, and Darreul Johnson.[1] Fitz was tried separately and was found guilty of malice murder, felony murder, aggravated assault, possession of a weapon, and false imprisonment in connection with the shooting death of Martinez; malice murder, felony murder (two counts), kidnapping, aggravated assault, and possession of weapon in connection with the shooting death of Gibbs; and malice murder, felony murder, aggravated assault, possession of weapon, and false imprisonment, in connection with the shooting death of Johnson. On appeal, Fitz asserts that a warrant to search his home was issued without probable cause, and he challenges the admissibility of his custodial statement. Finding no error, we affirm.
Fitz was dealing drugs from his apartment in the Copeland Road area of Atlanta. He was told by others that a rival drug dealer, Dyral Vire, had hired several people to kill him, including victims Gibbs and Johnson. As a result, Johnson was brought to Fitz's apartment where he was bound with rope and beaten.
Fitz, armed with a shotgun, located Gibbs nearby and brought him to the same apartment where he was also tied and beaten. Both Johnson and Gibbs denied that they were paid to kill Fitz, each blaming the other. Fitz gave the orders to shoot and kill both men. The two bodies were wrapped in plastic trash bags and were bound with rope. When Fitz was told that the deed was "done," he expressed his approval.
Fitz's accomplices disposed of the two bodies; one was thrown into a ditch near the Chattahoochee River, and the other was dumped near a creek in the same vicinity. Afterward, the collaborators returned to Fitz's apartment.
Meanwhile, Fitz suspected that Martinez was a traitoruntil this time Martinez had been an accomplice in the murders of Gibbs and Johnson. Consequently, Fitz ordered that Martinez be killed. But in order to demonstrate his loyalty to Fitz, Martinez offered to kill the rival drug dealer, Vire. Martinez, along with Fitz's accomplices, drove off together in the direction of Vire's apartment, ostensibly to accomplish that purpose. While they were in route, the collaborators carried out Fitz's orders to shoot and kill Martinez. A Polaroid photograph of Fitz was found in Martinez's pocket.
Johnson's body was recovered later that day. A Polaroid photograph of Fitz armed *671 with a shotgun was found adhered to the victim's forehead. The body of the third victim, Gibbs, was discovered in Cobb County.
All three victims had been shot with the same .38 caliber revolver which was recovered from Fitz's apartment during the execution of a search warrant.
The investigation of Martinez's murder led police to Fitz. In a first interview, Fitz told the police that a rival drug dealer was trying to kill him. Fitz identified Martinez as a drug user who had purchased cocaine from him, and he also acknowledged that it was his (Fitz's) photograph which had been found on the body. Two days later, Fitz was interviewed for the second time after the body had been located in Cobb County. Again, he told the police that his life was in danger, and he was given police protection at that time. After a search of his apartment revealed evidence of the crimes, Fitz was arrested, Miranda rights were administered, and he told police in a subsequent custodial interview that he ordered the killing of the three victims.
1. The evidence was sufficient under the standard of Jackson v. Virginia, 443 U.S. 307, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979), for a rational trier of fact to have found Fitz guilty beyond a reasonable doubt of the crimes of which he was convicted.
2. Fitz submits that the search of his apartment was based on an improper, conclusory affidavit which did not provide sufficient basis for a finding of probable cause.
During his initial interviews, Fitz informed the police investigators that he had moved out of his apartment and was living in a motel because he feared that he was on Vire's "hit list." Fitz consented to a search of that apartment, which proved unproductive. Subsequently, the police were informed by the apartment manager that Fitz was also leasing a second apartment in the same complex, a fact which he failed to reveal in his previous interviews. As a result, a warrant was obtained for the search of the second apartment. In executing that warrant, police found pillows and a bed comforter which appeared to have bullet holes and were stained with blood, blood-stained carpeting, plastic garbage bags, rope, duct tape, the .38 caliber pistol which had been used to kill all three victims, a .38 caliber cartridge, a sawed-off 12 gauge shotgun, and 12 gauge shotgun shells. Fitz challenges the warrant underlying that search.
A search warrant will only issue upon facts "sufficient to show probable cause that a crime is being committed or has been committed." OCGA § 17-5-21(a). The magistrate's task in determining if probable cause exists to issue a search warrant is "simply to make a practical, common-sense decision whether, given all the circumstances set forth in the affidavit before him, including the `veracity' and `basis of knowledge' of persons supplying hearsay information, there is a fair probability that contraband or evidence of a crime will be found in a particular place." [Cit.] Our duty in reviewing the magistrate's decision in this case is to determine if the magistrate had a "substantial basis" for concluding that probable cause existed to issue the search warrants. [Cit.] A magistrate's decision to issue a search warrant based on a finding of probable cause is entitled to substantial deference by a reviewing court. [Cit.]
DeYoung v. State, 268 Ga. 780, 786(7), 493 S.E.2d 157 (1997).
The affidavit in issue set forth that Gibbs, Johnson, and Martinez had all been shot numerous times and killed with the same type of .38 caliber handgun; that two of the victims had been wrapped in large plastic bags which had been sealed with tape; that all three victims were known crack addicts who dealt with and purchased cocaine from Fitz; that a photograph of Fitz was found on Johnson's body; that Fitz admitted owning guns and selling narcotics to all three victims; that Fitz advised police he was on a "hit list" of a rival drug dealer and he sought police protection for himself and his family; and that he nonetheless failed to tell investigators that he leased a second apartment in the same complex. Among the items sought to be seized were weapons, ammunition, blood, rope, tape and garbage bags.
Based on the averments in the affidavit, a neutral magistrate could reasonably have a "substantial basis" for concluding that *672 probable cause existed to issue the search warrant. DeYoung, supra at 786(7), 493 S.E.2d 157.
3. Fitz asserts that his custodial statement should have been suppressed because it was given after he had invoked his right to remain silent and after he had requested an attorney.
A Jackson v. Denno hearing was held to establish the admissibility of Fitz's custodial statements. The evidence established that Fitz was arrested and charged with the triple homicides after a search of his second apartment revealed significant physical evidence of the crimes. Because Fitz is not fluent in English, an officer conducted the custodial interview in Spanish. Initially, Fitz was instructed to remain silent until the officer completed administering the Miranda warnings. After having his rights read to him in Spanish, Fitz volunteered, "Can I talk now?" But first the officer ascertained that Fitz understood his rights, and then inquired whether he wanted to talk about the three victims. Fitz answered affirmatively and he executed a written waiver in Spanish. When the officer remarked that they wanted to hear the truth, Fitz stated: "Well, the real truth, ah, I have nothing to say to you. If you are going to take me to jail, take me, and best with my attorney. With him I can talk a little better." In order to clarify Fitz's intent, the officer asked, "So then you don't want to talk to us?" Fitz replied: "Well, I have nothing to say to you because simply I am the guilty one and that's it." Again the officer attempted further clarification and told Fitz, "if you want an attorney, you tell me ... and we'll end now. But if you want to talk to me, if you want to talk to us to see if we can come to the bottom of what happened, we can do that too. But the right that you have is an attorney." Fitz replied, "the real truth, I'm going to tell you the real truth ... because I am going to talk." Again the officer elicited the response that Fitz wanted to talk "without an attorney," and the interview proceeded, in which Fitz admitted his participation in the three murders.
Fitz's constitutional claims require separate analyses.
(a) Right to remain silent.
After twice expressing his intention to make a statement, Fitz was reminded that his responses must be truthful. He replied with an ambiguous statement which may have implicated the right to remain silent. "If the request is equivocal, the police `may ask questions designed to clarify whether the suspect intended to invoke his right to remain silent,' but they may not simply continue the interrogation." Hatcher v. State, 259 Ga. 274, 277, 379 S.E.2d 775, fn. 2 (259 Ga. 274, 379 S.E.2d 775) (1989). The questions which followed were directed at seeking clarification of Fitz's intentions. Accordingly, the trial court did not err in denying the motion to suppress on Fifth Amendment grounds. See Cook v. State, 274 Ga. 891(4), 561 S.E.2d 407 (2002).
(b) Right to counsel.[2]
Law enforcement officers must immediately cease questioning a defendant who has clearly asserted a right to have counsel present during custodial interrogation. Jordan v. State, 267 Ga. 442(1), 480 S.E.2d 18 (1997), citing Edwards v. Arizona, 451 U.S. 477, 101 S.Ct. 1880, 68 L.Ed.2d 378 (1981). But if the defendant "makes reference to an attorney that is ambiguous or equivocal in that a reasonable officer in light of the circumstances would have understood only that the suspect might be invoking the right to counsel," cessation of the questioning is not required. Davis v. United States, 512 U.S. 452, 459, 114 S.Ct. 2350, 129 L.Ed.2d 362 (1994).
Assuming that Fitz's statement, "and best with my attorney ... with him I can talk a little better," was a request for counsel, it was at best ambiguous. Because a reasonable officer would not necessarily have understood Fitz's reference to an attorney to be a clear request for counsel, the officer was not required to cease the questioning *673 on that basis. See Jordan, supra. Although the officer had no duty to clarify the ambiguous statement, id., he did so nonetheless. Further questioning by the officer confirmed Fitz's desire to talk without his attorney being present. The trial court did not err in denying the motion to suppress on Sixth Amendment grounds.
Judgment affirmed.
All the Justices concur.
NOTES
[1] The crimes took place on March 2-3, 1998. An indictment was returned on July 16, 1999, charging Fitz with malice murder (three counts); felony murder (six counts); kidnapping (three counts); possession of a weapon during the commission of a felony (three counts); and aggravated assault (three counts). Trial commenced on August 8, 1999, and a verdict was returned on August 28, 1999. Fitz was acquitted of two counts of felony murder, and two counts of kidnapping; he was found guilty of all other offenses, including two counts of false imprisonment. Sentencing orders were entered on September 28, 1999; Fitz received three life sentences plus multiple terms of years. A motion for new trial was filed on September 2, 1999, amended on December 15, 2000, and denied on November 29, 2001. A timely notice of appeal was filed on December 13, 2001. The case was docketed in this Court on March 14, 2002, and was submitted for a decision on briefs on May 6, 2002.
[2] Fitz makes no separate argument on appeal urging an independent State ground, and cites no cases which employ such an analysis. Thus, his claim is analyzed under the Sixth Amendment to the U.S. Constitution. See generally Taylor v. State, 177 Ga.App. 624(3), 340 S.E.2d 263 (1986).
| {
"pile_set_name": "FreeLaw"
} |
206 Va. 143 (1965)
ROBERT T. MAIN, JR., AND KATHRYN M. MAIN, PARTNERS TRADING AS ROBERT T. MAIN COMPANY
v.
DEPARTMENT OF HIGHWAYS AND SIDNEY C. DAY, JR., COMPTROLLER OF VIRGINIA.
Record No. 5986.
Supreme Court of Virginia.
June 14, 1965.
William R. Cogar and James C. Roberts (Collins Denny, III; Denny, Valentine & Davenport; Tucker, Mays, Moore & Reed, on brief), for the plaintiffs in error.
Frederick T. Gray (Robert Y. Button, Attorney General; M. Ray Johnston, Assistant Attorney General; Paul D. Stotts, Assistant Attorney General; Williams, Mullen & Christian, on brief), for the defendants in error.
Present, All the Justices.
1. Plaintiffs' contract for the construction of a section of highway required them to place as foundation select material meeting certain specifications. The sources of supply initially approved by the representatives of the Department of Highways failed to yield material of this quality and plaintiffs had to procure it elsewhere at an alleged cost of more than $500,000 over the original contract price. When plaintiffs sued to recover this and other items allegedly due under the contract, demurrer was sustained to their petition; as to the $500,000 item on the ground that they had failed to observe the plain provisions of the contract requiring them to obtain a supplemental agreement for this work, or an extra work order, and to give written notice of their intention to make claim for such extra compensation. This ruling correctly interpreted the contract. And plaintiffs' contention could not be accepted, that the Department was estopped to rely upon these provisions by having directed plaintiffs to secure suitable material from new sources. There was no basis of estoppel under the facts and even had there been, the doctrine of estoppel does not apply to the rights of the Commonwealth when acting in its governmental capacity.
2. The provision of the contract that the Commissioner should decide all questions arising as to the character, quality, amount and value of work done and materials furnished, his decisions to be final, was binding on the parties in the absence of any allegation that the Commissioner was guilty of bad faith or had exceeded his authority.
3. Such provision was not contrary to public policy and unenforceable as an attempt to oust the jurisdiction of the courts since it did not expressly provide that compliance with it was a condition precedent to the right to recover under the contract. The right of recourse to the courts was recognized by implication.
4. By refusing to pay plaintiffs' claim the Department was not estopped to rely on such provision of the contract.
5. There was no merit to plaintiffs' contention that they were entitled to recovery on the theory that the contract had been modified by mutual consent of the parties since, when the change of material became necessary, representatives of the Department and the plaintiffs met on the site and orally agreed to the change. The terms of a contract with the Department, entered into with the formalities required by law, cannot be changed or waived by subordinate employees of the Department.
Error to a judgment of the Circuit Court of the city of Richmond. Hon. S. Bernard Coleman, judge designate presiding. The opinion states the case.
EGGLESTON
EGGLESTON, C.J., delivered the opinion of the court.
On this appeal we are to determine whether the lower court erred in sustaining demurrers to and dismissing the original and amended petitions which Robert T. Main, Jr., and Kathryn M. Main, partners trading as Robert T. Main Company, hereinafter called the plaintiffs, filed in the lower court against the Department of Highways and the State Comptroller to recover the amounts alleged to be due by virtue of a contract which the plaintiffs entered into with the Department of Highways for the construction and improvement of a section of an interstate highway in Fairfax and Prince William counties.
The allegations of the original petition may be summarized thus:
During November, 1958 the Department of Highways advertised for bids for the construction and improvement of 8.480 miles of Interstate Route 66 in Fairfax and Prince William counties. Included *145 among the contract bid items was the placement and stabilization of approximately 196,000 cubic yards of select material "of a minimum CBR value of 12" upon that portion of the roadway prepared to receive its foundation and surface courses.
In the preparation of their bid the plaintiffs and the authorized representatives of the Department met on the site of the proposed construction, at which time these representatives designated on the ground and delineated upon the project plans a number of sources of material located within the roadway limits, which material the Department assured and represented to the plaintiffs was of sufficient "CBR value" and of suitable quality to be employed for the select material requirements of the contract.
Relying upon these assurances and representations, the plaintiffs submitted to the Department a bid proposal in the sum of $1,841,787.39. The plaintiffs' proposal was accepted by the Department and a contract was executed in writing on December 29, 1958. The plaintiffs commenced work under the contract on January 5, 1959.
During the latter part of 1959 and early part of 1960, the plaintiffs, in the course of their work, began to excavate and place as select material that which had been designated by the Department. After a portion of this material had been excavated and placed, the Department notified the plaintiffs that the sources originally designated were not of sufficient "CBR value," were not of suitable quality, and could no longer be used by the plaintiffs for the procurement of such material.
The Department thereupon directed the plaintiffs to secure from sources outside the limits of the project another type of select material and to finish the graded roadway with the latter material to a depth of six inches. Further, the Department directed the plaintiffs to place beneath the select material other material than that specified in the contract.
The plaintiffs complied with these directions of the Department and performed all conditions of the contract on their part. The extra work thus required of the plaintiffs was performed at a cost of $509,468.97 over and above the original contract price of the project.
In the further course of performance the plaintiffs laid a section of 36-inch corrugated metal pipe, in a manner expressly approved by the Department. From causes beyond the control of the plaintiffs a failure subsequently occurred in this pipe and the Department required them to excavate the pipe and replace the section which had failed, at a cost of $2,360.34. *146
All of the work required of the plaintiffs was accepted by the Department as of August 3, 1962. Thereafter the Department, in measuring for payment the quantities of select material excavated, placed and stabilized by the plaintiffs, failed to measure the same in the manner provided for in the contract. As a result, the plaintiffs were paid a sum for such material which was $47,253.65 less than that to which they were entitled under the contract.
The Department also deducted and withheld from payment to the plaintiffs the sum of $5,310 as liquidated damages for an alleged delay of 118 days in the completion of the contract. The delay in the completion of the project resulted directly from the modifications, changes and breaches of the contract by the Department and from the opening of the project to traffic by the Department prior to the date set for the completion of the work.
Upon completion of the contract the plaintiffs made timely and proper demands for payment of the sums due them, but these demands were refused.
The defendants demurred to the petition on the grounds that (1) the matters complained of are among those upon which the plaintiffs agreed in their contract that the decision of the State Highway Commissioner would be final and binding; (2) the plaintiffs failed to allege compliance with | 105.12 of the contract with respect to claims for adjustment and disputes, compliance with which is a prerequisite to the right to recover.
It was stipulated and agreed that the construction contract between the Department of Highways and the plaintiffs and the Department's Road and Bridge Specifications should be considered in determining the issues raised by the demurrer.
The specifications, which were integral parts of the contract, contained among others these pertinent provisions. [1]
* * *
"Whenever the termini of the project are changed and whenever any change or combination of changes results in increasing or decreasing the original contract amount by more than twenty-five (25) per cent, a supplemental agreement, acceptable to both parties to the contract, shall be executed in advance of performing the affected work. * * *"
"Sec. 104.04. Extra Work. -- The Contractor shall perform unforeseen work, for which there is no price included in the contract, whenever it is deemed necessary or desirable in order to complete fully the work as contemplated, and such extra work shall be performed in accordance with the specifications and as directed; provided, however, that before any extra work is started a work order shall be issued and approved."
"Sec. 105.02. Deviation From the Plans, Profiles, Etc. -- There shall be no deviation from the plans, profiles, cross sections, specifications, special provisions or approved working drawing except by mutual agreement between the Department and the Contractor. When changes and deviations are found necessary, they shall be covered in writing with a 'Work Order.' Each work order, so executed, shall become a supplement to the contract. * * *"
"Sec. 105.11. Final Inspection and Acceptance. -- Whenever all the materials have been furnished, all the work performed, and the construction provided and contemplated by the contract has been satisfactorily completed, all in accordance with these specifications, the Engineer shall make the final inspection. * * *"
"Sec. 105.12. Claims for Adjustment and Disputes. -- In any case where the Contractor deems that extra compensation is due him for work or material not clearly covered in the contract or not ordered by the Engineer as an extra, as defined herein, the Contractor shall notify the Engineer in writing of his intention to make claim for such extra compensation before he begins the work on which he bases the claim. If such notification is not given and the Engineer is not afforded proper facilities by the Contractor for keeping strict account of actual cost thereof, then the Contractor agrees to waive the claim for extra compensation. Such notice by the Contractor and the fact that the Engineer has kept account of the cost as aforesaid, shall not in any way be construed as providing the validity of the claim. In case the claim, after consideration by the Commission, is found to be just, it shall be allowed and paid for as an extra as provided herein for extra work. Nothing in this section shall be construed as establishing any claim contrary to the terms of Section 104.03"
"Section 105.13. Commissioner as Referee. -- To prevent all disputes and litigations, the Commissioner shall decide all questions, difficulties and disputes, of whatever nature, which may arise relative to the interpretation of the plans, construction, prosecution and fulfillment of the contract, and as to the character, quality, amount and value of any work done and materials furnished, under or by reason of the contract, and his estimates and decisions upon all claims, questions and disputes shall be final and conclusive upon the parties thereto."
"Sec. 106.01. Source of Supply and Quality Requirements. -- The materials used on the work shall be equal in quality to the requirements of these specifications. The source of supply of each of the materials shall be approved by the Engineer prior to delivery. As a part of his contract documents, the Contractor shall file a statement of the origin, composition, manufacture of all materials to be used in the work, together with samples, if required. If it is found, after trial that sources of supply previously approved do not produce uniform results or otherwise prove unacceptable, the Contractor shall furnish materials from other approved sources."
"Sec. 106.02. Local Material Pits. -- If the Contractor desires to furnish materials from local deposits, he shall first secure approval of the source from the Engineer. The Department may obtain options on available pits for borrow or other local materials and the Contractor may, at his election, take advantage of such options. No pits shall be opened until the material has been tested, approved and cross-sectioned. The Contractor shall assume full responsibility for the production of uniform and satisfactory materials from such local deposits. * * *"
"Sec. 109.07. Acceptance and Final Payment. -- When final inspection and final acceptance have been duly made by the Engineer, as provided in Section 105.11, the Engineer shall prepare the final estimate of the quantities of the various classes of work performed, and after the approval of such final estimate by the Commissioner, there shall be paid to the Contractor the entire sum due after deducting all previous payments and all other amounts to be retained or deducted under the provisions of the contract. * * *" *147
The lower court sustained the demurrer, with leave to the plaintiffs to file an amended petition. In sustaining the demurrer it held that since the petition had failed to alleged that the plaintiffs had complied with certain provisions of the Department's specifications which were embodied in the contract, their suit against the Department could not be maintained.
The plaintiffs filed an amended petition alleging that the Department had waived and was estopped to assert the various contractual provisions which the lower court had relied upon in sustaining the demurrer to the original petition. Further, the plaintiffs asserted that the arbitration clause embodied in | 105.13 of the specifications, relied upon by the defendants in their demurrer, was unenforceable as a matter of law.
The defendants again demurred on substantially the same grounds as those asserted in their demurrer to the original petition, and on the additional ground that the factual allegations in the amended petition were insufficient in law to raise an estoppel or to constitute a waiver by the Department of the provisions in the contract relied upon by the latter.
The lower court sustained the demurrer to the amended petition and the plaintiffs having declined leave to file a further amendment, the petition was dismissed.
148
In their amended petition the plaintiffs base their right to recover the cost of the extra work in excavating and placing suitable material on the roadway, $509,468.97; the alleged shortage in the amount paid them for excavating materials, $47,253.65; the cost of relaying the pipe, $2,360.34, and the sum of $5,310 wrongfully withheld from the payment due the plaintiffs, on the breach of the express contract between the parties.
They also base their right to recover the first of these items by virtue of what they allege was a "modification by mutual consent of the parties" of the terms of the original contract. They base their right to recover all of the items on the implied agreement of the Department to pay the reasonable value of all labor, materials and equipment furnished by the plaintiffs in the performance of the work.
On appeal the plaintiffs contend that the lower court erred in sustaining the demurrer to their amended petition, because, they say, (1) the Highway Department waived and is estopped to assert the various contractual provisions which the court held had barred the plaintiffs' right of recovery; (2) the arbitration provision of | 105.13 of the specifications does not bar the plaintiffs' cause of action, because (a) it is void and unenforceable, as a matter of law, and (b) the Department is estopped to assert it; (3) the petition sufficiently alleges the plaintiffs' right to recover under the terms of the modified agreement of the parties; and (4) the petition sufficiently alleges the plaintiffs' right to recover on the implied agreement between the parties. *149
In its written memorandum the lower court held that the plaintiffs were not entitled to recover for the alleged extra work performed by them because they failed to allege the execution of a supplemental agreement therefor as required by | 104.03 of the specifications, or that they had obtained an extra work order therefor as required by || 104.04 and 105.02, or had notified the engineer in writing of their intention to make claim for such extra compensation before beginning the work as required by | 105.12.
To meet these deficiencies, in their amended motion the plaintiffs alleged that the Department is estopped to rely upon these provisions of the specifications in that when it was ascertained that the material previously designated for the road work was not of suitable quality and could no longer be used, the Department directed the plaintiffs to secure suitable material from another source, and that they did so.
Obviously, this necessity for a change in the source of the material did not relieve the plaintiffs of the obligations imposed upon them by the terms of the contract. Section 106.01 of the specifications expressly provides that, "If it is found, after trial that sources of supply previously approved do not produce uniform results or otherwise prove unacceptable, the Contractor shall furnish materials from other approved sources." The plaintiffs must have known that this change would require extra work at an added cost. They could have fully protected themselves by obtaining a supplemental agreement therefor as provided in | 104.03, or by obtaining extra work orders as provided in || 104.04 and 105.02.
Moreover, | 105.12 of the specifications specifically provides that where the contractor deems that extra compensation is due him and the work has not been ordered as an extra under a duly issued and written work order, then the contractor must give notice in writing *150 of his intent of claim an extra and afford proper facilities for keeping a strict account of costs. That section expressly provides that unless he does these things, the contractor "agrees to waive the claim for extra compensation." The plaintiffs took none of these prescribed steps to insure payment for this extra work.
But, aside from this, it is well settled that the doctrine of estoppel does not apply to the rights of a State when acting in its sovereign or governmental capacity. This is so because the legislature alone has the authority to dispose of or dispense with such rights. See 31 C.J.S., Estoppel, | 140b, pp. 692, 693; 19 Am. Jur., Estoppel, | 166, p. 818; 49 Am. Jur., States, etc., | 85, p. 298;
Id., | 86, p. 299; Annotation: 1 A.L.R.2d, | 5, p. 344 ff. In
Almond Gilmer, 188 Va. 822, 836, 51 S.E.2d 272, 277, we held that the construction, maintenance and operation of a highway system is a governmental function. See also, Almond Day, 199 Va. 1, 8, 97 S.E.2d 824, 830.
One of the grounds of the defendants' demurrer, which the lower court sustained, was that the matters complained of are among those which the plaintiffs had agreed in their contract that the decision of the State Highway Commissioner would be final and binding. This ground involves | 105.13 of the specifications which provides that the Commissioner shall decide all questions which may arise as to the character, quality, amount and value of any work done and material furnished, and that "his estimates and decisions upon all claims, questions and disputes shall be final and conclusive upon the parties thereto." The court held that this provision was valid and binding on the parties, in the absence of any allegation that the Commissioner was guilty of fraud, bad faith, or had exceeded his authority. We agree with that holding.
Similar provisions are frequently embodied in building and construction contracts and are generally upheld. Corbin on Contracts, Vol. 3A, | 650, p. 115; 13 Am.Jur.2d, Building, etc. Contracts, | 32, p. 34; 5 Am.Jur.2d, Arbitration and Award, | 20, p. 535; 17A C.J.S., Contracts, | 499(2), p. 752; Condon South Side R.R. Co., 14 Gratt. (55 Va.) 302, 314, 315; Baltimore & Ohio R.R. Co. Polly, Woods & Co., 14 Gratt. (55 Va.) 447, 460; Belmont Iron Works Hotel Corporation of Norfolk, 109 Va. 269, 271-272, 63 S.E. 1068; Rosenberg Turner, 124 Va. 769, 777, 98 S.E. 763.
The fact that the Commissioner is made the arbiter does not affect the validity of the agreement. 5 Am.Jur.2d, Arbitration and Award, | 67, p. 569; State Highway Department MacDougald Const. Co., *151 189 Ga. 490, 6 S.E.2d 570, 576, 577; Belmont Iron Works Hotel Corporation of Norfolk, supra, 109 Va. at 272, 273.
The plaintiffs contend that | 105.13 is contrary to public policy and unenforceable, because, they say, its purpose is to oust the jurisdiction of the courts in that it does not provide that compliance therewith is a condition precedent to the right to recover under the contract. See 5 Am.Jur.2d, Arbitration and Award, | 36, p. 547.
We do not agree with this contention. It is not the purpose and effect of the provision to oust the jurisdiction of the courts. Its purpose is to limit the questions which may be litigated to those which have been settled by the Commissioner as the referee. It recognizes that such decisions may be enforced in a proper action. As applied to the present circumstances, the finding of the referee of the amount due upon the contract is by implication made a condition precedent to a right of action therefor. 5 Am.Jur.2d, Arbitration and Award, | 36, p. 547; Condon South Side R.R. Co., supra, 14 Gratt. (55 Va.) at 316, 317. The allegation that the "Department" "refused to pay" the plaintiffs' claim denotes that the Commissioner, the head of the Department, has found that there is nothing due to the plaintiffs on their claim.
The plaintiffs contend that the Department has waived and is estopped to rely on the provisions of | 105.13 in that it failed to act upon, ignored and refused to pay the plaintiffs' claim. There is no merit to this contention. In the first place, as we have already seen, the doctrine of estoppel does not apply to the rights of a State in the exercise of its governmental function in constructing a state highway. Moreover, we are aware of no principle of law which supports the view that failure to act upon or pay an obligation constitutes a waiver of any defense to the alleged obligation or an estoppel to assert such defense.
The plaintiffs argue that the allegations in Count V of their amended petition are sufficient to entitle them to recover the amount due for the work done and material furnished in the excavation and placement of the select material on the roadway by virtue of the "modification by mutual consent of the parties" of that portion of the contract relating thereto.
These allegations are that when it became necessary to change the selection and placement of the material, the representatives of the Highway Department and the plaintiffs "met on the site of the *152 proposed construction" and by "mutual consent" agreed to the necessary change; that the Department directed the plaintiffs to make such change; that the plaintiffs did so, and are entitled to recover the reasonable value of such work done and material furnished, which the plaintiffs say amounts to $565,392.86 (sic) . There is no allegation that such modified agreement was reduced to writing and signed by the authorized representatives of the Department. The argument in the brief is that such agreement was verbal, but quite legal and proper.
The statutes (Code, | 33-99 ff. ) clearly set forth the manner in which contracts for the construction of state highways may be entered into. They provide for the advertising and acceptance of bids for such work and the entering into of written contracts with respect thereto. When the specifications for such work have been promulgated and advertised they cannot be changed or waived by subordinate employees of the Department of Highways. Ragland Commonwealth, 172 Va. 186, 191, 200 S.E. 601, 603.
Thus, we cannot agree that a contractor and subordinate employees of the Department of Highways may enter into an oral agreement for the modification of a formal written contract, entered into in the manner provided by law, and place upon the State an added obligation of more than $500,000.
After all, the claim of the plaintiffs here is for the recovery of extra work done by them. As has been said, the written contract which the plaintiffs executed clearly provided the method by which they could insure the recovery of the cost of such extra work, and not having followed the prescribed method, they are not entitled to such recovery.
What we have just said disposes of the plaintiffs' claim that they are entitled to compensation for the extra work done on an implied agreement or quantum meruit basis. See Ragland Commonwealth, supra, 172 Va. at 191, 192, 200 S.E. at 603.
The judgment is
GORDON, J., concurs in the result.
Affirmed.
NOTES
[1] "Sec. 104.03. Alteration of Plans; Increase or Decrease of Quantities. -- The Department shall have the right to make alterations in plans or character of work as may be considered necessary or desirable during the progress of the work to complete satisfactorily the proposed construction. Such alterations shall not be considered as a waiver of any conditions of the contract nor invalidate any of the provisions thereof.
| {
"pile_set_name": "FreeLaw"
} |
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 98-2295
___________
Mary E. Cearley, Individually and as *
Administratrix of the Estate of Jimmy C.*
Cearley; Cynthia Jean Cearley Pritchett; *
Edward Wayne Cearley; Richard C. *
Cearley; Barbara Hill, *
*
Plaintiffs-Appellees, *
* Appeal from the United States
v. * District Court for the
* Western District of Arkansas
General American Transportation *
Corporation; Missouri Pacific Railroad *
Company, doing business as Union *
Pacific Railroad Company, *
*
Defendants-Appellants. *
___________
Submitted: November 19, 1998
Filed: July 27, 1999
___________
Before McMILLIAN, WOLLMAN1 and HANSEN, Circuit Judges.
___________
McMILLIAN, Circuit Judge.
1
The Honorable Roger L. Wollman became Chief Judge of the United States
Court of Appeals for the Eighth Circuit on April 24, 1999.
Union Pacific Railroad Company (Union Pacific) and General American
Transportation Corporation (GATC) (together appellants) appeal from an interlocutory
order entered in the United States District Court for the Western District of Arkansas
denying their motion for summary judgment in this wrongful death action brought by
family members (appellees) of Jimmy C. Cearley (Cearley), who suffered a fatal fall
from a railroad tank car. See Cearley v. General Am. Transp. Corp., No. 96-4044
(W.D. Ark. Jan. 9, 1998) (order) (hereinafter "slip op."). For reversal, appellants
argue that the district court erred in holding that appellees' state law claims are not
preempted by the Federal Safety Appliance Acts (FSAA), 49 U.S.C. § 20301 et seq.,
or the Federal Railroad Safety Act (FRSA), 49 U.S.C. § 20101 et seq.,2 and related
federal regulations. For the reasons stated below, we reverse the order of the district
court and remand for further proceedings consistent with this opinion.
Jurisdiction
Jurisdiction was proper in the district court under 28 U.S.C. § 1332. Jurisdiction
is proper in this court under 28 U.S.C. § 1292(b).
Background
The essential background facts are undisputed. On December 15, 1993, Cearley
and his co-worker, James Dodson, were unloading bromine from a tractor trailer onto
a railroad tank car that was parked on railroad tracks running through the premises of
their employer, Great Lakes Chemical Company, in El Dorado, Arkansas. The tank
car, classified as a "tank car without underframe," had been manufactured by GATC
and had been brought to El Dorado by Union Pacific. Dodson left the scene for about
ten minutes. When he returned, he found Cearley lying dead next to the tank car.
2
The FRSA was originally codified at 45 U.S.C. § 421 et seq. In 1994, Congress
recodified the FRSA at 49 U.S.C. § 20101 et seq.
-2-
There were no witnesses to the accident, but it is assumed for purposes of these
proceedings that Cearley died from injuries sustained from falling off a fixed platform
atop the tank car, approximately twelve feet above ground level. Upon inspection, the
tank car showed no signs that any railings were missing or damaged. The platform has
a railing around it which is thirty inches tall.
Appellees filed this action in federal district court, asserting state common law
claims against appellants, primarily on the ground that the railing on the tank car
platform was not high enough to provide adequate protection. Appellees asserted,
among other claims, a claim of negligence per se on the ground that the 30-inch height
of the railing failed to comply with 29 C.F.R. § 1910.23,3 a federal regulation
promulgated by the Occupational Safety and Health Administration (OSHA), under the
Secretary of Labor's authority pursuant to the Occupational Safety and Health Act.
Appellants moved for summary judgment on the ground that appellees' claims
are preempted by the FSAA, the FRSA, and related regulations. Upon review, the
district court held that appellees’ claims are not preempted and denied appellants'
motion for summary judgment. Recognizing that appellants' motion for summary
3
29 C.F.R. § 1910.23 provides in relevant part:
(c) Protection of open-sided floors, platforms, and runways. (1) Every
open-sided floor or platform 4 feet or more above adjacent floor or
ground level shall be guarded by a standard railing . . . on all open sides
except where there is entrance to a ramp, stairway or fixed ladder.
....
(e) Railing, toe boards, and cover specifications. (1) A standard railing
shall consist of top rail, intermediate rail, and posts, and shall have a
vertical height of 42 inches nominal from upper surface of top rail to floor,
platform, runway, or ramp level.
-3-
judgment involved controlling questions of law, as to which there are substantial
grounds for differing opinions, and that an immediate appeal could materially advance
the ultimate termination of this litigation, the district court certified the order for
interlocutory appeal pursuant to 28 U.S.C. § 1292(b). Permission to proceed with this
interlocutory appeal was then granted by our court.
Discussion
We review a denial of summary judgment de novo. See Harder v. Acands, 1999
WL 373539, at *1 (8th Cir. June 9, 1999). The question before the district court, and
this court on appeal, is whether the record, when viewed in the light most favorable to
the non-moving party, shows that there is no genuine issue as to any material fact and
that the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P.
56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249-50 (1986). Where the unresolved issues are primarily
legal rather than factual, summary judgment is particularly appropriate. See Crain v.
Board of Police Comm'rs, 920 F.2d 1402, 1405-06 (8th Cir. 1990).
Appellants argue, among other things, that appellees' state law claims are
preempted by regulations related to railroad safety promulgated by the Federal Railroad
Administration (FRA) under the authority of the Secretary of Transportation. Upon
careful review of the pertinent statutes, regulations, and case law, we agree.
In CSX Transp., Inc. v. Easterwood, 507 U.S. 658 (1993) (Easterwood), a
widow of a truck driver who was killed when his vehicle was struck by a train at a
grade crossing brought state common law claims alleging inadequate warnings at the
grade crossing and excessive speed of the train. The Supreme Court held that certain
federal regulations could preempt state tort law claims regarding grade crossings and
train speed. See id. at 665-75. In discussing the principles that apply in determining
the preemptive force of the FRA regulations at issue, the Supreme Court began by
-4-
discussing the regulatory framework established under the FRSA, which gives the
Secretary of Transportation "broad powers to 'prescribe, as necessary, appropriate
rules, regulations, orders, and standards for all areas of railroad safety.'" Id. at 662
(quoting former 45 U.S.C. § 431(a)).4 The Supreme Court went on to observe, as a
general rule, that state law must yield to federal law where the state law "conflicts with,
or frustrates" federal law. Id. at 663 (citing U.S. Const. art. VI, cl. 2; Maryland v.
Louisiana, 451 U.S. 725, 746 (1981)). The Court then explained:
In the interest of avoiding unintended encroachment on the
authority of the States, however, a court interpreting a federal statute
pertaining to a subject traditionally governed by state law will be reluctant
to find pre-emption. Thus, pre-emption will not lie unless it is the clear
and manifest purpose of Congress. Evidence of pre-emptive purpose is
sought in the text and structure of the statute at issue. If the statute
contains an express pre-emption clause, the task of statutory construction
must in the first instance focus on the plain wording of the clause, which
necessarily contains the best evidence of Congress' pre-emptive intent.
Id. at 663-64 (citations and internal quotation marks omitted).
At the time of Cearley's accident in 1993, the FRSA did contain an express
preemption clause. That clause, 45 U.S.C. § 434, provided in relevant part:
The Congress declares that laws, rules, regulations, orders, and standards
relating to railroad safety shall be nationally uniform to the extent
practicable. A State may adopt or continue in force any law, rule,
4
The FRSA, in its current codification, provides: "[t]he Secretary of
Transportation, as necessary, shall prescribe regulations and issue orders for every area
of railroad safety supplementing laws and regulations in effect on October 16, 1970."
49 U.S.C. § 20103. The stated purpose of the FRSA is "to promote safety in every
area of railroad operations and reduce railroad-related accidents and incidents." Id.
§ 20101.
-5-
regulation, order, or standard relating to railroad safety until such time
as the Secretary has adopted a rule, regulation, order, or standard
covering the subject matter of such State requirement. A State may
adopt or continue in force an additional or more stringent law, rule,
regulation, order, or standard relating to railroad safety when necessary
to eliminate or reduce an essentially local safety hazard, and when not
incompatible with any Federal law, rule, regulation, order, or standard,
and when not creating an undue burden on interstate commerce.
45 U.S.C. § 434 (1993) (emphasis added) (recodified in 1994 at 49 U.S.C. § 20106).5
Focusing on the plain wording of § 434, "which necessarily contains the best
evidence of Congress' pre-emptive intent," Easterwood, 507 U.S. at 664, we are
5
The current version of this preemption clause is worded slightly differently, but
is identical in substance. It provides:
Laws, regulations, and orders related to railroad safety shall be nationally
uniform to the extent practicable. A State may adopt or continue in force
a law, regulation, or order related to railroad safety until the Secretary of
Transportation prescribes a regulation or issues an order covering the
subject matter of the State requirement. A State may adopt or continue
in force an additional or more stringent law, regulation, or order related
to railroad safety when the law, regulation, or order –
(1) is necessary to eliminate or reduce an essentially local
safety hazard;
(2) is not incompatible with a law, regulation, or order of the
United States Government; and
(3) does not unreasonably burden interstate commerce.
49 U.S.C. § 20106.
-6-
confronted with the issue of whether or not the Secretary of Transportation has adopted
a rule, regulation, order, or standard "covering the subject matter" of appellees' claims.
In Easterwood, the Supreme Court faced the same issue and provided the following
guidance for interpreting § 434's phrase "covering the subject matter":
To prevail on the claim that the regulations have pre-emptive effect,
petitioner must establish more than that they "touch upon" or "relate to"
that subject matter, for "covering" is a more restrictive term which
indicates that pre-emption will lie only if the federal regulations
substantially subsume the subject matter of the relevant state law.
507 U.S. at 664 (emphasis added) (citations omitted). In the present case, appellees'
claims are based upon state tort law regarding platform safety features, such as safety
railings, on rolling tank cars. The question thus becomes whether or not a federal
regulation "substantially subsumes" state tort law regarding platform safety features,
including safety railings, on rolling tank cars. Appellants cite, as preempting this
subject matter, an FRA regulation addressing safety features on "tank cars without
underframes," which is the type of tank car from which Cearley fell. It provides in
relevant part:
§ 231.21Tank cars without underframes.
....
(j) Operating platform, ladder and safety railing – (1) Number. One
operating platform, two ladders and safety railing. Not required if all
fittings used in the loading and unloading of the tank car are accessible
from ground or end platform.
(2) Dimensions.
....
(vi) Operating platform, minimum width, seven inches; minimum
thickness, one and three-quarters inches.
(vii) Safety railing, one and one-quarter inch wrought iron or steel pipe.
-7-
(3) Location. (i) Operating platform to be of sufficient length to
provide access to all operating fittings. Ladder to be located on sides of
car at center.
(ii) The safety railing shall enclose the operating platform, manway and
fittings used in the loading and unloading of the tank. Railing shall be
open only at the ladders where it shall extend in a vertical direction down
to, and be securely attached to the platform. Maximum width of opening,
twenty-four inches.
(4) Manner of application. (i) The ladders shall be securely fastened
to the operating platform. The lower portion of ladder shall be braced in
such a manner as to prevent any movement.
(ii) The operating platforms shall be supported to prevent sagging and
be securely attached to the tank.
(iii) The safety railing shall be securely attached to four stanchions or
corner posts, which shall be securely attached to the tank or operating
platform.
49 C.F.R. § 231.21(j) (1993).
According to 49 C.F.R. § 231.21(j), a platform, two ladders, and a safety railing
are all required features of this type of tank car unless all fittings used in loading or
unloading are accessible from the ground or an end platform. The regulation also
imposes specific requirements for the placement, design, and construction of the
platform, ladders, and safety railing. In particular, the platform safety railing must be
made of one and one-quarter inch wrought iron or steel pipe; it must fully enclose the
platform, manway, and fittings used in loading and reloading; it must be open only at
the ladder and open no more than twenty-four inches; and it must be securely attached
at four points. Thus, notwithstanding the absence of a minimum height requirement for
the platform safety railing, we conclude that 49 C.F.R. § 231.21(j) substantially
subsumes the subject matter of state tort law regarding platform safety features on tank
cars without underframes. The FRA regulation therefore precludes additional state
regulation of the same subject matter. Cf. Easterwood, 507 U.S. at 674 ("Understood
-8-
in the context of the overall structure of the regulations, the speed limits must be read
as not only establishing a ceiling, but also precluding additional state regulation of the
sort that respondent seeks to impose on petitioner.").
Appellees argue, however, that the district court correctly rejected the
preemption argument because appellees are seeking, through their state law claims, to
enforce a uniform federal OSHA regulation, 29 C.F.R. § 1910.23. We disagree.
The Occupational Safety and Health Act provides, in relevant part, that
"[n]othing in this chapter shall apply to working conditions of employees with respect
to which other Federal agencies . . . exercise statutory authority to prescribe or enforce
standards or regulations affecting occupational safety or health." 29 U.S.C.
§ 653(b)(1). Section 653(b)(1) and the FRSA's preemption clause, 49 U.S.C. § 20106
(formerly 45 U.S.C. § 434), complement each other, just as Congress intended.6 As
noted above, 45 U.S.C. § 434 (the FRSA preemption clause in effect at the time of
Cearley's accident) provided that "[a] State may adopt or continue in force any law,
rule, regulation, order, or standard relating to railroad safety until such time as the
Secretary has adopted a rule, regulation, order, or standard covering the subject matter
of such State requirement." Section 653(b)(1) has the same effect: OSHA occupational
safety regulations may fill the gaps of FRA safety regulations – for example, through
a state law cause of action for negligence per se – if, and only if, the FRA has not
exercised its statutory authority to prescribe or enforce standards or regulations
affecting the relevant area of occupational safety or health.
Appellees further argue that their claim based on OSHA regulation 29 C.F.R.
§ 1910.23 is not preempted by FRA regulations in light of an FRA policy statement
6
See, e.g., 49 U.S.C. § 20149 (requiring the Secretary of Transportation to
coordinate railroad safety efforts with the Secretary of Labor).
-9-
issued on March 14, 1978. That FRA policy statement, addressing the interplay of
FRA and OSHA regulations, includes the following language:
WALKING-WORKING SURFACES (SUBPART D)
OSHA regulations concerning working surfaces deal with such
matters as ladders, stairway, platforms, scaffolds and floor openings.
Generally, these regulations are applicable in railroad offices, shops and
other fixed work places. There are three principal exceptions to the rule.
First, they would not apply with respect to the design of locomotives and
other rolling equipment used on a railroad, since working conditions
related to such surfaces are regulated by FRA as major aspects of railroad
operations.
....
POWERED PLATFORMS, MANLIFTS, AND
VEHICLE-MOUNTED WORK PLATFORMS (SUBPART F)
OSHA regulations apply according to their terms to the railroad
industry. A work platform would be regulated by OSHA, even if mounted
on an on-track vehicle. It should be noted the OSHA regulation does not
apply to the vehicle on which such a platform is mounted. See 29 C.F.R.
§ 1910.67(b)(3).
43 Fed. Reg. 10583, 10587-88 (1978) (emphasis added).
The district court relied on the above-quoted language referring to "powered
platforms, manlifts, and vehicle-mounted work platforms," to conclude that appellees'
claims in the present case are not preempted by FRA regulations. See slip op. at 4
("[A]ccording to the 1978 policy statement upon which the defendants rely, OSHA
regulations regarding the platform railings are not preempted. The only preempted
regulations would be those addressing the tank car's design."). Upon review, we hold
-10-
that the district court erred in concluding that this language refers to the type of
platform at issue in the present case – an error which apparently resulted from the
district court's failure to review the FRA regulation specifically cited by the FRA in the
1978 policy statement.
The platform from which Cearley is believed to have fallen is a fixed and
stationary platform on top of the tank car. See Appellants' Appendix at 36-46
(Affidavit of Trocky Ibert and attached photographs). It clearly is not a "powered
platform" or "manlift." The only question remaining is whether it is a "vehicle-mounted
work platform," within the FRA's intended meaning. The regulation which is
specifically cited in the 1978 policy statement in this context is entitled "Vehicle-
mounted elevating and rotating work platforms." 29 C.F.R. § 1910.67 (emphasis
added). The term "platform," moreover, is defined in § 1910.67 as "[a]ny personnel-
carrying device (basket or bucket) which is a component of an aerial device." Id.
§ 1910.67(a)(7). It is beyond genuine dispute that the platform from which Cearley
presumably fell is not a "personnel-carrying device (basket or bucket) which is a
component of an aerial device." Therefore, contrary to the district court's rationale, the
platform in question is not the type of "vehicle-mounted work platform" to which the
FRA was referring in its 1978 policy statement.
Conclusion
For the reasons stated, we hold that appellees' state law claims, based upon the
allegedly inadequate safety features of the tank car platform, including the safety
railing, are preempted by federal law.7 The order of the district court is reversed, and
7
Because our decision is based upon the preemptive force of an FRA regulation
authorized under the FRSA, we need not decide whether appellees' claims are also
preempted by the FSAA. Compare, e.g., Gilvary v. Cuyahoga Valley Ry., 292 U.S.
57, 60-61 (1934) ("[s]o far as the safety equipment of such [railroad] vehicles is
-11-
the case is remanded to the district court for further proceedings consistent with this
opinion.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
concerned, [the FSAA] operate[s] to exclude state regulation whether consistent,
complementary, additional, or otherwise"), with Garay v. Missouri Pac. R.R., 38
F. Supp. 892, 898 (D. Kan. 1999) ("the FSAA does not subsume the entire field of
devices which could be deemed safety equipment, but only the subject of those devices
which are listed in the statute").
-12-
| {
"pile_set_name": "FreeLaw"
} |
[Cite as State ex rel. Howard v. State Emp. Relations Bd., 2016-Ohio-4765.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
State ex rel. Roger Howard, :
Relator, :
v. : No. 15AP-220
[State Employee Relations Board] et al., : (REGULAR CALENDAR)
Respondents. :
D E C I S I O N
Rendered on June 30, 2016
On brief: Daniel H. Klos, for relator.
On brief: Michael DeWine, Attorney General, Lisa M.
Critser and Jonathan R. Khouri, for respondent State
Employment Relations Board.
IN MANDAMUS
ON OBJECTIONS TO THE MAGISTRATE'S DECISION
KLATT, J.
{¶ 1} Relator, Roger Howard, commenced this action in mandamus seeking an
order compelling respondent, State Employment Relations Board ("SERB"), to find that
the Franklin County Sheriff's Office ("FCSO") violated R.C. 4117.11(A)(8) when it
interpreted the collective bargaining agreement ("CBA") to prohibit relator from applying
for a particular position. Relator also sought an order compelling SERB to find that
relator's collective bargaining unit, Fraternal Order of Police, C-Lodge No. 9 ("FOP"),
violated R.C. 4117.11(B)(6) for not advancing relator's grievance to arbitration.
{¶ 2} Pursuant to Civ.R. 53 and Loc.R. 13(M) of the Tenth District Court of
Appeals, we referred this matter to a magistrate who issued a decision, including findings
No. 15AP-220 2
of fact and conclusions of law, which is appended hereto. The magistrate found that
SERB did not abuse its discretion when it dismissed the unfair labor practice ("ULP")
charges for lack of probable cause because the FCSO and FOP ultimately agreed that
section 9.5 of the CBA barred relator from applying for the sergeant position at issue.
Therefore, the magistrate has recommended that we deny relator's request for a writ of
mandamus.
{¶ 3} Relator has filed objections to both the magistrate's findings of fact and
conclusions of law.
Objections to the Magistrate's Findings of Fact
{¶ 4} Relator has objected to 14 of the magistrate's findings of fact. These factual
objections consist of approximately 18 pages of arguments that focus solely on the
relevance of the factual findings and/or the interpretation and application of these
findings to the issue of law presented. It is impossible to discern from relator's arguments
what part of the factual findings, if any, are inaccurate or why they are not supported by
the record. We conclude from our review of the record that the findings of fact challenged
by relator are supported by the record. For these reasons, we overrule all of relator's
objections to the magistrate's findings of fact.
Objections to the Magistrate's Conclusions of Law
{¶ 5} The essence of relator's objections to the magistrate's conclusions of law
appear to be that the magistrate allegedly erred in finding no abuse of discretion by SERB
because, according to relator, SERB should have found probable cause for an ULP based
on the plain language of the CBA. We disagree.
{¶ 6} Relator concedes that the issuance of a finding of probable cause by SERB is
discretionary. Contrary to relator's assertion, the CBA does not expressly address the
factual scenario presented by relator's grievance. Therefore, the CBA had to be
interpreted to resolve the issues raised by relator's grievance. Given that the record
reflects evidence that the FOP and the FCSO concluded that relator's grievance was
unsupportable based upon their independent interpretations of the CBA, we agree with
the magistrate that SERB did not abuse its discretion in finding the absence of probable
cause for an ULP. Therefore, we agree with the magistrate that relator has not
No. 15AP-220 3
demonstrated that SERB abused its discretion and we overrule relator's objections to the
magistrate's conclusions of law.
{¶ 7} Following an independent review of this matter, we find that the magistrate
has properly determined the facts and applied the appropriate law. Therefore, we adopt
the magistrate's decision as our own, including the findings of fact and conclusions of law
contained therein. In accordance with the magistrate's decision, we deny relator's request
for a writ of mandamus.
Objections overruled; writ of mandamus denied.
TYACK and BROWN, JJ., concur.
No. 15AP-220 4
APPENDIX
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
State ex rel. Roger Howard, :
Relator, :
v. : No. 15AP-220
[State Employee Relations Board], et al., : (REGULAR CALENDAR)
Respondents. :
MAGISTRATE'S DECISION
Rendered on January 29, 2016
Daniel H. Klos, for relator.
Michael DeWine, Attorney General, Lisa M. Critser and
Jonathan R. Khouri, for respondent State Employment
Relations Board.
Ron O'B rien, Prosecuting Attorney, and Scott J. Gaugler, for
respondent Franklin County Sheriff Zach Scott.
IN MANDAMUS
{¶ 8} Relator, Roger Howard, has filed this original action requesting that this
court issue a writ of mandamus ordering respondent, State Employment Relations Board
("SERB") to find that the Franklin County Sheriff's Office ("FCSO") violated R.C.
4117.11(A)(8) when interpreting the collective bargaining agreement ("CBA") in a manner
which prohibited relator from applying for a job, and finding that his collective bargaining
unit, Fraternal Order of Police, C-Lodge No. 9 ("FOP"), violated R.C. 4117.11(B)(6) when
FOP did not advance relator's grievance to arbitration.
No. 15AP-220 5
Findings of Fact:
{¶ 9} 1. Relator is employed by the FCSO and the FOP is the board-certified
representative for full-time, sworn, uniform deputies employed by FCSO.
{¶ 10} 2. FOP and FCSO are parties to a CBA effective January 1, 2013 through
December 31, 2015, which includes a binding grievance-arbitration process.
{¶ 11} 3. In February 2014, relator was working as a sergeant assigned to the
corrections division.
{¶ 12} 4. On February 11, 2014, relator bid upon a position as a corporal in the
Patrol Division. In order to take this job, relator was willing to be demoted to the rank of
corporal because he desired a position in the Patrol Division.
{¶ 13} 5. Section 9.5(E) of the CBA provides:
Any member who is not in the same rank as identified in the
notice of the posted vacancy shall not be selected to fill the
vacancy, except that a member in a higher rank than the
posted vacancy shall be eligible to be selected for the posted
vacancy if he agrees to a demotion to the rank of the posted
vacancy, if selected.
{¶ 14} 6. In a letter dated February 11, 2014 from Chief Michael Flynn of the
FCSO, relator was notified that he had been selected to fill the corporal vacancy for which
he applied. That letter provides:
You have been selected for the 2 Corporals-Patrol-1st shift
via the job posting. However, your transfer is being delayed.
Your transfer will be no later than April 6, 2014.
Your voluntary demotion to Corporal will occur when your
transfer takes effect. Until that time you will remain in the
rank of Sergeant.
{¶ 15} 7. On February 20, 2014, the FCSO and the FOP entered into a
Memorandum of Understanding ("MOU") because FCSO had sergeant positions that
remained vacant and needed to be filled. The MOU provides, in pertinent part:
[One] Members who have between one year and two years
seniority in the rank of Corporal shall be permitted to
participate in the promotional examination for Sergeant,
which is being conducted in March 2014. This group of
members shall be placed on a separate eligibility list that
may be utilized only upon exhaustion of the list of members
No. 15AP-220 6
with two or more years seniority in the rank of Corporal that
is established in accordance with Article 10. Members shall
be selected for promotion from this second eligibility list in
accordance with the terms of Article 10.
[Two] In the event that the promotional lists established
under paragraph 1 are both exhausted, and the Sheriff wishes
to provisionally promote additional Sergeants in accordance
with Section 10.3(C), the Sheriff may do so prior to
January 1, 2015 by selecting from all Corporals who have
more than one year seniority in the rank of Corporal.
[Three] No other provisions of Article 10 are affected by this
memorandum of Understanding.
[Four] This Memorandum of Understanding shall not serve
as precedent with respect to future promotions or the filling
of any future vacancies not expressly addressed herein.
{¶ 16} 8. In a letter dated March 10, 2014, Chief Michael Flynn informed relator
that his transfer to corporal in the patrol division would be effective Monday, March 24,
2014.
{¶ 17} 9. On March 12, 2014, while awaiting his transfer, relator applied for a
sergeant position in the patrol division. Relator did not get the sergeant position.
{¶ 18} 10. In a letter dated March 17, 2014, relator was informed by Chief Flynn
that his transfer to corporal in the patrol division was effective March 21, 2014.
{¶ 19} 11. On March 18, 2014, relator filed a grievance which was assigned
grievance number 14-09. Relator explained his grievance as follows:
On March 12th, 2014 The Grievant became aware that he
had been passed over for a job posting to 2nd Shift Patrol
Sgt. The Grievant believes this to be in violation of the
collective bargaining agreement between The Franklin
County Sheriffs Office and The Fraternal Order of Police,
Capital City Lodge #9.
{¶ 20} 12. Chief Deputy Geoff Stobart held a Step 2 grievance meeting on
March 19, 2014. Chief Stobart concluded that relator's grievance should be denied based
on the following findings:
Sgt. Roger Howard believed he was entitled to the position
and claims Sgt. Downing was not entitled to the position.
No. 15AP-220 7
Sgt. Howard had accepted a reduction in rank to post to a
vacant Corporal's Position. Howard was awarded this
position and was being held in his previous position pending
the promotions of the next round of Sergeants.
A MOU was drafted and signed by both the FOP and
Management. This MOU allowed the Office to promote
Corporals who had more than one year of seniority. This is
exactly what the Office did.
The Office worked with the FOP and agreed to offer
promotions working off the established list of all those who
had signed up to take the promotional exam. Those eligible
were placed on a list in order of seniority, and offered
promotions.
Every single person on the list was offered a Sergeant's
position. Downing was the last eligible person on [the] list
established in accordance with the MOU. He was offered and
accepted.
It should be further noted that even after promoting or
offering every person on this list promotions, the Office is
still short Sergeants.
The Office clearly worked with the FOP to establish this
MOU. The FOP was involved in all discussions about how we
intended to manage this process up to and including showing
them the list we intended work from.
The office strongly feels the process used was consistent with
the spirit of the MOU, we clearly worked with the FOP
during the course of this process, and the solution agreed on
was the right and fair thing to do for both the FOP and the
Office.
Sgt. Downing was promoted consistent with the clearly
established agreement, and is therefore entitled to the
vacancy is [sic] question.
{¶ 21} 13. A Step 3 grievance meeting with Chief Deputy Jim Gilbert occurred on
March 26, 2014. Chief Deputy Gilbert also recommended that the grievance be denied,
stating:
There are currently openings in the rank of Sergeant within
the Sheriff's Office.
No. 15AP-220 8
I reviewed the information provided by the FOP as well as
asked the grievant questions regarding this matter. The
grievant was asked "So you took the Sergeant's test two
weeks ago and what is your intention from here regarding a
promotion to that rank?" The grievant stated he "probably"
wouldn't take a promotion to Sergeant if offered by the
Sheriff's Office. He further stated that he thought taking the
self-demotion was best for his career because the Patrol
Bureau is where he has always wanted to work.
In reviewing the MOU, reviewing previous documents
regarding promotional matters and hearing from the
grievant[,] I believe that the process was consistent with the
MOU. The FOP along with management worked together
during this process. The grievant appears to be upset with
the "stars not aligning" as he would have liked. He knew in
taking a self-demotion that at some point other Sergeant
positions within the Office would be coming open however,
he chose to take a Corporal assignment under no pressure
from the FOP or the Sheriff's Office. In fact to further point
out his "intentions" for future promotional opportunities he
stated he "probably" wouldn't take a promotion to the rank
of Sergeant that is going to be offered to him within the next
several weeks.
{¶ 22} 14. In a letter dated March 28, 2014 and addressed to relator, Sheriff Zach
Scott informed him that he agreed with Deputy Chief Gilbert's Step 3 response and, as
such, relator's grievance was denied.
{¶ 23} 15. In a letter dated April 10, 2014, Jason Pappas, as president of the FOP,
notified Sheriff Scott of FOP's intent to proceed to arbitration on relator's grievance,
stating:
Pursuant to our current collective bargaining agreement the
lodge is notifying you of our intent to proceed to arbitration
on the attached grievance #14-9.
I will initiate the notification to the Federal Mediation and
Conciliation Service of our need for a panel of arbitrators.
{¶ 24} 16. By way of e-mails contained in the stipulation of evidence, it is apparent
that both FOP and FCSO thoroughly reviewed relator's grievance. For example, in
No. 15AP-220 9
response to an e-mail from relator's counsel dated April 16, 2014, an attorney for the FOP
responded:
Thank you for the letter. I have discussed this case with my
client again this morning; and, utilizing the information
contained in your letter, the Lodge will continue to conduct
its review of this grievance. This review already has been
extensive and has included a review of job bids by self-
demoted members over a period of approximately 20 years.
As of this date, the Lodge has not found any other situation
in which a self-demoted member was permitted to bid upon
and receive an assignment in his previous (higher) rank
while "on hold." If Roger has any contrary examples of that
circumstance, please share them with me as soon as possible.
As of this point in time, the Lodge believes that, for purposes
of job bids under Article 9, a member who has accepted a bid
assignment in a lower rank is no longer eligible to bid upon
an assignment in their previous (higher) rank - regardless of
whether they were placed on a temporary "hold" in the
higher rank. This position is based upon the Lodge's
understanding of the parties' intent with respect to Section
9.5E. of the collective bargaining agreement. However, the
Lodge will consider the information provided in your letter,
it will accept any additional information that you or your
client wish to offer, and it will conduct additional research
regarding prior cases.
I understand that Roger has had extensive discussions
regarding his grievance with Lodge representatives, and your
letter provides additional significant detail regarding Roger's
position with respect to that grievance. Since he has retained
you as his counsel, we will not be conducting a conference
call with Roger today. However, I will convey to you the
Lodge's final position on Roger's grievance -- i.e., whether it
will arbitrate that grievance -- on or before April 30, 2014.
Also, as noted above, please feel free to share any additional
information that you or Roger wish the Lodge to consider;
and, if you believe that a conversation between you and me
would be helpful, fee free to suggest a time, and we can
schedule a telephone call.
(Emphasis sic.)
{¶ 25} 17. A second e-mail from relator's counsel that same day provides:
No. 15AP-220 10
This is to follow up on our conversation regarding the
parties' interpretation of Section 9.5E. of the FOP collective
bargaining agreement. In particular, I understand that the
FCSO and the FOP have the same interpretation of Section
9.5E. In particular, that section of the contract permits a
member to "self-demote" to a lower rank by bidding on a
posted vacancy in a lower rank and being selected for that
assignment. Once the member has been selected for the
assignment in the lower rank (i.e., is notified of and does not
reject the lower rank assignment), the member is thereafter
precluded from receiving an assignment in a higher rank
through the Article 9 bid process (unless he is subsequently
re-promoted to the higher rank).
It also is my understanding that the FCSO believes that the
"hold" placed upon Roger Howard, which temporarily
delayed his transfer to his new Corporal assignment
following his self-demotion, did not restore him to the rank
of Sergeant for the purpose of additional job bids under
Article 9 of the contract. If my understanding of the FCSO's
position is accurate, the FOP does not dispute that position
and would not interpret the contract differently.
Please let me know if the foregoing accurately reflects the
position of the FCSO and its interpretation of both Section
9.5E. and the effect of the temporary hold that was placed on
Cpl. Howard's transfer to his new assignment.
{¶ 26} 18. Thereafter, in an e-mail dated April 30, 2014, relator's counsel withdrew
the request for arbitration, stating:
This is to notify you, as Roger Howard's attorney, that the
FOP (Capital City Lodge No. 9) will not arbitrate Corporal
Howard's grievance, #14-09, and it will notify the Sheriff's
Office that the request for arbitrations being withdrawn.
This decision is based upon the rationale set forth in my
email of April 17, appended below. Both prior and
subsequent to my email, the Lodge was unable to find any
instances where a member agreed to "self demote" by
accepting a bid to a lower ranked assignment, but as then
permitted to receive a bid to an assignment in his/her
previous (higher) rank - regardless of whether that member
had been placed on a temporary "hold" in his/her former
rank. The Lodge also has not received any examples of that
situation from Roger.
No. 15AP-220 11
More importantly, the Lodge was able to confirm that its
understanding of the intent of Section 9.5 E. of the collective
bargaining agreement (as discussed in my previous email) is
shared by the Sheriff's Office. As such, insofar as both parties
to the contract share the same understanding regarding the
meaning of that Section as it applies to Corporal Howard's
situation, there would be no basis to challenge the denial of
Roger's grievance (and no ability to win an arbitration).
{¶ 27} 19. In June 2014, relator was removed from his position as a corporal in the
patrol division and was reassigned to the corrections division after receiving negative
performance evaluations.
{¶ 28} 20. On June 10, 2014, relator filed an unfair labor practice ("ULP") charge
against FCSO alleging a violation of R.C. 4117.11(A)(8) (Case No. 2014-ULP-06-0085). In
his statement of facts, relator stated:
On March 12, 2014, I was denied a Sergeant position that I
posted for and was the most qualified for pursuant to the
Collective Bargaining Agreement ("CBA"). The position was
given to someone who should not have even been considered
for the position due to the fact that a qualified person
(myself) posted (pursuant to an existing Memorandum of
Understanding dated February __, 2014). The Union was
induced by the employer to take the position that the "spirit"
of the MOU had not been violated, even though the letter of
the MOU clearly was violated. The Union and the employer
have, in the past, allowed posting for positions while other
transfers were "on hold," as was the case with me, pursuant
to § 9.2 of the CBA, which states that a transfer does not take
effect until the employee actually assumes their new duties. I
filed a timely grievance on the issue. On April 30, 2014, the
Union informed me that it was withdrawing my grievance
over my objections because it was "in agreement" with the
employer.
{¶ 29} 21. Relator points to Section 9.2 of the CBA, which provides:
Section 9.2 Transfer and Vacancy Defined.
A transfer is any change in a member's regular assignment,
except days off. A vacancy is defined as a newly created
position to be filled, an opening which results from a
transfer, except a temporary transfer; or a position to be
filled resulting from termination, resignations, demotions
and/or promotions.
No. 15AP-220 12
{¶ 30} 22. That same day, relator filed an unfair labor practice ("ULP") charge
against FOP alleging a violation of R.C. 4117.11(B)(6) (Case No. 2014-ULP-0086). Relator
stated:
On March 12, 2014, I was denied a Sergeant position that I
posted for and was the most qualified for pursuant to the
Collective Bargaining Agreement ("CBA"). The position was
given to someone who should not have even been considered
for the position due to the fact that a qualified person
(myself) posted (pursuant to an existing Memorandum of
Understanding dated February __, 2014). The Union was
induced by the employer to take the position that the "spirit"
of the MOU had not been violated, even though the letter of
the MOU clearly was violated. The Union and the employer
have, in the past, allowed posting for positions while other
transfers were "on hold," as was the case with me, pursuant
to § 9.2 of the CBA, which states that a transfer does not take
effect until the employee actually assumes their new duties. I
filed a timely grievance on the issue. On April 30, 2014, the
Union informed me that it was withdrawing my grievance
over my objections because it was "in agreement" with the
employer.
{¶ 31} 23. On June 16, 2014, Holly M. Levine, a labor relationship specialist with
SERB, addressed letters to counsel requesting responses to certain questions and inviting
the parties to consider mediation as a preliminary step to resolving the dispute before an
initial finding regarding the ULP charges.
{¶ 32} 24. Relator, FCSO, and FOP submitted information relating to SERB's
request.
{¶ 33} 25. Holly Levine issued separate investigator's memoranda, dated July 28,
2014, concerning relator's ULP charges against the FCSO as well as against FOP to SERB.
In her Findings Upon Examination related to the ULP charge against FCSO, Levine set
forth the position of both relator and FCSO, stating:
Charging Party asserts while his transfer was on a temporary
hold, on March 12, 2014, he submitted a bid on a newly
posted vacant Sergeant position in the Patrol Division.
Charging Party asserts he was wrongfully denied the
position.
No. 15AP-220 13
On March 18, 2014, Charging Party filed a grievance alleging
he was passed over for the job vacancy of Sergeant. The
grievance was denied.
The County explained that despite Charging Party's
interpretation of the contract, it is their belief that self
demotion clause in Article 9.5(E) of the contract makes the
demotion effective immediately upon selection acceptance of
the position in a lower rank. Even though Charging Party
was still in his previous assignment as a Sergeant, with his
transfer on hold, he was in effect Acting Sergeant, in that he
was performing Sergeant's duties and pay, but his rank had
been converted to Corporal when he was selected to fill and
accepted the Patrol Corporal's assignment.
{¶ 34} Levine also set forth relator's ULP charge against the FOP as well as the
FOP's response, stating:
On March 18, 2014, Charging Party filed a grievance alleging
he was passed over for the job vacancy of Sergeant. The
grievance was denied.
Charging Party asserts FOP failed to fairly represent him
when it refused to take his grievance to arbitration.
FOP maintains that it spent a considerable amount of time
discussing Charging Party's grievance with him. FOP
contends that it was unable to find any evidence that the
contract had previously been interpreted in the way that
Charging Party would like it to be interpreted. Specifically,
FOP explained that Charging Party utilized a contractual
provision to voluntarily self-demote in order to bid upon and
receive an assignment in a lower rank. After the demotion
became effective, he attempted to "un do" the demotion by
bidding upon another vacant assignment in his previous
rank. The contract does not permit him to re-promote
himself in that fashion.
{¶ 35} 26. Levine recommended that SERB dismiss the charges with prejudice
against both FCSO and FOP for lack of probable cause to believe that either party
committed a ULP. With regard to FCSO, Levin explained:
Charging Party alleges the County violated Ohio Revised
Code § 4117.11(A)(8) by causing or attempting to cause the
Union to violate its duty of fair representation. Specifically,
Charging Party contends that the County's interpretation of
No. 15AP-220 14
the contract led the Union to unfairly represent him by
refusing to take his grievance to arbitration.
Contrary to the allegations raised by Charging Party, the
County's actions involve contractual interpretation and do
not rise to the level of a statutory violation. Charging Party
did not provide sufficient information to support the (A)(8)
allegation.
{¶ 36} 27. With regard to FOP, Levine explained:
In the case of In re OCSEA/AFSCME Local 11, SERB 98-010
(7-22-98), SERB modified In re AFSCME, Local 2312, SERB
89-029 (10-16-89) holding that arbitrariness, discrimination
and bad faith are distinct components of the same duty and
should be reviewed on an equal basis. The definition of
"arbitrary" conduct was modified to include a failure to take
a basic and required step without justification or viable
excuse. SERB also held that a union's failure to state the
reasons behind its actions, which was not previously called
for may result in an unrebutted presumption of
arbitrariness. In re Ohio Civil Service Employees
Assn/AFSCME, Local 11, SERB 93-019 (12-20-93), aff'd In
re Wheeland v. SERB, 1994 SERB 4-86 (CP, Franklin, 9-2-
94), aff'd In re Wheeland, 1995 SERB 4-19 (10th Dist. Ct.
App, Franklin, 6-6-95).
When an unfair labor practice charge is filed because a union
has allegedly violated its duty of fair representation, SERB
will look to see if the union's actions are arbitrary,
discriminatory, or in bad faith. If SERB finds any of these
components, there is a breach of the duty. The Complainant
has the burden of proving that the union did not fairly
represent its bargaining-unit members. As to the component
of arbitrariness, when the Complainant meets its burden of
proof, a breach of the duty of fair representation will be
found if the union cannot rebut the findings by providing
justification or viable excuse for its conduct; if the
justification or excuse constitutes simple negligence, we will
find independent that the conduct is not arbitrary.
The investigation reveals that FOP's actions were not
arbitrary, discriminatory or in bad faith. In fact, the FOP put
forth a concerted effort to explain the contractual provision,
in question, to Charging Party and the reasons for denying
the grievance.
No. 15AP-220 15
(Emphasis sic.)
{¶ 37} 28. On August 15, 2014, SERB dismissed relator's ULP charge against the
FCSO, stating:
Pursuant to Ohio Revised Code § 4117.12, the State
Employment Relations Board conducted an investigation of
this charge. The investigation revealed no probable cause
existed to believe Charged Parties violated Ohio Revised
Code § 4117.11. Information gathered during the
investigation revealed that contrary to the allegations raised
by the Charging Party, the Charged Parties' actions involve
contractual interpretation and do not rise to the level of a
statutory violation. Charging Party did not provide sufficient
information to support the (A)(8) allegation. Accordingly,
the charge is dismissed with prejudice for lack of probable
cause to believe the statute has been violated.
{¶ 38} 29. On August 15, 2014, SERB also dismissed relator's ULP charge against
the FOP, stating:
Pursuant to Ohio Revised Code § 4117.12, the State
Employment Relations Board conducted an investigation of
this charge. The investigation revealed no probable cause
existed to believe Charged Parties violated Ohio Revised
Code § 4117.11. Information gathered during the
investigation revealed that contrary to the allegations raised
by the Charging Party, the Charged Parties' actions were not
arbitrary, discriminatory or in bad faith. In fact, Charged
Party put forth a concerted effort to explain the contractual
provision in question to the Charging Party and the reasons
for denying the grievance. Accordingly, the charge is
dismissed with prejudice for lack of probable cause to believe
the statute has been violated.
{¶ 39} 30. Thereafter, relator filed this mandamus action asking this court to
compel SERB to find probable cause to believe his ULPs have been committed, issue
complaints, and conduct hearings on the ULP charges against both FCSO and FOP.
Conclusions of Law:
{¶ 40} Relator asserts that SERB erred in dismissing his ULP charges and that he
is entitled to a writ of mandamus to compel SERB to issue complaints and conduct
hearings on his charges. Before addressing relator's assertion, we must determine the
No. 15AP-220 16
appropriate standards for reviewing SERB's decisions finding no probable cause that ULP
charges have occurred.
{¶ 41} R.C. 4117.12(B) requires SERB to issue a complaint and conduct a hearing
on a ULP charge if it has probable cause for believing that a violation has occurred:
When anyone files a charge with the board alleging that an
unfair labor practice has been committed, the board or its
designated agent shall investigate the charge. If the board
has probable cause for believing that a violation has
occurred, the board shall issue a complaint and shall
conduct a hearing concerning the charge.
(Emphasis added.)
{¶ 42} Probable cause determinations by SERB under R.C. 4117.12(B) are not
reviewable by direct appeal. Ohio Assoc. of Public Emps., Chapter 643 v. Dayton City
School Dist. Bd. of Edn., 59 Ohio St.3d 159 (1991). Instead, in the absence of an adequate
remedy in the ordinary course of law, an action in mandamus is the appropriate remedy
to obtain judicial review of orders by SERB dismissing ULP charges for lack of probable
cause. State ex rel. Service Emps. Internatl. Union, Dist. 925 v. State Emp. Relations Bd.,
81 Ohio St.3d 173 (1998), syllabus. A writ of mandamus will issue to correct an abuse of
discretion by SERB in dismissing ULP charges. State ex rel. Leigh v. State Emp.
Relations Bd., 76 Ohio St.3d 143 (1996). An abuse of discretion means an unreasonable,
arbitrary, or unconscionable decision. State ex rel. Elsass v. Shelby Cty. Bd. of
Commissioners, 92 Ohio St.3d 529, a court addressing a petition for mandamus will not
substitute its judgment for that of SERB if there is conflicting evidence on the contested
issue. State ex rel. Portage Lakes Edn. Assn. v. State Emp. Relations Bd., 95 Ohio St.3d
533 (2002).
{¶ 43} Chapter R.C. 4117 does not define the term "probable cause." That term has
been defined by the Supreme Court of Ohio in Portage Lakes:
The Ohio State Employment Relations Board must issue a
complaint and conduct a hearing on an unfair labor practice
charge if, following an investigation, it has a reasonable
ground to believe that an unfair labor practice has occurred.
Id. at 541.
No. 15AP-220 17
{¶ 44} In Portage Lakes, the Supreme Court of Ohio analogized the role of SERB
in determining whether there was probable cause to that of a public prosecutor
investigating a complaint of criminal activity. In both cases, "the decision not to
prosecute is discretionary, and not generally subject to judicial review." Ohio Assoc. of
Public Emps. "The issue of probable cause in criminal proceedings is essentially one of
fact." See, e.g., State v. Tibbetts, 92 Ohio St.3d 146, 153 (2001).
{¶ 45} In his ULP charges, relator alleged that FCSO violated R.C. 4117.11(A)(8)
and FOP violated R.C. 4117.11(B)(6). The substance of his ULPs stems from his assertion
that he should have been given the sergeant position for which he applied after he had
applied for and was given the corporal position. Relator argues that FCSO and FOP
together took the exact opposite position with regards to applications than they had in the
past and discussed the factual scenarios involving two other employees. Respondents
asserted that the factual situations were not similar. Ultimately, SERB determined that
relator had failed to present sufficient information to support his allegations and
dismissed his complaints.
{¶ 46} Relator argued that FCSO violated R.C. 4117.11(A)(8)(B), which provides:
It is an unfair labor practice for a public employer, its agents,
or representatives to:
***
Cause or attempt to cause an employee organization, its
agents, or representatives to violate division (B) of this
section.
Relator also alleged that FOP violated R.C. 4117.11(B)(6), which provides:
It is an unfair labor practice for an employee organization, its
agents, or representatives, permanent total disability public
employees to:
***
Fail to fairly represent all public employees in a bargaining
unit.
{¶ 47} The essence of relator's argument is that his employer (FCSO) and his union
(FOP) conspired together to justify his not being given the sergeant's position to which he
No. 15AP-220 18
believed he was rightfully entitled. In order to prove a violation under R.C. 4117.11(B)(6),
relator must establish that FOP's conduct was arbitrary, discriminatory, or in bad faith
{¶ 48} In State ex rel. Hall v. State Emp. Relations Bd., 122 Ohio St.3d 528 (2009),
the Supreme Court of Ohio explained SERB's standard for determining whether a union
has violated its duty of fair representation:
If there are no apparent factors that show legitimate reason
for a union's approach to an issue, the Board will not
automatically assume arbitrariness. Rather, it will look to
evidence of improper motive: bad faith or discriminatory
intent. An element of intent must be present; it may be
evinced by discrimination based upon an irrelevant and
invidious consideration, or it may be indicated by hostile
action or malicious dishonesty i.e., bad faith. In the absence
of such intent, if there is no rational basis for the action,
arbitrariness will be found only if the conduct is so egregious
as to be beyond the bounds of honest mistake or
misjudgment
***
The initial burden is on a charging party and a complainant
to show that the union acted arbitrarily, and therefore did
not fairly represent the charging party, by showing that the
union failed to take a basic and required step.
Id. at 533-34.
{¶ 49} In the investigator's memoranda to the board, the investigator concluded
that relator's issue involved how FCSO and FOP interpreted the contractual provisions at
issue. SERB determined that relator did not meet his burden of proving his allegations
against either FCSO or FOP.
{¶ 50} In arguing to the contrary, relator continues to assert that he presented
evidence that two employees similarly situated to him were treated in the manner he
believes he should have been treated. However, FOP explained that the situations of both
employees to whom relator directed FOP's attention were not similarly situated because
section 9.5 of the CBA was not involved. Neither of those two employees had self-
demoted by bidding on and accepting an assignment to a lower rank.
{¶ 51} The reality is, after considering the issue, both FCSO and FOP concluded
that relator's situation was essentially one of first impression and further that they agreed
No. 15AP-220 19
with the manner in which FCSO had interpreted the CBA. This does not constitute bad
faith or discriminatory intent. Further, relator's grievances were heard and denied. FOP
represented relator through his Step 3 grievance and beyond. It cannot be said that the
FOP failed to take steps to represent relator's interest. The fact that FOP and FCSO
ultimately agreed on the manner in which the CBA was interpreted is not evidence of bad
faith. Based upon the facts as developed and explained in the investigator's
memorandum, the fact that the FCSO and FOP ultimately agreed on the interpretation of
the CBA provided a rational basis for the FOP to refrain from pursuing arbitration.
{¶ 52} The scenario presented by relator contrasts with the scenario presented by
both FCSO and FOP. As such, there was conflicting evidence before SERB. Following the
Supreme Court of Ohio's admonitions in Hall and Portage Lakes, this court should not
substitute its judgment for that of the administrative board and, finding that SERB could
have reasonably concluded that there was no probable cause to believe that either FCSO
or FOP violated the provisions of R.C. 4117.11(A)(8), and (B)(6), relator has not
demonstrated that he is entitled to a writ of mandamus.
/S/ MAGISTRATE
STEPHANIE BISCA
NOTICE TO THE PARTIES
Civ.R. 53(D)(3)(a)(iii) provides that a party shall not assign as
error on appeal the court's adoption of any factual finding or
legal conclusion, whether or not specifically designated as a
finding of fact or conclusion of law under Civ.R.
53(D)(3)(a)(ii), unless the party timely and specifically objects
to that factual finding or legal conclusion as required by Civ.R.
53(D)(3)(b).
| {
"pile_set_name": "FreeLaw"
} |
331 F.Supp. 652 (1971)
Willie Mae TRIPLETT et al., Plaintiffs,
v.
Alton B. COBB, Director, Mississippi Medicaid Commission, et al., Defendants.
No. WC 7023-S.
United States District Court, N. D. Mississippi, W. D.
June 29, 1971.
*653 James A. Lewis and Stanley L. Taylor, Jr., North Mississippi Rural Legal Services, Oxford, Miss., Michael B. Trister, Washington, D. C., Laurens Silver, Los Angeles, Cal., for plaintiffs.
A. F. Summer, Atty. Gen., Jesse R. Adams, Jr., Special Asst. Atty. Gen., Martin R. McLendon, Asst. Atty. Gen. of Mississippi, Jackson, Miss., for defendants.
MEMORANDUM OPINION
ORMA R. SMITH, District Judge.
On May 18, 1970 plaintiffs, Willie Mae Triplett and Lula Williams, brought this action pursuant to 42 U.S.C.A. § 1983 and 28 U.S.C.A. § 2201 for injunctive and declaratory relief restraining defendants from excluding welfare mothers and other caretaker relatives, who are receiving assistance under the State of Mississippi's Aid to Dependent Children Program, from the Mississippi Medical Assistance Program in violation of Title XIX of the Social Security Act, 42 U.S. C.A. § 1396, et seq.
This court has jurisdiction pursuant to 28 U.S.C.A. § 1331 in that there is an actual and justiciable controversy between the parties involving a federal question and an amount exceeding $10,000.
Plaintiff Willie Mae Triplett is a resident of Montgomery County, Mississippi and is receiving public assistance under Mississippi's Aid to Dependent Children Program (AFDC)[1] in the amount of $76.00 per month on behalf of five of her natural children. Plaintiff contends that she receives the above monthly sum on behalf of herself also and defendants deny this allegation. Plaintiff Triplett's needs are included within the state's welfare budget and are considered in the calculations to determine the level of AFDC grant required to meet the cost of necessities.
Plaintiff Lula Williams is a resident of LeFlore County, Mississippi, and receives $91.00 per month under the AFDC program on behalf of her eight children. Plaintiff's needs are also considered in the determination of her family's AFDC grant. Plaintiffs also contend that *654 plaintiff Williams receives the above specified monthly sum on behalf of herself as well as her children, and this is denied by defendants herein.
Plaintiffs, Triplett and Williams, received notice from defendants that their children were eligible for assistance under the State's Medical Assistance program, having received an eligibility card with the names of each child identifying them as being entitled to free medical and hospital services. Defendants determined that plaintiffs were not eligible for free medical assistance, therefore, their names were not listed on the identification cards. Plaintiffs contend that this denial of medical benefits is contrary to the provisions of Miss.Code Ann. § 7290-38 (Supp.1970)[2] as promulgated pursuant to the direction of 42 U.S.C.A. § 1396a(a) (10).[3]
Pursuant to Rule 23 of the Fed.R.Civ. P. plaintiffs bring this action on their own behalf and on behalf of all other needy parents and caretaker relatives similarly situated who are recipients of AFDC grants in the State of Mississippi and who have been excluded from receiving benefits under the Mississippi Medical Assistance Program.
Defendant Alton B. Cobb is the Director and defendants Evans, Ryan, Kossman, Burgin, Campbell, Stephens, and Case are the members of the Mississippi Medicaid Commission. Pursuant to Mississippi Code Ann. § 7290-41 (Supp. 1970), the Medicaid Commission is "authorized and empowered to administer a program of medical assistance" and to "adopt and promulgate reasonable rules, regulations and standards" so as to provide "medical assistance to all qualified recipients * * * as the commission may determine and within the limits of appropriated funds."
Defendant Arthur Winstead is the Commissioner of the State Department of Public Welfare, and defendants Boyce, Thomas, Jones, Chiles, and Fayard are members of the State Board of Public Welfare. Pursuant to Miss.Code Ann. §§ 7290-33 and 7290-39 (Supp.1970), the State Department of Public Welfare is the certifying agency for determining the eligibility of all applicants for medicaid in the State of Mississippi.
Defendants Brister and Copeland are the Directors of Public Welfare for Montgomery and LeFlore Counties respectively.
On October 5, 1970 Mrs. Ronlee Jones filed a motion for leave to intervene as a party plaintiff pursuant to Rule 24(b) of the Fed.R.Civ.P. Mrs. Jones contended that she was a recipient under the Mississippi Aid to Dependent Children program on behalf of herself and her ten-year old grandchild and that she has been excluded from the Mississippi Medicaid Program by the same regulation challenged by plaintiffs herein. On November 19, 1970 this court entered an order denying her motion because petitioner's interest was adequately represented by plaintiffs herein as she is a member of the heretofore specified class.
On October 19, 1970 plaintiffs filed a motion to strike the portion of defendants' answer requesting that a three-judge district court be requested to adjudicate this case, and on January 27, 1971 this court entered an order sustaining plaintiffs' motion to strike.
On November 2, 1970 plaintiffs filed a motion for summary judgment seeking a declaratory judgment declaring defendants' *655 regulations and policies which exclude AFDC caretaker relatives from the Mississippi Medical Assistance Program to be void and of no legal effect and declaring said regulations and policies to be in violation of Title XIX of the Social Security Act, to enjoin defendants to notify plaintiffs and all other caretaker relatives that they are eligible for medical assistance, as well as eligible for reimbursement of all covered medical bills since January 1, 1970.
It is this motion for summary judgment which is now ripe for decision by the court, with all parties having submitted excellent briefs and oral argument on all issues contained therein.
In the opinion of the court the issue of whether plaintiffs, as well as all members of the class heretofore specified and defined, are actually "qualified for public assistance grants" under provisions of Title IV of the Social Security Act, as administered by the State of Mississippi, is dispositive of all issues contained in this action for if plaintiffs are qualified then the State is required by 42 U.S.C.A. § 1396a(a) (10) to provide medical assistance to all class members herein. If a class member is qualified for AFDC payments then the member must receive the payments pursuant to 42 U.S.C.A. § 1396a(a) (8).
Mississippi participates in the Federal Government's Aid to Families With Dependent Children (AFDC) program, which was established by the Social Security Act of 1935. The purpose of the AFDC program is provided in 42 U.S. C.A. § 601 which provides in part:
"For the purpose of encouraging the care of dependent children in their own homes or in the homes of relatives by enabling each State to furnish financial assistance and rehabilitation and other services, as far as practicable under the conditions in such State, to needy dependent children and the parents or relatives with whom they are living to help maintain and strengthen family life and to help such parents or relatives to attain or retain capability for the maximum self-support and personal independence consistent with the maintenance of continuing parental care and protection, there is authorized to be appropriated for each fiscal year a sum sufficient to carry out the purposes of this part. * * *"
So it is from this provision that evidence of Congressional intent is manifested to not only enable States to furnish financial assistance, rehabilitation and other services to needy dependent children but also to the parents or relatives with whom they are living. A State is not required to participate in the AFDC program but if it does there are certain mandatory provisions which the State plan must contain. Pursuant to 42 U.S. C.A. § 602(a), a State plan for aid and services to needy families with children must, among other provisions:
"* * * (7) except as may be otherwise provided in clause (8), provide that the State agency shall, in determining need, take into consideration any other income and resources of any child or relative claiming aid to families with dependent children, or of any other individual (living in the same home as such child and relative) whose needs the State determines should be considered in determining the need of the child or relative claiming such aid, as well as any expenses reasonably attributable to the earning of any such income;
* * * * * *
(14) provide for the development and application of a program for such family services, as defined in section 606(d) of this title, and child-welfare services, as defined in section 625 of this title, for each child and relative who receives aid to families with dependent children. * * *;
* * * * * *
(15) provide (A) for the development of a program for each appropriate relative and dependent child receiving aid under the plan, and each appropriate individual (living in the *656 same home as a relative and child receiving such aid) whose needs are taken into account in making the determination under clause (7), with the objective of (i) assuring, to the maximum extent possible, that such relative, child, and individual will enter the labor force and accept employment so that they will become self-sufficient, * * *
(19) provide (A) for the prompt referral to the Secretary of Labor or his representative for participation under a work incentive program established by part C of (i) each appropriate child and relative who has attained age sixteen and is receiving aid to families with dependent children, (ii) each appropriate individual * * * who has attained such age and whose needs are taken into account in making the determination under section 602(a) (7) of this title, * * *."
As defined in 42 U.S.C.A. § 606(b) the term "aid to families with dependent children" means:
"* * * money payments with respect to, or * * * medical care in behalf of or any type of remedial care recognized under State law in behalf of, a dependent child or dependent children, and includes (1) money payments or medical care or any type of remedial care recognized under State law to meet the needs of the relative with whom any dependent child is living * * *."
Of course the key to the issue of whether plaintiffs and members of the class aforesaid are entitled to medical benefits must be determined by the public welfare laws of the State of Mississippi for it is within the provisions of these laws that a determination must be made as to whether or not plaintiffs and other class members are receiving AFDC benefits so as to subsequently qualify for medical assistance. Mississippi Code, Ann. § 7171 (Supp.1970) provides in part:
"Assistance may be granted under this act to any dependent child who is living in a suitable family home meeting the standards of care and health fixed by the laws of this state, and the rules and regulations of the state department of public welfare. * *"
The term "assistance" is defined in Mississippi Code, Ann. § 7172 (Supp.1970) as follows:
"`Assistance' means payment, including vendor or `in kind' payment, with respect to a dependent child or children paid to specified relatives named in the Social Security Act or to other approved persons, agencies, associations, corporations or institutions providing medical or foster care, maintenance, work incentive or training programs as authorized by the Federal Social Security Act, as amended, to strengthen family life through services to children, foster care for children, work incentive programs, and services aimed at restoring individuals to independence and self-support; administrative costs, physical examinations, day care or child care arrangements essential to work incentive programs."
These definitions must be read in conjunction with 42 U.S.C.A. § 606(b), supra,[4] where it provides that the term, "aid to families with dependent children" means money payments with respect to a dependent child or dependent children and includes money payments recognized under State law to meet the needs of the relative with whom any dependent child is living. It has been stipulated that plaintiffs' needs are considered in the determination of a needy family's AFDC grant and is a mandatory *657 provision included in a State's plan pursuant to 42 U.S.C.A. § 602(a) (1), supra, "Financial need is the eligibility requirement which is common to all four categories of public assistance, as stated in both the federal and state laws, and must be established for each person approved for an assistance grant."[5] Also the purpose of the public assistance budget is to "establish that financial need exists, or that the net income available to the person or ADC family meets the budgetary requirements for basic maintenance and that need does not exist. The budget also determines the amount of the grant."[6] Since plaintiffs' needs are considered in determining the family's financial need with respect to the dependent child or children, by establishing the public assistance budget to reflect the financial need of the child or children and covered parents or relatives, which public assistance budget determines the amount of the grant, then plaintiffs' needs must affect the amount of the family AFDC grant. Therefore, Mississippi is necessarily providing money payments to meet the needs of the relative with whom the dependent child or children is living and satisfies the "recognized under State law" requirement contained in the definition of "aid to families with dependent children" specified in 42 U.S.C.A. § 606(b), supra.
In addition to the Medicaid program, the State Department of Public Welfare also supervises the administration of the service programs for families and children. The State Department of Public Welfare provides services through the County Departments of Public Welfare through the programs of Aid to Dependent Children to all recipients of Aid to Dependent Children, which is defined as including a child or relative who is receiving aid,[7] implying that not only a child but relatives may be recipients under Mississippi's "Aid to Dependent Children"[8] program.
The Work Incentive Program is a congressionally authorized program to permit the State Department of Public Welfare to make prompt referral of appropriate persons who are in the State ADC budgets to the State Employment Service. The Department of Public Welfare is responsible for determining whether persons are appropriate for referral to the Work Incentive Program.[9] The acceptance of referral of persons in the ADC budget found appropriate to be referred to the local employment service for consideration for the Work Incentive Program is a condition of eligibility. There are six (6) classes of ADC recipients which the Mississippi State Department of Welfare considers appropriate for referral:
"1. Able-bodied, unemployed fathers in the home where the mother is incapacitated or absent from the home. * * *
2. Persons being phased out of Title V, Work Experience and Training Projects. * * *
3. Adults in the ADC budget other than the grantee relative, who are able-bodied and are not already employed full-time. * * *
4. Able-bodied mothers and other female grantee relatives in the ADC budget who: do not have preschool children; are not already working full-time; who volunteer for referral; and for whom plans have been made for the care of their children.
5. Able-bodied mothers or other female grantee relatives in the *658 ADC budget who: do have preschool children; are not already working full-time; volunteer for referral; and for whom plans have been made for the care of their children.
6. Able-bodied youth 16 to 18 years of age not enrolled in school, not planning to return and not employed full-time, provided: * * *"[10]
There are also eight classes of ADC recipients which the Welfare Department considers not appropriate for referral:
"1. Persons who are mentally or physically, or both, unable to undertake work or training. * *
2. Children under 16, and those 16 and over, who are attending elementary, high or vocational school part or full-time; * * * * * *
3. Persons who are needed in the home to care for members of the family who are ill or incapacitated.
4. Persons 65 years of age or over.
5. Persons who live so far away from a project or training site that their participation is impractical. * * *
6. Mothers or other female grantee relatives who do not volunteer. * * *
7. Mothers or other female grantee relatives in the ADC budget who do volunteer but whose absence from the home would be detrimental to the welfare of the child, as determined in the social security for the plan of service.
8. Persons who are already employed at least 30 hours a week at no less than the legal minimum wage; or in the absence of a legal minimum, at no less than the prevailing wage for the same or similar work in the community, as determined from the local employment service. * *"[11]
It can be readily seen that plaintiffs and the members of the class whom they represent are specified as recipients of ADC payments either appropriate or not appropriate for referral under the Work Incentive Program as administered by the Mississippi Department of Public Welfare and defined in regulations heretofore specified.
The Department of Public Welfare is responsible for determining eligibility for the Medicaid Program[12] and for certifying to the Medicaid Commission persons eligible for that program, including "persons * * * receiving assistance under the state's approved plans for * * * aid to dependent children * * *."[13] "The decisions concerning the amount, duration and scope of medical assistance to be covered by the Medicaid Program will be made by the Mississippi Medicaid Commission, based on the federal and state statutes, other federal requirements, and funds available."[14] In the opinion of the court the regulation promulgated by the Mississippi Department of Public Welfare stating:
"* * * In ADC the eligible children are the recipients and are thus the ones eligible for medical services."[15]
is in conflict with the "federal and state statutes" heretofore specified and is an erroneous interpretation of provisions defining persons who are receiving money payments from Mississippi's "Aid to Dependent Children" program. The Mississippi plan for medical assistance must "include reasonable standards * * for determining eligibility for and the extent of medical assistance under the plan which (A) are consistent with the *659 objectives of this subchapter",[16] which is to enable "each State, as far as practicable under the conditions in such State, to furnish (1) medical assistance on behalf of families with dependent children. * * *"[17] After a close analysis of ADC grants by the State of Mississippi, the court is of the opinion that the amount of the grant paid to ADC recipients[18] is not based solely on the number of children but is based on the budgetary deficit which includes the needs of parents and caretaker relatives as heretofore specified. The fact that there is a maximum payment based upon the budgetary deficit in families with one or more dependent children does not mean that the needs of parents or caretaker relatives do not affect the amount of the State "ADC" grant. In the case of Dandridge v. Williams,[19] involving the validity of a method used by Maryland, in the administration of an aspect of its public welfare program, to reconcile the demands of its needy citizens with the finite resources available to meet those demands, plaintiffs argued that the state regulation, imposing a maximum on benefits payable under the plan, denied benefits to the younger children in a large family. The United States Supreme Court, in approving Maryland's regulation, rejected plaintiff's argument, saying:
"* * * Although the appellees argue that the younger and more recently arrived children in such families are totally deprived of aid, a more realistic view is that the lot of the entire family is diminished because of the presence of additional children without any increase in payments. (Citation omitted). It is no more accurate to say that the last child's grant is wholly taken away than to say that the grant of the first child is totally rescinded. In fact, it is the family grant that is affected. * * *"[20]
So it is with Mississippi's maximum grant provisions; it is the entire family's grant which is affected and not just the amount attributable to the need of plaintiffs and other class members.
There can be no other interpretation involving persons receiving aid to families with dependent children in light of the Supreme Court's holding in Dandridge, supra, interpreting the congressional intent in 42 U.S.C.A. § 606(b), supra. The court held:
"The very title of the program, the repeated references to families added in 1962, Pub.L. 87-543, § 104(a) (3), 76 Stat. 185, and the words of the preamble quoted above, show that Congress wished to help children through the family structure. The operation of the statute itself has this effect. From its inception the Act has defined `dependent child' in part by reference to the relatives with whom the child lives. When a `dependent child' is living with relatives, then `aid' also includes payments and medical aid to those relatives, including the spouse of the child's parent.
* * * * * *
The States must respond to this federal statutory concern for preserving children in a family environment. * * *
* * * So long as some aid is provided to all eligible families and all eligible children, the statute itself is not violated."[21]
With the inclusion of plaintiffs and all other class members in Mississippi's Medicaid plan, one of the original purposes of Title XIX will be fulfilled, as stated by Miss Evelyn Gandy, former Commissioner, Mississippi State Department *660 of Public Welfare, in a speech at the proceedings of the conference on Medicare on April 5, 1966 at the University of Mississippi, where she said:
"When a state implements Title XIX, there are certain deadlines that must be met and there are certain minimum services that must be provided. I think first and foremost we in Mississippi will be particularly interested in providing medical service to all persons receiving welfare checks in this state with the exception, of course, of the old age assistance category. The people over 65 will be taken care of under Title XVIII; but if we are Title XIX by July 1, 1967, we will be obligated to provide the minimum services under Title XIX to those persons receiving welfare checks. * *"[22]
The record in this action reflects that on April 18, 1969, the Commissioner of the State Department of Public Welfare notified the Director of Comprehensive State Planning in the office of the Governor, by letter, that the Welfare Department did not consider the parent or other caretaker relative as a recipient of aid or assistance under the Aid to Dependent Children program and did not include such persons in making regular federal statistical reports, or receive federal funds for them. The State Director forwarded the letter to the Associate Regional Commissioner, Social and Rehabilitation Service, Medical Services Administration, Department of Health, Welfare and Education (HEW), Atlanta, Georgia, with the request that the letter be brought to the attention of the responsible official of HEW for review. The State Director sought approval of the State's plan to exclude parents and other caretaker relatives from the group of individuals receiving aid or assistance under the Aid to Dependent Children program. Responding to this request, the Acting Associate Regional Commissioner, Medical Services, HEW, on June 25, 1969, forwarded to the State Director a copy of a wire received by the Atlanta office from the Washington office, which said "REUR-MEMO MISSISSIPPI TITLE XIX INCLUDING ONLY AFDC CHILDREN, OFFICE OF GENERAL COUNSEL ADVISES NO LEGAL BASE RO (SIC) REQUIRE STATE TO INCLUDE AFDC PARENTS IN TITLE XIX SINCE STATE DOES NOT CONSIDER THEM AS RECIPIENTS".
The Administrator, Social and Rehabilitation Service, HEW, issued an order in Washington, D. C. on December 31, 1969, approving the plan for medical assistance adopted by the State of Mississippi and submitted to HEW for approval under Title XIX of the Social Security Act. The plan so approved is the plan under attack in the action sub judice.
Defendants argue that since the Medical Services of HEW approved the plan adopted by the State Department of Public Welfare, the court should not entertain plaintiffs' action. The court does not agree, however, that the exchange of correspondence between Mississippi and HEW officials and the approval of the plan by HEW acts to deprive plaintiffs of the right to contest the validity of the regulation.
Plaintiffs attach to their memorandum in support of the motion for summary judgment submitted to the court on February 22, 1971, prior to the hearing on the motion, which was held February 24, 1971, the xerox copy of a letter to the State Department of Public Welfare dated October 29, 1970 and written by the Regional Commissioner, Social and Rehabilitation Service, HEW, Atlanta, Georgia, calling the Department's attention to State Letter No. 1084 issued by the Department (HEW) on August 11, 1970, over the signature of the Commissioner, Assistance Payments Administration, which provided "The phrase `individuals receiving aid or assistance' includes all individuals whose needs are *661 included in the subsistence grant under one of the public assistance titles and those who could be recipients under that title according to the federal definition". The Department was specifically advised in the letter written by the Regional Commissioner that the parent or caretaker relative must be covered under the Medical Assistance program under Title XIX pursuant to State Letter No. 1084.
Thus, it appears that defendants were well aware as early as August 11, 1970 that the position of HEW was that parents and caretaker relatives were entitled to receive medical assistance under the Medical Assistance program under Title XIX. A careful review of the record and study of the affidavits submitted in connection with the motion for summary judgment, convince the court that there is no genuine issue as to any material fact in this action and that plaintiffs are entitled to a judgment as a matter of law.
The court determines that this action is one which can be maintained as a class action in that all the prerequisites of a class action set forth in Rule 23(a) Fed.R.Civ.P. are present herein, and the action is maintainable under Rule 23(b) (2) Fed.R.Civ.P. The order to be entered by the court will contain this determination and define the class, pursuant to Rule 23(c) (3) Fed.R.Civ.P. as "All needy parents and other needy caretaker relatives who are recipients of AFDC grants in the State of Mississippi and who have been excluded by defendants from receiving benefits under the Mississippi Medical Assistance program."
The court is of the opinion that plaintiffs are entitled to recover for the cost of medical services covered by the Mississippi Medical Assistance program necessarily paid for or incurred by them from the time defendants sent plaintiffs notices that their children were eligible for assistance under the State's Medical Assistance program. This notice was furnished plaintiff Triplett on February 7, 1970 and plaintiff Williams in March 1970. The exact date upon which the notice was sent plaintiff Williams is not shown in the record. Additionally, all members of the class represented by plaintiffs are entitled to be reimbursed for the cost of medical services covered by the Mississippi Medical Assistance program retroactive to October 29, 1970, the date of the letter from the Regional Commissioner to the Commissioner, State Department of Public Welfare.
Plaintiffs are entitled to recover their costs of this action, excluding attorney fees. The court does not feel that the defendants' conduct in the matter justifies the allowance of attorney fees. Attorneys for plaintiffs will prepare and submit to the court within fifteen days from the date of this opinion an order which will carry into effect the court's decision herein. Attorneys for defendants shall be served with a copy of the proposed order when the same is submitted to the court and will be granted ten days thereafter within which to file objections with the court or suggest modifications thereof or additions thereto. After the expiration of that time the court will enter such order as the court determines to be proper.
NOTES
[1] Miss.Code Ann. § 7171 (Supp.1970) provides in part:
"Assistance may be granted under this act to any dependent child who is living in a suitable family home meeting the standards of care and health fixed by the laws of this state, and the rules and regulations of the state department of public welfare. * * *"
[2] Miss.Code Ann. § 7290-38 (Supp.1970) provides in part:
"Recipients of medical assistance shall be the following persons only: (1) Who are qualified for public assistance grants under provisions of Title I, IV, X or XIV of the Social Security Act * *."
[3] 42 U.S.C.A. § 1396a(a) (10) provides:
"(a) A State plan for medical assistance must
(10) provide for making medical assistance available to all individuals receiving aid or assistance under State plans approved under subchapters I, X, XIV, and XVI of this chapter, and part A of subchapter IV of this chapter; * * *."
[4] See, Mississippi Manual of Public Assistance where it states in the Forward section:
"Because the federal government shares in furnishing the public assistance program, both in the grants to individuals and in the cost of administration, the provisions of the Federal Social Security Act, as amended, which relate to Public Assistance, also prescribe definite conditions to be met and certain standards to be maintained. The rules and regulations of the State Department must be in conformity with these provisions."
[5] Mississippi Manual of Public Assistance, Vol. III, Sec. E, P. 5000, reissued 7-1-69.
[6] Id.
[7] Mississippi Manual of Public Assistance, Vol. IV, § A, p. 1050, Revised 7-1-69.
[8] Although the name of the program has been changed under the Social Security Act to "Aid to Families with Dependent Children", Mississippi retains the original name of "Aid to Dependent Children".
[9] Mississippi Manual of Public Assistance, Vol. III, Section D, p, 4670, 1-1-69.
[10] Id. at p. 4672-4673, 1-1-69.
[11] Id. at p. 4673-4674, 1-1-69.
[12] Miss.Code Ann. §§ 7290-31 et seq. (Supp.1970).
[13] Mississippi Manual of Public Assistance, Vol. III, Sec. M, p. 9600 (Revised 5-1-70).
[14] Id.
[15] Id.
[16] 42 U.S.C.A. § 1396a(a) (17).
[17] 42 U.S.C.A. § 1396.
[18] Mississippi Manual of Public Assistance, Table VIII, Vol. III, Section E, p. 5880, Revised 3-1-71.
[19] 397 U.S. 471, 90 S.Ct. 1153, 25 L.Ed.2d 491, reh. den. 398 U.S. 914, 90 S.Ct. 1684, 26 L.Ed.2d 80 (1970).
[20] 397 U.S. at 477-478, 90 S.Ct. at 1158, 25 L.Ed.2d at 497-498.
[21] 397 U.S. at 479-481, 90 S.Ct. at 1158-1159, 25 L.Ed.2d at 498-499.
[22] University of Mississippi Bureau of Pharmaceutical Services, Proceedings of the Conference on Medicare, April 5, 1966, p. 25.
| {
"pile_set_name": "FreeLaw"
} |
PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________
No. 14-1467
_________
SANDRA J. BABCOCK; JAMES T. KENAAN, Jr.:
BRADLEY J. SARVEY; DALE R. LIPAN; SHAWN J.
KELLY; SAMANTHA PISTORIUS;
ANTHONY BLUMLING; RANDAL K. CYPHER; CHAD
NEIGH; TORY A. COYLE; JOSEPH HANCHOSKY;
DARREN M. KNOX; TODD WALKER; MICHAEL
EMERY; KEVIN POLLACK; RAY SLATER; MICHAEL J.
SHULER; TRAVIS MACULSKI; LEN THORNLEY;
JASON PRY; ROBERT D. SEATONL BRUCE W. FAIR;
LISA VASEY; MICHAEL A. GRAHAM; JOAN MUIR;
MATTHEW L. EDGAR; CHRISTOPHER A. FORINGER;
DAVID L. NADING; JAMES W. WGANER; EVAN R.
LONG; JUSTIN F. KRILEY; KELLY J. BUNDY;
RICHARD ZENTZ, Jr.; SHAUN A. SMITH; RANDY S.
RUSSELL; RYAN REKICH; DAVID C. SUMMERVILLE;
DESMOND FORINGER; AARON C. SLOBADA;
KRISTOPHER M. STEIGHNER; MISTY D. HOGAN;
DAVID K. WINTERS; BEAU SNEDDON; BRANDON
COUSINS; FRANCIS WALTERS; LISA MARIE
ZALUDEK; COREY RICHARD HELFRICH;
LANCE NEIGH; MARLENE STINE; QUINTIN GREY;
TRAVIS TRIMBUR; WILLIAM HILE, JR.; JOHN
STOJKA; CHRISTPHER HASKINS; DAWN MAIER;
MARK BOWAN; MATTHEW WAGNER; MARK
GUTSHALL; PATRICK CARLSON; MICHAEL TEXTER;
MICHAEL HASYCHAK; MICHAEL DORONDO; DAVID
CHRISTIE; MARK BISHOP, CHRISTOPHER REEVES;
MARK GROSSMAN; RYAN MCCANDLESS;
SPENCER CROUSE; MARK ALLEN BODKIN; REBECCA
RITZERT; ROGER FEDOKOVITZ; JEFFREY BAILEY;
SCOTT LEWIS, Individually an on behalf of all those
similarily situated,
Appellants
v.
BUTLER COUNTY; JOHN DOES
________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 2-12-cv-00394)
District Judge: Honorable Arthur J. Schwab
_______
Argued: May 19, 2015
Before: FUENTES, GREENAWAY, JR., and SLOVITER,
Circuit Judges.
(Opinion Filed: November 24, 2015)
2
Justin L. Swidler, Esq. [Argued]
Swartz Swidler
1101 Kings Highway North
Suite 402
Cherry Hill, NJ 08034
Attorney for Appellant
Marie M. Jones, Esq. [Argued]
Michael R. Lettrich, Esq.
Jones Passodelis
707 Grant Street
Suite 3510, Gulf Tower
Pittsburgh, PA 15219
Attorney for Appellees
________________
OPINION OF THE COURT
________________
SLOVITER, Circuit Judge.
This putative class action was initiated by Sandra Babcock, a
corrections officer at the Butler County Prison in Butler,
Pennsylvania. Babcock claims that Butler County failed to
properly compensate her and those similarly situated for
overtime in violation of the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. §§ 201-209, et seq. The FLSA requires
an employee who works “a workweek longer than forty
hours” to be paid at least one and one-half times the
3
employee’s regular rate for the work performed over forty
hours. 29 U.S.C. § 207(a)(1).
This appeal raises the issue of whether a portion of time for
the Butler County Prison corrections officers’ meal periods is
compensable under the FLSA.1 There is no provision of the
FLSA that directly addresses this issue. Two tests have been
suggested by other courts of appeal: one looks to whether the
employee has been relieved from all duties during the
mealtime; the other, more generally adopted, looks to the
party to which the “predominant benefit” of the mealtime
belongs. The District Court noted that this Circuit has not yet
established a test to determine whether a meal period is
compensable under the FLSA. For the reasons set forth
below, this Court will adopt the predominant benefit test and
affirm the District Court.
I.
Many of the relevant facts are not disputed. A collective
bargaining agreement (“CBA”) between Butler County and
the employees who work at the Butler County Prison provides
that corrections officers work eight and one-quarter hour
shifts that include a one hour meal period, of which forty-five
minutes are paid and fifteen minutes are unpaid.2 It is the
1
There is a special provision in the FLSA that covers
employees engaged in fire protection or law enforcement
activities, 29 U.S.C. § 207(k), but none of the parties to this
case has suggested it has any applicability here.
2
Plaintiffs produced the CBA in this case and made it part of
the record. Accordingly, the CBA was appropriately
considered on the Rule 12(b)(6) motion below, and is
appropriately considered on this appeal. See Pension Ben.
4
lack of compensation for that fifteen minutes that is the
subject of this action. During the meal period, the corrections
officers may not leave the prison without permission from the
warden or deputy warden, and they must remain in uniform,
in close proximity to emergency response equipment, and on
call to respond to emergencies. Plaintiffs claim that as a
result of this meal period policy, the officers cannot run
personal errands, sleep, breathe fresh air, or smoke cigarettes
during mealtime, and if an emergency or unexpected situation
arises, the officers must respond immediately in person, in
uniform, and with appropriate response equipment. Plaintiffs
allege that because of these restrictions, they should be
compensated for the full hour.
Butler County filed a motion to dismiss under Federal Rule of
Civil Procedure 12(b)(6), arguing that the corrections
officers’ meal periods were not compensable work because
the officers received the “predominant benefit” of the meal
period.3 The District Court agreed and dismissed the
complaint. Plaintiffs do not dispute the appropriateness of
applying the predominant benefit test. Rather, they argue that
their pleadings establish a plausible claim for relief under
Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192,
1196 (3d Cir. 1993).
3
A Rule 12(b)(6) “motion to dismiss may be granted only if,
accepting the well-pleaded allegations in the complaint as
true and viewing them in the light most favorable to the
plaintiff, a court concludes that those allegations ‘could not
raise a claim of entitlement to relief.’” Simon v. FIA Card
Servs., N.A., 732 F.3d 259, 264 (3d Cir. 2013) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 554, 558 (2007)).
5
either the predominant benefit test or the relieved from all
duties test.
II.
The predominant benefit tests asks “whether the officer is
primarily engaged in work-related duties during meal
periods.”4 The majority of the courts of appeals have adopted
this test. See, e.g., Reich v. S. New England Telecomm.
Corp., 121 F.3d 58, 61 (2d Cir. 1997); Roy v. Cty. of
Lexington, 141 F.3d 533, 544-45 (4th Cir. 1998); Bernard v.
IBP, Inc. of Neb., 154 F.3d 259, 264-65 (5th Cir. 1998); Hill
v. United States, 751 F.2d 810, 814 (6th Cir. 1984);
Alexander v. City of Chicago, 994 F.2d 333, 335 (7th Cir.
1993); Henson v. Pulaski Cty. Sheriff Dep’t, 6 F.3d 531, 534
(8th Cir. 1993); Armitage v. City of Emporia, 982 F.2d 430,
432 (10th Cir. 1992); Avery v. City of Talladega, 24 F.3d
1337, 1347 (11th Cir. 1994). Plaintiffs cite only two cases
that purportedly apply the relieved from all duties test:
Kohlheim v. Glynn County5 and Busk v. Integrity Staffing
Solutions, Inc.6 The court in neither case, however, actually
applied that test. Instead, the Eleventh Circuit in Kohlheim
applied its version of the predominant benefit test. 915 F.2d
at 1477 (“The firefighters are subject to real limitations on
their freedom during mealtime which inure to the benefit of
the county; accordingly, the three mealtime periods are
compensable under FLSA regulations for overtime
purposes.”). In Busk, the Ninth Circuit identified the two
4
Armitage v. City of Emporia, 982 F.2d 430, 432 (10th Cir.
1992) (internal quotation and citation omitted).
5
915 F.2d 1473 (11th Cir. 1990).
6
713 F.3d 525 (9th Cir. 2013), rev’d, 135 S. Ct. 513 (2014).
6
tests but explained that “[t]he distinction between the
‘completely relieved from duty’ and ‘predominant benefit’
standards d[id] not matter for th[at] case, which turn[ed] on
whether the activities at issue [we]re compensable ‘work.’”
713 F.3d at 531 n.4. The Supreme Court reversed the Ninth
Circuit’s decision in Busk and focused the analysis on “work”
as defined by the Portal-to-Portal Act. 135 S. Ct. 513. In
any event, the predominant benefit test is uncontroversial in
the case before us—neither party disputes that it is the
appropriate standard. Accordingly, we join our sister Circuits
in adopting the predominant benefit test.
Courts have generally eschewed a literal reading of a
Department of Labor regulation that provides that during a
“bona fide meal period”
[t]he employee must be
completely relieved from duty for
the purposes of eating regular
meals. . . . The employee is not
relieved if he is required to
perform any duties, whether
active or inactive, while eating.
For example, an office employee
who is required to eat at his desk
or a factory worker who is
required to be at his machine is
working while eating.
7
29 C.F.R. § 785.19(a).7 Instead, courts have assessed the
totality of the circumstances to determine, on a case-by-case
basis, to whom the benefit of the meal period inures. Most
courts derive this approach from Supreme Court precedent
holding that “[w]hether time is spent predominantly for the
employer’s benefit or for the employee’s is a question
dependent upon all the circumstances of the case.” Armour &
Co. v. Wantock, 323 U.S. 126, 133 (1944), superseded on
other grounds, Portal-to-Portal Act of 1947, Pub. L. No. 80-
49, 61 Stat. 84, codified at 29 U.S.C. §§ 251-262.
Thus, the predominant benefit test is necessarily a fact-
intensive inquiry. For some courts, whether the employee is
free to leave the premises is of particular importance. Others
emphasize the number of interruptions to which the
employees are subject. As the Eleventh Circuit has stated,
“the essential consideration in determining whether a meal
period is a bona fide meal period or a compensable rest period
is whether the employees are in fact relieved from work for
the purpose of eating a regularly scheduled meal.” Kohlheim,
915 F.2d at 1477.
Here, although Plaintiffs face a number of restrictions during
their meal period, the District Court correctly found that, on
balance, these restrictions did not predominantly benefit the
7
In evaluating the effect of these regulations, it is significant
to keep in mind that the Supreme Court has commented that
interpretive regulations issued by the Secretary of the
Department of Labor under the FLSA do not have the force of
law; the regulations “constitute a body of experience and
informed judgment to which courts and litigants may properly
resort for guidance.” Skidmore v. Swift & Co., 323 U.S. 134,
140 (1944).
8
employer. In comparison to the cadre of case law addressing
mealtime compensability in the law enforcement context, the
allegations in Plaintiffs’ complaint do not suffice. For
example, the corrections officers here could request
authorization to leave the prison for their meal period and
could eat lunch away from their desks. In Alexander v. City of
Chicago, in contrast, police officers were required to receive
permission to take a meal period and were not permitted to
read “nondepartmental publications.”8
Another factor to consider is the existence of the CBA. We
find helpful the decision of the Seventh Circuit in Leahy v.
City of Chicago, a case initiated by Chicago police officers
seeking overtime pay.9 The Seventh Circuit, like in the case
before us, had before it a CBA between the employees and
the employer. In that case, the City of Chicago faced an
action brought by Chicago police officers seeking overtime
pay. In affirming the district court, the Seventh Circuit held
that the CBA sufficiently protected the officers’ right to
overtime compensation. In this case, although the CBA is
silent on the compensability of the fifteen-minute period, it
provides corrections officers with the benefit of a partially-
compensated mealtime and mandatory overtime pay if the
mealtime is interrupted by work. As the Seventh Circuit
stated, “[t]he FLSA requires no more.”10 The CBA, then,
assumes “that generally an officer is not working during a
meal period, but provides for appropriate compensation when
an officer actually does work during the meal.”11
8
994 F.2d at 335.
9
96 F.3d 228 (7th Cir. 1996).
10
Id. at 232 (citing Alexander, 994 F.2d at 345 (Bauer, C.J.,
dissenting)).
11
Id.
9
The Dissent argues that we have “disregard[ed] Supreme
Court precedent,” inappropriately focused on a “red herring”
(the CBA), and relied upon a “factually inapposite and legally
outdated” case in our “misguided approach” to this case.
Dissenting Op. at 1, 7. In reality, our approach is consistent
with the weight of precedent, considers the CBA as one
relevant—though not dispositive—factor, and merely comes
to a different conclusion regarding the predominant benefit of
the corrections officers’ uninterrupted mealtime period under
the totality of the circumstances. Although we find the
Seventh Circuit’s analysis in Leahy useful for comparison, the
Dissent is correct that the instant case is distinguishable,
which is why, unlike the Leahy court, we do not hold that
“the [collective bargaining] agreement is a defense to liability
under the FLSA.” Leahy, 96 F.3d at 232 (emphasis added).
Nor have we “conflate[d] contractual rights with statutory
ones.” Manning v. Boston Med. Ctr. Corp., 725 F.3d 34, 52
n.9 (1st Cir. 2013). Rather, we consider the agreed-upon
characterization of the fifteen-minute unpaid meal break as a
factor in analyzing to whom the predominant benefit of the
period inures.
We have been advised at argument that the CBA is soon to
expire. During the collective bargaining for the new contract,
the parties will have a fresh opportunity to consider the issue
of compensation for the fifteen minutes at issue in this case.
It has been noted by the Supreme Court that employers and
employees may make “reasonable provisions of contract or
custom governing the computation of work hours where
precisely accurate computation is difficult or impossible.”
Tenn. Coal, Iron & R. Co. v. Muscoda Local No. 123, 321
U.S. 590, 603 (1944), superseded by statute on other
10
grounds, Portal-to-Portal Act of 1947, Pub. L. No. 80-49, 61
Stat. 84, codified at 29 U.S.C. §§ 251-262.
Although the District Court decided this case on the
pleadings, there has been, unlike in Alexander, “sufficient
development of the facts to enable a capable application of
the appropriate predominant benefit standard, including a
determination of whether the officers are unable to pass the
mealtime comfortably because their time or attention is
devoted primarily to official responsibilities.” 994 F.2d at
339. Here, even accepting all of Plaintiffs’ allegations as
true, we do not find that the officers were “primarily engaged
in work-related duties” during the daily, agreed-upon fifteen
minutes of uninterrupted mealtime. Armitage, 982 F.2d at
432 (citing Lamon v. City of Shawnee, 972 F.2d 1145, 1157
(10th Cir. 1992)). As a result, we find that they receive the
predominant benefit of the time in question and are not
entitled to compensation for it under the FLSA.
For the foregoing reasons, we hold that Plaintiffs’ claims
under the predominant benefit test fail to state a claim upon
which relief can be granted. We will accordingly affirm the
District Court’s order granting Butler County’s motion to
dismiss.
11
GREENAWAY, JR., Circuit Judge, dissenting.
Today the Majority holds that Plaintiffs’ Fair Labor
Standards Act (“FLSA”) claims should be dismissed based
upon a flawed application of the predominant benefit test.
Specifically, the Majority erroneously concentrates on
whether, under the parties’ collective bargaining agreement
(“CBA”), Plaintiffs are currently paid for a portion of their
meal period. The Majority thereby disregards Supreme Court
precedent on the definition of work. Indeed, Plaintiffs’
current contractual compensation, upon which the Majority
focuses, is a red herring that improperly detracts from the
factual allegations in the Complaint.1
1
As an initial matter, to the extent the Majority relies on CBA
compensation provisions in its decision to dismiss Plaintiffs’
Complaint, the Supreme Court has instructed that (1) the
FLSA takes precedence over CBAs, and (2) a CBA standing
alone may not control an FLSA claim. See Barrentine v.
Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 740–41
(1981) (“[C]ongressionally granted FLSA rights take
precedence over conflicting provisions in a collectively
bargained compensation arrangement.”); Skidmore v. Swift &
Co., 323 U.S. 134, 136–37 (1944) (“Whether [a meal period]
falls within or without the [FLSA] is a question of fact [that]
involves scrutiny and construction of the agreements between
the particular parties, appraisal of their practical construction
of the working agreement by conduct, consideration of the
nature of the service, and its relation to the waiting time, and
all of the surrounding circumstances.”). The CBA simply
does not govern statutory rights, nor can it preclude access to
a federal forum. Cf. Alexander v. City of Chi., 994 F.2d 333,
339 n.11 (7th Cir. 1993) (“[W]e are not persuaded by the
Plaintiffs2 are corrections officers at the Butler County
Correctional Facility who seek compensation for meal periods
that they argue constitute compensable work under the FLSA.
Although the Majority acknowledges the fact-intensive and
circumstance-specific nature of the totality-of-the-
circumstances inquiry under the predominant benefit test, see
Majority Op. at 6, the Majority does not permit the Plaintiffs
in this case to conduct the discovery that would permit them
access to the facts and circumstances to meet that standard.
Rather, the Majority misconstrues the predominant
benefit standard. Its decision to dismiss relies upon the facts
that Plaintiffs may request authorization to leave the prison
for their meal period, are compensated for the first forty-five
minutes of their hour lunch period, and must be compensated
defendants’ argument that the collective bargaining
agreement between the City and its police officers obviates
the officers’ claim by confirming those parties’ understanding
that meal periods are not working time within the FLSA.
Although a factfinder might consider such an agreement as
one among many factors . . . it certainly does not outright
preclude the officers’ claim.”). Furthermore, it is well
settled—and Defendant concedes—that it is not possible to
contract around federal law. See Appellee’s Br. at 17.
2
Plaintiff Sandra Babcock moved for conditional collective
action certification of a class of similarly situated corrections
officers, and over fifty other officers joined the proposed
class. However, the District Court dismissed the action
before reaching the collective certification motion.
2
if their meal period is “interrupted.”3 See CBA, Article V,
Section 5.1.D.1. Further, the Majority discusses a Seventh
Circuit decision, Leahy v. City of Chicago, 96 F.3d 228 (7th
Cir. 1996), which is inapposite to the instant case, has been
soundly rejected by the two circuits that have considered it,
and has been called into question by subsequent Supreme
Court precedent.4
The issue before us is not whether Plaintiffs are paid
for the first forty-five minutes of their meal period and paid if
called upon to work during their lunch hour. Nor is the issue
before us whether Plaintiffs may request permission to leave
the prison.5 Instead, it is whether Plaintiffs should be paid
because they allege that they are required to be prepared to
3
See Majority Op. at 7 (“[T]he corrections officers here could
request authorization to leave the prison for their meal
period.”); id. (“[The CBA] provides corrections officers with
the benefit of a partially-compensated mealtime and
mandatory overtime pay if the mealtime is interrupted by
work.”).
4
See Wright v. Universal Mar. Serv. Corp., 525 U.S. 70, 82
(1998); Manning v. Bos. Med. Ctr. Corp., 725 F.3d 34, 52 n.9
(1st Cir. 2013); Bernard v. IBP, Inc. of Neb., 154 F.3d 259,
264 (5th Cir. 1998).
5
That Plaintiffs may request permission to leave the prison
during the lunch period should have no influence on the
Court’s decision. There is nothing in the record establishing
the frequency with which Plaintiffs are allowed to leave the
prison. This is precisely the type of fact-gathering that may
be conducted during discovery.
3
serve at a moment’s notice for the entirety of the meal period.
As a result of maintaining this readiness to serve Defendant,
Plaintiffs allege that they are subject to a number of
restrictions and prohibitions that greatly limit their movement
and activities. Considered in their totality, these restrictions
create conditions constituting compensable work. As such,
one can only conclude that the Complaint was improperly
dismissed; I therefore respectfully dissent.
I. Plaintiffs Raise a Plausible Claim that
Uninterrupted Meal Periods Are Compensable Work.
In their Complaint, Plaintiffs allege that they must
remain in uniform, in the prison, in close proximity to
emergency response equipment, and on call to respond to
emergencies, for the duration of their meal periods. App. 24,
¶ 27. They also allege that they are not permitted to go
outside, sleep, smoke, or run personal errands during this
time. Id. ¶¶ 30, 31, 32.
“The central issue in mealtime cases is whether
employees are required to ‘work’ as that term is understood
under the FLSA.” Reich v. S. New England Telecomm.
Corp., 121 F.3d 58, 64 (2d Cir. 1997) (citing Henson v.
Pulaski Cty. Sheriff Dep’t, 6 F.3d 531, 533–34 (8th Cir.
1993)). “[T]he [Supreme] Court [has] held that ‘work’ under
the FLSA means ‘physical or mental exertion (whether
burdensome or not) controlled or required by the employer
and pursued necessarily and primarily for the benefit of the
employer and his business.’” Id. (quoting Tenn. Coal, Iron
& R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 598
(1944)). Indeed, “the Court counseled that the determination
of what constitutes work is necessarily fact-bound.” Id.
4
(citing Armour & Co. v. Wantock, 323 U.S. 126, 133 (1944);
Skidmore, 323 U.S. at 136–37).
When courts evaluate which hours should be
compensated as work, “the answer depends [in part] upon the
degree to which the employee is free to engage in personal
activities during periods of idleness.” Skidmore, 323 U.S. at
138 (internal quotation marks omitted). The Supreme Court
has further clarified:
Readiness to serve may be hired, quite as much
as service itself, and time spent lying in wait for
threats to the safety of the employer’s property
may be treated by the parties as a benefit to the
employer. Whether time is spent predominantly
for the employer’s benefit or for the employee’s
is a question dependent upon all the
circumstances of the case.
Armour, 323 U.S. at 133.
Where employees have faced significant restrictions
for the benefit of their employer, meal periods have been
considered compensable work under the FLSA.
During such periods when “workers [were] restricted
to the site for the purpose of performing valuable security
service for the company,” the Second Circuit found the meal
period to be compensable as work. Reich, 121 F.3d at 65.
Although observing that “the workers perform different
services during meal breaks than throughout the rest of the
day,” the Second Circuit reasoned that “the workers’ on-site
presence [during meals] is solely for the benefit of the
employer and, in their absence, the company would have to
5
pay others to perform those same services.” Id. The court
concluded, “[b]y not compensating these workers, [the
employer] is effectively receiving free labor.” Id.
Similarly, here, Plaintiffs have alleged that they are
required to remain at the correctional facility during their
meal period to be available to assist in security measures.
Indeed, state regulations require certain staffing levels be
maintained at correctional facilities at all times.6 As in Reich,
without Plaintiffs’ presence at the facility during meals,
Defendant could be required to hire others during that time
period. Plaintiffs’ allegations regarding the restrictions on
their movement and activities are sufficient to state a claim
under the FLSA that the meal period is compensable work.
The Majority distinguishes this case from Alexander v.
City of Chicago—where the Seventh Circuit reversed the
district court’s entry of judgment on the pleadings—based on
the fact that, there, “police officers were required to receive
permission to take a meal period and were not permitted to
read ‘nondepartmental publications.’” Majority Op. at 7.
Although the police officers in Alexander faced additional
prohibitions relating to their personal behavior, they were
subject to several of the same restrictions on activity and
movement that Plaintiffs face here. There, during meal times
the police officers: (1) had to remain within their assigned
district; (2) had to remain in uniform; (3) could not nap or
rest; and (4) were required to respond to emergencies and
6
See 37 Pa. Code § 95.241. The specific standards set for the
Butler County Correctional Facility are not in the record at
this time; this is another type of fact-gathering that may be
conducted during discovery.
6
requests for assistance from the public. 994 F.2d at 334–35.
Here, Plaintiffs: (1) had to remain within the prison; (2) had
to remain in uniform; (3) could not sleep; and (4) were
required to respond to emergencies. App. 24, ¶¶ 27–34. As
in Alexander, Plaintiffs are required to maintain a physical
and mental readiness primarily for the benefit of their
employer. Therefore, the Majority’s reliance on Alexander to
compel a different result here is misplaced.7
7
Moreover, at oral argument, Plaintiffs represented that
corrections officers face restrictions on reading materials—
another similarity to Alexander which weakens the Majority’s
attempt to distinguish the case. This is a third example of an
area in which factual development should have been allowed.
Nevertheless, the Majority concludes that there has been
“sufficient factual development of the facts to enable a
capable application of the appropriate predominant benefit
standard.” Majority Op. at 9. Plaintiffs, however, are entitled
to a correct application of the predominant benefit standard to
an appropriately developed record. Even if the District Court
had properly determined that the Complaint had been
insufficiently pled, the dismissal still would have been
improper. Rather, because amendment would not have been
futile, Plaintiffs should have been given leave to amend. See
Phillips v. Cty. of Allegheny, 515 F.3d 224, 228 (3d Cir.
2008) (“[I]n the event a complaint fails to state a claim,
unless amendment would be futile, the District Court must
give a plaintiff the opportunity to amend her complaint.”)
Indeed, “[i]t does not matter whether or not a plaintiff seeks
leave to amend.” Id. at 236.
7
II. The Majority’s Reliance on Leahy Is Factually and
Legally Flawed.
The Majority also relies on Leahy v. City of Chicago to
support its misguided approach in this case. See Majority Op.
at 7. However, Leahy is both factually inapposite and legally
outdated. In Leahy, the Seventh Circuit found that because
“the collective bargaining agreement’s guarantee of overtime
compensation for time worked in excess of eight hours in an
eight-and-one-half hour tour of duty protects Chicago police
officers’ FLSA rights to overtime compensation[,] . . . the
agreement is a defense to liability under the FLSA and the
plaintiffs’ suit cannot succeed.” 96 F.3d at 232. The instant
case is factually dissimilar from Leahy because the CBA here
explicitly precludes the arbitrator from making determinations
concerning compliance with the FLSA. 8 Indeed, the
arbitrator’s ambit here was limited to the scope of the CBA,
and the arbitrator did not reach the question of whether the
FLSA had been violated.9
Further, Leahy’s holding is questionable post-Wright
because Wright did not address whether the plaintiffs had
exercised a “clear and unmistakable waiver” of their statutory
right to a federal forum. See Wright, 525 U.S. at 81–82.
Indeed, no court of appeals has followed Leahy in the
8
See Arbitrator’s Decision at 6, 7 (“Simply stated, the CBA
does not authorize an arbitrator to resolve FLSA claims.”; “I
have not reviewed or considered the FLSA in rendering an
Award, and I express no opinion regarding whether or not the
FLSA has been violated.”).
9
See id. at 6.
8
nineteen years since it was issued. Two of our sister circuits
have addressed Leahy, and each has squarely rejected its
holding. The Fifth Circuit dismissed Leahy, noting,“[n]ot
only is the majority position ‘preposterous,’ it completely
ignores the Supreme Court’s decision in Barrentine” because,
“[u]nder Barrentine, [] the plaintiffs’ right to pursue a suit
under the FLSA is completely independent from their rights
under the CBA.” Bernard, 154 F.3d at 263–64 (footnotes
omitted) (quoting Leahy, 96 F.3d at 235) (Cudahy, J.,
dissenting). The First Circuit also rejected the Leahy
analysis, observing that it “conflates contractual rights with
statutory ones.” Manning, 725 F.3d at 52 n.9. Given the
paucity of support for Leahy and the likelihood that its
holding did not survive Wright, the Majority’s reliance on
Leahy to dismiss Plaintiffs’ claims is mistaken.
III. Conclusion
In their Complaint, Plaintiffs set forth sufficient
allegations to state a claim that their meal period should be
considered compensable work under the FLSA. For this
reason alone, their claims should not have been dismissed.
Further, while discounting Plaintiffs’ factual allegations, the
Majority decides this matter by overvaluing the CBA’s
compensation provisions—disregarding relevant Supreme
Court precedent in the process. Ending this lawsuit now is
clearly improper. I respectfully dissent.
9
| {
"pile_set_name": "FreeLaw"
} |
694 F.2d 465
UNITED STATES of America, Plaintiff-Appellee,v.Dave Wilson ENOCH, James C. Wheeler, Kenneth Ray Allmond,Richard Howard Love, Defendants-Appellants.
Nos. 82-5084, 82-5085, 82-5083 and 82-5095.
United States Court of Appeals,Sixth Circuit.
Argued Nov. 5, 1982.Decided Dec. 7, 1982.
Ross E. Alderman, Asst. Public Defender, Metropolitan Nashville, Nashville, Tenn. (Court-appointed), for Enoch.
Joe B. Brown, U.S. Atty., Nashville, Tenn., for U.S.
Joseph L. Lackey, Jr., Nashville, Tenn. (Court-appointed), for Allmond.
J.H. Reneau, III, Celina, Tenn., Ben Fann, Cookeville, Tenn., for Wheeler and Love.
Before EDWARDS, Chief Circuit Judge, JONES, Circuit Judge, and PECK, Senior Circuit Judge.
PER CURIAM.
1
Four defendants appeal, 650 F.2d 115, their various convictions for interstate receipt, transportation and sale of stolen beer in violation of 18 U.S.C. Secs. 371, 2314, 2315 and 2. The facts developed at trial showed that defendant Love was a loader for the Anheuser-Busch plant at St. Louis, Missouri, who on three different occasions loaded extra pallets of beer on a truck driven by defendant Lankford. Appellants Enoch and Allmond, one of whom ran a tavern and the other a beer package store, were prospective purchasers of the stolen beer.
2
The government's proofs included those of Lankford who pleaded guilty to conspiracy to transport stolen beer across state lines and who testified at the trial. His evidence involved all four of the appellants. In addition there is testimony from a deputy sheriff who caught Lankford in the act of unloading beer at Allmond and Enoch's places of business. At the time of the arrest of these parties, Allmond was found to have nearly $1,000 in cash in his pockets and Lankford had no bill of lading for the 582 cases of beer on his truck.
3
Turning to the appellate issues argued by the parties, we find no difficulty in holding that there was more than ample evidence to establish the fact that appellants were dealing in stolen beer. As to the second issue which was argued with considerable vigor before us, whether or not the government sufficiently proved a value of the stolen property in excess of the statutory $5,000 limit, we conclude that there was proof from which the jury could have found, as it did, that the government had proved the jurisdictional figure. Nor do we find reversible error in the court's charge as to the element of the value of the stolen goods.
4
This Court has found rather more difficulty with the fourth issue presented by appellants concerning their contention that the trial judge committed reversible error by excessive participation in the questioning of witnesses and the admonishing of appellants' counsel.
5
Certainly a trial judge has considerable discretion in seeking to make sure that a clear record is presented before the jury and in avoiding any unnecessary trial delays. Every effort should be made, however, to maintain both the fact and the appearance of judicial impartiality in the conduct of the trial. This Court has set forth these standards in United States v. Carabbia, 381 F.2d 133, 139 (1967). Reviewing this record against these standards, we do not find abuse of judicial discretion which would require reversal for new trial.
6
The judgments appealed from are affirmed.
| {
"pile_set_name": "FreeLaw"
} |
United States Court of Appeals
For the First Circuit
No. 15-2354
JUDITH SHAULIS,
Plaintiff, Appellant,
v.
NORDSTROM, INC., d/b/a/ NORDSTROM RACK,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. F. Dennis Saylor IV, U.S. District Judge]
Before
Torruella, Lynch, and Lipez, Circuit Judges.
S. James Boumil, with whom Boumil Law Offices, Konstantine W.
Kyros, and Law Offices of Konstantine W. Kyros, were on brief, for
appellant.
P. Craig Cardon, with whom Dylan J. Price, Sheppard Mullin
Richter & Hampton LLP, John P. Bueker, Rebecca C. Ellis, and Ropes
& Gray LLP, were on brief, for appellee.
July 26, 2017
LIPEZ, Circuit Judge. This case is about a sweater with
a controversial price tag. Appellant Judith Shaulis purchased a
cardigan sweater for $49.97 at a Nordstrom Rack outlet store in
Boston, Massachusetts. The price tag attached to that sweater
listed both the purchase price of $49.97 and a higher "Compare At"
price of $218. Shaulis claims that the listed "Compare At" price
was deceptive. The sweater was, she alleges, never sold by
Nordstrom Rack, or any other retailer, for $218. Instead, Shaulis
claims that the "Compare At" price tags are used by Nordstrom to
mislead consumers about the quality of items. To vindicate this
position, Shaulis filed suit alleging that Nordstrom had, in
violation of Massachusetts statutory and common law, improperly
obtained money from her and other Massachusetts consumers and
requested that a court order Nordstrom to restore this money and
enjoin Nordstrom from continuing to violate Massachusetts law.
The district court, in a well-reasoned opinion, granted
Nordstrom's motion to dismiss all of Shaulis's claims. We affirm.
I. Background
The facts underlying this case are taken from the second
amended complaint and are presumed true for the purpose of this
appeal. They are fully set forth in the opinion of the district
court. See Shaulis v. Nordstrom Inc., 120 F. Supp. 3d 40, 43-44
(D. Mass. 2015).
- 2 -
Defendant Nordstrom, Inc. is a Seattle, Washington-based
corporation that operates department stores throughout the United
States and Canada, including five "Nordstrom Rack" outlet stores
in Massachusetts. Shaulis purchased a sweater at one of these
stores in Boston in 2014. The price tag attached to the sweater,
which included both the $49.97 purchase price and the "Compare At"
price of $218, identified the difference between the two numbers
as "77%" worth of savings.1
Shaulis claims that this price tag was deceptive.
According to Shaulis, although price tags on Nordstrom Rack
products contain both a sale price and a "Compare At" price that
purports to represent a bona fide price at which Nordstrom (or
some other retailer) formerly sold those products, Nordstrom, in
reality, sells goods manufactured by designers for exclusive sale
at its Nordstrom Rack stores, which means that such items were
never sold -- or intended to be sold -- at the "Compare At" prices
advertised on the price tags. Shaulis claims that she was
wrongfully "[e]nticed by the idea of paying significantly less
than the 'Compare At' price charged outside of Nordstrom Rack,"
and that, but for Nordstrom's deception, she never would have
purchased the sweater.
1 The complaint also listed a number of "typical examples" of
products representing "the pricing schemes and tactics utilized
by" Nordstrom. The complaint does not, however, allege that
Shaulis purchased any of these items.
- 3 -
On November 6, 2014, Shaulis initiated this action with
a complaint filed in the Massachusetts Superior Court. She filed
an amended complaint on December 8, 2014, and a second amended
complaint ("SAC") on December 24. The SAC alleged claims for
fraud, breach of contract, unjust enrichment, violations of the
Code of Massachusetts Regulations and the Federal Trade Commission
Act,2 and violations of Mass. Gen. Laws ch. 93A ("Chapter 93A").
The SAC was brought on behalf of herself and all those similarly
situated, and proposed a class consisting of "[a]ll individuals
residing in the Commonwealth of Massachusetts who, within the
applicable statute of limitations preceding the filing of this
action . . . , purchased Nordstrom Rack Products."
Nordstrom removed the case to federal court and
successfully moved to dismiss the action for failure to state a
claim. The district court held that Shaulis had failed to
adequately plead a legally cognizable injury under Chapter 93A,
and further denied her requests to certify several Chapter 93A
questions to the Massachusetts Supreme Judicial Court ("SJC") and
for leave to file a third amended complaint. The court also
dismissed all of Shaulis's common law claims, again citing the
failure to plead a legally cognizable injury.
2 The district court dismissed Shaulis's claim for violations
of the Code of Massachusetts Regulations and the Federal Trade
Commission Act on the ground that neither statute provides for a
private cause of action. Shaulis does not appeal this decision.
- 4 -
On appeal, Shaulis challenges dismissal of her Chapter
93A claim and her common law claims for fraud, breach of contract,
and unjust enrichment. Our review is de novo. Carter's of New
Bedford, Inc. v. Nike, Inc., 790 F.3d 289, 291 (1st Cir. 2015).
As a federal court sitting in diversity, we apply the substantive
law of Massachusetts, as articulated by the SJC. Sanders v.
Phoenix Ins. Co., 843 F.3d 37, 47 (1st Cir. 2016).
II. Chapter 93A
The bulk of Shaulis's appeal involves objections to the
district court's dismissal of her Chapter 93A claim for damages
and injunctive relief.3 Chapter 93A, commonly known as the
Massachusetts Consumer Protection Act, is a broad consumer
protection statute that provides a private cause of action for a
consumer who "has been injured," Mass. Gen. Laws ch. 93A § 9(1),
3Shaulis also asks us to certify several questions on Chapter
93A to the SJC, which we may do if the questions are determinative
of the pending cause of action and there is no controlling
precedent. See Mass. S.J.C. R. 1:03; Easthampton Sav. Bank v.
City of Springfield, 736 F.3d 46, 50 (1st Cir. 2013). "We have
interpreted the SJC's requirement that there be 'no controlling
precedent' to prevent certification in cases when 'the course [the]
state court[ ] would take is reasonably clear.'" Id. at 51
(alteration in original) (quoting In re Engage, Inc., 544 F.3d 50,
53 (1st Cir. 2008)). The fact "[t]hat a legal issue is close or
difficult is not normally enough to warrant certification," since
otherwise cases involving state law "would regularly require
appellate proceedings in two courts." Bos. Gas Co. v. Century
Indem. Co., 529 F.3d 8, 15 (1st Cir. 2008). As explained below,
because the course the SJC would take on the issues before us is
reasonably clear, certification is not appropriate in this case.
- 5 -
by "unfair or deceptive acts or practices in the conduct of any
trade or commerce," id. § 2(a). See Rule v. Fort Dodge Animal
Health, Inc. (Rule II), 607 F.3d 250, 253 (1st Cir. 2010); see
also Casavant v. Norwegian Cruise Line Ltd., 952 N.E.2d 908, 912
(Mass. 2011) ("If any person invades a consumer's legally protected
interests, and if that invasion causes the consumer a loss --
whether that loss be economic or noneconomic -- the consumer is
entitled to redress under our consumer protection statute."
(quoting Hershenow v. Enterprise Rent-A-Car Co., 840 N.E.2d 526,
535 (Mass. 2006))).
After reviewing the relevant Massachusetts regulations,4
the district court determined that Nordstrom's alleged pricing
scheme "constitut[ed] an unfair or deceptive practice under
Chapter 93A." Shaulis, 120 F. Supp. 3d at 48-49. The court
further found that Shaulis had adequately alleged that Nordstrom's
deception "caused" an identifiable "harm" -- namely, that Shaulis
had sufficiently alleged that she was "directly induced" to make
a purchase she would not have made, absent the unfair or deceptive
practice. Id. at 50, 52. The court held, however, that Shaulis
4 The district court also discussed the applicable portions
of the Federal Trade Commission Act and related FTC Guidelines
dealing with false advertising and deceptive pricing. However,
because the court determined that the SAC adequately alleged a
violation of the Code of Massachusetts Regulations, it declined to
decide "whether the complaint also allege[d] a deceptive practice
under the Federal Trade Commission Act." Shaulis, 120 F. Supp. 3d
at 49 n.4.
- 6 -
had failed to allege a legally cognizable injury for purposes of
Chapter 93A because Shaulis's "subjective belief that she did not
receive a good value, without more, is not enough to establish the
existence of a Chapter 93A injury." Id. at 53.
On appeal, Shaulis contends that the district court
misread the SJC's Chapter 93A jurisprudence and erroneously
concluded that she had failed to adequately allege a legally
cognizable injury based on Nordstrom's deceptive pricing scheme.
Hence, we first review the relevant case law on Chapter 93A
injuries, and then review Shaulis's claim de novo.
A. Injury under Chapter 93A
Many courts -- both state and federal -- have struggled
to explain what constitutes an injury under Chapter 93A. See Tyler
v. Michaels Stores, Inc., 984 N.E.2d 737, 745 n.15 (Mass. 2013)
(discussing differing interpretations of earlier SJC opinions);
Rule v. Fort Dodge Animal Health, Inc. (Rule I), 604 F. Supp. 2d
288, 298 (D. Mass. 2009) (noting that case law "construing the
Chapter 93A . . . injury requirement has had a less than
intellectually coherent course of development"). We last explored
the parameters of Chapter 93A injuries in 2010 in Rule II. That
case involved a Chapter 93A claim by a plaintiff who purchased
heartworm medication for her dog, Luke. 607 F.3d at 251. After
administering the medication, the plaintiff learned that the FDA
had recalled the medication because of harmful side effects. Id.
- 7 -
Plaintiff then brought a class action against the manufacturer of
the heartworm medication, alleging that, although Luke was none
the worse for wear, she had overpaid for the medication. Id.
at 251-52. Plaintiff's theory of the case was that "she purchased
[the medication] because of a deception (failure to disclose the
risk), the product was 'in reality' worth less than she paid for
it (because of that undisclosed risk)," and thus she had suffered
"injury," the measure of her damages being "the difference between
what she paid and what she would have paid if the risk had been
disclosed." Id. at 253.
A central issue in Rule II was whether a "per se" theory
of injury -- that is, a claim that the deception itself is the
requisite injury -- was sufficient to state a claim under Chapter
93A. Or, as we put the question in Rule II: whether "[C]hapter
93A injury requires that a plaintiff who seeks to recover show
'real' economic damages," or whether "injury as a violation of
some abstract 'right' like the right not to be subject to a
deceptive act that happened to cause no economic harm" was
sufficient. Id. We noted that the plaintiff had suffered no
"economic injury in the traditional sense" because she had "used
up" the medication for its advertised purpose without ill effect,
and she thus held nothing of reduced value nor faced any risk of
harm. Id. at 255. We acknowledged, however, that if Rule had
sued before Luke consumed the medication, she may have been able
- 8 -
to claim injury based on her overpayment theory, because she would
have possessed medication that was not what she bargained for.
Id.
In reaching this decision, we observed that "the most
recent SJC cases" had "moved away" from the "per se" theory of
injury supported by earlier cases -- that is, a claim that an
unfair or deceptive act alone constitutes injury -- and had
"returned to the notion that injury under [C]hapter 93A means
economic injury in the traditional sense." Id. at 254-55; see
also Rule I, 604 F. Supp. 2d at 298-306 (surveying the development
of the SJC's Chapter 93A jurisprudence). Specifically, we
contrasted the SJC's earlier opinions in Leardi v. Brown, 474
N.E.2d 1094 (Mass. 1985), and Aspinall v. Philip Morris Cos., 813
N.E.2d 476 (Mass. 2004), with more recent opinions in Hershenow,
840 N.E.2d at 526, and Iannacchino v. Ford Motor Co., 888 N.E.2d
879 (Mass. 2008), which had rejected the "per se" theory of injury.
See Hershenow 840 N.E.2d at 535 ("A consumer is not . . . entitled
to redress under [Chapter 93A], where no loss has occurred.");
Iannacchino, 888 N.E.2d at 886-87 (explaining that, if properly
alleged, a claim that plaintiffs own vehicles with defective door
handles, in violation of federal safety regulations, would support
a cause of action under Chapter 93A because plaintiffs would have
paid for fully compliant vehicles, which they did not receive).
We acknowledged, however, that there may remain certain
- 9 -
"exceptions" to this general rule, embodied in older SJC opinions
that have not been expressly overruled, but we left to the SJC the
task of defining them. Rule II, 607 F.3d at 255 (citing Leardi,
474 N.E.2d at 1101); see also Hershenow, 840 N.E.2d at 538, (Cowin,
J., concurring) (noting that Hershenow had "overruled . . . sub
silentio" earlier opinions supporting a "per se" theory of injury).
1. Tyler
Helpfully, since our opinion in Rule II, the SJC has
clarified what constitutes a legally cognizable injury under
Chapter 93A, most notably in Tyler v. Michaels Stores, Inc. In
Tyler, the plaintiff accused the defendant of violating a statute,
Mass. Gen. Laws ch. 93, § 105, that prohibits companies from
writing customers' "personal identification information" on credit
card transaction forms when the credit card issuer does not require
the company to provide such information. 984 N.E.2d at 738 & n.1.
The SJC explained that, if the company, as a result of a violation
of § 105, "use[d] the [personal identification] information for
its own business purposes," such as "by sending the customer
unwanted marketing materials or by selling the information for a
profit," the company would "ha[ve] caused the consumer a[] [non-
economic] injury that [wa]s distinct from the statutory violation
itself and [thus] cognizable under [Chapter 93A]." Id. at 746.
But the SJC went on to explain that if, by contrast, the company
had merely placed the personal information in a file "and never
- 10 -
used the information for any purpose thereafter, a consumer would
not have a cause of action for damages" under Chapter 93A, even
though the company may have violated § 105 and thereby committed
"an unfair or deceptive act." Id. at 746 n.17.
In explaining its decision in Tyler, the SJC stated that
a violation of an independent statute -- such as the Code of
Massachusetts Regulations here -- does not itself "satisf[y] the
injury requirement of c. 93A, § 9," and hence, does not
"automatically entitle[ ] the plaintiff to at least nominal damages
(and attorney's fees)" under Chapter 93A. Id. at 744–45. Instead,
"the violation of the legal right that has created the unfair or
deceptive act or practice must cause the consumer some kind of
separate, identifiable harm arising from the violation itself."
Id. at 745 (emphasis added). The SJC thus held that "a plaintiff
bringing an action . . . under [Chapter 93A] must allege and
ultimately prove that she has, as a result [of the statutory
violation], suffered a distinct injury or harm that arises from
the claimed unfair or deceptive act." Id. at 745-46 (emphasis
added); see also Walsh v. TelTech Sys., Inc., 821 F.3d 155, 161-
62 (1st Cir. 2016) (discussing Tyler); Bezdek v. Vibram USA Inc.,
No. 12-cv-10513-DPW, 2013 WL 639145, at *5 (D. Mass. Feb. 20, 2013)
(observing that the SJC has "disavowed the notion that deceptive
advertising constitutes per se injury on consumers who purchase
the product").
- 11 -
2. Bellermann
The SJC recently reaffirmed Tyler's holding in
Bellermann v. Fitchburg Gas & Elec. Light Co., 54 N.E.3d 1106
(Mass. 2016), which postdates the district court's opinion in this
case. See 54 N.E.3d 1106. In Bellermann, a state agency
determined that a utility company had failed to comply with certain
storm preparedness regulations. Id. at 1107. Plaintiffs,
customers of the company, filed a class action under Chapter 93A,
alleging that they had suffered economic injury by "overpaying for
a level of emergency storm preparedness" that the company could
not have provided, if a storm had occurred. Id. at 1108. As the
plaintiffs saw it, they had adequately alleged injury because "they
ha[d] paid for more in terms of quality and reliability of service
than they received." Id. at 1109-10.
The SJC rejected the Bellermann plaintiffs' theory of
injury. Id. at 1114. Citing Tyler and earlier cases, the SJC
distinguished cases where a Chapter 93A plaintiff "suffered an
economic injury because . . . the defendants' products did not
deliver the full anticipated and advertised benefits, and
therefore were worth less, as used or owned, than what the
plaintiffs had paid," from those cases where the alleged injury
was merely hypothetical or speculative. Id. at 1112. Reaffirming
Tyler's holding that "to meet the injury requirement under [Chapter
93A], a plaintiff must have suffered a 'separate, identifiable
- 12 -
harm arising from the [regulatory] violation' that is distinct
'from the claimed unfair or deceptive conduct itself,'" the SJC
concluded that permitting plaintiffs' overpayment theory of injury
"would permit class certification . . . whenever a product (or
service) fails to conform to a regulatory requirement and the
consumer alleges an economic injury based on overpayment for the
product." Id. at 1111 (quoting Tyler, 984 N.E.2d at 745).
In other words, the SJC treated the plaintiffs' theory
as akin to a per se theory of injury. Because the plaintiffs had
alleged only a possibility of adverse consequences -- which did
not occur -- they were, in effect, seeking damages based solely on
the utility company's violation of the regulations. The court
held that such a claim, alleging an "overpayment" for a flawed
"product" that never actually underperformed, did not state a
cognizable injury under Chapter 93A.
The SJC reached this conclusion in Bellermann by
comparing and contrasting its reasoning in three earlier Chapter
93A cases: Iannacchino, Aspinall, and Hershenow. Two of the cases,
Iannacchino and Aspinall, involved regulatory noncompliance in
which the court had found identifiable economic injury. In the
third, Hershenow, the SJC concluded that the defendant's
regulatory violation had caused no economic loss. Id. at 1111-
13.
- 13 -
Specifically, in Iannacchino, the plaintiffs claimed
that their vehicles' door handles did not comply with applicable
safety regulations. 888 N.E.2d 882. Although the SJC dismissed
the plaintiffs' claims on other grounds, the court observed that
safety regulations play "a highly significant role" in a consumer's
decision to purchase a vehicle, id. at 886, and thus
the purchase price paid by the plaintiffs for their
vehicles would entitle them to receive vehicles that
complied with . . . safety standards or that would be
recalled if they did not comply. If [the defendant]
knowingly sold noncompliant (and therefore potentially
unsafe) vehicles or if [the defendant], after learning
of noncompliance, failed to initiate a recall and to pay
for the condition to be remedied, the plaintiffs would
have paid for more (viz., safety regulation-compliant
vehicles) than they received. Such an overpayment would
represent an economic loss -- measurable by the cost to
bring the vehicles into compliance -- for which the
plaintiffs could seek redress under G.L. c. 93A.
888 N.E.2d 886-87.
Bellermann similarly construed the circumstances in
Aspinall. There, the SJC had held that purchasers of cigarettes
could bring a class action against a manufacturer for falsely
claiming that its cigarettes delivered health benefits they did
not, in fact, provide. 813 N.E.2d 479-80. The manufacturer
labeled the cigarettes as "light," in purported compliance with
regulations under which "light" cigarettes were those that
delivered lower levels of toxins compared to regular cigarettes.
Id. The SJC concluded that the putative class members "were
injured when they purchased a product that, when used as directed,
- 14 -
exposed them to substantial and inherent health risks that were
not . . . minimized by their choice of the defendant's 'light'
cigarettes." Id. at 488. As the Bellermann court interpreted the
holding in Aspinall, the consumers had alleged a legally cognizable
injury because each consumer "had purchased and smoked cigarettes
that did not deliver the advertised health benefits" and they did
not receive the benefit (lower toxins) "for which each had paid."
Bellermann, 54 N.E.3d at 1112.
The SJC contrasted these cases with Hershenow, in which
putative class members who had rented automobiles from the
defendant rental company sought class certification based on the
defendant's violation of a regulation governing the terms of damage
waiver clauses. Although the rental agreement did not comply with
applicable regulations, none of the putative class members had
been in an accident that triggered the damage waiver clause.
Because the invalid provision was never enforced, the SJC concluded
that no plaintiff had suffered the necessary, distinct injury that
"is an essential predicate for recovery under" Chapter 93A.
Hershenow, 840 N.E.2d at 528 (emphasizing that each putative class
member was no "worse off during the rental period than he or she
would have been had the [damage waiver provision] complied in
full"). Hence, "unlike the injuries recognized in Iannacchino and
Aspinall," where plaintiffs did not "receive[] the full benefit of
the purchase," the plaintiffs in Hershenow received everything
- 15 -
they bargained for and faced no future risk of harm. Bellermann,
54 N.E.3d at 1113 (quoting Shaulis, 120 F. Supp. 3d at 52).
We can derive from the analyses in Tyler and Bellermann
a clear understanding of the SJC's current view of a legally
cognizable economic injury under Chapter 93A. To state a viable
claim, the plaintiff must allege that she has suffered an
"identifiable harm" caused by the unfair or deceptive act that is
separate from the violation itself. Tyler, 984 N.E.2d at 745.
Put another way, a plaintiff must "show 'real' economic damages,"
as opposed to some speculative harm. Rule II, 607 F.3d at 253.
Accordingly, a claim that alleges only a "per se" injury -- that
is, a claim resting only on a deceptive practice, regulatory
noncompliance, or the "impairment of an abstract right without
economic loss" -- is insufficient to state a Chapter 93A claim.
Id.; see also Tyler, 984 N.E.2d at 745-46. It is thus not enough
to claim that the defendant's improper conduct created a risk of
"real economic damages." Rule II, 607 F.3d at 253 (internal
quotation marks omitted). Speculation concerning still inchoate
harm does not establish the distinct injury that "is an essential
predicate for recovery under" Chapter 93A. Bellermann, 54 N.E.3d
at 1113 (quoting Hershenow, 840 N.E.2d at 528); see also Rule II,
607 F.3d at 253. Instead, legally cognizable injuries under
Chapter 93A must involve objective, "identifiable" harm that goes
- 16 -
beyond the deception itself. Tyler, 984 N.E.2d at 745; Iannacchino
888 N.E.2d at 888.
B. Application
Shaulis claims that she has suffered a legally
cognizable injury because she was "induced" to make a purchase she
would not have made, but for the false sense of value created by
Nordstrom's pricing scheme. She primarily asserts that her injury
is the loss of $49.97 because, in the district court's words, "she
would rather have her money -- which she could use to purchase
other things -- than the sweater." Shaulis, 120 F. Supp. 3d at
52. Although the SJC has not addressed an "induced purchase"
theory of injury exactly like Shaulis's, we think it is clear,
given the discernible principles in the SJC's case law, that
Shaulis's claim falls short of alleging the "identifiable" injury,
distinct from the claimed deceptive conduct itself, that the SJC
requires for individual relief under Chapter 93A. Tyler, 984
N.E.2d at 745; see also Bellermann, 54 N.E.3d at 1111.
The flaw in Shaulis's theory of injury -- that the mere
purchase of an item may constitute cognizable injury, regardless
of the item's specific qualities -- is that it merges the alleged
deception with the injury. To illustrate that point, we offer two
scenarios. First, if Shaulis had not purchased a sweater after
viewing the offending "Compare At" price tag, and later learned
that Nordstrom's pricing scheme violated the Massachusetts Code of
- 17 -
Regulations, she obviously would not have suffered a legally
cognizable Chapter 93A injury. To claim injury based on the
deceptive tag would be to rely on the "per se" theory of injury
the SJC has rejected.
In the second scenario, taking the facts as Shaulis
alleges them, she purchased the sweater, but claims she did so
only because the tag suggested that the sweater was worth more
than the price Nordstrom actually charged. This contention is
simply another way of saying that Shaulis was wrongfully deceived
by Nordstrom. She identifies no objective injury traceable to the
purchased item itself -- for example, that the sweater was poorly
made or that its materials were misrepresented. Such a purchase-
as-injury claim collapses the SJC's required distinction between
deception and injury by attempting to plead an assertion about a
consumer's disappointed expectations of value in place of an
allegation of real economic loss.
Shaulis contends that this construction reads the SJC's
definition of injury too narrowly. In her view, her injury is
clear: she no longer has her money, and the sweater she does have
is "worth nothing at all to [her] since she never would have bought
it" absent Nordstrom's deception. Thus, Shaulis argues, her injury
is concrete -- more like the injuries alleged by owners of
noncompliant cars in Iannacchino than like the speculative or
never-realized harms alleged in Rule II or Hershenow -- and,
- 18 -
therefore, she has alleged more than the mere regulatory violation
the SJC has rejected as a viable form of Chapter 93A injury.
However, Shaulis's attempt to distinguish her injury
from those of the unsuccessful plaintiffs in cases like Rule II,
Hershenow, and Bellermann overlooks a primary rationale for those
decisions, namely, that the plaintiffs had received everything
they had bargained for. Thus, in Rule II, the plaintiff received
effective medication without side effects. In Hershenow, the
plaintiffs received adequate rental cars, and the illegal damage
waivers in their rental contracts were never enforced. And, in
Bellermann, the plaintiffs received all of the electrical service
to which they were entitled.
By contrast, in cases where plaintiffs' Chapter 93A
claims were successful, there was a clear connection between the
defendant's regulatory violation and an objective injury. In
Iannacchino, for example, the SJC noted that plaintiffs could
adequately plead injury where the cars they purchased purported
to, but did not, meet federal safety regulations, the defendant
refused to recall and fix the vehicles, and the plaintiffs' damages
could be easily identified by measuring the cost to bring the
vehicles into compliance with the regulations. Iannacchino, 888
N.E.2d at 886-87; see also Bezdek, 2013 WL 639145, at *6
(recognizing "price premium" theory of injury adequately alleged
- 19 -
where plaintiffs claimed they paid more for shoes that promised
to, but did not, provide specific health benefits).
Unlike the plaintiffs in Iannacchino, however, Shaulis's
complaint fails to identify any bargained-for characteristic of
the sweater that she has not received. As the district court
explained, Shaulis "arguably got exactly what she paid for, no
more and no less," emphasizing her failure to allege that the
sweater was "worth less than the selling price, that it was
manufactured with shoddy materials or inferior workmanship, that
it is of an inferior design, or that it is otherwise defective."
Shaulis, 120 F. Supp. 3d at 51-52. At bottom then, Shaulis's
alleged "injury" is only that Nordstrom tricked her into believing
that she was getting a bargain, and not, as was the case in
Iannacchino, that the product itself was deficient in some
objectively identifiable way. That perceived adverse impact -- as
the district court put it, "the subjective belief as to the nature
of the value [Shaulis] received" -- does not state a legally
cognizable economic injury under Chapter 93A because it fails to
identify anything objective that Shaulis bargained for that she
did not, in fact, receive.
Perhaps realizing this flaw in her claims, Shaulis
attempts to reframe her injury as a loss of the benefit of the
bargain, contending that the "Compare At" price tag was a false
representation that the sweater was of "high quality." But this
- 20 -
reformulation is fundamentally no different than her "induced
purchase" theory of injury because Shaulis does not explain how
the sweater was not of "high quality" in any objective way. As
the SJC explained in Iannacchino, a plaintiff's "bare assertion"
that a product is deficient in some way is "conclusory and can be
subjective" and thus "does not suffice to state a viable claim."
888 N.E.2d at 888. Instead, claims of injury premised on
"overpayment" for a product, or a loss of the benefit of the
bargain, require an objective measure against which the
plaintiff's allegations may be evaluated. See id. ("[T]he
complaint must identify a legally required standard that the
[product] w[as] at least implicitly represented as meeting, but
allegedly did not.").
Shaulis, however, makes no objective claims, instead
relying only on inferences she drew about the quality of the
sweater based on the "Compare At" price tag. Indeed, Shaulis's
assertion that the sweater is "worth nothing to [her]" proves too
much, as it demonstrates that the only injury she has alleged is
based solely on her subjective belief that she got a bad deal.
Shorn of its conclusory allegations, the complaint adequately
alleges only that Nordstrom violated the Massachusetts Code of
Regulations and that Shaulis purchased a sweater for $49.97 that
she no longer wants.
- 21 -
Shaulis's attempt to analogize this case to fake-Rolex
hawking in Hong Kong is also unpersuasive. She claims that the
district court "apparently would find no actionable grievance in
the fact that the purchase was not a real Rolex but a replica made
of inferior materials, selling at a 99% discount." There is an
obvious distinction there: falsely advertising a watch as a "Rolex"
is a material misstatement about the watch's quality. Shaulis
alludes to what she purchased as a "phony designer sweater" but
has made no allegations that Nordstrom ever represented it as such.
It may be the case that Shaulis, in fact, made an
inference from price to value (the claimed "high quality" of the
sweater) based on Nordstrom's "Compare At" price tag, or even that
Nordstrom hopes some customers will make this inference. See Dhruv
Grewal & Larry D. Compeau, Comparative Price Advertising:
Informative or Deceptive?, 11 J. Pub. Pol'y & Mktg. 52, 55 (1992)
("By creating an impression of savings, the presence of a higher
reference price enhances subjects' perceived value . . . [of a]
product."). Indeed, it is presumably just this kind of erroneous
inference that Massachusetts seeks to prevent by regulation. Yet,
not only have Massachusetts courts declined to find injury under
Chapter 93A where the plaintiff relies entirely on her subjective
belief as to the value received, but federal courts also have
routinely rejected claims of injury under Chapter 93A that were
not grounded in any objective measure. See, e.g., In re Celexa &
- 22 -
Lexapro Mktg. and Sales Practices Litig., No. 14-cv-13848-NMG,
2015 WL 3751422, at *8 (D. Mass. June 15, 2015) (rejecting
"informed choice" theory of injury where plaintiffs alleged they
would not have purchased drug had they known certain information);
Sergeants Benv. Ass'n Health & Welfare Fund v. Sanofi-Aventis U.S.
LLP, 20 F. Supp. 3d 305, 336 (E.D.N.Y. 2014), aff'd, 806 F.3d 71
(2d Cir. 2015) (rejecting induced purchase theory of injury under
Chapter 93A).
Appellate courts reviewing the consumer protection
statutes of other states also have consistently rejected similar
purchase-as-injury claims. See, e.g., Kim v. Carter's Inc., 598
F.3d 362, 366 (7th Cir. 2010) (rejecting induced purchase theory
of injury where plaintiff alleged she was deceived by fictitious
price tags on clothing); Small v. Lorillard Tobacco Co., 720 N.E.2d
892, 898 (N.Y. 1999) (rejecting induced purchase theory of injury
under New York law because it "sets forth deception as both act
and injury"). Absent allegations of real loss grounded in some
objective measure, Shaulis's "induced purchase" theory of injury
is simply the "per se" theory of injury in new clothing, and hence,
it is insufficient to adequately allege injury under the SJC's
current Chapter 93A jurisprudence.
In a final attempt to salvage her claim for damages,
Shaulis changes tack, arguing that even if she has not suffered an
economic injury by being induced to purchase the sweater, she has
- 23 -
suffered a separate injury in the form of expenses incurred
traveling to the Nordstrom Rack.5 Shaulis's "travel expenses"
theory of damages, however, was not pleaded in the SAC, and she
did not raise it in the district court. Hence, we need not address
it here. In any event, this argument would also fail because
Shaulis does not explain how a deceptive price tag could have
caused her to travel to the Nordstrom Rack in the first place.6
See Walsh, 821 F.3d at 160 ("A plaintiff's failure to establish
5 Shaulis also claims that she is entitled to damages under
Chapter 93A's statutory damages provision and the SJC's
acknowledgment in Tyler that "injury or harm worth more than a
penny" entitles a plaintiff to statutory damages. See 984 N.E.2d
at 746 n.20. Shaulis misapprehends the relevant law. Chapter
93A, § 9 provides that "if the court finds for the petitioner,
recovery shall be in the amount of actual damages or twenty-five
dollars, whichever is greater." This statutory damage provision
does not, however, supplant the requirement that a plaintiff prove
injury under § 9. Instead, "[i]t merely eliminates the need to
quantify an amount of actual damages if the plaintiff can establish
a cognizable loss caused by a deceptive act." Hershenow, 840 N.E.2d
at 526 n.18 (emphasis added). Tyler, however, involved noneconomic
injury (an invasion of the consumer's privacy), and its discussion
of "injury or harm worth more than a penny" dealt with the measure
of damages, not the establishment of injury in the first instance.
Here, Shaulis has simply not pleaded a legally cognizable injury,
an inquiry that is antecedent to the measurement of damages.
6 Shaulis attempts to circumvent this causation problem by
claiming that she was lured to the Nordstrom Rack by unspecified
advertising that promised bargains. These claims are too vague to
meet the heightened pleading requirements of Federal Rule of Civil
Procedure 9(b) for claims sounding in fraud. Martin v. Mead
Johnson Nutrition Co., No. 09-cv-11609, 2010 WL 3928707, at *3 (D.
Mass. Sept. 30, 2010) ("A claim under Chapter 93A that involves
fraud is subject to the heightened pleading requirement.").
- 24 -
both factual causation and proximate causation is fatal to her
Chapter 93A claim.").
C. Injunctive Relief under Chapter 93A
Shaulis separately assigns error to the district court's
failure to grant her request for injunctive relief under Chapter
93A. In particular, Shaulis contends that she is entitled to
injunctive relief under Chapter 93A regardless of whether her claim
for damages is dismissed.
Shaulis's only support for this claim is Diviacchi v.
Speedway LLC, in which the district court held that "a [Chapter
93A] plaintiff may pursue a claim for purely injunctive
relief . . . absent any injury." 109 F. Supp. 3d 379, 386 (D.
Mass. 2015). In making this determination, the Diviacchi court
focused on language in Tyler that it said suggested that the
requirement of proving injury applied only to a claim for damages.
Id. at 385–86. Specifically, the Diviacchi court acknowledged
that Tyler demonstrated "a broad shift away from the notion that
the invasion of a legal right, standing alone, is sufficient to
support a claim under Chapter 93A," but the court noted that the
SJC's silence on the availability of equitable relief counseled in
favor of finding that such relief was available. Id.; see Shaulis,
120 F. Supp. 3d at 50 n.5 (discussing Diviacchi).
We find this reasoning unpersuasive, as did the district
court. Neither the text of Chapter 93A nor the relevant case law
- 25 -
supports this argument. The plain language of Chapter 93A limits
the class of consumers who may bring an action to those who "ha[ve]
been injured," and offers as remedy both "damages and
. . . equitable relief, including an injunction." Mass. Gen. Laws
ch. 93A, § 9(1) (emphasis added). We find nothing in the text of
Chapter 93A that obviates the need to prove injury in private suits
for injunctive relief, or even suggests that private suits for
equitable relief should somehow be treated differently than claims
for damages.
Further, the SJC has never explicitly distinguished
between the form of injury required for damages and that required
for injunctive relief. See Hershenow, 840 N.E.2d at 535 (holding
that Chapter 93A plaintiff must prove (1) an "invasion" of a
"legally protected interest" and (2) that the "invasion causes the
consumer a loss," either "economic or non-economic"); cf. Young v.
Wells Fargo Bank, N.A., 717 F.3d 224, 242 (1st Cir. 2013) (vacating
dismissal of claims for both damages and injunctive relief under
Chapter 93A, and noting that claim for injunctive relief was
"derivative of" plaintiff's claim for damages). Moreover, the
SJC's most recent opinion on point, Bellermann, lacks any language
distinguishing claims for damages from claims for injunctive
relief. See 54 N.E.3d at 1110 ("To succeed in [a] motion for class
certification under [Chapter 93A] . . . plaintiffs . . . must show
that the assertedly unfair or deceptive act or practice
- 26 -
. . . caused their injuries."). Hence, consistent with the plain
language of the statute, we hold that a private cause of action
under Chapter 93A -- either for damages or injunctive relief --
requires a plaintiff to allege injury, as that term is defined by
the SJC. See Tyler, 984 N.E.2d at 745 ("The invasion of a
consumer's legal right . . . may be a violation of G.L. c. 93A,
§ 2 . . . but the fact that there is such a violation does not
necessarily mean the consumer has suffered an injury.").
Shaulis gravely warns, however, that failure to provide
for a private cause of action for injunctive relief will leave
Massachusetts consumers unprotected from retailers' dishonest
pricing schemes. We disagree. As we noted in Rule II, the
Massachusetts Attorney General "has authority [under Chapter 93A]
to seek heavy sanctions on those who engage in deceptive
advertising even without injury." 607 F.3d at 255 (emphasis added)
(citing Mass. Gen. Laws ch. 93A, § 4); see also Rule I, 604 F.
Supp. 2d at 304 ("Chapter 93A was not 'mean[t] to authorize purely
vicarious suits by self-constituted private attorneys-general.'"
(alteration in original) (quoting Leardi, 474 N.E.2d at 1102)).
It may be the case that Nordstrom's allegedly unlawful conduct
needs to be deterred, "but not necessarily by those who . . . were
not injured." Rule II, 607 F.3d at 255. Hence, because Shaulis
has not adequately alleged that she suffered a legally cognizable
- 27 -
injury, her Chapter 93A claims for damages and injunctive relief
were both properly dismissed.
III. Common Law Claims
Shaulis's remaining common law claims -- for fraud,
unjust enrichment, and breach of contract -- fare no better than
her Chapter 93A claim. We address each in turn.
First, Shaulis's claim for fraudulent misrepresentation
fails for the same reason as her Chapter 93A claim: she has not
alleged an actionable injury caused by Nordstrom's allegedly false
statement. Specifically, under Massachusetts law, a claim for
fraudulent misrepresentation requires a pecuniary loss. See Twin
Fires Inv., LLC v. Morgan Stanley Dean Witter & Co., 837 N.E.2d
1121, 1135-36 (Mass. 2005). Although Shaulis alleges that she
would not have purchased the sweater but for Nordstrom's deception
-- and, hence, that we should infer that her "loss" is the total
purchase price -- she does not allege that the sweater she actually
received was worth less than she paid, or that the sweater was
defective in some way. Absent such allegations, her claim for
fraudulent misrepresentation fails to allege any pecuniary loss.
Shaulis contends, however, that she is at least entitled
to consequential damages on her fraud claim -- in the form of
travel expenses to the Nordstrom Rack, shipping expenses to return
the sweater, or the cost of telephone calls to Nordstrom to
complain. This argument also fails. Although consequential
- 28 -
damages are generally available for fraudulent misrepresentation,
see Rivera Castillo v. Autokirey, Inc., 379 F.3d 4, 12 (1st Cir.
2004), Shaulis does not allege any consequential damages in the
SAC. As explained above, the "travel expenses" theory of damages
is alleged for the first time on appeal, and, even if this theory
had been properly alleged in the SAC, it fails for the simple
reason that plaintiff could not have seen the deceptive price tag
until she had already reached the store. See Kiluk v. Select
Portfolio Servicing, Inc., No. 11-civ-10731-FDS, 2011 WL 8844639,
at *5 (D. Mass. Dec. 19, 2011) ("[T]he complaint must allege that
plaintiffs suffered a pecuniary loss as a consequence of their
reliance on defendant's alleged misrepresentation.").
As for Shaulis's breach of contract claim, we find no
allegations in the SAC that the sales contract itself was actually
breached. See Kim, 598 F.3d at 364 (finding no breach of contract
where item was advertised for "30% off an inflated, fictitious"
price, because "[b]y charging this agreed price in exchange for
ownership of the clothing, [defendant] gave the plaintiffs the
benefit of their bargain"). The agreement between Shaulis and
Nordstrom was nothing more than a straightforward, everyday sales
contract for the purchase of a sweater. By charging the agreed
- 29 -
price in exchange for ownership of the sweater, Nordstrom fulfilled
its contractual obligations.7
Shaulis's common law claim for unjust enrichment also
fails because a party with an adequate remedy at law cannot claim
unjust enrichment. ARE-Tech Square, LLC v. Galenea Corp., 91 Mass.
App. Ct. 1106 (Mass. App. Ct. 2017); see also Mass. Eye & Ear
Infirmary v. QLT Phototherapeutics, Inc., 412 F.3d 215, 234 (1st
Cir. 2005) (noting that unjust enrichment serves only as an
"equitable stopgap for occasional inadequacies in contractual
remedies at law"). Moreover, Massachusetts law does not permit
litigants "to override an express contract by arguing unjust
enrichment." Platten v. HG Bermuda Exempted Ltd., 437 F.3d 118,
130 (1st Cir. 2006). Although Shaulis argues that, if her other
claims are dismissed, she effectively has no adequate remedy, this
argument misapprehends the relevant law. It is the availability
of a remedy at law, not the viability of that remedy, that
prohibits a claim for unjust enrichment. See Reed v. Zipcar, Inc.,
7 Shaulis also makes an undeveloped claim that Nordstrom
violated the implied covenant of good faith and fair dealing.
Under Massachusetts law, a covenant of good faith and fair dealing
is implied in every contract. UNO Restaurants, Inc. v. Boston
Kenmore Realty Corp., 805 N.E.2d 957, 964 (Mass. 2004). However,
"[t]he duty of good faith and fair dealing concerns the manner of
performance" of the contract, as opposed to the negotiation of its
terms. Id. Moreover, the implied covenant may not be invoked to
create rights and duties not contemplated by the provisions of the
contract or the contractual relationship. Id. Here, because there
are no allegations in the SAC regarding Nordstrom's performance of
its contract with Shaulis, this claim also fails.
- 30 -
883 F. Supp. 2d 329, 334 (D. Mass. 2012) (noting that the viability
of the remedy at law "is beside the point" and the "mere
availability" of a remedy at law bars a claim for unjust
enrichment), aff'd, 527 F. App'x 20 (1st Cir. 2013); Fernandes v.
Havkin, 731 F. Supp. 2d 103, 114 (D. Mass. 2010) ("Plaintiff's
negligence and [C]hapter 93A claims . . . preclude a claim for
unjust enrichment. The disposition of those claims is
irrelevant.").
IV. Motion for Reconsideration and Leave to Amend
Finally, we find that the district court did not err in
denying Shaulis's motion for reconsideration and for leave to
amend.
The district court held "that [Shaulis had] not made the
necessary showing of newly discovered evidence or a manifest error
of law to warrant reconsideration," and thus declined to vacate
the judgment of dismissal under Fed. R. Civ. P. 59 or 60 to allow
leave to amend. See Acevedo–Villalobos v. Hernández, 22 F.3d 384,
389 (1st Cir. 1994) ("Unless postjudgment relief is granted, the
district court lacks power to grant a motion to amend the complaint
under Rule 15(a)."). As explained above, the district court
committed no legal error in dismissing Shaulis's Chapter 93A and
common law claims. Hence, Shaulis's only remaining argument for
post-judgment relief is based on purported newly discovered
evidence -- a Nordstrom "Compliance Manual" that Shaulis alleges
- 31 -
demonstrates "that Nordstrom has intentionally and deliberately
implemented" a deceptive pricing scheme. The district court,
however, found that Shaulis had adequately pleaded that
Nordstrom's alleged pricing scheme "constitut[ed] an unfair or
deceptive practice under Chapter 93A." Shaulis, 120 F. Supp. 3d
at 49. Nordstrom has not even appealed this determination, and,
hence, cumulative allegations of Nordstrom's allegedly deceptive
conduct cannot help Shaulis avoid dismissal of her claims. Here,
the primary deficiency in the SAC was that Shaulis failed to
adequately plead that she suffered a legally cognizable injury;
further allegations of deception do nothing to remedy that flaw.
Affirmed.
- 32 -
| {
"pile_set_name": "FreeLaw"
} |
957 A.2d 1171 (2008)
957 N.J. 461
PENPAC, INC.
v.
PASSAIC COUNTY UTILITIES AUTHORITY.
C-41 September Term 2008 62,832
Supreme Court of New Jersey.
September 5, 2008.
Petition for certification. Denied.
| {
"pile_set_name": "FreeLaw"
} |
105 F.Supp.2d 1326 (2000)
William CARO, Jr., Plaintiff,
v.
MIAMI-DADE COUNTY, Department of Corrections, Inc., and James Brooks, Defendants.
No. 98-2917-CIV.
United States District Court, S.D. Florida.
April 12, 2000.
Cornelius Shiver, Law Offices of Cornelius Shiver, Miami, FL, for plaintiff.
Thomas A. Tucker Ronzetti, Assistant County Attorney, Dade County Attorney, Miami, FL, for defendants.
ORDER GRANTING DEFENDANT MIAMI-DADE COUNTY AND DEFENDANT JAMES BROOKS' MOTIONS FOR SUMMARY JUDGMENT
HOEVELER, Senior District Judge.
THIS CAUSE comes before the Court upon (1) Defendant Miami-Dade County's Motion For Summary Judgment, filed October 7, 1999, and (2) Defendant James Brooks' Motion For Summary Judgment, also filed October 7, 1999. Plaintiff's Memorandum In Opposition To Defendants' Motion For Summary Judgment was filed with leave of Court on December 23, 1999. All parties filed their respective *1327 Statements Of Uncontested Facts, per S.D.Fla.L.R. 7.5. Having been advised in the premises, it is hereby ORDERED AND ADJUDGED that
Defendant Miami-Dade County's Motion For Summary Judgment is GRANTED;
Defendant James Brooks' Motion For Summary Judgment is GRANTED.
Background
Plaintiff is an American-born male of Puerto Rican ancestry who has been a correctional officer with Defendant Miami-Dade County ("County") since 1984. To date, Plaintiff still works for County. Defendant James Brooks ("Brooks") was one of Plaintiff's supervisors during the periods material to Plaintiff's Complaint. Count I is brought against both Defendants for alleged violations of 42 U.S.C. § 1981 and Title VII, 42 U.S.C. § 2000 et seq. Counts II-IV are pendent state law claims against County only: Count II alleges negligent hiring, Count III asserts negligent supervision, and Count IV is a negligent retention claim.
ANALYSIS
Standard on Summary Judgment
The Federal Rules of Civil Procedure provide for summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). "Material" facts are those that relate to the substantive law of each cause of action. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A "genuine issue" is one about which a reasonable fact finder could find for the nonmoving party. Id. On summary judgment, the district court must view all of the evidence "`in the light most favorable to the nonmoving party.'" Continental Casualty Co. v. Wendt, 205 F.3d 1258, 1261 (11th Cir.2000) (quoting Samples on Behalf of Samples v. Atlanta, 846 F.2d 1328, 1330 (11th Cir.1988)).
The parties moving for summary judgment bear the initial burden "to show the district court, by reference to materials on file, that there is no genuine issue of material fact that should be decided at trial." Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991). If this burden is met, the nonmoving party may defeat a grant of summary judgment by demonstrating "that there is indeed a material issue of fact that precludes summary judgment." Clark, 929 F.2d at 608. The nonmoving party satisfies his burden of production in this respect by showing "sufficient evidence of each and every element that he or she must prove." Wendt, 205 F.3d 1258, 1261 (citing Rollins v. TechSouth, Inc., 833 F.2d 1525, 1528 (11th Cir.1987)). Neither the moving nor nonmoving parties on summary judgment may rely on the pleadings alone. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Count I
Plaintiff sues both County and Brooks in Count I section 1981 and Title VII. County asserts that a section 1981 suit cannot stand against a county.[1] For his own part, *1328 Brooks asserts the defense of qualified immunity against this claim. As a general rule, this Court would normally address the issue of whether Brooks violated section 1981 before turning to the question of Brooks' qualified immunity defense. See Bishop v. Avera, 177 F.3d 1233, 1236 n. 7 (citing County of Sacramento v. Lewis, 523 U.S. 833, 118 S.Ct. 1708, 140 L.Ed.2d 1043 (1998)). Because Plaintiff emphasizes in his opposition to summary judgment that he is suing County and Brooks in Count I for violating Title VII by creating a hostile work environment,[2] the Court now turns to a discussion of Plaintiff's claim of Title VII discrimination.
Title VII prohibits an employer from discriminating "against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin." 42 U.S.C. § 2000e-2(a)(1). A plaintiff may establish his employer's violation of Title VII by showing that the discriminatory actions have created a "hostile or abusive work environment." Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57, 66, 106 S.Ct. 2399, 91 L.Ed.2d 49 (1986); see also Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 118 S.Ct. 2257, 2265, 141 L.Ed.2d 633 (1998) (contrasting hostile work environment claims from quid pro quo claims in Title VII context). The prima facie requirements necessary to establish a hostile work environment claim require that (1) Plaintiff belongs to a protected group, (2) Plaintiff was subjected to unwelcome racial harassment, (3) the harassment was based upon Plaintiff's race, and (4) the harassment affected the conditions of Plaintiff's employment. See Fleming v. Boeing Co., 120 F.3d 242 (11th Cir.1997).
The critical issue in the instant case is the fourth element of the prima facie test whether Defendants' harassment of Plaintiff affected the conditions of Plaintiff's employment. Plaintiff can satisfy this element by showing "that the harassment was sufficiently severe or pervasive to alter the conditions of her employment and create an abusive working environment." Watkins v. Bowden, 105 F.3d 1344, 1355 (11th Cir.1997) (citing Harris v. Forklift Systems, Inc., 510 U.S. 17, 20-22, 114 S.Ct. 367, 126 L.Ed.2d 295 (1993)).
In support of its motions for summary judgment, Defendants filed with the Court Plaintiff's deposition transcript. In opposition to Defendants' motions for summary judgment, Plaintiff provided only excerpts from that same deposition. Because Plaintiff identifies so few incidents as evidence of his allegedly hostile work environment, the Court will summarize each of those incidents here: (1) Someone in the workplace posted an offensive cartoon depicting an African American. Brooks told Plaintiff that such behavior would not be permitted. Brooks then instructed Plaintiff to sign the back of the cartoon, ostensibly in recognition that Plaintiff understood that posting offensive cartoons was impermissible. Plaintiff refused to sign. Then Brooks called Plaintiff a dumb, f***ing jackass or a "stupid, f***ing d***head"; (2) Brooks once said to Plaintiff, "Ven aqui," which means "Come here" in Spanish. Plaintiff considered that to be demeaning; (3) In 1994 or 1995, someone had posted an image of Fidel Castro in the workplace. Plaintiff considered that incident to be harassing, yet Plaintiff did not complain about the picture nor did he remove the picture while he was on supervisory duty; (4) An 11 ½ × 8-inch sheet of paper containing a religious statement was posted on a wall in Brooks' office. Plaintiff was offended by the statement and felt it was improper. Plaintiff complained to *1329 the EEOC, Lt. Wright, and Cpt. Kovacs; (5) Some unknown person or persons in the workplace paired certain employees' names with photographs of other people. Plaintiff's name was attached to a photo of an Asian girl. Plaintiff believes that this implied that he was homosexual or that he was "Oriental because of the slanting of my eyes"; (6) Brooks told Plaintiff that a malfunctioning copy machine was not working because it was Puerto Rican.
The Court's own reading of Plaintiff's deposition transcript uncovered three additional incidents that evidence a tense relationship between Brooks and Plaintiff. After Plaintiff returned from Puerto Rico for his father's funeral, Brooks asked Plaintiff if he enjoyed his "vacation." On another occasion, Brooks hung up on Plaintiff when Plaintiff called Brooks' home seeking an extra day of vacation. At another time, Brooks was present when Plaintiff's co-worker, Officer Nunez, told Plaintiff to kill himself if he could not handle the pressure at work. While Brooks may have acted callously toward Plaintiff at these times, bad manners alone do not a Title VII discrimination claim make.
Plaintiff need not show "tangible psychological injury" to sustain his hostile work environment claim; however, he needs to show more than "merely offensive" behavior on the part of his employer. Harris v. Forklift Systems, Inc., 510 U.S. 17, 21, 114 S.Ct. 367, 126 L.Ed.2d 295 (1993). This Plaintiff has not accomplished. The Court finds that Plaintiff's claims of racial discrimination in the instant case fall far short of the "severe or pervasive" standard. While the Court does not employ a "mathematically precise test," Harris, 510 U.S. at 22, 114 S.Ct. 367, it may evaluate several factors to determine whether Plaintiff has established a viable hostile work environment claim. Among these factors are the following: the frequency of the discriminatory conduct, the severity of that conduct, the physical threat or humiliation caused by the actions, and the degree to which the behavior interferes with an employee's work performance. Id. at 23, 114 S.Ct. 367.
The incidents detailed above are relatively infrequent in light of the six or so years Plaintiff had spent working under Brooks' supervision before he filed this lawsuit. In addition, these occurrences do not appear to show physical threats or particular humiliation directed at Plaintiff as a Puerto Rican. Moreover, Plaintiff presents no evidence that his work performance has been affected in any way by this alleged discrimination. Rather, these events show only Plaintiff's sensitivity and propensity to take offense at isolated comments directed not to his Puerto Rican race/identity, but rather to issues as varied as religion (the paper in Brooks' office), politics (the picture of Castro), and language/culture (Brooks' use of Spanish). Plaintiff was offended by each of these statements, but taken as a whole, a reasonable person could not find that these instances are sufficiently "severe" or "pervasive" to sustain a charge of racial discrimination. See Harris, 510 U.S. at 21-22, 114 S.Ct. 367 (identifying subjective and objective tests in hostile work environment cases).
Indeed, the implication of race, insofar as Plaintiff as described his race as Puerto Rican, is tenuous at best. With respect to the derogatory representation of an African American in a cartoon, Brooks himself told Plaintiff that posting of such a racially offensive cartoon is impermissible. Even granting that Brooks expressed anti-Puerto Rican animus when he commented about the non-working copy machine being Puerto Rican, this sole comment respecting Plaintiff as Puerto Rican is hardly "pervasive" for Title VII purposes.
Because the Court finds that summary judgment should be granted as to Count I, the Court now turns to Counts II-IV, which are state law claims.
Counts II-IV
Plaintiff brings Counts II-IV against County alone. These Florida state law *1330 claims allege the County's negligent hiring (Count II), negligent supervision (Count III), and negligent retention (Count IV) in connection with the events described earlier in this Order. Plaintiff acknowledges that the Court possesses only "pendent jurisdiction to redress" these three remaining claims. See Complaint at ¶ 2e. In exercising its supplemental jurisdiction, see 28 U.S.C. § 1367, the Court holds that summary judgment shall be entered as to each of these causes of action.
County argues that Counts I-IV fail as a matter of law because Plaintiff seeks damages for emotional distress, Florida law requires that emotional distress in a negligence claim "must flow from physical injuries the plaintiff sustained in an impact" R.J. v. Humana of Fla., Inc., 652 So.2d 360, 362 (Fla.1995) (describing Florida's "impact rule"), and Plaintiff has made no showing of any physical injuries he sustained as a result of County's negligence. The Court observes that Plaintiff's Memorandum In Opposition To Defendants' Motion For Summary Judgment does not respond to County's motion for summary judgment as to Counts II-IV. However, even assuming that Plaintiff's Complaint complies with the requirements of Florida's impact rule to sustain Counts II-IV for motion to dismiss purposes, see Weld v. Southeastern Companies, Inc., 10 F.Supp.2d 1318, 1323 (M.D.Fla.1998) (granting motion to dismiss negligent supervision cause of action for failure to state a claim where plaintiff failed to satisfy Florida's impact rule in her complaint), a non-moving party may not rely on the pleadings alone in opposing summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Rather, once the burden shifts to Plaintiff to show a genuine issue of material fact, as has happened here, Plaintiff must present evidence in the form of affidavits, depositions, answers to interrogatories, or admissions on file. See Fed.R.Civ.P. 56(c).
The Court has read the entire deposition transcript of Plaintiff (with accompanying exhibits), which Defendants filed in support of their motions for summary judgment. The transcript does not present any genuine issue of material fact as to any element of Plaintiff's claims for negligent hiring, negligent supervision, or negligent retention. Although Plaintiff seeks damages other than emotional distress,[3] he does not offer any evidence beyond his Complaint that he has endured any damages whatsoever. Accordingly, Plaintiff has failed to carry his burden as to Counts II, III, and IV. Summary judgment is GRANTED as to each count of Plaintiff's Complaint.
NOTES
[1] County argues that Plaintiff's national origin discrimination claim, unlike a racial discrimination claim, is not recoverable under section 1981. This argument does not provide a basis for the grant of summary judgment as Plaintiff alleges that Defendants "subjected Plaintiff to racial discrimination consisting of, but not limited to, racial slurs about Puerto-Rican-Americans." Complaint at ¶ 16 (emphasis added).
Similarly, in his opposition to summary judgment, Plaintiff frames his claim in terms of discrimination premised on race, and not necessarily national origin. See Plaintiff's Memorandum In Opposition To Defendants' Motion For Summary Judgment at 1-2. While the sociological constructs that differentiate "national origin" from "race" are complex and beyond the scope of this Order, the Court notes that Plaintiff has not described his race other than to state that he is of Puerto Rican ancestry. But see Cariddi v. Kansas City Chiefs Football Club, Inc., 568 F.2d 87, 88 (8th Cir.1977) (discussing section 1981 cases in which Puerto Rican plaintiff claimed national origin discrimination and not racial discrimination).
[2] Plaintiff's Complaint titles Count I as "Violation of Section 1981," but Plaintiff explicitly alleges Title VII violations against Defendants in his Complaint at ¶¶ 1, 2a, as well as implicitly at ¶ 28. See also Ferrill v. The Parker Group, Inc., 168 F.3d 468, 472 (recognizing that "the test for intentional discrimination in suits under § 1981 is the same as the formulation used in Title VII discriminatory treatment cases.") (citation omitted).
[3] Plaintiff alleges impairment of reputation; stress, anxiety, and emotional distress; significant past and future pain and suffering; and medical expenses. See Complaint at ¶¶ 44 (Count II), 51 (Count III), and 58 (Count IV).
| {
"pile_set_name": "FreeLaw"
} |
566 F.2d 1039
BENDIX HOME SYSTEMS, INC., Plaintiff-Appellant,v.HURSTON ENTERPRISES, INC., et al., Defendants-Appellees.
No. 77-2569
Summary Calendar.*
United States Court of Appeals,Fifth Circuit.
Jan. 30, 1978.
Robert E. Austin, Jr., Timothy A. Burleigh, Leesburg, Fla., for plaintiff-appellant.
Henry E. Coleman, Tavares, Fla., for defendants-appellees.
Appeal from the United States District Court for the Middle District of Florida.
Before THORNBERRY, RONEY and HILL, Circuit Judges.
PER CURIAM:
1
Bendix Home Systems, Inc., a Michigan corporation, sued Hurston Enterprises, Inc., Capital Mobile Homes, Inc., and Service Contract Company, Inc., Florida corporations, to recover $45,121 owed Bendix from the sale of four custom built mobile homes to Capital. Service Contract Company counterclaimed against Bendix for $34,000 which Bendix owed Service for warranty, service and repair operations on mobile homes. The parties stipulated to the amounts involved. Because Capital was insolvent at the time of the suit, Bendix sought to set aside the separate corporate identities of the three companies and to aggregate their assets.1 The case was tried to the court which held that Bendix had not, as a matter of law, met its burden to demonstrate that the corporate entities should be disregarded and entered judgment for Bendix against Capital for $45,121 and Service against Bendix for $34,000.
2
The trial court applied the test for disregard of corporate entities set out in Berger v. Columbia Broadcasting System, 453 F.2d 991, 995 (5 Cir. 1972). Although Berger involved a suit in a Florida district court, the law which was applied by agreement of the parties was that of New York. Id. at 994. We, however, are governed by the general rule that a federal court sitting in a diversity case must apply the law of the state in which it sits. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).2 We must, therefore, determine whether there is any material difference between Florida's law and the test adopted by the trial court and whether the trial court was correct in its conclusion that there was no evidence of conduct warranting disregard of the corporate entity.
3
The test set out in Berger requires that a plaintiff seeking to set aside a corporate identity must show that there has been:
4
(1) Control, not mere majority or complete stock control, but complete domination, not only of finances, but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; and
5
(2) Such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest and unjust act in contravention of plaintiff's legal rights; and
6
(3) The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.
7
Florida applies a rule that the separate identities of two or more corporations will be disregarded on a showing that one corporation is a "mere instrumentality" of the other, Aztec Motel v. State ex rel. Faircloth, 251 So.2d 849 (Fla.1971); Unijax, Inc. v. Factory Insurance Association, 328 So.2d 448 (Fla.App.1976); St. Petersburg Sheraton Corp. v. Stuart, 242 So.2d 185 (Fla.App.1971), and that the corporation is a device or sham to mislead creditors or exists for fraudulent purposes. Gross v. Cohen, 80 So.2d 360 (Fla.1955); Computer Center, Inc. v. Vedapco, Inc., 320 So.2d 404 (Fla.App.1975); Sirmons v. Arnold Lumber Co., 167 So.2d 588 (Fla.App.1964). We think that there is no material difference between the Berger requirements under which a plaintiff must show that the individual or corporation sought to be held liable completely "dominated" the other corporation and used that domination to commit an unjust act or wrong and the Florida rule which requires a finding of mere instrumentality and that the instrument corporation was used to mislead the creditor or for fraudulent purposes. While the trial court was technically incorrect in applying Berger the lack of material difference between the law applied and the law which should have been applied permits us to pass to the question whether Bendix failed, as a matter of law, to demonstrate that the corporate identities should be disregarded.
8
In any suit to disregard the corporate entity, it is of primary importance to examine the relationships between the corporations and individuals involved. In the present case Bendix seeks to treat the assets of Hurston Enterprises, Inc., Capital Mobile Homes, Inc., and Service Contract Company, Inc. as one fund. Bendix did not sue Edward Hurston individually and does not seek to hold him liable in this action. This requires us as a reviewing court to look to the actions of Edward Hurston as president of Hurston Enterprises, Inc. and to determine whether Hurston Enterprises, Inc., the parent company, so controlled the activities of its subsidiaries that they were no more than mere instrumentalities used to mislead creditors.3
9
The trial court held that as a matter of law the plaintiff had failed to carry its burden to show conduct warranting a disregard of the corporate entity. The three defendant corporations are close, private corporations. Edward E. Hurston owns around 80% Of Hurston Enterprises, Inc. shares. He was president of Hurston Enterprises and one of its directors. Hurston Enterprises owned all of the stock in Capital Mobile Homes and Service Contract Company.
10
Florida courts have long held that a corporate entity will not be ignored simply because the number of stockholders is few unless the circumstances are such as would warrant the same disregard of the entity were there many stockholders. Sirmons v. Arnold Lumber Co., 167 So.2d 588 (Fla.App.1964). Thus the fact that Hurston Enterprises, Inc. owned all of Capital and Service stock does not permit the court to disregard the separate identities unless there are other aggravating circumstances.
11
Bendix alleged that the three corporations have some common directors and executives, that Capital was grossly undercapitalized, that Capital and Service paid a salary to Mr. Hurston while Hurston Enterprises did not, and that the formal legal requirements with respect to Capital and Service were only loosely observed. An independent examination of the record reveals that despite these allegations Bendix failed to show that Hurston Enterprises, Inc. exercised an impermissible degree of control over Capital or Service or that Capital or Service were treated as one by the parent company. The presence of common directors, absent a showing that Hurston Enterprises manipulated them or that they treated the subsidiaries as one with each other and the parent company, is not evidence requiring a court to pierce the corporate veil. Capital Mobile Homes, Inc. had $5,000 capitalization. We cannot say that this is gross undercapitalization. Capital and Service maintained separate bank accounts, were separately listed in the telephone book, utilized separate stationery and substantially complied with the formal requisites of corporate existence. The $250 per week salary paid to Hurston by Capital and Service was not an amount which permits us to infer that either Edward Hurston or Hurston Enterprises was bleeding the other two companies.4
12
Florida law requires, in addition to a finding of mere instrumentality, that the corporate structure be used to mislead a creditor. The record shows that Bendix was not misled concerning the financing of the custom built mobile homes. It is true that general inventory mobile homes were "floor planned". The four custom built homes, however, were released to Capital by Bendix before any payment was received. Bendix now alleges that it took those actions only because Capital agreed to give Bendix a check at the time that the papers were transferred and agreed that the check could be cashed within thirty days. We need not resolve the dispute centering around that agreement. We set out these financing details only because they clearly indicate that Bendix was undeceived about Capital's financial position and that Bendix had reason to know from its past experience with floor planning that it would have to look to Capital for payment of the amounts owed on them.5 Having let the mobile homes and the title papers pass to Capital before it received payment, Bendix cannot now claim that Capital's corporate structure involved it in its present position.
13
We agree with the district court that there is no evidence warranting the disregard of the corporate entities of Hurston Enterprises, Capital Mobile Homes and Service Contract Company. The district court is AFFIRMED.
*
Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5 Cir., 1970, 431 F.2d 409, Part I
1
Disregard of the corporate entities would have permitted Bendix to set off the $34,000 it owed Service Contract Company against the debt that Capital Mobile Homes owed Bendix
2
We voice no opinion on the correctness of the Berger court's decision to apply New York law. Florida law may direct that the court honor the agreement of the parties. That question is not before us in this diversity case and we therefore apply the law to which Erie directs us
3
During the trial Bendix made much of the fact that the bank which had "floor planned" Capital's inventory of mobile homes had extended credit to Capital on the basis of Mr. Hurston's individual guarantee. While this circumstance may have been some indication that the line between Hurston as an individual and Capital was somewhat fuzzy, it is no indication that the lines between the three corporations were not properly maintained
4
As the Florida court has said in an analogous situation involving a creditor seeking to hold liable individual stockholders:
In order to (enter an order for) individual stockholders to show cause why they should not be held personally accountable for the corporation's debts, there should be a preliminary showing that the corporation is in actuality the alter ego of the stockholders and that it was organized or after organization was employed by the stockholders for fraudulent or misleading purposes, or in some fashion that the . . . corporate assets depleted for the personal benefit of the individual stockholders, or that the corporate structure was not bona fidely established or, in general, that property belonging to the corporation can be traced into the hands of the stockholders.
Advertects, Inc. v. Sawyer Industries, 84 So.2d 21 (Fla.1955). In the present case there was no evidence that either Hurston Enterprises, Inc. or Service Contract Company benefits from the demise of Capital Mobile Homes.
5
In the normal floor plan arrangement Bendix sent the papers to the floor planning bank which then sent Bendix the money for the mobile homes. Bendix now says that it intended that the custom built homes would be treated in the same way, yet it released the papers to Capital rather than to the bank
| {
"pile_set_name": "FreeLaw"
} |
996 F.2d 311
NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of November 29, 1993, suspending 10th Cir. Rule 36.3 until December 31, 1995, or further order.
Thomas W. SPINDLE, Petitioner-Appellant.v.Larry B. BERRONG, Jr., Respondent-Appellee.
No. 93-3056.
United States Court of Appeals, Tenth Circuit.
June 24, 1993.
Before LOGAN, MOORE, and BRORBY, Circuit Judges.
ORDER AND JUDGMENT*
BRORBY, Circuit Judge.
1
After examining the briefs and the appellate record, this three-judge panel has determined unanimously that oral argument would not be of material assistance in the determination of this appeal. See Fed.R.App.P. 34(a); 10th Cir.R. 34.1.9. The cause is therefore ordered submitted without oral argument.
2
Mr. Spindle, a federal inmate and pro se litigant, appeals the denial of his petition for habeas corpus relief. We exercise jurisdiction and affirm.
3
Mr. Spindle, while serving in the armed services, was convicted by a court martial of felony murder, attempted sodomy, assault with intent to commit sodomy and indecent acts with a child under sixteen years of age. The convictions arose from the death of a young boy whose body had been left in an abandoned bomb shelter. Mr. Spindle was found guilty based primarily on the testimony of an eyewitness who subsequently went AWOL and was declared unavailable at trial. Additionally, Mr. Spindle confessed that he was present at the scene of the murder. Mr. Spindle was sentenced, inter alia, to life imprisonment. It is these convictions which Mr. Spindle challenges in his habeas corpus petition.1
4
We first must examine the limits of our authority in reviewing the conviction and sentence imposed by a court martial. In Dodson v. Zelez, 917 F.2d 1250 (10th Cir.1990), we set forth our scope of review:
5
1. The asserted error must be of substantial constitutional dimension;
6
2. The issue must be one of law rather than of disputed fact already determined by the military tribunals;
7
3. Military considerations may warrant different treatment of constitutional claims;
8
4. The military courts must give adequate consideration to the issues involved and apply proper legal standards.
9
Id. at 1252-53 (citations omitted). In his habeas corpus petition and in his brief, Mr. Spindle categorizes nine separate issues. Many of these complaints all relate to the pivotal issue: whether the prosecution's use of an unavailable witness' prior testimony violates the petitioner's Sixth Amendment right of confrontation. We are unable to review the rest of Mr. Spindle's alleged errors, as they relate to determinations of fact or issues not considered by the military court.
10
Private Joseph Courtney, an alleged eyewitness testified against Mr. Spindle at an Article 32 investigation, the military equivalent of a preliminary hearing. Private Courtney was subjected to extensive cross-examination, not only by Mr. Spindle's counsel but by counsel for Mr. Spindle's codefendant. Upon a finding of unavailability, the military court allowed this testimony to be introduced into evidence at Mr. Spindle's trial.
11
Private Courtney was not exactly the most credible witness. Private Courtney provided at least five differing written statements reflecting the events of that evening. In some versions, Private Courtney was not present. In another, Mr. Spindle became scared and left the scene of the murder. After the murder, Private Courtney entered into a drug rehabilitation facility as he admitted to smoking twenty to thirty bowls of marijuana a day and to using numerous other drugs. In fact, on the night of the murder Private Courtney admitted that he was "wasted."
12
In none of Private Courtney's stories was there anyone else present beside Private Courtney, Mr. Spindle, codefendant Mr. Hubbard, and the victim. Subsequent to the Article 32 hearing it was discovered that the bite mark on the victim did not match with any of these individuals. Consequently, Mr. Spindle was not afforded the opportunity to cross-examine Private Courtney on this contradiction. Similarly, petitioner was unable to use Private Courtney's theft of $275 for impeachment purposes as it occurred after the Article 32 investigation. Finally, Private Courtney suspiciously went AWOL prior to trial, fleeing with an individual whose palm print had been found in the bunker.
13
Were it left to us to evaluate the credibility of Private Courtney's testimony we may have reached a different result than the court martial. Our inquiry, however, is constrained by Ohio v. Roberts, 448 U.S. 56 (1980). In order for an unavailable witness' statement to be admissible at trial it must bear an adequate "indicia of reliability." Id. at 66. The Roberts Court further states that such guarantees of trustworthiness are found "in the accouterments of the preliminary hearing itself." Id. at 73. Thus, the law infers the indicia of reliability from the procedure; if the defendant is present, has an opportunity to cross-examine, and the witness is under oath, any statement is considered necessarily reliable. The Court in Roberts, holding a preliminary hearing automatically affords the guarantees of trustworthiness necessary to comply with the Confrontation Clause, probably did not envision testimony from such an incredible witness serving the basis for a murder conviction. Nevertheless, we are limited to consider whether defendant was present at the Article 32 hearing and was provided with the constitutional opportunity to meaningfully confront the witness. As a matter of procedure, petitioner was afforded the constitutional minimum.
14
The judgment of the district court is AFFIRMED. The mandate shall issue forthwith.
*
This order and judgment has no precedential value and shall not be cited, or used by any court within the Tenth Circuit, except for purposes of establishing the doctrines of the law of the case, res judicata, or collateral estoppel. 10th Cir.R. 36.3
1
The government has filed a notice informing this court it has elected not to respond. Inexplicably, the government has decided this case is not worth spending any time or money pursuing. We do not approve of this practice
| {
"pile_set_name": "FreeLaw"
} |
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1158
HELEN DALE,
Plaintiff - Appellant,
v.
MARYLAND DEPARTMENT OF TRANSPORTATION, MARYLAND TRANSIT
ADMINISTRATION,
Defendant - Appellee.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. Ellen L. Hollander, District Judge.
(1:13-cv-00191-ELH)
Submitted: November 30, 2016 Decided: January 11, 2017
Before GREGORY, Chief Judge, and KING and AGEE, Circuit Judges.
Affirmed by unpublished per curiam opinion.
John H. Morris, Jr., Baltimore, Maryland, for Appellant. Brian
E. Frosh, Attorney General of Maryland, Jennifer L. Katz, Eric
S. Hartwig, Assistant Attorneys General, Baltimore, Maryland,
for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Helen Dale appeals the district court’s order granting the
Maryland Department of Transportation’s and the Maryland
Transportation Administration’s motion to dismiss Dale’s race
and gender discrimination claims, brought pursuant to Title VII
of the Civil Rights Act of 1964, as amended, 42 U.S.C.A.
§§ 2000e to 2000e-17 (West 2008 & Supp. 2016); age
discrimination claims, brought pursuant to the Age
Discrimination in Employment Act of 1967, as amended,
29 U.S.C.A. §§ 621 to 634 (West 2008 & Supp. 2016); and unlawful
employment practices claims, brought pursuant to the Maryland
Fair Employment Practices Act, Md. Code Ann., State Gov’t § 20-
606(a)(1)(i) (West 2014). We have reviewed the record and find
no reversible error. Accordingly, we affirm for the reasons
stated by the district court. See Dale v. Md. Dep’t of Transp.,
No. 1:13-cv-00191-ELH (D. Md. Jan. 15, 2015). We dispense with
oral argument because the facts and legal contentions are
adequately presented in the materials before this court and
argument would not aid the decisional process.
AFFIRMED
2
| {
"pile_set_name": "FreeLaw"
} |
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 08-8522
RANDY L. VALENTINE,
Petitioner - Appellant,
v.
CECILIA REYNOLDS, Warden,
Respondent - Appellee.
Appeal from the United States District Court for the District of
South Carolina, at Florence. Henry M. Herlong, Jr., District
Judge. (4:08-cv-00979-HMH)
Submitted: May 21, 2009 Decided: May 27, 2009
Before MOTZ, TRAXLER, and AGEE, Circuit Judges.
Dismissed by unpublished per curiam opinion.
Randy L. Valentine, Appellant Pro Se. William Edgar Salter,
III, Assistant Attorney General, Donald John Zelenka, Deputy
Assistant Attorney General, Columbia, South Carolina, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Randy L. Valentine seeks to appeal the district
court’s order accepting the recommendation of the magistrate
judge and denying relief on his 28 U.S.C. § 2254 (2006)
petition. The order is not appealable unless a circuit justice
or judge issues a certificate of appealability. 28 U.S.C.
§ 2253(c)(1) (2006). A certificate of appealability will not
issue absent “a substantial showing of the denial of a
constitutional right.” 28 U.S.C. § 2253(c)(2) (2006). A
prisoner satisfies this standard by demonstrating that
reasonable jurists would find that any assessment of the
constitutional claims by the district court is debatable or
wrong and that any dispositive procedural ruling by the district
court is likewise debatable. Miller-El v. Cockrell, 537 U.S.
322, 336-38 (2003); Slack v. McDaniel, 529 U.S. 473, 484 (2000);
Rose v. Lee, 252 F.3d 676, 683-84 (4th Cir. 2001). We have
independently reviewed the record and conclude that Valentine
has not made the requisite showing. Accordingly, we deny a
certificate of appealability and dismiss the appeal. We
dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before the
court and argument would not aid the decisional process.
DISMISSED
2
| {
"pile_set_name": "FreeLaw"
} |
101 Cal.App.2d 890 (1951)
THE PEOPLE, Respondent,
v.
JOHN SAYIG et al., Appellants.
Civ. No. 14385.
California Court of Appeals. First Dist., Div. One.
Jan. 26, 1951.
Rea, Jacka & Frasse and J. E. Bean, Jr., for Appellants.
Holloway Jones, Jack M. Howard, Joseph F. DeMartini, Roger Anderson, John P. Horgan and Robert E. Reed for Respondent.
PETERS, P. J.
The state brought this proceeding in eminent domain to condemn, for highway purposes, defendants' interests, if any, in a 15-foot strip of land fronting defendants' properties. Admittedly, defendants have title to the underlying fee of the strip in question. The complaint, as amended, alleged that all of the property sought to be condemned "is subject to an easement or prescriptive right of the public for public travel thereover by vehicular and pedestrian traffic." The trial court found this allegation to be true, and further found that the bare fee title, subject to *892 the public easement, was of no value. The court also found that none of the defendants suffered any damages to the remainder of their properties by the changes made in the highway by the new improvement. The defendants appeal. They admit that they offered no evidence of the value of the underlying fee subject to the easement, and admit that the findings that their underlying titles, if they are subject to the easement, are of no value, are supported. They contend, however, that the findings that there was a public easement for highway purposes over the strip are totally unsupported by any evidence. They further urge that, regardless of the questions involving the 15-foot strip, the changes made in the highway have substantially impaired their right of access to their remaining lands, and they claim that they are entitled to compensation for this impairment.
The 15-foot strip which was taken for highway purposes extends across the front of the five pieces of commercial property owned by defendants. These properties are located on the El Camino Real in Sunnyvale near the junction of El Camino Real with the Sunnyvale-Saratoga Road. El Camino Real is one of the main highways between the cities of San Francisco and San Jose, and has existed substantially in its present location for many years. It runs generally north and south, but in the area here involved runs substantially east and west. The five pieces of property owned by defendants are located on the north side of the highway, and on each lot the respective owner operates a commercial establishment. Fronting each lot is a 15-foot strip, title to which is in the owner of the lot to which the strip is adjacent. The parties, for purposes of convenience at the time of trial, divided this strip into five parcels and designated them as parcels one, two, three, four and five. The lots behind each parcel will be designated as lots one, two, three, four and five. Parcels and lots one, two and three are contiguous and extend between Taaffe Street and Frances Street, two streets that join El Camino Real from the north. Parcels and lots four and five are contiguous and are located across Frances Street to the east of parcels and lots one, two and three. Between the lots and parcels there is a cement curb and gutter.
El Camino Real, certainly since 1910, and probably from a much earlier date, has run past the properties here involved. Originally, the highway was a two-lane paved highway 20 feet in width, and subsequently it became a three-lane paved highway. Adjoining the highway to the north was a shoulder which was oiled and gravelled. The 15-foot strip adjoins *893 this shoulder, then (since 1926) comes the curb and gutter, and then defendants' lots. There is evidence that from the center of the highway to the curb line was about 50 feet. The present improvement relocates the highway in certain respects, and in front of defendants' lots makes the highway a divided highway, so that such lots have direct access only to a one-way highway in front of their properties where the traffic is proceeding towards San Francisco. To get to the one-way highway to go to San Jose defendants have to travel various distances from 500 to 1,000 feet to the crossover. Under the new improvement, the 15-foot strip becomes an integral part of the one- way highway on which the traffic is travelling towards San Francisco.
Prior to 1925 the lots and parcels of defendants were part of an orchard abutting the highway and its shoulder. There is some evidence that prior to 1925 some automobiles occasionally travelled along the 15-foot strip to avoid the heavy traffic on the highway and its adjacent shoulder. There is also substantial evidence, however, that prior to 1925 the strip was covered with fruit trees, and admittedly was covered with weeds. Prior to 1926 there was no physical division between the parcels and lots. In 1925 the orchard was subdivided and the trees removed. The subdivider, in 1926, saw fit to construct a six-inch high cement curb and a gutter between the lots and the strip in question. Later a sidewalk was constructed in front of several of the lots and behind the curb line. Thus, since 1926, there has been a physical barrier between the lots and the parcels constituting the strip here involved. The original deeds to the subdivided area which carried title to the parcel fronting each lot contained a restriction against using the front 25 feet of the property for building purposes, but this restriction died in 1936.
Shortly after the property was subdivided the subdivider gravelled the 15- foot strip, and later permits were granted to the owners of several of the lots here involved to oil the parcel in front of their lots. After this was done the 15-foot strip, physically, was simply a continuation of the surfaced shoulder and indistinguishable from the shoulder.
Gradually, after the orchard was subdivided in 1925, the various lots here involved became improved with various types of commercial buildings. Before buildings were constructed on all of the lots here involved there is some evidence that some substantial amount of traffic travelled up and down the 15-foot strip to avoid the heavy travel on the main highway *894 and its adjacent shoulder. As the area developed commercially the strip more and more came to be used for parking purposes, and it was so used until it became part of the new development of the highway. There is substantial evidence that the parking was public parking and was unrestricted.
A brief description of each parcel and lot follows:
Parcel and Lot One:
These are owned by John Sayig. In 1935 a grocery store was constructed on the lot, and since that time the parcel in front of the lot has been used primarily for diagonal parking.
Parcel and Lot Two:
These are owned by Clarence Kay. There was a great deal of evidence introduced as to the use of these properties. Part of this lot was unimproved. On this unimproved portion Kay displayed motor vehicles and farm equipment for sale. The balance of the lot was used by Kay for a garage and service station. The portion of the parcel in front of the unimproved part of the lot was sometimes used by Kay to display his equipment, but there is substantial evidence that several times a state highway official demanded that Kay remove such equipment from the strip, and that Kay always removed the equipment upon demand. The parcel in front of the garage and service station was sometimes used by Kay for the purpose of parking cars while batteries were checked, etc. Kay commenced his business on this lot in 1937. In 1938 at the east end of the parcel there was constructed a Texaco sign which was erected on a concrete abutment or platform about 20 inches high. This abutment was about two feet wide at the highway end and bigger on the lot side. This abutment ran from the buildings on the lot and across part of the parcel in front of the lot. There is evidence that this abutment ran a little more than halfway across parcel two, which means that it ran 8 to 10 feet across the 15-foot strip.
Parcel and Lot Three:
These were purchased by Kay in 1948, about a year before the trial. Since 1931 the lot has been used for restaurant purposes, and parcel three has been used primarily for diagonal parking.
Parcel and Lot Four:
In 1930 or 1931 a fruit stand was built on this lot. Later *895 a lunch stand was added and the building gradually became a restaurant, which it is today. Parcel four is used primarily for parking purposes. These properties are owned by Peter Pangracs.
Parcel and Lot Five:
These are owned by Rufino Yglesias. The building on the lot, constructed in 1928 or 1929, harbors a barbershop, a bus depot, a restaurant and a taxi stand. Busses and taxis parked on parcel five.
The state contends that its evidence supports the finding that a public easement for highway purposes--i. e., a dedication by the owners and an acceptance by the public--attached long before the properties were fully improved. The state produced substantial evidence that prior to the building of the present improvements on the lots the witnesses could, did, and saw others drive over the 15-foot strip. This travel over the strip existed before the orchard was subdivided in 1925, but certainly has existed since the construction of the curb and gutter in 1926, and the gravelling of the area in 1927 or 1928. Since the property has been improved the strip has been used primarily for parking. The evidence on the part of the state supports the inference that such parking was public unrestricted parking, and not limited to customer parking.
[1] In addition to this testimony of use the state produced some other evidence which it claims supports the conclusion that the property owners, or some of them, recognized that the state controlled the strip in question. Lawrence Robinson, the assistant maintenance district engineer of the state and formerly maintenance superintendent of the San Jose territory, testified that in 1938 the owner of parcel five applied to the state to improve the parcel in front of his property from the curb line out, by oiling the surface. This request was denied, but permission was granted the owner to improve the surface at his own expense. The owner of parcel three, in 1941, filed an application to improve the surface of the strip in front of lot three, which application was granted. Obviously, if the strip was not subject to a public easement, and if the owners of parcels three and five claimed to be the absolute owners of the parcels, there was no necessity of applying to the state for permission to gravel or otherwise improve the parcels. Such actions certainly support the inference that these owners recognized an interest in the state in the parcels in question. *896
Laird Geddes, a state highway engineer, testified that on several occasions he asked Kay to remove his vehicles displayed for sale on parcel two, and that Kay complied with these requests. He also testified that on one occasion he asked Kay to remove gravel from the gutter in front of the curb between lot and parcel two because it was obstructing the flow of water, and Kay had done so. He also testified that the state had granted permission to Kay to install a water drainage pipe in the gutter. Such actions, of course, support an inference that Kay recognized an interest of the state in the strip in front of his lot.
The parties to this appeal agree as to the applicable law, but differ as to the application of that law to the facts. [2] The trial court referred to the public acquiring an "easement by prescription" in the strip in question. Technically, that is not correct. If the public did acquire any right to the use of the strip for highway purposes, such right was acquired under the doctrine of implied dedication and not by prescription. (See 9 Cal.Jur. p. 41, 32.) A public easement arises only by dedication. But adverse user by the state for the prescriptive period--five years--may be evidence of a dedication, and many of the rules applicable to private easements are applicable to public easements. The case of Venice v. Short Line Beach Land Co., 180 Cal. 447 [181 P. 658], presents a good summary of the various principles applicable to the law of implied dedication. At page 450 these principles are summarized as follows: "In order to constitute such dedication, or such abandonment, by the owner, his intention to that effect must appear. Such intent need not be manifested by any contract, writing, or express declaration of the owner. It may be implied from his conduct. 'If the donor's acts are such as to indicate an intention to appropriate the land to the public use, then, upon acceptance by the public, the dedication becomes complete.' (People v. Marin County, 103 Cal. [223] 228, [26 L.R.A. 659, 37 P. 203].) In that case it is said that in the case of an express dedication by words or acts, 'the intention to appropriate the land to public use is manifested by some outward act of the owner manifesting his purpose,' but that an implied dedication may be proved 'by acts or conduct not directly manifesting the intention, but from which the law will imply the intent.' As stated in Helm v. McClure, 107 Cal. [199] 204, [40 P. 437], the question 'whether a dedication of land for highway purposes has occurred in any instance is a conclusion of fact to be drawn from *897 the circumstances of the particular case; that such circumstances must clearly show an unequivocal intention, manifested by appropriate words or conduct, or both, on the part of the owner, to devote his land to the wayfaring uses of that somewhat vague entity called "the public." ' [Citing cases.] It is not necessary that the acceptance by the public be manifested by any direct action, ordinance or declaration of the public authorities. 'Such acceptance may be shown by mere user without any formal action in relation thereto by the municipal authorities.' (Monterey v. Malarin, 99 Cal. [290] 293 [33 P. 840].) 'The use of the street by the public for a reasonable length of time,' is sufficient evidence of acceptance. (Smith v. San Luis Obispo, 95 Cal. [463] 470 [30 P. 591].)" (See, also, cases collected and commented upon in 9 Cal.Jur. p. 45, 35.)
In Barnes v. Daveck, 7 Cal.App. 487, 491 [94 P. 779], the proper rule is stated as follows: "... where prescriptive title to land is claimed, it has been said that the hostile possession must be open and notorious and with intent to usurp the place of the true owner and put him out of possession [citing a case]; but the rule as to highways requires only such adverse use and occupation as is inconsistent with the owner's right to claim the exclusive use of the land; i. e., such adverse use as carries with it the assertion of an equal right by the public to use the highway."
[3] There is a general presumption that a use by other than the owner is adverse and not permissive. While this presumption is not as strong when the land is open and uncultivated and remote, as when it is enclosed, cultivated and developed (F. A. Hihn Co. v. City of Santa Cruz, 170 Cal. 436 [150 P. 62]; Whiteman v. City of San Diego, 184 Cal. 163 [193 P. 98]; City of San Diego v. Hall, 180 Cal. 165 [175 P. 889]; Schwerdtle v. County of Placer, 108 Cal. 589 [41 P. 448]), the presumption exists in either case. [4] The problem is one of fact for the trial court. (See O'Banion v. Borba, 32 Cal.2d 145, 149 [195 P.2d 10]; Weideman v. Staheli, 88 Cal.App.2d 613, 616 [199 P.2d 351]; Pratt v. Hodgson, 91 Cal.App.2d 401, 404 [204 P.2d 934].)
Tested by these standards we think that the evidence supports the findings that a public easement over the strip attached. Appellants argue that the evidence would not support a finding that there was an implied dedication prior to 1925. While there is some evidence of public travel over *898 the strip prior to that date, such evidence is not very satisfactory. There is substantial evidence, including that of the farmer who operated the orchard, that, prior to the subdivision, trees grew on the strip and that it was impassable. However, the state does not have to rely upon the public easement having come into existence prior to 1925. There is ample evidence to support the conclusion that a public easement came into existence after 1925.
Appellants argue that any use of the strip made by the public after the buildings were constructed on the lots was permissive and not adverse. It is urged that the evidence shows that the owners of the lots and parcels used the strip for their own convenience. Great emphasis is placed on the admitted fact that the Texaco sign was erected and the abutment constructed across half or more of the strip in front of lot two. That sign was not erected until 1938, and, as the state correctly points out, the evidence shows that the public easement was acquired long before that date. [5] Of course, once the public easement for highway purposes attached, title by adverse possession could not be acquired against the state. (Hoadley v. San Francisco, 50 Cal. 265; People v. Pope, 53 Cal. 437; County of Sacramento v. Lauszus, 70 Cal.App.2d 639 [161 P.2d 460].) The evidence shows that an adverse use commenced about 1926, and long before 1938 had continued long beyond the required five-year period. The evidence that vehicles displayed for sale were placed on the strip by the owner of lot two also deals with acts after 1935. Moreover, there is evidence that this owner, upon demand of highway employees, removed these vehicles. [6] The portion of the strip in front of lot five used as a taxi stand and bus stop is certainly not inconsistent with that parcel being part of the highway. Appellants also urge that most of the strip was used for customer parking and for parking by the owners and their employees. The evidence, while in conflict, supports the inference that the parking was public unrestricted parking. Appellants seem to argue that even if there was public unrestricted parking, that would not create a public easement for highway purposes because the parked cars prohibited public travel over the strip. [7] It is too clear to require further discussion that the portion of a street or highway used for public parking is as much devoted to a highway or street use as the portion over which vehicles travel.
Appellants also place much reliance on certain signs erected *899 by the owners of the lots, and urge that these signs show that any use by the public for parking was permissive and not adverse. The evidence as to these signs is not very clear. The sign adjacent to parcel one was on a watermelon stand built on a portion of lot one, and purported to reserve some area for the parking of customers of the stand. It is by no means clear from the evidence whether the space reserved for customers was inside the lot or on parcel one. Certainly, the evidence is susceptible of the inference that a portion of lot one and not parcel one was reserved for customers. The sign on parcel two read "No parking behind this point, keep driveway clear," and in 1938 was attached to the Texaco sign. Later, exactly when is not clear, the sign was moved and attached to the building on the lot. It must be remembered that these signs were erected after the public easement had attached. [8] Even if they had been erected prior to that time they would only be a factor to be considered and would not be conclusive on the issue of permissive or adverse use. (Pratt v. Hodgson, 91 Cal.App.2d 401, 405 [204 P.2d 934].)
[9] The general picture we get from the record is this: Since 1910, and probably prior thereto, the strip has been within or on the boundary of the highway. Prior to 1925, it is most difficult to ascertain the precise boundaries of the travelled area. Then in 1926, all doubt of the area intended to be included by the owners within the highway area was set at rest. The construction of the uniform curb and gutter in front of these properties removed all doubt. It is apparent that it is, to say the least, a reasonable inference that the subdivider intended that the strip should thereafter be part of the highway and should be used for travel and parking. A short time later the subdivider graded and gravelled the strip, thus making it an indistinguishable part of the shoulder adjacent to the paved highway. It is no answer to say that such actions are also consistent with an intent to reserve the strip for parking, for public parking is a highway use. After the strip was gravelled there was no physical feature to indicate any reservation for permissive use--in fact, the physical setup indicated, if it did not demonstrate, that the strip was part of the highway. This supports the finding of intent to dedicate. Public use and acceptance for far longer than the five-year period are also shown by the evidence already summarized. It follows that insofar as the judgment determines *900 the existence of a public easement over parcels one, two, three, four and five, it must be affirmed.
The second major contention of appellants involves claimed compensable damages because, so it is averred, the appellants' right of access to their respective lots has been materially impaired by the improvement. Prior to the present improvement the old highway had three lanes. Traffic travelling in either direction on this highway as it then existed could turn directly from the highway proper to any of appellants' commercial establishments. The precise nature of the present improvement is somewhat difficult to describe. While lots four and five are somewhat differently affected than lots one, two and three, for practical and legal purposes it can be stated that the highway is now physically divided in front of the properties, so that there is one highway with traffic flowing towards San Jose, and a separate highway, divided from the other by an impassable "island," with traffic flowing from San Jose. So far as lots one, two and three are concerned, the new improvement in no way affects traffic proceeding towards San Francisco. As to those three lots, such traffic has direct access to the establishments operated by the owners. This is also substantially true as to lots four and five, although some slight circuity of travel is required for San Francisco- bound traffic to reach those lots. None of the lots has direct access to the traffic lane where the traffic is proceeding south towards San Jose. Because of the center dividing strip, any vehicle travelling south towards San Jose that desires to reach any of appellants' lots has to travel past appellants' properties 500 to 1,000 feet, to where there is a crossover to the San Francisco traffic lane and proceed back to the properties. It is appellants' theory that by thus putting their properties on a one-way street, their rights of ingress and egress in one direction have been materially impaired, and that this constitutes a compensable injury. (For a general discussion of the problem see 32 Cal.L.Rev. 95; 18 So.Cal.L.Rev. 42; note in 100 A.L.R. 491.)
In contending that they are entitled to damages for this impairment of their right of access, appellants cite and place their sole reliance on the rules announced in People v. Ricciardi, 23 Cal.2d 390 [144 P.2d 799]. In that case the defendants owned busines property on a main highway. The state constructed an underpass directly in front of defendants' property. Direct access to the main highway was entirely cut off, but a service road was constructed for the use of the property. The Supreme Court held that the damage to *901 the right of ingress and egress was compensable. In so holding, the court stated several important principles:
1. "Not every depreciation in the value of the property not taken can be made the basis of an award of damages." (P. 395.) The court pointed out (p. 396) that the injury to the business of the occupant of the property is not compensable. Only damage to the property itself may be considered. The court then held, citing Rose v. State of California, 19 Cal.2d 713 [123 P.2d 505]; People v. Gianni, 130 Cal.App. 584 [20 P.2d 87]; City of Stockton v. Marengo, 137 Cal.App. 760 [31 P.2d 467], that "an abutting owner has no right to compensation by reason of diversion of traffic away from his property." (P. 396.)
2. The court then cited many cases in support of the rule that the abutting owner has the right to a free and convenient right of access to the highway on which his property abuts. [10] This right of ingress and egress attaches to the lot and is a property right as fully as the lot itself.
3. At page 399 it is stated: "We recognize that the defendants have no property right in any particular flow of traffic over the highway adjacent to their property, but they do possess the right of direct access to the through traffic highway and an easement of reasonable view of their property from such highway. If traffic normally flowing over that highway were re-routed or if another highway were constructed which resulted in a substantial amount of traffic being diverted from that through highway the value of their property might thereby be diminished, but in such event defendants would have no right to compensation by reason of such re-routing or diversion of traffic. The re-routing or diversion of traffic in such a case would be a mere police power regulation, or the incidental result of a lawful act, and not the taking or damaging of a property right. But here we do not have a mere re-routing or diversion of traffic from the highway; we have, instead, a substantial change in the highway itself in relation to the defendants' property; i. e., a re-routing of the highway in relation to defendants' property rather than a mere re-routing of traffic in relation to the highway. Defendants' private property rights in and to that highway are to be taken and damaged. It is only for such private property rights that compensation has been assessed. The court allowed no damages to be predicated on any diversion of traffic from the highway but it did properly *902 allow damages to be based on diversion of the highway from direct access to defendants' property."
[11] 4. It is for the trial judge, not the jury, to determine whether the property owner's right of access is substantially impaired. If such an impairment is found, then the extent of the impairment is for the jury.
Another case that appellants might have cited in support of these same general principles is Bacich v. Board of Control, 23 Cal.2d 343 [144 P.2d 818], which holds that a property owner suffered compensable damage when, as a result of a public improvement, his property, which was formerly located on a street running in both directions in front of his property became located in a cul-de-sac--i. e., ingress and egress to the next intersecting street in one direction was cut off.
The question with which we are presented is whether the rule of these cases should be extended to a situation where the highway runs past the property in both directions but traffic is permitted to flow only in one direction. There is undoubtedly language in the Ricciardi and Bacich cases that supports the contentions of appellants in the instant case, and the rule of those cases could easily be extended so as to apply to the situation here presented.
However, those cases recognize that diversion of traffic or mere circuity of travel, even where they result in impairment of value, are not compensable. Those cases also recognize that where an owner locates his business on a main highway and secures his main business from traffic travelling on the highway, and the state changes the highway route so that his property is no longer located on a main highway so that the business of the owner is totally destroyed, the resulting damage is not compensable. We also know that the state, under its police power, may regulate traffic without becoming liable for damages for impairment to businesses that may be adversely affected. It may create freeways or limited access highways and relocate existing highways, without conferring the right to damages on property owners adversely affected. (Holloway v. Purcell, 35 Cal.2d 220 [217 P.2d 665].) If a property owner is entitled to compensation because a divided highway is constructed in front of his property, then the same result would logically follow when one- way streets are created in cities to control traffic, or even where a double white line is placed in a highway which prohibits traffic from crossing that lane lawfully, and thus permits only one-way traffic in front of the property. The Vehicle Code abounds with other regulations that result in permitting the property *903 owner to proceed only in one direction when emerging from his property.
While it might be argued that the rules of the Ricciardi and Bacich cases should be extended so as to apply to the factual situation here involved, it is obvious that those cases do not necessarily control the factual situation here presented. The degree of impairment of the right of access was greater in those cases than in the instant one. The nature of the impairment is different. We are not without authority on the precise point involved. In Holman v. State of California, 97 Cal.App.2d 237 [217 P.2d 448] (hearing denied by the Supreme Court), a divided highway was constructed. Plaintiffs' property was located on this highway, but, because of the divided highway, northbound traffic was entirely cut off from plaintiffs' property. Such traffic, in order to reach plaintiffs' property, had to proceed to a crossover located a considerable distance from plaintiffs' property. Plaintiffs operated on their property the business of servicing trucks and highway equipment. They contended that they were entitled to damages occasioned by the building of the dividing strip which interfered with their access to their property. They also alleged that vehicles leaving their property could no longer make an immediate left-hand turn and proceed north, which resulted in a depreciation of the reasonable market value of the land. The court held that plaintiffs were not legally damaged. It distinguished the Ricciardi case on the ground that in the Holman case, the plaintiffs had access from every point on their property to the highway. The Bacich case was distinguished on the ground that that case involved the creation of a cul-de-sac. Many other cases were also cited and discussed (pp. 241-242). The court stated, in the Holman case (p. 241): "In all of the foregoing cases in which it was held that compensation must be paid there was either physical injury to an owner's property itself, as in the Reardon case, or a physical impairment of access from the property to the street, whether caused by change of grade ... or by physical impairment of the property to the street by the means of the construction of a physical barrier as in the McCandless case, or by removing the property from the through highway and placing it on a side or service road as in the Ricciardi case, or by the creation of a dead end street as in the Bacich case. None of these cases involve the division of a highway into separate roadways by concrete islands or division strips and all are factually different from the case at bar." *904
The court (p. 242) cited, with approval, the following passage from Beckham v. City of Stockton, 64 Cal.App.2d 487, 502 [149 P.2d 296]: " 'Regulations such as the prescribing of one-way traffic or the prohibiting of left-hand turns may interfere to some extent with right of access without furnishing a basis for recovery of damages even by an abutting owner. (See note, 100 A.L.R. 487, 491-493.) In Eachus v. Los Angeles etc. Ry. Co. [103 Cal. 614 (37 P. 750, 42 Am.St.Rep. 149)], supra, the court said: "The damage for which compensation is to be made is a damage to the property itself, and does not include a mere infringement of the owner's personal pleasure or enjoyment. Merely rendering private property less desirable for certain purposes, or even causing personal annoyance or discomfort in its use, will not constitute the damage contemplated by the constitution; ..." ' "
The court then said (p. 242) that "the real basis of plaintiffs' claim is diversion of traffic from their business," and under the rule stated in Rose v. State of California, 19 Cal.2d 713, 737 [123 P.2d 505], and other cases, such damages are not compensable, as a landowner has no property right in the continuation or maintenance of the flow of traffic past his property.
On page 243 the court continues: "Damages resulting from the exercise of police power are not compensable. [Citing a case.] It seems quite clear that the division of a highway is an exercise of the police power being directly intended for the public safety."
The opinion then quotes, with approval, the following passage from Mr. Justice Edmonds' concurring opinion in the Bacich case (p. 243): " 'But the travelling of additional distances occasioned by modern traffic engineering to make travel more safe and to adapt the highway system to the adequate disposal of the increasingly heavy burden of automobile traffic--as, for example, by the construction of divided highway for various types of traffic, or the re-routing of traffic by one-way regulations or the prohibition of left-hand turns--is an element of damage for which the property owner may not complain in the absence of arbitrary action. ... And, therefore, in testing the merits of the majority rule, mere "circuity of travel," in the sense that it refers to the additional distance required to be traversed because of a proper highway construction, should not be used to justify the allowance of compensation to the owner abutting upon the street in the block where the obstruction exists.' " *905
The court, in the Holman case, concluded that plaintiffs' property was open to the highway, and that "once on the highway to which they have free access, [plaintiffs] are in the same position and subject to the same police power regulations as every other member of the travelling public. ... They are liable to some circuity of travel in going from their property in a northerly direction. They are not inconvenienced whatever when travelling in a southerly direction from their property. The re-routing or diversion of traffic is a police power regulation and the incidental result of a lawful act and not the taking or damaging of a property right."
"... The damage of which plaintiffs complain would be the same if no division strip had been constructed on the highway in question but that double white lines had been painted on the highway and a 'no left turn' sign had been erected, or if the entire highway had been designated as a one-way street." (P. 244.)
This case involves precisely the problem involved in the instant case. The Ricciardi and Bacich cases are applicable only by way of analogy. It is obvious that no general rule can be laid down to cover all situations. We know that property placed in a cul-de-sac by reason of an improvement is entitled to compensation for the depreciation of the property. (Bacich case.) We know that if property is divided from the highway by an underpass and the only access to the highway is a service road, the property located on the service road has been legally damaged. (Ricciardi case.) We also know that mere relocation of a highway thus diverting traffic from the property does not legally damage the property. (Holloway v. Purcell, supra.) We also know that the construction of a divided highway in front of the property does not legally damage it. (Holman case.) The distinctions between these various situations and their impact on the actual value of the property is simply one of degree. [12] Our case falls within the rule of the Holman case. For that reason the trial court correctly held that the owners of lots one, two, three, four and five were not legally damaged by the construction of the divided highway.
The judgment appealed from is affirmed.
Bray, J., and Wood (Fred B.), J., concurred.
| {
"pile_set_name": "FreeLaw"
} |
852 P.2d 1023 (1993)
Brian M. BARNARD, Petitioner,
v.
The Honorable Michael MURPHY, Judge, Third District Court in and for Salt Lake County, Respondent.
No. 930136-CA.
Court of Appeals of Utah.
April 29, 1993.
*1024 Brian M. Barnard and John Pace, Utah Legal Clinic, Salt Lake City, for petitioner.
Colin R. Winchester, Gen. Counsel, Administrative Office of the Courts, Salt Lake City, for respondent.
Before BENCH, BILLINGS and RUSSON, JJ. (Law and Motion).
PER CURIAM:
This matter is before the court on a petition for extraordinary writ in the nature of mandamus to compel compliance with Rule 63(b), Utah Rules of Civil Procedure.
Pursuant to Rule 63(b), petitioner filed affidavits alleging prejudice and bias by Judge Michael Murphy in seven cases pending in the Third District Court in and for Salt Lake County. Those cases are:
1. Montgomery v. Montgomery, Case No. 90-490-3394 DA affidavit filedDecember 7, 1992 notice to submit filed January 19, 1993
2. State v. Blood & Phillips, Case No. 92-090-0397 DA affidavit filedDecember 7, 1992 notice to submit filedJanuary 19, 1993
3. Morris v. Morris, Case No. 89-490-3019 DA affidavit filedJanuary 5, 1993 notice to submit filedJanuary 19, 1993
4. Shelley (Brand) v. Shelley, Case No. 90-490-1380 DA affidavit filedJanuary 5, 1993 notice to submit filedJanuary 19, 1993
5. Jensen v. Frasier (Jensen), Case No. 91-490-3233 DA affidavit filedMarch 24, 1993 notice to submit filedMarch 24, 1993
6. In Re: Adoption of J.J.R., Case No. 93-290-0103 AD affidavit filedMarch 24, 1993 notice to submit filedMarch 24, 1993
7. In Re: Name Change of Richard Anthony Carroll, Case No. 93-390-0296 NC affidavit filedMarch 24, 1993 notice to submit filedMarch 24, 1993
The sole issue before this court is whether Judge Murphy complied with the procedures mandated by Rule 63(b), Utah Rules of Civil Procedure in his treatment of the affidavits.[1] Rule 63(b) provides:
Whenever a party to any action or proceeding, civil or criminal, or his attorney shall make and file an affidavit that the judge before whom such action or proceeding is to be tried or heard has a bias or prejudice, either against such party or his attorney or in favor of any opposite party to the suit, such judge shall proceed no further therein, except to call in another judge to hear and determine the matter.
Every such affidavit shall state the facts and the reasons for the belief that such bias or prejudice exists, and shall be filed as soon as practicable after the case has been assigned or such bias or prejudice is known. If the judge against whom the affidavit is directed questions the sufficiency of the affidavit, he shall enter an order directing that a copy thereof be forthwith certified to another judge (naming him) of the same court or of a court of like jurisdiction, which judge shall then pass upon the legal sufficiency of the affidavit. If the judge against whom the affidavit is directed does not question the legal sufficiency of the affidavit, or if the judge to whom the affidavit is certified finds that it is legally sufficient, another judge must be called in to try the case or determine the matter in question. No party shall be entitled in any case to file more than one affidavit; and no such affidavit shall be filed unless accompanied by a certificate of counsel of record that such affidavit and application are in good faith.
In Montgomery v. Montgomery, Judge Murphy entered an order on February 9, 1993, which incorrectly characterized a *1025 Rule 63(b) affidavit as a motion to disqualify, incorporated by reference his decisions on motions to disqualify in two other cases, including State v. Blood & Phillips, and ultimately denied the motion. The order also certified the matter to Judge Noel "in accordance with Rule 63(b) ... to pass upon the legal sufficiency of the affidavit." Judge Noel subsequently directed petitioner to file a memorandum of law "addressing whether or not counsel's lawsuit against the assigned Judge necessitates per se recusal," apparently as a result of a reference in Judge Murphy's February 9, 1993 order to his decision on a motion for recusal in State v. Blood & Phillips. Petitioner contends that Judge Murphy failed to comply with Rule 63(b) by characterizing and ruling on the affidavit as if it were a motion, and by making reference to his decisions in other cases, which risked improperly influencing the review by Judge Noel after certification. We agree.
Rule 63(b) clearly states the options available to a trial judge in response to the filing of an affidavit alleging bias or prejudice. "If the judge against whom the affidavit is directed questions the sufficiency of the affidavit, he shall enter an order directing that a copy thereof be forthwith certified to another judge (naming him) of the same court or of a court of like jurisdiction, which judge shall then pass upon the legal sufficiency of the affidavit." In the alternative, if the judge does not question the legal sufficiency of the affidavit, a substitute judge "must be called in to try the case or determine the matter in question." The rule further provides that upon receipt of the affidavit, the judge against whom it is directed "shall proceed no further therein, except to call in another judge to hear and determine the matter."
The clear import of Rule 63(b) is that a judge against whom the affidavit is directed must either recuse him- or herself, or if he or she questions the legal sufficiency of the affidavit, certify the matter to another named judge for a ruling on its legal sufficiency. The order of February 9, 1993, went beyond the procedure outlined in Rule 63(b). Accordingly, we order Judge Murphy to vacate the order of February 9, 1993 and to enter an order certifying the affidavit, without comment, to a named judge.[2] The memorandum of law on the issue of per se recusal suggested by Judge Murphy and requested by Judge Noel is not germane to the issue of disqualification for bias or prejudice under Rule 63(b).
Petitioner's further contention is that Judge Murphy has improperly delayed action on the affidavits filed in the other six identified cases. We agree that the procedure set out in Rule 63(b) contemplates expeditious action to minimize delay in adjudication and disposition of pending cases. Therefore, we further order Judge Murphy to immediately act upon the Rule 63(b) affidavits filed in the remaining six cases identified herein by making a determination whether or not he questions the legal sufficiency of the affidavits, and on that basis, either recusing himself or certifying the affidavits to a named judge.
NOTES
[1] In State v. Blood & Phillips, Case No. 92-090-0397 DA, petitioner filed a motion for recusal, which was denied by the trial court, prior to filing a Rule 63(b) affidavit. No issues pertaining to the motion for recusal are before this court.
[2] Both parties conceded at oral argument that the judge to whom a Rule 63(b) affidavit is certified may request supporting legal memoranda.
| {
"pile_set_name": "FreeLaw"
} |
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 03-1315
___________
Angelo Colasante, *
*
Plaintiff-Appellant, *
* Appeal from the United States
v. * District Court for the
* Southern District of Iowa.
Wells Fargo Corporation, doing *
business as Wells Fargo National * [UNPUBLISHED]
Home Equity Group, Inc., *
*
Defendant-Appellee. *
___________
Submitted: October 24, 2003
Filed: November 20, 2003
___________
Before LOKEN, Chief Judge, LAY and HEANEY, Circuit Judges.
___________
PER CURIAM.
In June of 2000, Angelo Colasante filed a claim with the Equal Employment
Opportunity Commission (“EEOC”) alleging that he had been subjected to persistent
unwelcome sexual advances by a female supervisor at his place of employment, Wells
Fargo Bank, N.A. (“Wells Fargo”). On February 7, 2002, the EEOC granted
Colasante an administrative release, giving him ninety days in which to file a civil
action against Wells Fargo. See 42 U.S.C. § 2000e-5(f)(1). On May 7, 2002, one day
before his federal right to sue on the claim was set to expire, Colasante filed a
complaint against Wells Fargo in the United States District Court for the Southern
District of Iowa.1
On September 2, 2002, 118 days after filing the complaint, Colasante made
arrangements with an out-of-state process server to serve Wells Fargo at its corporate
headquarters in San Francisco. The process server did not effect proper service until
10:45 a.m. on September 5, 2002, 121 days after filing the complaint. Shortly
thereafter, Wells Fargo filed a motion to dismiss the complaint as untimely pursuant
to Fed. R. Civ. P. 4(m).2 Following a hearing on Wells Fargo’s motion, the district
court determined that Colasante had demonstrated neither good cause nor excusable
neglect for his failure to serve process within the 120 days mandated by Rule 4(m),
and entered an order dismissing the complaint without prejudice. Since Colasante’s
right to sue under § 2000e-5(f)(1) had expired, however, the dismissal effectively
terminated his claim against Wells Fargo. Colasante now appeals, and we affirm.
Under Rule 4(m), a district court must engage in a two-step analysis of motions
to dismiss a complaint premised upon untimely service of process. First, it must
inquire whether the plaintiff has demonstrated good cause for his failure to serve
within the prescribed 120-day period. If the district court concludes that good cause
1
The Honorable James E. Gritzner, United States District Court for the
Southern District of Iowa.
2
Rule 4(m) of the Federal Rules of Civil Procedure provides in relevant part:
If service of the summons and complaint is not made upon a defendant
within 120 days after the filing of the complaint, the court, upon motion
or on its own initiative after notice to the plaintiff, shall dismiss the
action without prejudice as to that defendant or direct that service be
effected within a specified time; provided that if the plaintiff shows
good cause for the failure, the court shall extend the time for service for
an appropriate period.
-2-
is shown, it must extend the time for service. See Fed. R. Civ. P. 4(m) (stating that
“if the plaintiff shows good cause for the failure, the court shall extend the time for
service for an appropriate period”); see also Adams v. AlliedSignal Gen. Aviation
Avionics, 74 F.3d 882, 887 (8th Cir. 1996). Second, if good cause is not shown, the
district court still retains the discretion to grant an extension of the time for service.
Adams, 74 F.3d at 887. To warrant such a permissive extension, a plaintiff must
demonstrate excusable neglect. Coleman v. Milwaukee Bd. of Sch. Dirs., 290 F.3d
932, 934 (7th Cir. 2002). A district court’s findings at each step of the analysis will
not be set aside absent an abuse of discretion. Adams, 74 F.3d at 887.
Colasante argues that the district court erroneously concluded that he had not
demonstrated good cause for his failure to timely serve Wells Fargo. In support of
his claim, Colasante points to the following considerations: 1) Colasante’s counsel
often experienced difficulty in communicating with Colasante, as the latter lived in
California and was involved in bankruptcy proceedings during the pendency of this
litigation; 2) Colasante’s failure to effect timely service was marginal, occurring only
one day after the 120-day deadline; 3) Wells Fargo was aware of the existence of the
lawsuit and would suffer no prejudice if an extension were granted; and 4) a dismissal
would effectively terminate Colasante’s claim.
There is no comprehensive definition of what constitutes good cause sufficient
to warrant a mandatory extension under Rule 4(m). It has been stated that “[a]
showing of good cause requires at least ‘excusable neglect’–good faith and some
reasonable basis for noncompliance with the rules.” Id. At its core, however, the
standard of good cause, like many others in the law, is necessarily amorphous.
Whether or not it has been satisfied is largely dependent upon the facts of each
individual case. It is for this very reason that such a determination is entrusted to the
sound and considerable discretion of the district court in the first instance.
-3-
Under the circumstances of this case, we cannot say that the district court’s
dismissal was an abuse of discretion. Upon questioning by the district court,
Colasante could offer no legitimate reason why he waited until 118 days after filing
the complaint to arrange for service of process. Although he made veiled references
to communication problems with his attorney, Colasante conceded that he did not ask
the district court for an extension of the deadline in which to serve Wells Fargo.
Instead, Colasante stressed his reliance upon an out-of-state process server to see that
service was made in a timely manner. This is insufficient to demonstrate good cause.
See Petrucelli v. Bohringer and Ratzinger, 46 F.3d 1298, 1307 (3d Cir. 1995).
We are similarly unable to say that the district court’s conclusion that
Colasante failed to demonstrate excusable neglect was an abuse of discretion. The
district court carefully considered the reasons set forth by Colasante in support of a
permissive extension of the deadline for service. Foremost among these was that a
dismissal, while purporting to be without prejudice, would have effectively barred
Colasante’s claim against Wells Fargo. “However, ‘the running of the statute of
limitations does not require the district court to extend time for service of process.’”
Adams, 74 F.3d at 887 (quoting Petrucelli, 46 F.3d at 1306). This is all the more true
when the plaintiff can offer no legitimate reason for the untimely service of process.3
3
During the hearing on Wells Fargo’s motion to dismiss the complaint,
Colasante admitted to the district court that:
There are dynamics in the attorney-client relationship sometimes that
make cutting it close a little too uncomfortable, and this is one of the
occasions where, if I had a chance to do it over, I would get a more
comfortable time frame in which to serve the defendant. Nonetheless,
there was reliance upon a process server. I realize there are cases that
say that’s too bad . . . but I’m not going to lie to the court and try to
come up with a good excuse. That’s the facts as they are.
(Tr. of Hr’g at 11-12).
-4-
Where a dismissal without prejudice has the actual effect of terminating a
plaintiff’s claim, as is the case here, a strong argument may be made for a permissive
extension, at least when such an extension would cause little or no prejudice to the
defendant. Had the matter been addressed to us in the first instance, we may have
granted Colasante a brief extension in the time for service. But it is not our duty to
substitute our judgment for that of the district court. As Judge Posner has rightly
stated:
Where as in this case the defendant does not show any actual harm to its
ability to defend the suit as a consequence of the delay in service . . . ,
and where moreover dismissal without prejudice has the effect of
dismissal with prejudice because the statute of limitations has run since
the filing of the suit . . . , most district judges probably would exercise
lenity and allow a late service, deeming the plaintiff’s failure to make
timely service excusable by virtue of the balance of hardships. But the
cases make clear that the fact that the balance of hardships favors the
plaintiff does not require the district judge to excuse the plaintiff’s
failure to serve the complaint and summons within the 120 days
provided by the rule. It does not abolish his discretion.
Coleman, 290 F.3d at 934. In this case, the district court found that Colasante’s
untimely service was attributable to an inattention to procedural rules, and we find
nothing in the record to suggest otherwise.
For the foregoing reasons, the judgment of the district court is AFFIRMED.
______________________________
-5-
| {
"pile_set_name": "FreeLaw"
} |
236 A.2d 63 (1967)
Andrew W. TOWNSLEY, Appellant,
v.
UNITED STATES, Appellee.
No. 4310.
District of Columbia Court of Appeals.
Argued October 9, 1967.
Decided December 12, 1967.
*64 Bruce P. Saypol, Washington, D. C. (appointed by this Court), for appellant.
Lee A. Freeman, Jr., Asst. U. S. Atty., with whom David G. Bress, U. S. Atty., Frank Q. Nebeker and Lawrence Shinnick, Asst. U. S. Attys., were on the brief, for appellee.
Before HOOD, Chief Judge, MYERS, Associate Judge, and QUINN, Associate Judge, Retired.
MYERS, Associate Judge.
After trial by court without a jury, appellant was convicted of attempted house-breaking, D.C.Code § 22-103(1967), destroying property, D.C.Code § 22-403 (1967), and petit larceny, D.C.Code § 22-2202(1967). Appellant contends that the trial court erred in not granting his motion for acquittal because the evidence was such that a reasonable doubt of appellant's guilt must be entertained.
Between the close of business at 9:00 p. m. Saturday and 2:00 a. m. the following Monday morning, the glass front door of a drugstore was broken, the lock pried off the door, and drugs valued at approximately $100.00 stolen from a cabinet in the rear of the store. The record does not reveal how or by whom the crime was discovered. A police fingerprint expert dusted the glass broken out of the door and found two latent fingerprints impressed on the side of the glass that had originally been the outside surface of the door. Appellant was arrested three months later, after his fingerprints were found to match the impressions left at the scene of the crime.
At trial the arresting officer testified that appellant was known to frequent the neighborhood in which the drugstore is located. The fingerprint expert identified the latent prints he had lifted off the glass and said that they were identical to those of appellant. He also testified that the impressions could have been left on the glass a day before the crimes were committed.
Appellant's motion for acquittal at the conclusion of the Government's case was denied. He then took the stand and attempted to explain how his fingerprints were left on the glass. His testimony was highly suspect on its face and was totally discredited by a Government rebuttal witness. Appellant's testimony did not, however, supply any facts necessary to prove the Government's case.[1]
*65 Appellant's conviction was, therefore, based only on circumstantial evidence, the presence of his fingerprints on a glass surface which had once been the outside surface of a drugstore entrance. No evidence placed him near the scene around the time of the commission of the crimes and no evidence placed him inside the store.[2]
The reliability of fingerprint identification has long been recognized. United States v. Kelly, 55 F.2d 67, 69 (2d Cir.1932), 83 A.L.R. 122. Appellant does not contest the identification of his fingerprints. But "[t]he fact that fingerprints corresponding to those of an accused are found in a place where a crime was committed is without probative force unless the circumstances are such that the fingerprints could only have been impressed at the time when the crime was perpetrated. 20 Am.Jur. Evidence, section 358; 16 A.L.R., Annotation, 370; 63 A.L.R., Annotation, 1324." State v. Minton, 228 N.C. 518, 46 S.E.2d 296, 298 (1948). Appellant's fingerprints were found in a place always accessible to the public and could have been impressed at any time. That the glass on which the fingerprints were found was originally located low down in the door raises a suspicion. "But a suspicion, even a strong one, is not enough." Hiet v. United States, 124 U.S. App.D.C. 313, 314, 365 F.2d 504, 505 (1966). Many explanations consistent with appellant's innocence could account for the low position of the fingerprints. It is possible that appellant touched the glass in an incident so trivial that he simply did not remember it when he was arrested, three months later.
When the prosecution relies wholly upon circumstantial fingerprint evidence, as it does in this case, it must negate at least some of the reasonable inferences consistent with defendant's innocence that can be drawn from that evidence. Borum v. United States, D.C.Cir., 380 F.2d 595, 597 (1967).[3] Because the Government did not attempt to negate any of the reasonable inferences consistent with innocence, reasonable doubt of appellant's guilt must necessarily exist and the convictions are
Reversed with directions to enter judgments of acquittal.
NOTES
[1] Because appellant's testimony did not supplement the prosecution's case, we are not presented with the kind of problem to which Cephus v. United States, 117 U.S.App.D.C. 15, 324 F.2d 893 (1963), is addressed. Unlike the Cephus situation, the denial of a motion for acquittal did not occasion the introduction of testimony necessary to support the conviction. The case as it went to the trier of fact after appellant's testimony was in essentially the same posture as when the Government completed its case in chief.
[2] Although the glass was dusted for fingerprints while lying in the back of the store, the record does not indicate whether the glass was found in that location when the crimes were discovered.
[3] Cf. Borum v. United States, D.C.Cir., 380 F.2d 590 (1967).
| {
"pile_set_name": "FreeLaw"
} |
184 F.2d 872
GILLISv.GILLETTE et al.
No. 12145.
United States Court of Appeals Ninth Circuit.
October 30, 1950.
C. C. Tanner, Nome, Alaska, for appellant.
Chellis Carpenter, San Francisco, Cal., for appellee.
Before HEALY, BONE and ORR, Circuit Judges.
BONE, Circuit Judge.
1
This case was before us on a previous appeal, 177 F.2d 7, and was remanded with directions to make and enter further findings indicating: (1) whether appellant Gillis willfully abandoned the work before completion or abandoned it in compliance with a request made by appellee, Mrs. Gillette, (2) whether certain materials furnished for the job were furnished in compliance with a modification of an original agreement between the parties or in compliance with a new and separate agreement, and (3) if the court finds that the materials above mentioned were furnished by Gillis under a separate agreement to supply such materials, then to further find whether or not the Gillis claim of lien for these materials was filed within the proper time after ceasing to furnish them.
2
The present appeal is from the final judgment entered after the court had reconsidered the pleadings and evidence and made new findings and conclusions, including therein the findings and conclusions specifically required by our order.1 The findings and conclusions now before us appear to cover in sufficient detail the material fact issues involved in the case.
3
In respect to the contract or contracts between the parties, the court, in its Finding No. 3, found among other matters:
4
"That on August 8, 1946, plaintiff undertook to pour a full concrete basement on the land described in paragraph II hereof, to move defendants' dwelling house from its then location on the south side of Front Street in Nome, Alaska, across the street to the land described in paragraph II hereof, and to construct an addition to said dwelling house, as shown and directed by the defendants; that by the terms of the agreement, the dwelling house was to be moved in October, 1946. That the moving operations, the pouring of the full concrete basement at the new site of the dwelling house and the construction of the addition thereto were to cost the defendants the sum of Two Thousand Eight Hundred Seventy-two and 28/100 ($2872.28) Dollars. That on October 10, 1946, defendants paid to plaintiff the sum of One Thousand ($1,000.00) Dollars to apply upon the total cost. That plaintiff did not move the dwelling house during the month of October, 1946, and not until freezing weather had set in, approximately November 12, 1946; that plaintiff continued to work on said dwelling from time to time until December 15, 1946, at which time he abandoned the work, leaving it unfinished in the following particulars: * * *"2
5
In response to the requirement of our order remanding the cause for additional findings on three fact issues the court found (as noted in its Finding No. 3) (1) that appellant continued to work on appellees' dwelling house "from time to time" until December 15, 1946, at which time he "abandoned" the work, leaving the said dwelling unfinished in the five certain particulars set out in Note 2 and that this abandonment "was willful and without cause"; (2) that during "the moving and building operations" appellant (with the consent of appellees, and as a separate agreement from that in which appellees were to furnish all materials to be used in such operations) did supply at his own cost certain extra services and supplies of the reasonable value of $526.08 in the securing and purchase of which appellant acted as the agent and for the benefit of appellees and (3) that all of said services and supplies were furnished between the 12th day of November, 1946, and the 15th day of December, 1946, and the last of said supplies was furnished sometime prior to the 15th day of December, 1946, and more than ninety days prior to the filing of the purported lien herein.3
6
In covering other pertinent matters the court also made further findings: (1) that in the latter part of January, 1947, appellant informed appellees that he was going to do nothing further upon appellees' dwelling house or the concrete basement thereof, and then "quit and withdrew from the premises"; (2) that thereafter appellees completed the concrete basement at a reasonable cost of $327.50; (3) that appellant left the dwelling house "unbraced" so that it sagged five inches in the center in consequence of which the doors on the main floor would not open, all of which required appellees to have the building raised and five bracing posts put under it which work cost $190.00; (4) that appellees had thawed and excavated a sump in the basement of said dwelling at a cost of $39.75 which sump the appellant wantonly and negligently filled in and made it a total loss to appellees; (5) that plaintiff failed, neglected and refused to complete the addition to said dwelling house to be used as a dining room and defendants were compelled to complete the same at a cost of $260.00; (6) that appellant, in moving appellees' dwelling house, cut off one corner of the same and neglected and refused to repair this damage and the reasonable cost of repair will be $100.00.
7
The total amount of the last five items of costs claimed as damages by appellees and noted in the preceding paragraph is $917.25. They are the items referred to in Note 2, and it is evident from the record and the findings that the court was fully persuaded, and we think correctly so, that by an expenditure of $917.25 the appellees were able to complete the work on their dwelling house which was required to be done under their contract with appellant, a contract which he wilfully abandoned without cause before completion of the work agreed upon.
8
Other specific findings which dispose of certain contentions in the case are that appellant did not remove a certain pressure pump from appellees' dwelling house or property; that appellant was not shown to be responsible for having left the basement open, or for any damage by frost to the basement floor and the plumbing, or responsible for negligently pouring the concrete basement walls without proper foundation, or for appellees' room rent during the moving operations. Appellees claimed (and the court rejected the claim) that the matters and things referred to in this paragraph represented compensable injuries suffered by them by reason of appellant's acts. The total loss so claimed by appellees amounted to $1169.89. We think that the court properly rejected these claims of appellees.
9
Upon the facts so found the court entered Conclusions of Law reciting generally therein that appellant is not entitled to a judgment of foreclosure of his lien for labor furnished and material supplied, and that his purported lien should be discharged and cancelled of record; that appellant is entitled to judgment for $526.08 which sum represents the value of the materials furnished and paid for by him, these being supplied at the request of the appellees; that appellees are entitled to judgment in the sum of $917.25 which amount represents the damages (noted above) claimed to have been suffered by them by reason of the wrongful failure of appellant to complete the moving of appellees' dwelling house within the month of October, 1946, and by reason of appellant's willful abandonment, without cause, of the work of moving, repair and building operations on the said dwelling house.
10
The judgment of the court discharged appellant's lien and ordered it cancelled of record. It awarded to appellees the sum of $391.17 which amount represents the balance in favor of appellees after deducting from the $917.25 found to be due the appellees, the sum of $526.08 found to be due appellant. It denied attorneys' fees and costs to both parties but interest at the rate of 6% was allowed on the balance of $391.17 from date of the judgment.
11
One specific finding of fact is that the last of the supplies (represented by the item of $526.08 were furnished by appellant some time prior to December 15, 1946 and more than 90 days prior to the time of the filing of appellant's lien. This finding may not be set aside unless clearly erroneous, a conclusion not justified by the record. It correctly disposes of the question of the validity of appellant's lien so far as it covers the furnishing of such supplies.
12
It is obvious that the trial judge was also fully persuaded that appellant's willful abandonment of the work without cause deprived him of the right to foreclose his purported lien for labor performed under his contract with appellees.
13
We cannot weigh the evidence and resolve doubts concerning conflicts presented in the testimony before the trial court. There was evidence in the case which convinced the court that appellant did, without cause, wrongfully and willfully abandon work on his contract with appellees and we are not free to draw a contrary conclusion concerning this matter since we are not convinced that the finding is clearly erroneous.
14
Our attention has not been called to any Alaska case (apparently there are no Alaska cases in point) which bears directly on the legal effect of an "abandonment" of the character which the judge believed and found was revealed by the evidence. Abandonment is a fact made up of an intention to abandon and the external act by which the intention is carried into effect. If the evidence convinced the court (as it did) that these two elements united in this case, then "abandonment" was established as a fact. In this case the court formally found that the abandonment was willful and without cause. This finding is not clearly erroneous.
15
The older Oregon cases which are frequently cited as authority in Alaska courts4 appear to support the contention of appellees that where a contractor fails to perform a considerable part of the work required by his contract, his failure, regardless of his intentions, constitutes a bar to his enforcement of a lien for the work performed. This rule retains its vitality in the more recent cases5 and it seems clear that appellant's labor lien ceased to be enforceable by foreclosure when the abandonment here charged was established as a fact.
16
One further point remains to be determined. The appellant contends that even though his labor lien may not be foreclosed, he is nevertheless entitled to judgment for the reasonable value of his services. Appellant has received $1,000 for his services and the question now is whether in view of his abandonment of the work he is entitled to recover therefor a further amount. On the basis of the authority cited to us and as a result of our own research we are persuaded that the willful abandonment of the contract by the plaintiff, without cause, is a bar to any recovery of any further amount for the value of his services.6 The rule established by the authorities cited in Note 6 is to the effect that where one performs service for another which is of value to the latter, recovery may be had for the same on quantum meruit, unless there has been a willful abandonment of the undertaking by the party doing the work. The appellant in the instant case falls squarely within this exception which arises in cases of willful abandonment.
17
We conclude that the trial court clearly erred in finding that appellees were "damaged" in the sum of $917.25, this item representing the amount required to be expended by them to finish the work appellant had contracted to do. As indicated in the findings, the agreed contract price on the work was $2872.28. Appellees made an advance payment of $1,000 on this contract, leaving a balance of $1872.28 due appellant if he finished the work in accordance with his contract. While appellant forfeited his right to recover this balance when he willfully abandoned his contract, without cause, it is also true that appellees were able to finish the work called for by the contract by an expenditure of only $917.25 in addition to the $1,000 previously paid to appellant, that is, by a total expenditure of $1917.25 instead of the contract price of $2872.28. In this situation appellees did not suffer the damages they claim and are not legally entitled to recover this item of $917.25. (See Restatement of the Law of Contracts, Vol. 1, p. 533, Sec. 335, and Cf. Restatement of the Law of Contracts, Vol. 2, p. 628, par. 4.)
18
The cause is remanded with directions to enter judgment in favor of appellant for the sum of $526.08 with interest thereon at the rate of 6% from date of the original judgment until paid.
Notes:
1
After the trial of the case the court took it under advisement for about three months during which period of time trial counsel for appellees died. A memorandum of decision was then served upon both parties by the court. Counsel for appellant refused to prepare and tender proposed Findings of Fact, Conclusions and Judgment. After remand by this court the trial court was not aided by any suggestion from the parties in this action regarding the form and contents of its Findings of Fact, Conclusions of Law and Judgment which come to us on this second appeal
2
Failure to complete the full concrete basement; leaving the house unbraced causing it to sag so main floor doors would not open; failure to replace a cornice cut off in moving operations; negligently covering a sump in the basement excavation, and failure to complete an addition to the dwelling to be used as a dining room
3
The lien for labor and materials here referred to is required to be filed within 90 days after cessation of the labor and the furnishing of the materials described in the claim of lien
4
See Kohn v. McKinnon, D.C.Alaska, 90 F. 623, 625 where the court states that "By an act of the congress providing a civil government for Alaska, passed May 17, 1884, the general laws of the state of Oregonthen in force were declared to be the law of this district, so far as the same were applicable, and not in conflict with the provisions of that act or the laws of the United States." (Emphasis supplied.)
Alaska courts also rely on Oregon decisions and law for the further reason that Oregon law was formally adopted by the two Alaska Codes of 1899 and 1900, these being mainly copied from the statutes of Oregon. And to the end that adjudications by the Supreme Court of Oregon might remain as directly in point as possible, changes were sparingly made in these 1899 and 1900 Codes. For a discussion of this phase of Alaska history see author's "Introduction" in "Carter's Annotated Alaska Codes" 1900.
5
Pippy v. Winslow, 62 Or. 219, 125 P. 298; Bradfield v. Bollier, 169 Or. 425, 128 P.2d 942; Wolke v. Schmidt, 112 Or. 99, 228 P. 921. Birkemeier v. Knobel, 149 Or. 292, 40 P.2d 694
6
Tribou v. Strowbridge, 7 Or. 156; Steeples v. Newton, 7 Or. 110, 33 Am. Rep. 705; Todd v. Huntington, 13 Or. 9, 4 P. 295; Gove v. Island City M. & M. Co., 19 Or. 363, 24 P. 521; In re Murray's Estate, 56 Or. 132, 107 P. 19; Wuchter v. Fitzgerald, 83 Or. 672, 163 P. 819; Easton v. Quackenbush, 86 Or. 374, 168 P. 631; Espenhain v. Barker (Phillips v. Barker), 121 Or. 621, 256 P. 766; Rose v. U. S. Lumber and Box Co., 108 Or. 237, 215 P. 171; Wolke v. Schmidt, 112 Or. 99, 228 P. 921; State v. U. S. Fidelity Co., 144 Or. 535, 24 P. 2d 1037. See also 5 Williston on Contracts (Revised Edition) Sec. 1475; Restatement of Contracts Sec. 357
| {
"pile_set_name": "FreeLaw"
} |
107 S.W.3d 786 (2003)
Rosemary MOORE, Individually and on Behalf of the Estate of Heather Moore, Deceased, Appellant,
v.
Mark E. SUTHERLAND, M.D., and Collom & Carney Clinic Association, Appellees.
No. 06-02-00014-CV.
Court of Appeals of Texas, Texarkana.
Submitted April 16, 2003.
Decided May 22, 2003.
*788 M. Mark Lesher, Monty G. Murry, Lesher & Murry, Texarkana, for appellant.
Jeffery C. Lewis, Alan Harrel, Atchley, Russell, Waldrop & Hlavinka, LLP, William C. Gooding, Gooding & Dodson, Texarkana, for appellees.
Before ROSS, CARTER and CORNELIUS,[*] JJ.
OPINION
Opinion by Justice CORNELIUS (Retired).
Rosemary Moore, Individually and on behalf of the Estate of Heather Moore, deceased, appeals from the dismissal of her medical malpractice suit against Mark E. Sutherland, M.D. and Collom & Carney Clinic Association (the Clinic). In two points of error, Moore contends that the trial court abused its discretion: (1) by dismissing her claim for failing to file an expert report complying with the requirements of TEX.REV.CIV. STAT. ANN art. 4590i, § 13.01 (Vernon Supp.2003); and (2) by denying her request for a thirty-day extension to file a new report.
On March 3, 2000, Moore filed suit against Sutherland and the Clinic, alleging medical negligence. She alleged that, on March 5, 1998, Heather Moore was admitted to St. Michael Hospital for a gastric ulcer and reflux diagnosis. On that same date, Sutherland, a physician at the Clinic, performed an operation called "vagotomy and antrectomy." Moore was discharged from the hospital on March 13 and died on March 16 from "bile peritonitis and small bowel volvulus due to ruptured common bile duct."
Rosemary Moore, the daughter of Heather Moore, timely filed her expert report in letter form. The letter is dated May 2, 2000, from Brent H. Miedema, M.D., F.A.C.S. On August 24, 2001, Sutherland and the Clinic moved to strike the expert report and dismiss Moore's suit because the report failed to represent a good faith effort to comply with the statutory requirements of an expert report. On October 11, 2001, the trial court found that: (1) plaintiff's expert report failed to comply with Tex.Rev.Civ. Stat. Ann. art. 4590i, § 13.01(d); and (2) such failure was *789 not the result of an accident or mistake. In re Collom & Carney Clinic Ass'n, 62 S.W.3d 924, 927 (Tex.App.-Texarkana 2001, orig. proceeding). Moore now appeals.
Moore first contends that the trial court erred by dismissing her suit pursuant to Tex.Rev.Civ. Stat. Ann. art. 4590i, § 13.01. Dismissal of a cause of action under Article 4590i, Section 13.01 is treated as a sanction and is reviewed for an abuse of discretion. See Am. Transitional Care Ctrs. of Tex., Inc. v. Palacios, 46 S.W.3d 873, 877 (Tex.2001). An abuse of discretion occurs when a trial court acts in an arbitrary or unreasonable manner or without reference to any guiding principles. See Garcia v. Martinez, 988 S.W.2d 219, 222 (Tex.1999). A trial court does not abuse its discretion simply because it may decide a matter within its discretion differently than an appellate court. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 242 (Tex.1985). However, a trial court has no discretion in determining what the law is or in applying the law to the facts. Thus, "a clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion." Walker v. Packer, 827 S.W.2d 833, 840 (Tex.1992).
Tex.Rev.Civ. Stat. Ann. art. 4590i, § 13.01(d) requires a plaintiff asserting a healthcare liability claim to submit an expert report, along with the expert's curriculum vitae, as to each physician or healthcare provider named as a defendant in the suit, no later than the 180th day after filing suit. See Tex.Rev.Civ. Stat. Ann. art. 4590i, § 13.01(d). The Act describes an expert report as a written report providing "a fair summary of the expert's opinions... regarding applicable standards of care, the manner in which the care rendered by the physician or health care provider failed to meet the standards, and the causal relationship between that failure and the injury, harm, or damages claimed." Tex.Rev. Civ. Stat. Ann. art. 4590i, § 13.01(r)(6).
If a claimant furnishes a report within the time permitted, a defendant may file a motion challenging the report. See Tex. Rev.Civ. Stat. Ann. art. 4590i, § 13.01(l). The trial court shall grant the motion only if it appears to the court, after hearing, that the report does not represent a good faith effort to comply with the statutory definition of an expert report. See Tex. Rev.Civ. Stat. Ann. art. 4590i, § 13.01(l); Am. Transitional Care Ctrs. of Tex., Inc. v. Palacios, 46 S.W.3d at 877-78.
If a report omits any of the statutory elements, it cannot be a good faith effort. Id. at 879. A report that merely states the expert's conclusions about the standard of care, breach, and causation is not sufficient. Id. In determining whether the report represents a good faith effort, the trial court's inquiry is limited to the four corners of the report. Tex.Rev.Civ. Stat. Ann. art. 4590i, § 13.01(r)(6); Palacios, 46 S.W.3d at 878.
The expert report must set forth an applicable standard of care and a breach of that standard. Tex.Rev.Civ. Stat. Ann. art. 4590i, § 13.01(r)(6). The standard of care for a physician is what an ordinarily prudent physician would do under the same or similar circumstances. Palacios, 46 S.W.3d at 880. Identifying the standard of care is critical: whether a defendant breached his duty to a patient cannot be determined absent specific information about what the defendant should have done differently. Id. "While a `fair summary' is something less than a full statement of the applicable standard of care and how it was breached, a fair summary must set out what care was expected, but not given." Id.
*790 The expert's report must also contain information on causation. It is not enough for a report to contain conclusory insights about the plaintiff's claims. Bowie Mem'l Hosp. v. Wright, 79 S.W.3d 48, 52 (Tex.2002). Rather, the expert must explain the basis of the statements and link his conclusions to the facts. Id. (citing Earle v. Ratliff, 998 S.W.2d 882, 890 (Tex. 1999)).
Moore presented an expert report in letter form from Miedema. Miedema's letter, in pertinent part, states:
It is my opinion that Dr. Sutherland should have had a high index of suspicion for a bile duct leak due to his dissection in this region. The patient most likely developed her bile duct leak on 3/8/98 when she developed abdominal pain and an increased need for narcotics. Most surgeons would have instituted a diagnostic evaluation to rule out bile peritonitis between 3/9/98 and 3/13/98. Dr. Sutherland's failure to do so was below the standard of care. Had the diagnosis of bile peritonitis been made before discharge from the hospital, treatment would have prevented the patient's death.
To comply with the expert report requirement, the plaintiff must only make a good faith attempt to provide a fair summary of the expert's opinions. Tex. Rev.Civ. Stat. Ann. art. 4590i, § 13.01(1); Am. Transitional Care Ctrs. of Tex., Inc. v. Palacios, 46 S.W.3d at 875. To constitute a good faith effort, the report must discuss the standard of care, breach, and causation with sufficient specificity to inform the defendant of the conduct the plaintiff has called into question, and to provide a basis for the trial court to conclude that the claims have merit. Id.
Analyzing Miedema's report, we see that it summarizes his opinions of the standard of care, the breach, and causation in these particulars:
Standard of Care:
Dr. Sutherland should have had a high index of suspicion for a bile duct leak due to his dissection in this region.
....
Most surgeons would have instituted a diagnostic evaluation to rule out bile peritonitis between 3/9/98 and 3/13/98 [due to her developed abdominal pain and increased need for narcotics on 3/8/98.] Dr. Sutherland's failure to do so was below the standard of care.
Breach:
Dr. Sutherland's failure to do so [institute a diagnostic evaluation to rule out bile peritonitis between 3/9/98 and 3/13/98] was below the standard of care.
Causation:
Had the diagnosis of bile peritonitis been made before discharge from the hospital, treatment would have prevented the patient's death.
We believe the report is a good faith attempt to give a fair summary of the standard of care, Sutherland's breach and the time of his breach, and the cause of Moore's death. The magic words are not always used, but magical words are not necessary. Bowie Mem'l Hosp. v. Wright, 79 S.W.3d at 53. It is the substance of the opinions, not the technical words used, that constitutes compliance with the statute. The substance of these statements gave fair notice to Sutherland and the Clinic of (1) the standard of care, i.e., what most surgeons would do; (2) what Sutherland did wrong, i.e., the failure to make a diagnostic evaluation for bile peritonitis; and (3) the cause of Moore's death, i.e., the failure to diagnose and treat bile peritonitis.
*791 The expert report need not present evidence as if it were litigating the merits of the case. It may be informal, and the information presented does not need to meet the same requirements as evidence offered in a summary judgment proceeding or in a trial. Am. Transitional Care Ctrs. of Tex., Inc. v. Palacios, 46 S.W.3d at 879.
Sutherland and the Clinic contend that Miedema's report only states conclusions. We disagree. A statement that most surgeons would have instituted a diagnostic evaluation for bile peritonitis between March 9, 1998 and March 13, 1998, due to Moore's developed abdominal pain and increased need for narcotics and that Sutherland's failure to do so was below that standard of care is not a conclusionary statement. It is an opinion containing specific facts.
Sutherland and the Clinic rely on the Palacios and Wright cases to support their position that Miedema's report is inadequate. Bowie Mem'l Hosp. v. Wright, 79 S.W.3d 48; Am. Transitional Care Ctrs. of Tex., Inc. v. Palacios, 46 S.W.3d 873. But the facts in those two cases are clearly distinguishable from our case. For example, in Palacios there was no statement whatsoever in the expert report as to what was the standard of care. There was only a statement that the medical care rendered to Palacios was below the accepted and expected standard of care. There was no statement of what care was expected but not given. Of course, that was insufficient.
In Wright, our Supreme Court held that the expert report gave a fair summary of the standard of care and the breach of that standard, but held that the report did not fairly summarize the causation because the statement of causation was conclusionary. The statement of causation was "if the x-rays would have been correctly read and the appropriate medical personnel acted on those findings then Wright would have had the possibility of a better outcome." As noted by the Supreme Court, this statement did not summarize the causal relationship between the hospital's failure to meet the standard of care and the patient's injury because "the report simply opines that Barbara might have had `the possibility of a better outcome' without explaining how Bowie's conduct caused injury to Barbara."
In our case, Miedema's report charged Sutherland with negligence in failing to diagnose and treat bile peritonitis. His report specifically stated what Sutherland should have done and what happened because he failed to do it. The statement of causation is not a conclusion or a statement of a mere possibility, as in the Wright case, but is a positive statement of fact: "Had the diagnosis of bile peritonitis been made before discharge from the hospital, treatment would have prevented the patient's death."
Miedema's report did not charge Sutherland with a negligent or substandard method of treatment. Rather, it charged that Sutherland's complete failure to diagnose and complete failure to treat the bile peritonitis were below the standard of care, and that such failures caused Moore's death. We believe this report gives Sutherland and the Clinic fair notice of what Miedema considers the standard of care, how Sutherland breached that standard, and how that breach caused Moore's death.
We also find that the trial court erred in denying Moore's motion for an extension of time under Section 13.01(g) because Moore established that the failure to file a complying report was neither intentional nor the result of conscious indifference, *792 but was the result of an accident or mistake.
We review the trial court's ruling on a motion for extension of time to file a complying report under an abuse of discretion standard. See Doades v. Syed, 94 S.W.3d 664, 672 (Tex.App.-San Antonio 2002, no pet.).
Subsection (g) of Article 13.01 states:
Notwithstanding any other provision of this section, if a claimant has failed to comply with a deadline established by Subsection (d) of this section and after hearing the court finds that the failure of the claimant or the claimant's attorney was not intentional or the result of conscious indifference but was the result of accident or mistake, the court shall grant a grace period of 30 days to permit the claimant to comply with that subsection. A motion by a claimant for relief under this subsection shall be considered timely if it is filed before any hearing on a motion by a defendant under Subsection (e) of this section.
Tex.Rev.Civ. Stat. Ann. art. 4590i, § 13.01(g).
According to the statute's plain language, an extension of time must be granted if the requirements of Section 13.01(g) are met, and if the motion sets forth facts that, if true, would negate intentional or consciously indifferent conduct. Horsley-Layman v. Angeles, 968 S.W.2d 533, 536 (Tex.App.-Texarkana 1998, no pet.) (citing Dir., State Employees Workers' Comp. Div. v. Evans, 889 S.W.2d 266, 268 (Tex.1994)). Some excuse, but not necessarily a good excuse, is sufficient to warrant an extension of time to file the expert report, so long as the act or omission causing the failure to file the report was, in fact, accidental. Horsley-Layman v. Angeles, 968 S.W.2d at 536. With respect to Section 13.01(g), the movant has the burden to show some excuse of accident or mistake to establish that he or she did not act "intentionally" or with "conscious indifference." Id.; De Leon v. Vela, 70 S.W.3d 194, 200 (Tex.App.-San Antonio 2001, pet. denied). The trial court abuses its discretion if it dismisses a case when the failure to file the expert report was not intentional or the result of conscious indifference. Tex.Rev.Civ. Stat. Ann. art. 4590i, § 13.01(g); Landry v. Ringer, 44 S.W.3d 271, 275 (Tex.App.-Houston [14th Dist.] 2001, no pet.); Horsley-Layman v. Angeles, 968 S.W.2d at 536.
Here, Moore included in her written response to the motion to dismiss, a request for an extension of time under subsection (g). In this response, Moore asserted that, if her expert report was inadequate, it was the result of her attorney's mistake in misunderstanding the requirements of the statute. In the hearing on the motion for extension, Moore's attorney elaborated on his mistaken understanding of the statutory requirements, and stated to the trial court that he filed his expert report before the Texas Supreme Court rendered its opinion in the case of American Transitional Care Centers of Texas, Inc. v. Palacios, 46 S.W.3d 873, and was therefore unaware of the requirements for expert reports set out in that case. Because of his mistaken belief that the report he filed was sufficient under the law, Moore's counsel urged the trial court to grant him an extension so he could file an adequate report. Aside from Sutherland's and the Clinic's argument that the Palacios case did not change the law, they did not controvert Moore's counsel's representations that he was mistaken about the requirements of Tex.Rev.Civ. Stat. Ann art. 4590i, § 13.01, or that his failure to file what they contended was an adequate expert report was not the result of intentional disregard or conscious indifference, but was an accident and mistake.
*793 Sutherland and the Clinic contend that Moore's counsel's statements to the trial court at the hearing do not constitute evidence because the statements were not under oath. Normally, an attorney's statements must be under oath to constitute evidence. Banda v. Garcia, 955 S.W.2d 270, 272 (Tex.1997). This can be waived, however, by failing to object when the opponent of the evidence knows or should know that an objection should be made. Id.; Knie v. Piskun, 23 S.W.3d 455, 463 (Tex.App.-Amarillo 2000, pet. denied). As in Banda v. Garcia and Knie v. Piskun, the evidentiary nature of Moore's counsel's statements at the hearing was apparent. He was seeking to prove that, if his expert report was inadequate, his act in filing the inadequate report was the result of an accident or mistake, and was not in intentional disregard or conscious indifference of the law. We conclude that Sutherland's and the Clinic's failure to object to counsel's statements waived the oath requirement.
As noted earlier, the reason for failing to strictly comply with Section 13.01 need not necessarily be a good excuse; some excuse will suffice so long as the act or omission was, in fact, an accident or mistake. Landry v. Ringer, 44 S.W.3d at 275. And even admitted negligence on the part of the party seeking an extension will not defeat his right to such an extension. Roberts v. Med. City Dallas Hosp., Inc., 988 S.W.2d 398, 403 (Tex.App.-Texarkana 1999, pet. denied).
Our courts have ruled that the terms "mistake or accident" and "conscious indifference" should be construed similarly to their application in the default judgment context. Horsley-Layman v. Angeles, 968 S.W.2d at 536; In re Rodriguez, 99 S.W.3d 825 (Tex.App.-Amarillo 2003, no pet. h.). Various courts, including this one, have held that an attorney's misunderstanding of the requirements of the law or of a specific statute, as well as calendaring errors or faulty office procedures, are sufficient to show mistake or accident and a lack of conscious indifference. In re Rodriguez, 99 S.W.3d 825, 826-27; Knie v. Piskun, 23 S.W.3d at 462; Presbyterian Health Care Sys. v. Afangideh, 993 S.W.2d 319 (Tex.App.-Eastland 1999, pet. denied); Roberts v. Med. City Dallas Hosp., Inc., 988 S.W.2d at 403; Horsley-Layman v. Angeles, 968 S.W.2d at 536.
We conclude that Moore's counsel did not act with conscious indifference or intentional disregard, but showed an accident or mistake, and thus was entitled to the thirty-day extension in which to file a proper expert report. We note that, even though the trial court believed Moore had not met the legal requirements of showing accident or mistake, he nevertheless felt that Moore deserved an extension and attempted to grant her one. See In re Collom & Carney Clinic, 62 S.W.3d 924 (Tex. App.-Texarkana 2001, orig. proceeding).
For all of the reasons stated, we reverse the judgment and remand the cause to the trial court for further proceedings consistent with this opinion.
NOTES
[*] William J. Cornelius, Chief Justice, Retired, Sitting by Assignment
| {
"pile_set_name": "FreeLaw"
} |
951 F.2d 363
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.UNITED STATES of America, Plaintiff-Appellee,v.Donald CHAMBERS, Defendant-Appellant.
No. 90-50631.
United States Court of Appeals, Ninth Circuit.
Submitted Nov. 26, 1991.*Decided Dec. 12, 1991.
Before HUG, POOLE and CANBY, Circuit Judges.
1
MEMORANDUM**
2
Donald Chambers appeals his conviction following a bench trial for using and carrying a firearm during and in relation to a crime of violence, in violation of 18 U.S.C. § 924(c)(1). Chambers contends that the evidence was insufficient to support his conviction. We have jurisdiction under 28 U.S.C. § 1291 and we affirm.
3
"We will uphold a conviction if [ ]'any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. [ ]' " United States v. Torres-Medina, 935 F.2d 1047, 1048 (9th Cir.1991) (quoting United States v. Orozco-Santillan, 903 F.2d 1262, 1264 (9th Cir.1990))
4
To prove a violation of section 924(c)(1) the government must establish two elements: (1) "the firearm at issue was 'related to,' or played some role in, the underlying crime;" and (2) the defendant must have 'used' or 'carried' the firearm."1 Torres-Medina, 935 F.2d at 1048-49 (footnote omitted). The firearm need not be produced at trial. United States v. Harris, 792 F.2d 866, 868 (9th Cir.1986) (evidence based solely on the testimony of the victim is sufficient to establish the existence of a firearm).
5
Here, the government presented sufficient evidence to support the district court's conclusion that Chambers robbed postal carrier Eric Richie at gunpoint. Richie testified at trial that he was sitting in his postal jeep with the engine on while preparing to deliver the mail, when Chambers approached him with a gun. Chambers pointed the gun down towards him and ordered him to exit the jeep. Next, Chambers entered the jeep and drove away. Chambers testified that he had no weapon in his possession during the commission of the robbery. No firearm was introduced into evidence at trial.
6
By questioning the sufficiency of the evidence, Chambers appears to suggest that Richie's testimony is not credible because Chamber's testimony contradicts it. "Credibility determinations, however, are matters left to the trier of fact." United States v. Vasquez, 858 F.2d 1387, 1391 (9th Cir.1988). In convicting Chambers, the district court clearly found Richie's testimony credible.
7
In light of this evidence, we hold that a rational trier of fact could have found that Chambers used a firearm to commit the robbery. See Torres-Medina, 935 F.2d at 1050.
8
AFFIRMED.
*
The panel unanimously finds this case suitable for decision without oral argument. Fed.R.App.P. 34(a); 9th Cir.R. 34-4
**
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
1
18 U.S.C. § 924(c)(1) states in pertinent part:
Whoever, during and in relation to any crime of violence ... uses or carries a firearm, shall, in addition to the punishment provided for such crime ... be sentenced to imprisonment for five years....
18 U.S.C. § 924(c)(1) (1991).
| {
"pile_set_name": "FreeLaw"
} |
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 97-2405
ERNEST G. PORTERFIELD; ALICE PORTERFIELD
THORN; WILLARD R. MEADOWS,
Plaintiffs - Appellants,
versus
ROBERT F. HODGES, Lawyer for Mary Mood North-
ern, Incorporated; BRIAN SCHEID, Lawyer for
Mary Moody Northern, Incorporated; THE HONOR-
ABLE J. COLIN CAMPBELL; THE HONORABLE HARRY L.
CARRICO, Chief Justice, State Supreme Court,
Defendants - Appellees.
Appeal from the United States District Court for the Western Dis-
trict of Virginia, at Roanoke. Jackson L. Kiser, Senior District
Judge. (MISC-97-49)
Submitted: April 29, 1998 Decided: May 13, 1998
Before MURNAGHAN, NIEMEYER, and WILLIAMS, Circuit Judges.
Dismissed by unpublished per curiam opinion.
Ernest G. Porterfield, Alice Porterfield Thorn, Willard R. Meadows,
Appellants Pro Se.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Appellants appeal from the district court's orders dismissing
their action as frivolous under 28 U.S.C.A. § 1915(e)(2) (West
Supp. 1998), and denying their motion for reconsideration. We have
reviewed the record and the district court's opinions and find that
this appeal is frivolous. Accordingly, we dismiss the appeal on the
reasoning of the district court. Porterfield v. Hodges, No. MISC-
97-49 (W.D. Va. Oct. 6, 1997). See 28 U.S.C.A. § 1915(e)(2). We
dispense with oral argument because the facts and legal contentions
are adequately presented in the materials before the court and
argument would not aid the decisional process.
DISMISSED
2
| {
"pile_set_name": "FreeLaw"
} |
961 F.2d 208
Ferko (Joseph, Anne)v.Supreme Court of PA
NO. 91-3730
United States Court of Appeals,Third Circuit.
Mar 12, 1992
Appeal From: W.D.Pa.,
Mencer, J.
1
AFFIRMED.
| {
"pile_set_name": "FreeLaw"
} |
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
___________________________
No. 01-60145
___________________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
ANTONIA SHEFFIELD,
Defendant-Appellant.
Appeal from the United States District Court for the Southern District of
Mississippi
1:00cr53BrG
January 11, 2002
Before KING, Chief Judge, HIGGINBOTHAM and DAVIS, Circuit Judges.
PER CURIAM:1
Defendant Antonio Sheffield pled guilty pursuant to a plea agreement to possession of a
controlled substance with intent to distribute and being a convicted felon in possession of a firearm.
He reserved the right to appeal the district court’s denial of his motion to suppress evidence against
him. Sheffield makes several arguments related to the validity of the search warrant and the conduct
of the search. Finding no error, we affirm.
1
Pursuant to 5TH CIR. R. 47.5, the Court has det ermined 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.
1
The application for the warrant was based on information provided by Sheffield’s girlfriend
who told the investigating officer that the defendant had pointed a silver colored semi-automatic
pistol at her and threatened to kill her, that the defendant was a convicted felon, and that he and the
gun could be found at a particular residence. The officer verified that Sheffield was a convicted felon.
Based on these facts, the officers acted with objective good-faith reliance on the search warrant.
United States v. Shugart, 117 F.3d 838, 843 (5th Cir. 1997). The offense of possession of a firearm
by a convicted felon is a simple one. The officers had timely information from an informant regarding
the location of the gun and the defendant and independently confirmed that Sheffield was a convicted
felon. The officer who sought the warrant testified that the informant had provided correct
information in the past, although she was not always forthcoming with information. Thus, the officer
had no reason to think that she was not credible. Whether or not the residence where Sheffield was
said to live was leased to Sheffield and whether or not the defendant’s girlfriend had filed a complaint
against Sheffield based on his threats against her is immaterial. Neither do we attach any significance
to the failure of the officer to specifically state in the affidavit for the warrant that the informant was
credible or reliable. This absence of such a statement does not make the affidavit so lacking in indicia
of probable cause as to render belief in the existence of probable cause entirely unreasonable. Id. at
843-44.
These facts also support a finding of probable cause for the issuance of the search warrant.
Contrary to Sheffield’s assertions, the information supporting the warrant was not stale. Lessner
testified that the search warrant was obtained the same day that the informant advised him that she
had observed Sheffield with a firearm.
Sheffield also argues that the officers conducting the search exceeded the scope of the
2
warrant. The officers searched the pockets of a jacket located in the residence and found the crack
cocaine that forms the basis of the possession charge. The warrant authorized the officers to search
for the weapon only. A container may be searched if it is reasonable to believe that it could conceal
items of the type set forth in the warrant. United States v. Giwa, 831 F.2d 538, 543-44 (5th Cir.
1987). The searching officer testified that the pocket was “without a doubt” big enough to contain
the firearm he was searching for. Once the officer found the cocaine cookie, which was obviously
incriminating in nature, he was entitled to seize it. United States v. Hill, 19 F.3d 984, 989 (5th Cir,
1994).
Accordingly, the district court’s judgment is AFFIRMED.
3
| {
"pile_set_name": "FreeLaw"
} |
FILED
NOT FOR PUBLICATION APR 25 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
JOSE MERCEDES RIOS-FLORES, No. 08-72876
Petitioner, Agency No. A094-371-830
v.
MEMORANDUM *
ERIC H. HOLDER, Jr., Attorney General,
Respondent.
On Petition for Review of an Order of the
Board of Immigration Appeals
Submitted April 17, 2012 **
Before: LEAVY, PAEZ, and BEA, Circuit Judges.
Jose Mercedes Rios-Flores, a native and citizen of El Salvador, petitions for
review of the Board of Immigration Appeals’ (“BIA”) order dismissing his appeal
from an immigration judge’s decision denying his application for withholding of
removal and protection under the Convention Against Torture (“CAT”). We have
*
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).
jurisdiction under 8 U.S.C. § 1252. We review for substantial evidence factual
findings, Wakkary v. Holder, 558 F.3d 1049, 1056 (9th Cir. 2009), and we deny the
petition for review.
Substantial evidence supports the agency’s conclusion that the beating and
subsequent threat Rios-Flores suffered did not rise to the level of persecution. See
Hoxha v. Ashcroft, 319 F.3d 1179, 1182 (9th Cir. 2003) (beating and repeated
threats of harm or death were not “so severe as to compel a finding of past
persecution”). Substantial evidence also supports the agency’s determination that
Rios-Flores did not establish a clear probability of future persecution. See
Canales-Vargas v. Gonzales, 441 F.3d 739, 747 (9th Cir. 2006) (concluding that
threats received thirteen years prior did not establish clear probability of future
persecution). Accordingly, Rios-Flores’ withholding of removal claim fails.
In addition, substantial evidence supports the agency’s denial of CAT relief
because Rios-Flores failed to establish it is more likely than not he will be tortured
upon return to El Salvador. See Wakkary, 558 F.3d at 1067-68.
Finally, we decline to consider the new evidence Rios-Flores references in
his opening brief because our review of the BIA’s order is limited to the
administrative record. See Fisher v. INS, 79 F.3d 955, 963 (9th Cir. 1996) (en
banc).
2 08-72876
PETITION FOR REVIEW DENIED.
3 08-72876
| {
"pile_set_name": "FreeLaw"
} |
313 F.2d 215
Thomas COLLINS, Plaintiff-Appellant,v.Clark O. MURRAY and William Evans, doing business as Inland Newspaper Supply Company of Kansas City, Missouri, a partnership, Defendants-Appellees.
No. 13630.
United States Court of Appeals Seventh Circuit.
December 11, 1962.
Rehearing Denied February 26, 1963.
John P. Forester, Chicago, Ill., Tenney, Sherman, Bentley & Guthrie, Chicago, Ill., of counsel, for plaintiff-appellant.
George F. Nichols, Dixon, Ill., for defendants-appellees.
Before DUFFY, KILEY, and SWYGERT, Circuit Judges.
KILEY, Circuit Judge.
1
This is a diversity suit by Collins for an accounting of commissions, wages, and expenses, with a counterclaim by defendants for an accounting of advances to plaintiff during his employment as their sales representative. The issues were referred to a Special Master. The District Court approved the Master's report, confirmed his findings, and entered the judgment recommended for plaintiff in the amount of $5,763.85.1 Plaintiff has appealed, asserting the inadequacy of the judgment.
2
Defendants in 1952 were operating a used printing machine business in Kansas City, Missouri, buying and selling printing presses. In March, 1952, plaintiff, after conversations with defendant Evans, commenced employment with defendants' partnership. He was experienced in selling rotary and other printing presses and was engaged to locate, buy, and sell presses. After Collins had entered upon the work, a question arose about the rate of commissions to be paid upon sales of presses to be installed for the purchasers. Collins and defendant Murray exchanged several letters which led to a conference on July 30, 1952 between plaintiff and Evans and Murray. Collins worked until January 31, 1954. During that period, there is no indication that he asked for an accounting of his commissions and none that any accounting was given him by defendants. He brought this suit on May 14, 1954.
3
Plaintiff alleged an oral contract made about March 20, 1952 under which he was to receive, so far as pertinent here, a minimum commission of 10% of the total amount of the purchase price2 of printing equipment sold by him. He also alleged a supplemental oral agreement made July 30, 1952 under which he was to be given ten dollars a day for subsistence and two dollars an hour for work in dismantling and erecting presses. Defendants admitted the 10% agreement, but denied that it was to be based on the gross sales price. They admitted the agreement as to subsistence and wages, with reservations as to the amounts claimed.
4
The Master decided that plaintiff did not prove the contract of March, 1952, as alleged. His decision is based upon the finding that the 10% was not to be paid upon the gross sales price of equipment to be installed or reconditioned, but upon the sales price less the cost of dismantling, freight, reconditioning and installation.3 The question here is whether that finding, approved by the District Court after oral argument and the submission of briefs, is clearly erroneous.4
5
There was a conflict in the testimony of Collins and Evans on the question whether, at the initial March meeting, Evans orally promised Collins a 10% commission on the gross sales price. We think the correspondence between Collins and Murray shows that there was no meeting of the minds at the March discussion. Murray agreed to a 10% commission on gross sales price if Collins sold the "Davenport press" for $80,000. But he repeatedly refused to be "strapped down" with a definite, inflexible 10% commission on gross sales price. He and Collins agreed that a conference between Evans, Murray and Collins should be held to discuss all of the problems concerning their business relationship.5 The Master concluded, after hearing and reading the evidence, that defendant Evans had not bound the partnership in March, 1952, to pay 10% on the gross sales price of machinery sold by plaintiff.
6
The resolution of the conflicts in the testimony was the province of the Master. We think there is substantial evidence to support the Master's finding on this issue. We have no "definite and firm conviction that a mistake has been committed," United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1947), and we think the finding is not clearly erroneous.
7
A Chicago conference of the three men was held on July 30, 1952, to bring about a meeting of the minds on the question of the 10% rate on installed presses, and to discuss a drawing account against future commissions. In addition, wages, expenses and subsistence were discussed at that six hour meeting. Collins gave his version of the understanding reached at that meeting as to the 10% commission. He was contradicted by Evans and Murray. The Master accepted the version of the defendants. We cannot say he should have accepted Collins' version.
8
We see no merit in the contention that the Master, in applying the 10% rate on the net sales price, thereby made an agreement for the parties. The Master found that the agreement made was that testified to by defendants. Plaintiff contends that the defendants had the burden of proving that contract, and that the Master failed to require defendants to sustain that burden. There was some contrariety in defense testimony; nevertheless we think the Master's finding upon the contract has sufficient support in the record on the evidence produced by the defendants. We need not therefore discuss the question of where the burden of proof lay nor whether the Master failed to require defendants to sustain that burden. The cases cited on this point are not helpful.6
9
We have considered but need not discuss several subordinate arguments made by plaintiff on the proof and findings. They refer to matters we deem to be of no importance to the decision.
10
The remaining questions concern the Master's disallowance of interest in the amount found due plaintiff from January 1, 1954 and his taxing the costs equally against the parties. Plaintiff concedes that, in both cases, it is a question of what is equitable and just in view of all the circumstances in the case. People ex rel. Barrett v. The Farmers State Bank of Irvington, 371 Ill. 222, 224, 20 N.E.2d 502, 504 (1938). In our opinion, plaintiff's arguments on these questions do not show an abuse of discretion.7 Chemetron Corp. v. Perry, 295 F.2d 703 (7th Cir., 1961).
11
For the reasons given, the judgment is affirmed.
Notes:
1
The court also gave judgment for Evans in the amount of $693.00 upon a promissory note made by Collins. That judgment is not involved in this appeal
2
Hereinafter referred to as gross sales price
3
Hereinafter referred to as net sales price
4
There is no controversy in this court about the findings with respect to the commission on presses located by Collins and purchased by defendants, or about the 10% commission upon his sales of presses which did not have to be installed or reconditioned in the customers' plants. After detailed findings with respect to disputed items, the Master credited plaintiff with a total of $27,767.33 in commissions, wages, and expenses, and credited defendant with advances of $22,003.48. Plaintiff's judgment was for the balance, $5,763.85. None of the findings of these amounts is challenged. The only point made by plaintiff is that the court failed to apply the 10% rate to the gross sales price; and that he is entitled to $17,445.41 instead of $5,763.85
5
Collins wrote to Murray on July 12, 1952, as follows:
"* * * there seems to be a need for a 3-way discussion * * * I sense certain basic disagreements [among the three parties] * * * it should not take long to face the fundamentals and define them * * *."
6
The facts here clearly distinguish, for instance, Lewy v. Standard Plunger Elevator Co., 218 Ill.App. 306, 314 (1920). It is true that the court there, in a fact situation strikingly similar to the one at bar, put the burden of establishing its version of the contract on the defendant-employer. But the court merely held that the defendant had not carried that burden with sufficient evidence
7
Plaintiff argues, for example, that defendants have not paid his sales commissions, under any theory of what they should be, since he left their employ. But, as both the Master and appellees note, plaintiff did not, until the actual litigation was in progress, produce any accounting of the sums advanced to him by defendants for expenses
| {
"pile_set_name": "FreeLaw"
} |
376 F.Supp.2d 334 (2005)
The REPUBLIC OF ECUADOR and Petroecuador, Plaintiffs,
v.
CHEVRONTEXACO CORPORATION and Texaco Petroleum Company, Defendants.
Chevrontexaco Corporation and Texaco Petroleum Company, Counterclaim Plaintiffs,
v.
The Republic of Ecuador and Petroecuador, Counterclaim Defendants.
No. 04 Civ. 8378(LBS).
United States District Court, S.D. New York.
June 27, 2005.
*335 *336 *337 International Labor Rights Fund, Washington, DC, Terry Collingsworth, Thomas Cmar, Natacha Thys, Derek Baxter, Meredith Cohen Greenfogel & Skirnick, P.C., New York City, Robert A. Skirnick, Meredith Cohen Greenfogel & Skirnick, P.C., Philadelphia, PA, Daniel B. Allanoff, for Plaintiffs / Counterclaim Defendants the Republic of Ecuador and Petroecuador.
Jones Day, New York City, Thomas E. Lynch, Jones Day, Washington, DC, Louis K. Fisher, Gregory A. Castanias, Michael Kolis, for Defendants / Counterclaim Plaintiffs ChevronTexaco Corporation and Texaco Petroleum Company.
*338 OPINION AND ORDER
SAND, District Judge.
In this action, the Republic of Ecuador ("Ecuador" or "the Republic"), and its state-owned oil company Petroecuador, seek a permanent stay of an arbitration proceeding commenced by defendants ChevronTexaco Corporation ("ChevronTexaco") and Texaco Petroleum Company ("TexPet"), as well as other injunctive and declaratory relief. ChevronTexaco and TexPet (collectively "Defendants") counterclaim against Ecuador and Petroecuador (collectively "Plaintiffs"), alleging breach of contract and failure to indemnify an implied agent, and seeking damages as well as injunctive and declaratory relief.
The matter is currently before the Court on two motions by Plaintiffs: a motion for summary judgment on their own claims, and a motion to dismiss Defendants' counterclaims under Rule 12(b) for lack of subject matter jurisdiction and failure to state a claim. Also before the Court are various motions incidental to these two dispositive motions, such as applications to strike certain filings as untimely and for permission to file sur-replies. For the reasons stated below, Plaintiffs' motion for summary judgment is denied, and Plaintiffs' motion to dismiss the counterclaims is granted in part, denied in part, and in part left unresolved pending supplemental briefing regarding Ecuadorian law.
I. Background
Because of the different legal standards governing the various motions before the Court, it is impossible to establish a single and complete set of facts that can be assumed to be true for purposes of this entire Opinion and Order. Before turning to the individual motions, however, it is useful to outline the basic facts regarding which the parties agree,[1] and the procedural history of this action, in order to place the motions and specific factual disputes in context.
A. The Napo Concession
In 1965, following a grant to them by Ecuador of an oil concession in the Oriente region of that country, known as the "Napo Concession," TexPet and the Ecuadorian Gulf Oil Company ("Gulf") entered into a Joint Operating Agreement (the "1965 JOA").[2] TexPet was named the first "Operator" under the 1965 JOA. The 1965 JOA contained an arbitration clause, requiring the parties to submit disputes to the American Arbitration Association ("the AAA") in New York. It contained an indemnification clause providing as follows:
If the Operator shall exercise its best judgment and care to select competent personnel and competent contractors to carry out and discharge its duties and obligations under this Agreement, the Operator shall not be liable to the Parties in damages or otherwise for its acts or omissions in carrying out and discharging or failing to carry out and discharge its duties and obligations under this Agreement. The Parties shall indemnify and save the Operator harmless from all claims and demands which may *339 be made against Operator by third parties due to, arising out of, or related to the performance by the Operator of its duties under this Agreement.
(Perez Aff. Ex. C ถ 6.4.) It also contained a choice-of-law clause stating that "[t]his Agreement and the relationship of the Parties hereunder shall be governed by and interpreted in accordance with the laws of the State of New York ... except for those matters which are necessarily governed by the laws of the Republic of Ecuador." (Id. ถ 23.1.) The 1965 JOA provided that it would "inure to the benefit of and be binding upon the successors and assigns of the parties hereto and each of them respectively." (Id. ถ 26.1.)
In February 1972, a military government took power in Ecuador. The military government wished to increase the Ecuadorian state's control over, and participation in, the development of Ecuador's oil reserves. In furtherance of this goal, on June 6, 1972, the government issued Supreme Decree No. 430, which, inter alia, required TexPet and Gulf "to agree to new oil concession contracts with the Republic and to relinquish a substantial percentage of Napo Concession lands." (Pl. R. 56.1 Stmt. ถ 52; Def. R. 56.1 Resp. ถ 52.) The Ecuadorian state-owned oil company Compania Estatal Petrolera Ecuatoriana or CEPE, which after reorganization later became plaintiff Petroecuador, immediately began to exploit those portions of the relinquished land where oil production was already ongoing. TexPet and Gulf requested compensation for the land they had relinquished, but these requests were rejected.
On or about March 27, 1973, Ecuador published Decree No. 317,[3] which established a Model Contract containing certain new terms to which TexPet and Gulf were required to agree. A modified version of this contract was published on or about August 4, 1973 in Decree No. 925, and signed by Ecuador, TexPet and Gulf on or about August 6, 1973.
The contract published in Decree No. 925 and signed on August 6, 1973 (the "1973 Contract") substituted for certain previous contracts; whether the 1965 JOA was among those contracts replaced by it is one of the main points of contention in this case. As had been mandated by Supreme Decree 430 in 1972, "the 1973 Contract incorporated the terms of a 1971 Hydrocarbons Law that gave the Republic greater control over oil pricing and a larger percentage of royalties." (Pl. R. 56.1 Stmt. ถ 58; Def. R. 56.1 Resp. ถ 58.) The 1973 Contract also mandated that CEPE be allowed an option to purchase a stake in the Napo Concession, or Napo Consortium (as Plaintiffs describe the organization formed to explore the Napo Concession), in 1977. The 1973 Contract did not contain an arbitration clause.
On or about January 10, 1974, Ecuador issued Supreme Decree No. 9, mandating that CEPE would begin participating in the Napo Concession or Consortium in 1974, rather than in 1977 as had been indicated by the 1973 Contract. In ensuing negotiations, "the Republic informed Texaco[4] and Gulf that CEPE's 25% participation *340 in the Napo Consortium would begin on June 6, 1974, whether or not the Republic and the companies had reached an agreement on compensation." (Pl. R. 56.1 Stmt. ถ 63; Def. R. 56.1 Resp. ถ 63.) Given this ultimatum and fearing complete expropriation of the Napo Consortium by the Republic if it did not comply, TexPet executed a contract or "Acta" on or about June 14, 1974 (the "1974 Contract").[5] The other signatories to the compelled 1974 Contract were Gulf, CEPE, and the Republic; Plaintiffs assert that the Republic and CEPE were "acting jointly as one party" (Pl. R. 56.1 Stmt. ถ 68), but Defendants deny this.
Under the 1974 Contract, CEPE acquired a 25% share of all of the Napo Concession's operations, including "proportional parts of all investments, operational costs, obligations, royalties, [and] sales of crude for internal consumption...." (Pl. R. 56.1 Stmt. ถ 23, quoting Pls.' Ex. Q. cl. 10; Def. R. 56.1 Resp. ถ 23.) The 1974 Contract also provided for acquisition of a share of the Trans-Ecuadorian Pipeline by either CEPE or the Republic of Ecuador, but this provision was unilaterally voided by the Republic in 1975. The 1974 Contract did not itself contain a clause providing for arbitration; it did, however, contain a clause stating that "[t]he totality of the activities that will develop in the Joint Operation will be regulated by an operating agreement entered into by the parties"[6] (Pl. R. 56.1 Stmt. ถ 24, quoting Pls.' Ex. Q. cl. 8; Def. R. 56.1 Resp. ถ 24), the effect of which the parties dispute.
By 1976, Gulf became uncomfortable with its position with respect to the Republic, and began to withhold certain funds from the Republic. The Republic responded by threatening expropriation of Gulf's Napo Consortium assets. Fearing that it would lose its stake in the Consortium without receiving any compensation, Gulf negotiated an agreement, finalized on May 27, 1977, by which Gulf's remaining 37.5% stake in the Consortium was transferred to CEPE (which Plaintiffs assert was again acting as one party with the Republic). This agreement (the "1977 Contract") contained clauses addressing CEPE's lack of obligation for certain claims of or against Gulf, the effect of which the parties again dispute.
From 1977 to 1990, the Napo Concession or Consortium continued to operate with TexPet and CEPE/Petroecuador as the only partners and TexPet as the Operator. On January 22, 1985, however, TexPet and CEPE entered into an agreement providing for CEPE to take over as Operator on one year's notice (the "1985 Agreement").
On July 1, 1990, pursuant to an agreement signed by representatives of Petroecuador and TexPet the previous day (the "1990 Agreement"), Petroamazonas, a subsidiary of Petroecuador, replaced TexPet as the Operator of the Napo Concession. On March 25, 1991, Petroecuador, TexPet, and Petroamazonas entered into an "Operating Agreement" for the "Petroecuador-Texaco Consortium" (the "1991 Agreement"), which agreement specified that it would "be effective [retroactively] as of the first day of July 1990 and remain in effect until the termination of the [1973] Contract." (Supplementary Kolis Decl. Ex. 1.) *341 The expiration date of the Napo Concession as provided in the 1973 Contract was June 6, 1992.
B. Aguinda v. Texaco, the 1995 Settlement, and the Lago Agrio Action
In 1993, an action captioned Aguinda v. Texaco was brought in the United States District Court for the Southern District of New York by a group of residents of the Oriente region of Ecuador (the "Aguinda Plaintiffs"), against Texaco, Inc., which has since become a wholly owned subsidiary of defendant ChevronTexaco by merger. The Aguinda Plaintiffs "alleged that between 1964 and 1992 Texaco's oil operation activities polluted the rain forests and rivers in Ecuador...." Aguinda v. Texaco, Inc., 303 F.3d 470, 473 (2d Cir.2002). They "sought money damages under theories of negligence, public and private nuisance, strict liability, medical monitoring, trespass, civil conspiracy, and violations of the Alien Tort Claims Act," as well as
extensive equitable relief to redress contamination of the water supplies and environment, including: financing for environmental cleanup to create access to potable water and hunting and fishing grounds; renovating or closing the Trans-Ecuadorian Pipeline; creation of an environmental monitoring fund; establishing standards to govern future Texaco oil development; creation of a medical monitoring fund; an injunction restraining Texaco from entering into activities that risk environmental or human injuries, and restitution.
Id. at 473-474.
The procedural history of the Aguinda litigation is outlined in detail in Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir.2002), and Jota v. Texaco, Inc., 157 F.3d 153 (2d Cir.1998). Although it would be duplicative to recite that entire history here, a brief summary is appropriate. In November 1996, on Texaco's motion, the case was dismissed by the district court (Rakoff, J.) on grounds of forum non conveniens, international comity, and failure to join indispensable parties, specifically Ecuador and Petroecuador, whose presence was held to be necessary to effectuate the extensive equitable relief requested, but impossible to obtain in light of their sovereign immunity. Aquinda[7]v. Texaco, Inc., 945 F.Supp. 625 (S.D.N.Y.1996). The Second Circuit in 1998 vacated the dismissal and remanded the case for reconsideration, Jota, 157 F.3d at 163, holding that a forum non conveniens dismissal was inappropriate absent a requirement that Texaco consent to Ecuadorian jurisdiction, id. at 159; that the comity determination had potentially been undermined by Ecuador's change from opposing litigation of the issue in a United States court to supporting that litigation, id. at 160-161; and that the indispensable-party theory, while perhaps correct as to some of the relief requested, was insufficient to support dismissal of the entire complaint, id. at 162. On remand, Texaco having consented to jurisdiction in Ecuador, the district court again dismissed the case on grounds of forum non conveniens. Aguinda v. Texaco, Inc., 142 F.Supp.2d 534 (S.D.N.Y.2001). The Second Circuit affirmed. Aguinda v. Texaco, Inc., 303 F.3d 470 (2d Cir.2002).
During the pendency of the Aguinda litigation, TexPet, Ecuador and Petroecuador entered into several agreements regarding environmental remediation. Following a December 1994 Memorandum of Understanding, those parties in May 1995 signed a contract the name of which has *342 been translated as "Contract For Implementing Of Environmental Remedial Work and Release From Obligations, Liability and Claims" (hereinafter referred to as the "1995 Settlement"). In the 1995 Settlement, TexPet agreed to perform specified environmental remedial work in exchange for a release of claims by the Government of Ecuador and Petroecuador. This release, granted to TexPet, Texaco, Inc., and other related companies, encompassed by its terms "all the Government's and Petroecuador's claims against the Releasees for Environmental Impact arising from the Operations of the Consortium, except for those related to the obligations contracted" under the 1995 Settlement itself, which were to be "released as the Environmental Remedial Work is performed to the satisfaction of the Government and Petroecuador." (Veiga Aff. Ex. B at 9.) By a "Final Document" dated September 30, 1998 (the "1998 Final Release"), the 1995 Settlement was declared to be "fully performed and concluded," and the Government and Petroecuador "proceed[ed] to release, absolve, and discharge" TexPet and related companies "from any liability and claims by the Government of the Republic of Ecuador, PETROECUADOR and its Affiliates, for items related to the obligations assumed by TEXPET in" the 1995 Settlement. (Veiga Aff. Ex. D at Part IV.)
In May 2003, following the final dismissal of the Aguinda litigation, a group of individuals that Plaintiffs allege included "a substantial number of the Aguinda Plaintiffs" filed claims against ChevronTexaco in Lago Agrio, Ecuador. One of the laws upon which the plaintiffs in this Lago Agrio litigation based their claims, although not the only law, was an Ecuadorian environmental law enacted in 1999. Defendants contend that this law in effect allows the plaintiffs in the Lago Agrio litigation to assert, as private attorneys general, claims that belonged to Ecuador but were released by the 1995 Settlement and 1998 Final Release.
C. Procedural History of This Litigation
On June 11, 2004, ChevronTexaco and TexPet commenced an arbitration proceeding against Petroecuador before the AAA, claiming a right to indemnification for their costs and expenses in connection with the Lago Agrio litigation. They sought a monetary award for breach of contract, specifically breach of the 1965 JOA, which they alleged "require[d] Petroecuador to indemnify Chevron Texaco and TexPet for Petroecuador's share of all claims arising out of TexPet's role as Operator of the Napo Concession." (Kolis Decl. Additional Docs. Ex. 1 ถ 54.) This award was to be in the amount of "the total value of their costs, fees, and any adverse judgment rendered in the Lago Agrio lawsuit, plus interest." (Id. ถ 59.) ChevronTexaco and TexPet further sought "injunctive relief requiring Petroecuador to pay all fees, costs, and expenses associated with the Lago Agrio litigation that may be incurred in the future, including the amount of any potential adverse final judgment rendered against ChevronTexaco in the Lago Agrio litigation." (Id. ถ 62.) TexPet, although purportedly not ChevronTexaco, further sought "a declaratory judgment that the [1965] JOA's indemnity provision is valid and binding, and that Petroecuador is responsible to indemnify and hold harmless TexPet and ChevronTexaco... for ... all fees, costs and expenses relating to the Ecuadorian lawsuit, including any final judgment that may be rendered against ChevronTexaco in Ecuador." (Id. ถ 66.)
On October 15, 2004, Plaintiffs commenced an action in New York State Supreme Court, New York County, against Defendants and the AAA, seeking an order and judgment staying the arbitration proceeding *343 that had been brought by Defendants against Petroecuador. Proceeding by petition under section 7503 of the New York Civil Practice Law and Rules (CPLR) and "the exception to CPLR ง 7503(c) that was established by the New York Court of Appeals in Matarasso v. Continental Casualty Company, 56 N.Y.2d 264, 451 N.Y.S.2d 703, 436 N.E.2d 1305 (1982)," they asserted as the basis for their petition that "the Petitioners never agreed to arbitrate." (Notice of Removal Ex. 3 ถ 25.) Defendants removed the action to this Court by notice of removal filed on October 22, 2004.
Following removal, Defendants ChevronTexaco and TexPet responded to the petition by filing first a Memorandum of Law in Opposition to Motion for Preliminary Injunction (Defendants having interpreted Plaintiffs' actions in state court as a request for such a preliminary injunction), and then an Answer. The AAA responded by filing a motion to dismiss the petition pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. In a Memorandum and Order dated December 7, 2004, this Court granted the AAA's motion and dismissed the action insofar as it named the AAA as a party defendant, finding the AAA to be neither a necessary or proper party under the well-established legal principle of arbitral immunity.
Plaintiffs then moved for leave to amend their complaint, see Fed. R. Civ. Pro. 15(a), and leave to file an amended complaint was granted without opposition. Plaintiffs' Amended Complaint, filed on December 8, 2004, restates their demand for a permanent stay of arbitration proceedings, and asserts several additional claims for relief as well. At oral argument, Plaintiffs' counsel represented that these additional claims are contingent, such that the Court need address them only if it concludes that the arbitration should not be dismissed; the Amended Complaint, however, does not explicitly make the additional claims contingent upon failure of the arbitration claim.
The additional claims for relief all focus on alleged inconsistencies between positions purportedly taken by Defendants in demanding arbitration and positions taken by Texaco during the Aguinda litigation. First, Plaintiffs claim that collateral estoppel precludes relitigation of the issue of "the Republic of Ecuador and Petroecuador's sovereign immunity in this matter," because this issue "was actually litigated and determined in the District Court's 1996 Aguinda v. Texaco decision" and "[t]he District Court's 1996 holding that the Republic of Ecuador and Petroecuador enjoyed sovereign immunity in the United States was essential to the District Court's ultimate dismissal of the case under the doctrine of forum non conveniens and the affirmance of that decision by the Second Circuit." (Am.Compl. ถถ 64-67.) Second, Plaintiffs claim that the doctrine of judicial estoppel prevents Defendants from asserting that Petroecuador agreed to arbitration, because this assertion is inconsistent with the position taken by Texaco in the Aguinda litigation regarding the sovereign immunity of Ecuador and Petroecuador. Third, Plaintiffs claim that Texaco's failure to seek arbitration against Petroecuador during the pendency of the Aguinda litigation constituted a waiver of the right to arbitrate.
The prayer for relief in Plaintiffs' Amended Complaint[8] requests both "a *344 permanent and final injunction, staying the arbitration proceedings ... before the AAA" (Am. Compl. Prayer for Relief ถ (C)), and other injunctive and declaratory relief with respect to various aspects of Plaintiffs' claims. Plaintiffs request a ten-part declaratory judgment, the substance of which can be understood as comprising six parts: (1) that their collateral estoppel, judicial estoppel, and waiver theories are meritorious; (2) that "[n]either ... Ecuador nor Petroecuador has ever agreed to arbitrate any disputes with Texaco[9] in any American forum" and "there are no valid grounds upon which Texaco may demand arbitration against ... Ecuador or Petroecuador" (id. ถถ (A)(i)-(A)(j)); (3) that the 1973 Contract and not the 1965 JOA controls the contractual relationship between Plaintiffs and Defendants; (4) that Plaintiffs are "a single party for the purposes of their contractual relationship with Texaco" (id. ถ (A)(f)); (5) that neither Ecuador nor Petroecuador has waived sovereign immunity in the United States in this matter; and (6) that "Aguinda v. Texaco involved the same claims, brought by many of the same plaintiffs, as the case currently pending in Lago Agrio, Ecuador on which Texaco seeks indemnification from Petroecuador in this matter" (id. ถ (A)(c)). Plaintiffs further request that the Court "[i]ssue ... permanent and final injunction[s], estopping Texaco from denying that the Republic of Ecuador and Petroecuador enjoy sovereign immunity in the United States in this matter.... [and] barring Texaco from asserting a right to indemnification against the Republic of Ecuador and Petroecuador in this matter." (Id. ถ (B)-(C).)
In response to this Amended Complaint, Defendants, on January 10, 2005, filed an Answer containing several counterclaims. The counterclaims brought against Petroecuador are explicitly conditional, in the sense that Defendants commit not to litigate them in this Court unless "the arbitrability question raised by the Amended Complaint is decided in favor of Petroecuador." (Countercls. ถ 5.) The counterclaims against the Republic of Ecuador are not conditional.
The first counterclaim, asserted against Petroecuador only, is for "indemnification of [an] implied agent." (Countercls. ถถ 65-70.) Petroecuador, Defendants allege, is bound to indemnify ChevronTexaco and TexPet for their costs and expenses in the Lago Agrio litigation, and any final judgment therein, because after Petroecuador's entry into the Napo Consortium "TexPet... operated the Consortium as Petroecuador's agent" and "[t]he litigation expenses and costs of any judgment in the Lago Agrio litigation have been and will be incurred within the scope of the agency relationship." (Countercls. ถถ 66-67.)
The second and third counterclaims are asserted against both Ecuador and Petroecuador, and concern alleged breaches of the 1995 Settlement and 1998 Final Release. Specifically, Ecuador and Petroecuador are said to have breached those agreements by "allowing the Lago Agrio lawsuit to proceed as a private-attorney-general action," by "refusing to inform the court in Lago Agrio that they owned and released all rights to environmental remediation or restoration by TexPet in the concession area," and by not "indemnifying ChevronTexaco and TexPet for any of their costs" in the Lago Agrio litigation. (Countercls. ถ 75.) Defendants seek damages for costs that they have incurred in the Lago Agrio litigation or that they will incur in the future, and an injunction "requiring the Republic of Ecuador *345 and Petroecuador to pay all fees, costs and expenses associated with the Lago Agrio litigation that may be incurred in the future, including the amount of any potential adverse final judgment rendered against ChevronTexaco in the Lago Agrio litigation" (Countercls. ถ 81).
In Defendants' fourth counterclaim, they seek a declaratory judgment addressing the same subject matter as the first three counterclaims. The judgment that they request would declare
that Petroecuador is in breach of its obligations to indemnify TexPet for Consortium operations, that the Republic of Ecuador and Petroecuador are in breach of their obligations under the 1995 Settlement and 1998 Final Release ... and that the Republic of Ecuador and Petroecuador are obligated to intervene in the Lago Agrio litigation and inform the Ecuadorian court that they owned and released all rights to environmental remediation or restoration by TexPet in the concession area, and to indemnify and hold harmless TexPet and ChevronTexaco for any and all fees, costs and expenses relating to the Ecuadorian lawsuit, including any final judgment that may be rendered against ChevronTexaco in Ecuador.
(Countercls. ถ 84.) That is, the judgment requested by Defendants would declare the correctness of Defendants' positions with respect to both the implied-agency claim against Petroecuador and the settlement-based claims against Ecuador and Petroecuador.
Plaintiffs responded to the counterclaims, as has already been mentioned, not by answer but by motion to dismiss pursuant to Rule 12(b), asserting both lack of subject-matter jurisdiction and failure to state a claim. Shortly after filing this motion on January 31, 2005, they filed, on February 7, the motion for summary judgment that is now before the Court. On February 28, Plaintiffs filed an additional motion to stay discovery pending resolution of the two dispositive motions. Defendants also having filed their responses to the two dispositive motions on February 28, Plaintiffs then filed, on March 1, a motion to strike Defendants' responses as untimely, or, in the alternative, for a preliminary injunction and additional time to reply. Following a telephone conference on March 2, the Court ordered all proceedings in the arbitration stayed until the pending motions for permanent stay of arbitration proceedings were decided or until further order of this Court. The subsequent briefing on both dispositive motions led to a motion by Defendants for permission to file sur-replies in opposition, in response to which Plaintiffs moved for permission to file a response to the sur-replies. Oral argument was then held, and the Court reserved decision.
II. Jurisdiction and Venue
A. Subject Matter Jurisdiction Over Plaintiffs' Claims
Although no party has disputed that this Court has subject-matter jurisdiction over plaintiffs' claims, the Court must nevertheless determine whether such jurisdiction exists. Da Silva v. Kinsho Int'l Corp., 229 F.3d 358, 361 (2d Cir.2000). Plaintiffs have alleged two sources of federal subject-matter jurisdiction for the claims contained in their Amended Complaint: diversity jurisdiction under 28 U.S.C. ง 1332, and federal-question jurisdiction pursuant to 28 U.S.C. ง 1331 and 9 U.S.C. งง 201-08, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Defendants initially removed the action pursuant to the same claimed sources of jurisdiction, as well as two others: federal-question jurisdiction pursuant to the Inter-American Convention on International Commercial Arbitration, specifically 9 U.S.C. ง 302, and general federal-question *346 jurisdiction due to the applicability of the federal substantive law of arbitration. Because the source of the Court's jurisdiction may determine the appropriate choice of governing law, see Smith/Enron Cogeneration Ltd. P'ship v. Smith Cogeneration Int'l, Inc., 198 F.3d 88, 95 (2d Cir.1999), and Part III.B.1.a infra, it is prudent to examine all of the potential sources.
1. Diversity Jurisdiction
The Court has diversity jurisdiction over the subject matter of Plaintiffs' claims pursuant to 28 U.S.C. ง 1332(a)(4), which allows such jurisdiction "where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between ... a foreign state, defined in section 1603(a) of this title, as plaintiff and citizens of a state or different states." 28 U.S.C.A. ง 1332(a) (West 2005). Plaintiffs and Defendants agree that the amount in controversy exceeds the value of $75,000 (Not. of Removal ถ 2(e); Am. Compl. ถ 14; Ans. ถ 14), and this appears to be so. Defendants, both corporations incorporated in Delaware and with principal places of business in California, are "citizens of a state or of different States" for diversity purposes. And whatever the outcome of the dispute between Plaintiffs and Defendants regarding whether Petroecuador is legally distinct from the Republic, the foreign-state-as-plaintiff condition of ง 1332(a)(4) jurisdiction is also met.
Plaintiffs are foreign states as that term is defined in 28 U.S.C. ง 1603(a), whether or not Petroecuador has a legal identity independent from the Republic. Ecuador is a foreign state in the simplest meaning of that term. On Plaintiffs' view, Petroecuador is a kind of doing-business-as name for Ecuador. On Defendants' view, Petroecuador is "a separate legal person ... a majority of whose ... ownership interest is owned by a foreign state ... and ... which is neither a citizen of a State of the United States ... nor created under the laws of any third country," 28 U.S.C.A. ง 1603(b), and thus is "an agency or instrumentality of a foreign state as that term is defined in [28 U.S.C. ง 1603](b)," 28 U.S.C.A. ง 1603(a). In either case, Petroecuador, like the Republic of Ecuador, is covered by ง 1332(a)(4).
Furthermore, while ง 1332(a)(4) only speaks of an action in which "a foreign state" is plaintiff, not an action in which two foreign states are plaintiffs, it would nevertheless apply even if Petroecuador were considered to be a legal entity distinct from the Republic. The Second Circuit's statement that in the ง 1603(a) context "agencies and instrumentalities... are subsumed within the `foreign state'.... [and] deemed part of the foreign state," Filler v. Hanvit Bank, 378 F.3d 213, 219 (2d Cir.2004) (emphasis in original), strongly suggests that Petroecuador would be deemed part of the single "foreign state" of Ecuador for purposes of ง 1332(a)(4) despite any independent legal identity it might have. Even assuming arguendo that Petroecuador did qualify as a ง 1603(a) "foreign state" separate from Ecuador, ง 1332(a)(4) would still apply because of the rule that "[i]n determining the meaning of any Act of Congress, unless the context indicates otherwise ... words importing the singular include and apply to several persons, parties, or things." 1 USCS ง 1 (2005). There is no apparent contextual reason why a suit should not be subject to diversity jurisdiction simply because it is brought by both a foreign state and an instrumentality of that same foreign state.[10] Thus, all of the conditions for ง 1332(a)(4) jurisdiction are satisfied here.
*347 2. Federal-Question Jurisdiction
The Court would have federal-question jurisdiction over the subject matter of this action if the action were governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 ("the New York Convention" [11]), 21 U.S.T. 2517, 330 U.N.T.S. 38, reprinted at 9 U.S.C.A. ง 201 note (West 2004), or the Inter-American Convention on International Commercial Arbitration of January 30, 1975 ("the Inter-American Convention"), O.A.S.T.S. No. 42, reprinted at 9 U.S.C.A. ง 301 note. Chapter Two of the Federal Arbitration Act (FAA), implementing the New York Convention, provides that "[a]n action or proceeding falling under the Convention shall be deemed to arise under the laws and treaties of the United States ... [and][t]he district courts of the United States ... shall have original jurisdiction over such action or proceeding, regardless of the amount in controversy," 9 U.S.C.A. ง 203, and also provides for removal to federal court "[w]here the subject matter of an action or proceeding pending in a state court relates to an arbitration agreement or award falling under the Convention," 9 U.S.C.A. ง 205. Chapter Three of the FAA, implementing the Inter-American Convention, makes the original-jurisdiction and removal provisions of Chapter Two applicable to that Convention as well. 9 U.S.C.A. ง 302 (stating that 9 U.S.C. งง 202-205, and ง 207, "shall apply to this chapter as if specifically set forth herein, except that for purposes of this chapter `the Convention' shall mean the Inter-American Convention").
Defendants' suggestion that the mere applicability of the federal substantive law of arbitration would be sufficient to provide federal-question jurisdiction under 28 U.S.C. ง 1331 is incorrect, however. The original FAA, now Chapter One of that statute, "creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate, yet ... does not create any independent federal-question jurisdiction under 28 U.S.C. ง 1331 ... or otherwise." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 26, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Thus, whether federal-question jurisdiction exists depends upon whether either the New York Convention or the Inter-American Convention (collectively "the Conventions") applies.
As a general matter, the Conventions are enforceable in United States courts where, as here, a written agreement purportedly exists that provides for arbitration in the United States (or another signatory nation), and the legal relationship out of which the alleged arbitration agreement arises is a commercial one with a significant connection to a foreign country. See 9 U.S.C.A. งง 201-202, 301-302; Smith/Enron Cogeneration Ltd. P'ship v. Smith Cogeneration Int'l, Inc., 198 F.3d 88, 92 (2d Cir.1999); Productos Mercantiles *348 E Industriales, S.A. v. Faberge USA, 23 F.3d 41, 44-45 (2d Cir.1994). It is immaterial that the alleged arbitration agreement, comprised of the 1965 JOA and Petroecuador's purported accession thereto in the early 1970s, partially predates the New York Convention (which entered into force in the United States in 1970, see 9 U.S.C.A. ง 201 note), and completely predates the Inter-American Convention (which began its existence in 1975 and did not enter into force in the United States until 1990, see 9 U.S.C.A. ง 301 note). The Second Circuit has observed with respect to the New York Convention that "the Convention contains no prospective language and should be applied retroactively to existing arbitration agreements and awards." Fotochrome, Inc. v. Copal Co., 517 F.2d 512, 515 n. 3 (2d Cir.1975). The Inter-American Convention contains no "prospective language" not present in the New York Convention, and the Second Circuit has stated that "[t]he legislative history of the Inter-American Convention's implementing statute ... clearly demonstrates that Congress intended the Inter-American Convention to reach the same results as those reached under the New York Convention," Productos Mercantiles, 23 F.3d at 45.[12] Thus, Fotochrome's retroactivity holding should apply to the Inter-American Convention as well. The fact that "the United States acceded to the Convention [s] after the contract in suit was signed," Fotochrome, 517 F.2d at 515 n. 3, therefore does not alter the general applicability of either of the Conventions to the legal relationship at issue here.
The more difficult question is whether either or both of the Conventions are applicable to provide jurisdiction over this particular action. Article II of the New York Convention provides for recognition of an "agreement in writing" to submit to arbitration, and further provides that a court having before it "an action in a matter in respect to which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless the said agreement is null and void, inoperative or incapable of being performed." 9 U.S.C.A. ง 201 note (West 2004). In this action, however, Plaintiffs do not request the Court to refer the parties to arbitration, but rather ask the Court to prevent arbitration, and to grant them other injunctive and declaratory relief as well. It is not at all clear that an action seeking such relief "fall[s] under the [New York] Convention" within the meaning of 9 U.S.C. ง 203, so as to provide this Court with original jurisdiction. The Inter-American Convention says still less about judicial intervention before the stage at which an arbitration award exists, stating only that "[a]n agreement in which the parties undertake to submit to arbitral decision any differences that may arise or *349 have arisen between them with respect to a commercial transaction is valid," 9 U.S.C.A ง 301 note,[13] so it would seem if anything less likely to provide jurisdiction (under ง 203 as incorporated by ง 302) for a petition to stay arbitration. That the implementing law for both the New York Convention and the Inter-American Convention incorporates chapter one of the FAA to the extent it is not inconsistent with them, 9 U.S.C.A. งง 208, 307, does not change this result, as "the FAA does not provide for petitions (such as [Plaintiffs']) brought by the party seeking to stay arbitration." Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir.2003).
The Second Circuit has suggested that "the [New York] Convention [is] inapplicable ... [where] the party invoking its provisions did not seek either to compel arbitration or to enforce an arbitral award." International Shipping Co., S.A. v. Hydra Offshore, Inc., 875 F.2d 388, 391 n. 5 (2d Cir.1989). This suggestion would preclude invocation of the New York Convention โ and presumably the Inter-American Convention as well, see Productos Mercantiles, 23 F.3d at 45 โ by a party simply seeking to stay arbitration, let alone one also seeking to obtain broader declaratory and injunctive relief. In Borden v. Meiji Milk Products Co., 919 F.2d 822, 826 (2d Cir.1990), the Second Circuit expanded the category of parties allowed to invoke the New York Convention somewhat when it "h[e]ld that entertaining an application for a preliminary injunction in aid of arbitration is consistent with the court's powers pursuant to [the Convention]." This holding, however, was coupled with an emphasis on the fact that "far from trying to bypass arbitration, Borden sought to have the court compel arbitration." 919 F.2d at 826. There appears to be little or no basis in Second Circuit case law for invocation of the New York Convention or the Inter-American Convention by a party seeking to avoid arbitration, rather than compel or aid it.
In this case, however, the parties who initially sought the exercise of federal jurisdiction were Defendants, under the removal provision applicable to the Conventions. That provision, 9 U.S.C. ง 205 (made applicable to the Inter-American Convention by 9 U.S.C. ง 302), allows removal "[w]here the subject matter of an action or proceeding pending in state court relates to an arbitration agreement or award falling under the Convention," whether or not this relationship "appear[s] on the face of the complaint." 9 U.S.C.A. ง 205. The logic of Borden suggests that this aspect of Convention jurisdiction was available to Defendants: they were seeking to allow arbitration to continue, while Plaintiffs were the ones who sought to "bypass" it by their application for a stay of arbitration pursuant to Article 75 of the CPLR.
The fact that Plaintiffs dispute the existence of any "arbitration agreement" between the parties is irrelevant to the question of subject matter jurisdiction under the Conventions. In Sarhank Group v. Oracle Corp., 404 F.3d 657, 660 (2d Cir.2005), the Second Circuit rejected the argument that "the district court lacked subject matter jurisdiction in the absence of a signed written arbitration agreement between the parties," where the dispute before the court concerned whether respondent Oracle Corp. was legally bound to arbitrate by a contract entered into between petitioner Sarhank and a subsidiary of Oracle. According to Sarhank, "[w]hen a party challenges the court's subject matter *350 jurisdiction based upon the merits of the case," such as by disputing whether it is bound by an arbitration agreement it did not itself sign, "that party is merely arguing that the adversary has failed to state a claim ... [and][t]he court has and must assume subject matter jurisdiction and hear the merits of the case." 404 F.3d at 660. Thus, this Court had federal-question removal jurisdiction, pursuant to 9 U.S.C. ง 205, over Plaintiffs' application to stay the arbitration.
Plaintiffs' decision to file an amended complaint after removal should not alter the jurisdictional situation with regard to their application for a stay of arbitration. The amended complaint still contains the same application for a stay under Article 75 of the CPLR (specifically CPLR ง 7503), a New York procedural rule that the Court is requested to "borrow" as an alternative to issuing a stay under the FAA and the All Writs Act. (Am.Compl. ถ 13.) That Plaintiffs have chosen to add other claims for relief and other proposed sources of jurisdiction, in addition to what was present in the removed action, should not operate to deprive the Court of any federal-question jurisdiction it had upon removal. This is so both as a matter of logic,[14] and because it would be incompatible with the basic purpose of a removal provision for the addition of other claims to deprive Defendants of any protection granted them by the existence of federal-question jurisdiction under 9 U.S.C. ง 205.
With respect to Plaintiffs' requests for broader injunctive and declaratory relief pertaining to their waiver and estoppel theories, however, federal-question jurisdiction is lacking. Those claims for relief were not part of the removed action, do not fall within 9 U.S.C. ง 203 as interpreted in International Shipping and Borden, and do not raise a jurisdiction-bestowing federal question in any other respect. The Court's jurisdiction over those claims for relief must therefore stem solely from 28 U.S.C. ง 1332, or perhaps from 28 U.S.C. ง 1367(a) (supplemental jurisdiction). This implies that New York choice of law rules apply to those claims. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Rogers v. Grimaldi, 875 F.2d 994, 1002 (2d Cir.1989).
B. Subject Matter Jurisdiction Over Defendants' Counterclaims
Unlike the existence of subject-matter jurisdiction over Plaintiffs' claims, the existence of subject-matter jurisdiction over Defendants' counterclaims is vehemently contested: Plaintiffs have moved pursuant to Rule 12(b) of the Federal Rules of Civil Procedure to dismiss Defendants' counterclaims for, inter alia, lack of such jurisdiction. Because the issue has been raised by a distinct motion so briefed by the parties, and because deferring consideration of it is more analytically appropriate in other respects, the question of jurisdiction over the counterclaims will be addressed in a subsequent portion of this Opinion and Order. See infra Part IV.A.
C. Personal Jurisdiction and Venue
Defendants do not dispute the existence of personal jurisdiction, any objection with respect to which is therefore waived. Defendants also do not dispute the appropriateness of venue in the Southern District of New York, any objection to which is also waived. Plaintiffs, too, do not raise, and *351 therefore waive, any objection as to personal jurisdiction or venue with respect to Defendants' counterclaims.
III. Plaintiffs' Motion for Summary Judgment
A. Legal Standard
The standard under which Rule 56 motions for summary judgment are evaluated is a familiar one. "Summary judgment is appropriate only where ... the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Carroll v. United States, 339 F.3d 61, 67 (2d Cir.2003); Steel Partners II, L.P. v. Bell Indus., Inc., 315 F.3d 120, 123 (2d Cir.2002) (internal quotations omitted). "In assessing the record, all ambiguities and reasonable inferences are viewed in a light most favorable to the nonmoving party." Vona v. County of Niagara, 119 F.3d 201, 206 (2d Cir.1997). "The party seeking summary judgment has the burden to demonstrate that no genuine issue of material fact exists." Marvel Characters v. Simon, 310 F.3d 280, 286 (2d Cir.2002).
While "[t]he mere existence of a scintilla of evidence in support of the [nonmovants'] position will be insufficient" to defeat a motion for summary judgment, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), "[s]ummary judgment is improper if there is any evidence in the record that could reasonably support a.... verdict for the non-moving party," Marvel Characters, 310 F.3d at 286. "On a motion for summary judgment, the court is not to weigh the evidence, or assess the credibility of the witnesses, or resolve issues of fact, but only to determine whether there are issues to be tried." United States v. Rem, 38 F.3d 634, 644 (2d Cir.1994).
B. Analysis
Plaintiffs raise three distinct arguments in support of their contention that no genuine issue of material fact precludes the determination that Defendants' dispute with Petroecuador is not arbitrable. Their primary argument is that Petroecuador never agreed to arbitrate disputes such as the one at issue. Plaintiffs also assert that the doctrine of waiver, and the act of state doctrine as applied to the 1973 Contract, provide independent grounds on which to find that Defendants are barred from seeking arbitration against Petroecuador, even if an otherwise-valid arbitration agreement exists.
1. Agreement to Arbitrate
"In considering whether `a particular dispute is arbitrable,' a court must first decide `whether the parties agreed to arbitrate.'" Smith/Enron Cogeneration Ltd. P'ship v. Smith Cogeneration Int'l, Inc., 198 F.3d 88, 95 (2d Cir.1999) (quoting Chelsea Square Textiles, Inc. v. Bombay Dyeing & Mfg. Co., 189 F.3d 289, 294 (2d Cir.1999)). The Second Circuit "ha[s] held that whether an entity is a party to the arbitration agreement also is included within the broader issue of whether the parties agreed to arbitrate." Id. At issue here is whether Petroecuador is, or was, a party to an arbitration agreement covering the dispute in question.
It is common ground between the parties that Petroecuador "never signed an arbitration agreement with [either defendant], the customary implementation of an agreement to arbitrate," Sarhank Group v. Oracle Corp., 404 F.3d 657, 662 (2d Cir.2005). Defendants contend, however, that Petroecuador became a party to the 1965 JOA, which contained an arbitration clause, when Petroecuador acquired its stake in the Napo Consortium. As they explain it, the 1973 Contract that accompanied *352 Petroecuador's entry into the Consortium replaced the 1964 concession agreement between Ecuador and the concessionaires, but did not affect the 1965 JOA, which continued to govern relations among the members of the Consortium (one of which, after 1973, was Petroecuador). Even though Petroecuador did not sign the 1965 JOA, Defendants assert, it knowingly accepted benefits from the 1965 JOA and proceeded as if the 1965 JOA controlled its relationship with TexPet. Thus, Defendants conclude, Petroecuador is bound by the arbitration clause within the 1965 JOA.
Plaintiffs, in contrast, assert that the 1973 Contract was a novation that replaced the 1965 JOA, and that the 1973, 1974 and 1977 Contracts โ none of which contain an arbitration clause โ governed Petroecuador's relationship with the other members of the Napo Consortium. According to Plaintiffs, the notion that the 1965 JOA and the arbitration clause within it apply to Petroecuador is "purely a recent invention of Chevron[T]exaco's lawyers." (Oral Ar. Tr. at 3.) The 1965 JOA and the arbitration clause within it, Plaintiffs contend, do not in any way bind Petroecuador.
a. Governing Law
To decide whether sufficient issues of material fact exist to preclude the grant of summary judgment on the theory that Petroecuador never agreed to arbitrate, it is necessary to ascertain what law governs this Court's determination of whether Petroecuador became bound by the 1965 JOA and the arbitration clause within it. "We first look to the substantive law of the action to determine which facts are material," Golden Pac. Bancorp v. FDIC, 375 F.3d 196, 200 (2d Cir.2004), and to do so, we must know to what substantive law we shall look. Specifically, we must determine whether New York law, federal common law, or Ecuadorian law should govern the question of whether Petroecuador is bound by an agreement to arbitrate.[15]
Several recent Second Circuit cases support the application of state law to the question of whether a party is bound by a purported agreement to arbitrate. Bell v. Cendant Corp., 293 F.3d 563 (2d Cir.2002), held that "[b]ecause an agreement to arbitrate is a creature of contract ... the ultimate question of whether the parties agreed to arbitrate is determined by state law," and applied Connecticut law to ascertain if the parties had agreed to allow the arbitrator to determine arbitrability. 293 F.3d at 566. Bell cited the Supreme Court's statement in First Options v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995), that "when deciding whether the parties agreed to arbitrate a *353 certain matter (including arbitrability), courts generally ... should apply ordinary state-law principles that govern the formation of contracts." Shaw Group, Inc. v. Triplefine Int'l Corp., 322 F.3d 115, (2d Cir.2003), in turn cited Bell and First Options for the proposition that "[w]hether parties have obligated themselves to arbitrate certain issues, including the question of arbitrability, is determined by state law." 322 F.3d at 120. Similarly, Chelsea Square Textiles, Inc. v. Bombay Dyeing & Mfg. Co., 189 F.3d 289, 294 (2d Cir.1999), described "the determination that parties have contractually bound themselves to arbitrate disputes" as "a determination involving interpretation of state law." Accord Progressive Casualty Ins. Co. v. C.A. Reaseguradora Nacional De Venezuela, 991 F.2d 42, 45-46 (2d Cir.1993) (citing Perry v. Thomas, 482 U.S. 483, 492 n. 9, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987)). Following these cases here could result in the application of New York substantive law, or possibly the application of Ecuadorian substantive law under New York or federal choice of law rules, Ecuador being a "state" with a significant connection to the relevant contracts.
There is also, however, a line of Second Circuit authority supporting the application of federal common law to questions such as the one at issue here, particularly in cases arising under the New York Convention. Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 845 (2d Cir.1987), held, with respect to a motion under the FAA and New York Convention to stay an action pending arbitration, that whether a party was "bound by the arbitration clause of ... sales confirmation forms [including some it did not sign] is determined under federal law, which comprises generally accepted principles of contract law." In Thomson-CSF, S.A. v. American Arbitration Association, 64 F.3d 773, 776 (2d Cir.1995), the Second Circuit stated that "[the] theories under which nonsignatories may be bound to the arbitration agreements of others ... arise out of common law principles of contract and agency law."[16]Smith/Enron Cogeneration Ltd. P'ship v. Smith Cogeneration Int'l, Inc., 198 F.3d 88, 96-98 (2d Cir.1999), followed Thomson-CSF' s common law principles in a New York Convention case after holding that "[w]hen we exercise jurisdiction under Chapter Two of the FAA, we have compelling reasons to apply federal law, which is already well-developed, to the question of whether an agreement to arbitrate is enforceable." 198 F.3d at 96. "Where there is little connection to the forum and the Agreements between the parties state an intention to be governed by the FAA," Smith/Enron explains, "proceeding otherwise would introduce a degree of parochialism and uncertainty into international arbitration that would subvert the goal of simplifying and unifying international arbitration law." Id. Quite recently, citing Smith/Enron, the Second Circuit reaffirmed that "[i]t is American federal arbitration law that controls" the question of whether an American nonsignatory can be bound to arbitrate in a New York Convention case, because "[t]o hold otherwise would defeat the ordinary and customary expectations of experienced business persons." Sarhank Group v. Oracle Corp., 404 F.3d 657, 661-662 (2d Cir.2005).
Strictly speaking, this is probably not a case covered by the New York Convention. The United States and Ecuador are both members of the Organization of American States and parties to the Inter-American *354 Convention, see 9 U.S.C.A. ง 301 note, so that "a majority of the parties are citizens of a State or States that have ratified or acceded to the Inter-American Convention and are member States of the Organization of American States," 9 U.S.C.A. ง 305, and thus that Convention rather than the New York Convention appears to apply. This does not alter the choice of law analysis, however. Given Congress's expectation "that courts in the United States would achieve a general uniformity of results under the two conventions," Productos Mercantiles E Industriales, S.A. v. Faberge USA, 23 F.3d 41, 45 (2d Cir.1994) (quoting H.R.Rep. No. 501, 101st Cong., 2d Sess. 4 (1990), reprinted in 1990 U.S.C.C.A.N. 675, 678), and given that the policy concerns motivating the rule in Smith/Enron and Sarhank apply to Inter-American Convention cases as much as to New York Convention cases, Smith/Enron and Sarhank strongly suggest that federal common law should govern arbitrability issues in an Inter-American Convention case as well.
If the rule of Smith/Enron and Sarhank were settled with regard to Convention cases, it would be appropriate to follow it here even though this action comes to the Court under both Convention jurisdiction and diversity jurisdiction, see supra Part II.A.1. "[T]he goal of simplifying and unifying international arbitration law," Smith/Enron, 198 F.3d at 96, would not be any less relevant simply because the parties could also get into court another way. There appears at first glance to be tension between different Second Circuit authorities regarding whether federal common law governs the validity of a party's purported agreement to arbitrate where, as here, the case arises under one of the Conventions and the contract manifesting the purported agreement contains a choice-of-law clause: Sarhank held that such a choice-of-law clause was to be ignored in favor of federal common law, while Motorola Credit Corp. v. Uzan, 388 F.3d 39 (2d Cir.2004), held that the choice-of-law clause governed. Sarhank and Motorola can, however, be reconciled.
The appellee in Sarhank, proceeding under the district court's 9 U.S.C. ง 203 jurisdiction pursuant to the New York Convention, had successfully petitioned for confirmation of "a commercial arbitration award rendered jointly and severally against Oracle [Corporation] and its wholly owned subsidiary Oracle Systems, Inc. (`Systems')," despite the fact that Oracle was not a signatory to either the agreement under which arbitration had been demanded or any other agreement to arbitrate with the petitioner-appellee. 404 F.3d at 658. The arbitration agreement at issue, "a bilateral executory contract" between petitioner-appellee Sarhank and Systems, id., contained a choice-of-law law clause stating that "[t]his agreement shall be construed and governed in all respects in accordance with the laws of the Republic of Egypt and the parties hereto hereby agree to submit to the jurisdiction of the Courts of Cairo." 404 F.3d at 661. The arbitrators had concluded, based on Egyptian contract law, that Oracle was bound by its subsidiary's signature, id. at 662. Notwithstanding the Egyptian choice-of-law clause, the Court of Appeals held that "[i]t is American federal arbitration law that controls" and that "[a]n American nonsignatory cannot be bound to arbitrate in the absence of a full showing of facts supporting an articulable theory based on American contract law or American agency law." Id. The case was remanded to the district court "to find as a fact whether Oracle agreed to arbitrate, by its actions or inaction ... or on any other basis recognized by American contract law or the law of agency." Id. at 662-63.
The defendants in Motorola "sought to *355 compel arbitration under 9 U.S.C. ง 206"[17] pursuant to agreements that had been signed by plaintiffs and by certain companies controlled by the defendants' family, but to which the defendants themselves were not parties. 388 F.3d at 42-43, 49. The agreements in question contained Swiss choice-of-law clauses, and the Court of Appeals held that "if defendants wish to invoke the arbitration clauses in the agreements at issue, they must also accept the ... choice-of-law clauses that govern those agreements." Concluding "that under Swiss law ... defendants, as nonsignatories, have no right to invoke those agreements," the Court of Appeals "affirm[ed] the District Court's denial of defendants' motion to compel arbitration." 388 F.3d at 53.
The most reasonable way to reconcile Motorola and Sarhank is to conclude that a choice-of-law clause will govern where a nonsignatory to a particular arbitration agreement seeks to enforce that agreement against a signatory, but not where a signatory seeks to enforce the agreement against a nonsignatory. In the former case, exemplified by Motorola, the party seeking arbitration must implicitly accept that the contract under which arbitration is sought is valid and binding on it, and the party opposing arbitration has signed the contract, so both parties can reasonably be bound by the choice-of-law clause. In the latter case, exemplified by Sarhank, the nonsignatory party opposing arbitration is in essence contending that it is not subject to the contract at all; thus, applying the choice-of-law clause from that contract to determine the issue would beg the question in a manner potentially unfair to the nonsignatory. Cf. Thomson-CSF, 64 F.3d at 779 (stating that while "the circuits have been willing to estop a signatory from avoiding arbitration with a nonsignatory when the issues the nonsignatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed," this does not logically imply that a signatory can compel a nonsignatory in similar fashion, inasmuch as holdings that "the parties were estopped from avoiding arbitration because they had entered into written arbitration agreements, albeit with the affiliates of those parties asserting the arbitration and not the parties themselves" cannot be extended to "estop[] [a nonsignatory] from denying the existence of an arbitration clause to which it is a signatory because no such clause exists.") Here, TexPet, signatory to the 1965 JOA, seeks arbitration, and nonsignatory Petroecuador opposes arbitration. Thus, Sarhank rather than Motorola controls, and the federal common law of arbitration agreements applies.
One might argue that the holding of Sarhank is inapplicable to this case because that holding dealt with the circumstances under which "an American nonsignatory [could] be bound to arbitrate," 404 F.2d at 662, and this case deals with whether a foreign nonsignatory can be bound to arbitrate. Motorola, in contrast, dealt with whether a foreign signatory could be bound to arbitrate. If the difference between an American party and a foreign party were more significant than the difference between a signatory and a nonsignatory, therefore, the Motorola choice-of-law rule would be applicable here. A reconciliation of Sarhank and Motorola that would have the choice of governing law in a Convention case depend on the nationality of the party sought to be forced into arbitration, however, is not consistent with the Smith/Enron principle that "parochialism" in international arbitration *356 should be avoided in furtherance of "the goal of simplifying and unifying international arbitration law," 198 F.3d at 96. Nothing in either of the Conventions suggests that the validity of an alleged arbitration agreement involving citizens of nations that are signatories to the convention should depend on which signatory nation's citizens resist arbitration. The Second Circuit has attached great weight to the distinction between signatories and nonsignatories, see, e.g., Merrill Lynch Inv. Managers v. Optibase, Ltd., 337 F.3d 125, 131 (2d Cir.2003) (declaring the distinction to be "decisive" and stating that "it matters whether the party resisting arbitration is a signatory or not"); Thomson-CSF, 64 F.3d at 779, and a reconciliation of Sarhank and Motorola based on this distinction is significantly more consistent with the Smith/Enron anti-parochialism principle. Therefore, we will follow Sarhank and apply federal common law to the question of whether Petroecuador is bound by the arbitration clause in the 1965 JOA.
b. Evidence for Agreement to Arbitrate Under Federal Common Law
Under federal common law, the Second Circuit "ha[s] recognized five theories for binding nonsignatories to arbitration agreements: 1) incorporation by reference; 2) assumption; 3) agency; 4) veil-piercing/alter ego; and 5) estoppel." Thomson-CSF, 64 F.3d at 776. "[A] willing signatory (such as [TexPet]) seeking to arbitrate with a non-signatory that is unwilling (such as [Petroecuador]) must establish at least one of the five theories described in Thomson-CSF." Merrill Lynch Inv. Managers, 337 F.3d at 131.
Of the five Thomson-CSF theories, the most likely to apply in this case is estoppel. "A party is estopped from denying its obligation to arbitrate when it receives a `direct benefit' from a contract containing an arbitration clause." American Bureau of Shipping v. Tencara Shipyard S.P.A., 170 F.3d 349, 353 (2d Cir.1999) (citing Thomson-CSF, 64 F.3d at 778-79). Direct benefits are those "flowing directly from the agreement," while "the benefit derived from an agreement is indirect where the nonsignatory exploits the contractual relation of parties to an agreement, but does not exploit (and thereby assume) the agreement itself." MAG Portfolio Consultant, GMBH, v. Merlin Biomed Group LLC, 268 F.3d 58, 61 (2d Cir.2001). "To prevail, then, [Defendants] must show that [Petroecuador] `knowingly exploited' the ... contract and thereby received a direct benefit from the contract." Id. at 62 (quoting Thomson-CSF, 64 F.3d at 778).
If Defendants' view of the events surrounding the entry of CEPE/Petroecuador into the Napo Consortium were accepted, it would be reasonable to conclude that Petroecuador knowingly received "direct benefits" from the 1965 JOA, and thereby became estopped from denying agreement to arbitrate under it. As Defendants describe the situation, it was only within the framework of the 1965 JOA that TexPet acted as "Operator" of the Napo Consortium. That is, when TexPet took the lead role in extracting oil from the land covered by the Napo Concession, this action was โ on Defendants' account โ taken under and because of the 1965 JOA, which all parties understood to govern. On this view, Petroecuador received oil extracted by TexPet, at cost, and had control over various aspects of the extraction of that oil, only because of the 1965 JOA, and knew that it received those benefits because of the 1965 JOA. It was thus analogous to the shipowners in American Bureau of Shipping, who received lower insurance rates and registration under the French flag only because of an agreement containing an arbitration clause, and were therefore bound to that arbitration clause despite *357 not being a signatory to the agreement. 170 F.3d at 353.
If one were to accept Plaintiffs' version of the facts, on the other hand, there would be no basis for subjecting Petroecuador to arbitration. If the 1973 Contract was a novation intended by the parties to replace the 1965 JOA, and the subsequent relationship among the Napo Consortium parties was understood to be "quasi-contractual, governed by an ambiguous amalgam of prevailing `standards and procedures'" (Pl. Reply in Supp. of Mot. for Summ. J. at 4), then there was no extant contract containing an arbitration clause from which Petroecuador could be said to have derived a direct benefit. Nor would any of the other Thomson-CSF theories be applicable, if, as Plaintiffs contend, the 1965 JOA and its arbitration clause have been dead and buried for forty years.
The question, then, is whether there is sufficient evidence in the record supporting Defendants' version of events to raise a genuine issue of material fact regarding whether Petroecuador became bound by the arbitration clause in the 1965 JOA. We answer this question in the affirmative. In so doing, we address only those portions of the record necessary to demonstrate clearly that genuine issues of material fact do exist, and do not attempt an exhaustive description of the voluminous evidence submitted by the parties.
i. Pareja Affidavit
The first significant piece of evidence that the 1965 JOA was understood to govern the operations of the Napo Consortium after Petroecuador entered it, and that Petroecuador derived significant benefits from the 1965 JOA, is the affidavit of Jorge Pareja Cucalon submitted by Defendants. Mr. Pareja, according to his affidavit, was an employee of Gulf involved in the Texaco-Gulf Consortium from 1969 to 1970, the General Manager of CEPE from 1981 to 1982, and the President of Petroecuador in 1999. He has also served at various times as Chairman of the Petroleum Policy Commission in the Ecuadorian Ministry of Energy, Ecuador's Ambassador to Austria, Ecuador's representative to OPEC, and Ecuador's Minister of Energy and Mines.
Mr. Pareja avers that because of his duties at Gulf from 1969 to 1970, he "knew about the Napo Joint Operating Agreement entered into by subsidiaries of Texaco and Gulf in 1965 ("Napo JOA")." (Pareja Aff. ถ 4.) He further avers that "[t]here was no question that, when CEPE became an interest holder in the Napo Concession, CEPE also became a party to the [1965] Napo JOA, as that contract controlled the relationship and operations of the parties to the concession" and that he "always understood, as did CEPE, that the [1965] Napo JOA was the agreement that governed the relationship between TexPet and CEPE regarding oil exploration and production in the Napo Concession." (Pareja Aff. ถ 9.) The 1965 JOA, according to Mr. Pareja, "delineated the joint rights of CEPE and TexPet, with respect to each other." (Pareja Aff. ถ 9.)
The Pareja Affidavit also details benefits that CEPE is asserted to have received from the 1965 JOA. The 1965 JOA, Mr. Pareja says, not only "enabled CEPE ... to enjoy its share of the oil produced in the Napo Concession by the Operator, TexPet, but also allowed CEPE, through its representatives, to have significant input into the exploration and production efforts by the Operator." (Pareja Aff. ถ 9.) According to Mr. Pareja, CEPE was able to approve all "annual work plans and budgets" and to "approve (or not) significant contractual relationships that the Operator wished to enter into with various contractors." (Id.) It could thereby "have a voice *358 in the petroleum exploration and production plans and activities" and "address its own budgetary concerns by being able to seek limits on the programs that the Operator wanted to pursue." (Pareja Aff. ถ 10.)
ii. Other Affidavits
Although Mr. Pareja is perhaps the most compelling of Defendants' affiants insofar as he worked for CEPE/Petroecuador during a portion of the relevant time period, other affidavits have also been provided in support of Defendants' contention that the Consortium of which CEPE became a part was understood to operate under the 1965 JOA. It would serve little purpose at this stage to reiterate in detail the averments of former Consortium Operations Manager Rene Bucaram, former TexPet Chief Counsel Rodrigo P้rez Pallares, or the former manager of TexPet's separate (non-Consortium) office, Donald Sawyer. For summary judgment purposes, it is sufficient to note that they tend to corroborate the statements made by Mr. Pareja.
Defendants have also offered affidavits from proposed expert witnesses Norman N. Anderson and Owen L. Anderson. These affiants address usual practice in the oil industry, and conclude that the Napo JOA was a typical joint operating agreement, and that such operating agreements are generally considered essential where more than one oil-extraction company shares rights under a concession from a host government. They further conclude that pursuant to usual practice in the oil industry, Petroecuador would have been understood to enter the Napo Concession subject to the existing JOA.
iii. Lack of Explicit Abrogation of 1965 JOA in 1973 Contract
Another piece of evidence that the 1973 Contract was not, as Plaintiffs claim, a novation replacing the 1965 JOA is that the 1973 Contract explicitly replaced several other contracts, but did not mention the 1965 JOA. Paragraph 53.1 of the 1973 Contract stated in relevant part that "the contract executed on August 26, 1961 in its applicable portion, and the contracts executed on March 5, 1964 and June 27, 1969 are completely substituted by the present contract. Consequently, the parties shall hereinafter be governed only by the stipulations set forth in this public instrument." (Perez Aff. Ex. E.) While Plaintiffs focus on the latter sentence, Defendants focus on the former, and the fact that it mentions previous concession contracts between Ecuador and the concessionaires but does not mention the 1965 JOA. Particularly in light of the fact that the 1965 JOA contained a provision declaring itself "binding on the successors and assigns of the Parties" (Perez Aff. Ex. C. ถ 26.1), this omission of any reference to the 1965 JOA makes it at least ambiguous whether the 1973 Contract was intended to render the 1965 JOA inoperative. And on summary judgment, "all ambiguities ... are viewed in a light most favorable to the nonmoving party." Vona, 119 F.3d at 206.
Plaintiffs contend that "the underlying intent behind the 1973 Contract was that all disputes involving the Napo Consortium be resolved in Ecuador" (Pl. Mem. in Supp. of Mot. for Summ. J. at 8), so that at least the arbitration provision of the 1965 JOA must have been abrogated even if some other portions of the 1965 JOA survived. They cite in support of this contention paragraph 50.1 of the 1973 Contract, which states that "[t]he contractors shall submit to the laws, courts, and judges of Ecuador, to summary verbal proceeding, and expressly waive any claim through diplomatic channels." (Pl.Ex. C. ถ 50.1.) "The general rule in cases containing forum selection clauses," however, "is that `when only jurisdiction is specified the clause will generally not be enforced without some further language indicating the *359 parties' intent to make jurisdiction exclusive.'" John Boutari & Son, Wines & Spirits, S.A. v. Attiki Importers & Distributors Inc., 22 F.3d 51, 52 (2d Cir.1994) (quoting Docksider, Ltd. v. Sea Technology, Ltd., 875 F.2d 762, 764 (9th Cir.1989)). In particular, a clause stating that the parties "submit to the jurisdiction of" a particular state's courts will not be read as exclusive, Keaty v. Freeport Indonesia, Inc., 503 F.2d 955, 956 (5th Cir.1974); one stating that the parties "submit to the ... courts[] and judges" of a particular forum would seem to be closely analogous. Moreover, the inclusion of this clause referring to submission of "the contractors" to Ecuadorian courts, in a model contract promulgated by the Ecuadorian government and alleged by Defendants to have been in essence a concession contract, could be construed as requiring only that the concessionaires submit to Ecuadorian jurisdiction and laws if disputes arose in their relationship with Ecuador. The clause is not sufficiently clear to preclude the possibility that CEPE/Petroecuador could be estopped from denying the applicability of the 1965 JOA's arbitration clause if CEPE and TexPet had in fact proceeded on the assumption that the 1965 JOA governed their relationship.
The effect of paragraph 43.2 of the 1973 Contract, also cited by Plaintiffs to support their contention that the intent behind that Contract was for all disputes to be resolved in Ecuador, is similarly unclear. It states that "indemnities to be paid by the contractors for the damages caused on lands, crops, buildings or other properties due to the exploration, exploitation or any other phase of the oil industry, shall be determined by experts designated by the parties" and that "[i]n case of disagreement, the Ministry concerned shall appoint a third expert, whose verdict shall be unappealable." (Pl.Ex. C. ถ 43.2.) This paragraph immediately follows, and is contained within the same "Clause" as, one concerning "[e]xpropriation of lands, buildings, and other properties," which it is provided "shall be effected by the Ministry concerned." (Pl.Ex. C. ถ 43.1) Viewed in context, therefore, paragraph 43.2 appears to regulate the legal relationship between the concessionaires and the Republic on the one hand, and the local population on the other. It might have been relevant to the question whether the Aguinda Plaintiffs could sue Texaco in the United States, but it does not unambiguously bear on the question whether the 1965 JOA governs the relationship between Petroecuador and TexPet.
iv. Conflicting and Ambiguous References to 1973 Contract and 1965 JOA in Subsequent Agreements Between the Parties
If the subsequent written agreements entered into by the parties unambiguously clarified that the relationship between CEPE/Petroecuador and TexPet after 1973 was not governed or thought to be governed by the 1965 JOA, then it might be doubtful whether Defendants could survive summary judgment by pointing to their contrary evidence. While some of the subsequent agreements tend to indicate that the 1973 Contract and not the 1965 JOA controlled, however, the overall picture is not so clear as to justify summary judgment in the face of the evidence offered by Defendants.
(a.) 1974 Contract
The 1974 Contract contains a passing reference to the 1973 Contract, but does not state that the 1973 Contract regulates the relationship between CEPE and the other concessionaires of the Napo Concession. Rather, the 1974 Contract, as translated by Plaintiffs, states that "[t]he totality of the activities that will develop in the Joint Operation will be regulated by an *360 operating agreement entered into by the parts [sic]." (Pl.Ex. Q ถ 8.) Plaintiffs cite this clause and assert that "neither the Republic nor CEPE/Petroecuador ever entered into such a formal operating agreement with Texaco and/or Gulf." (Pl. Mem. in Supp. of Mot. for Summ J. at 8.)
The lack of mention of the 1965 JOA in the 1974 Contract may tend to suggest that the 1965 JOA was not understood to continue in effect. The 1974 Contract's implication that an operating agreement separate from the 1973 and 1974 Contracts would be required, however, tends to support Defendants' argument that the 1973 Contract did not itself function as an operating agreement, and that industry convention would require one. The 1974 Contract does not address the question of what contract or other legal framework would govern "the activities that will develop in the Joint Operation" in the period before the parties entered into the future operating agreement to which the 1974 Contract refers. It thus does not decisively resolve the conflict between Defendants' contention that the 1965 JOA was understood to apply in the interim, and Plaintiffs' assertion that the interim relationship was "quasi-contractual, governed by an ambiguous amalgam of prevailing `standards and procedures'" (Pl. Reply in Supp. of Mot. for Summ. J. at 4).
(b.) 1977 Contract
The 1977 Contract by which CEPE bought out Gulf's remaining portion of the Napo Concession tends to support Plaintiffs' position in this case, but not so definitively as to permit summary judgment in the face of Defendants' contrary evidence. Most favorable to Plaintiffs is paragraph 2.13, which states:
With respect to any obligations Gulf may have to third parties and which do not appear in its accounts, neither the Ecuadorian government nor CEPE shall assume any responsibility whatsoever, and these must be taken care of by Gulf.
Therefore CEPE shall assume only those obligations that are in accordance with this agreement.
(Pl.Ex. O ถ 2.13.) The arbitration clause of the 1965 JOA could be described as an obligation Gulf had to TexPet, and there has been no showing that it appeared in Gulf's accounts. And although TexPet was not a signatory to the 1977 Contract, paragraph 2.13 could still serve as evidence that CEPE/Petroecuador believed the 1965 JOA to be inapplicable and thus did not "knowingly exploit[]" it, MAG Portfolio Consultant, 268 F.3d at 62 (quoting Thomson-CSF, 64 F.3d at 778).
By the time of the 1977 Contract, however, CEPE had been part of the Napo Concession/Consortium for several years. If the parties understood the obligations of the 1965 JOA to have attached to CEPE, those obligations would have been in place before the 1977 Contract entered the picture. Furthermore, it is not clear that an operating agreement is the sort of "obligation" that would be expected to "appear in [Gulf's] accounts"; it is likely that this wording was meant to refer to monetary liabilities.
(c.) 1985 Agreement
The 1985 Agreement also tends to support Plaintiffs' position that the 1973 Contract and not the 1965 JOA was seen as controlling the relationship between members of the Napo Consortium. The background section of the 1985 Agreement mentions only the 1973 Contract and not the 1965 JOA, although it does not specifically state that the 1973 Contract controlled the relationship between Consortium members or abrogated the 1965 JOA. Even more suggestive are clauses 3.3.1 and 3.3.2 of the 1985 Agreement, which provide respectively that "[t]he *361 parties shall within 30 days commence negotiations for a final Joint Operations Agreement to continue the Consortium's operations" and that "[u]ntil the Joint Operations Agreement becomes effective, the Consortium's operations shall be carried out according to the standards and procedures that have been in force up to now." (Perez Aff. Ex. L, at 5.) Taken together, these clauses seem most consistent with Plaintiffs' view that no Joint Operations Agreement was in force in 1985 โ which would explain why one had to be negotiated โ and that the relationship of the Consortium parties was instead "quasi-contractual, governed by an ambiguous amalgam of prevailing `standards and procedures'" (Pl. Reply in Supp. of Mot. for Summ. J. at 4).
It is also possible, however, to read clauses 3.3.1 and 3.3.2 as indicating dissatisfaction by the parties with the then-governing legal regime, and a desire to replace it, while leaving open the question of what the then-governing legal regime actually was. The 1985 Agreement does not specify whether the "standards and procedures that have been in place" were quasi-contractual, or contractual and derived from the 1973 Contract, or contractual and derived from the 1965 JOA. One can imagine a scenario in which Mr. Pareja is correct that during his time as the General Manager of CEPE from 1981 to 1982 the parties believed the 1965 JOA to govern the operations of the Consortium, and yet by the time of drafting of the 1985 Contract, there was sufficient uncertainty in the mind of the drafter regarding what contract or other legal framework governed the Consortium that language was chosen to avoid the question entirely. The 1985 Agreement tends to suggest that the 1965 JOA was not understood to govern the relationship of the parties to the Consortium, but it does not establish that proposition so conclusively as to justify disregarding contrary evidence on a motion for summary judgment.
(d.) 1991 Agreement
Perhaps most favorable to Plaintiffs' position is the 1991 Agreement. The 1991 Agreement does not reference the 1965 JOA at all, or contain any reference to arbitration. It defines the "Contract" as the 1973 Contract, and states that "`Consortium' ... means the de facto company made up of Petroecuador and Texaco, for the exploration and exploitation of the oil fields assigned hereto by the State, in accordance with the Contract." (Suppl. Kolis Decl. Ex. 1 ถถ 1.1-1.2.) It further provides that "[i]f disputes arise between the Parties with respect to the application and/or interpretation of this Agreement, such disputes shall be heard in the Special Court [Juzgado Especial], in accordance with Section 10 of the Hydrocarbons Act" and that "this Agreement and the operations contemplated shall be subject to the laws of Ecuador, and the rules, regulations, contracts and other agreements signed by the parties." (Suppl. Kolis Decl. Ex. 1 ถถ 13.1-13.2 (alterations in original).)
This language certainly, as Plaintiffs contend, tends to suggest that their version of events is the correct one. It is conceivable, however, that "the de facto company made up of Petroecuador and Texaco, for the exploration and exploitation of the oil fields assigned hereto by the State, in accordance with the Contract" might refer to the de facto company for the exploration of oil fields that were "assigned by the State ... in accordance with the [1973] Contract" โ consistent with Defendants' argument that the 1973 Contract was understood to be a concession contract only โ rather than to a "de facto company made up of Petroecuador and Texaco ... in accordance with the 1973 Contract." *362 And while the forum selection clause is helpful to Plaintiffs, particularly because it is "mandatory rather than permissive," John Boutari & Son, 22 F.3d at 53, and "[t]he Supreme Court ... has indicated that forum selection ... clauses are presumptively valid where the underlying transaction is fundamentally international in character," Roby v. Corporation of Lloyd's, 996 F.2d 1353, 1362-63 (2d Cir.1993) (citing The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972)), the temporal extent of the clause is not so clear as to necessarily wipe out any right of arbitration that TexPet might previously have acquired by estoppel. The 1991 Agreement states that it "shall be effective as of the first day of July 1990." (Suppl. Kolis Decl. Ex. 1 ถ 3.) Disputes among the parties with respect to their relations before that date therefore may not qualify as "disputes ... between the Parties with respect to the application and/or interpretation of th[e] [1991] Agreement" (Suppl. Kolis Decl. Ex. 1 ถ 13.1).
(e.) 1995 Settlement
Unlike the 1985 Agreement and the 1991 Agreement, the 1995 Settlement, signed by representatives of Petroecuador, TexPet and Ecuador, tends to suggest that Petroecuador and TexPet understood their relationship as members of the Consortium to have been based on the 1965 JOA. The 1995 Settlement recites that "Compania Texaco de Petroleos del Ecuador, C.A., and Gulf [Ecuador], which were ultimately succeeded by Texpet and Petroecuador (hereinafter referred to as the `Consortium'), signed a Joint Operating Agreement with Texpet on January 1, 1965, covering the operation of the Consortium's facilities (hereinafter referred to as the `Napo Agreement')." (Veiga Aff. Ex. B at 2.) It further recites that "Petroecuador exercised its rights under the Napo Agreement, and replaced Texpet as the operator of the Consortium on July 1, 1990." (Veiga Aff. Ex. B at 3.) The reference to Petroecuador as one of the successors of the 1965 JOA's signatories, and the reference to Petroecuador exercising rights under the 1965 JOA in 1990, both support Defendants' contention that the 1965 JOA was understood to survive with Petroecuador as a party.
v. Letter From Marco Herrera Balarezo
The 1995 Settlement is not the only post-1973 writing that implies a belief on the part of CEPE/Petroecuador that the 1965 JOA continued to govern. Another such writing, attached as Exhibit F to the affidavit of Ren้ Bucaram, is a letter sent to Mr. Bucaram by Marco Herrera Balarezo, "CEPE GENERAL AUDITOR," in November of 1986. In relevant part, the letter, as translated, first complains that
Operator TEXACO failed to observe Article 8 section (8) of the Napo Joint Operating Agreement, give[n] that cash calls to CEPE were not made "... in writing at least 30 days in advance of the start of the month to which the budget relates..." but rather generally complied [sic] in the second two weeks of the previous month.
The letter goes on to allege "significant shortages between the amounts in sucres provided by TEXACO and those spent in [various months] ... in which CEPE, on the contrary, had surpluses," and to state that "[i]t has become essential to rationalize cash calls pursuant to Article 8 of the Napo Agreement."
Article 8, section 8 of the 1965 JOA did pertain to the timing of requests for funds by the Operator, and did require such requests to be made 30 days in advance. The wording of article 8, section 8 as quoted in Mr. Herrera's letter does not correspond precisely to the wording of the 1965 *363 JOA, which states in relevant part that "[t]he Operator shall make written requests at least 30 days in advance of due date" (Perez Aff. Ex. C at ถ 8.8), but it is possible that the difference is a result of translation from English to Spanish and back to English. In the absence of any other "Napo Agreement" in the record that contains an article 8, section 8, applicable to requests for funds, it is a reasonable inference that the Napo Agreement quoted is the 1965 JOA.
Plaintiffs have suggested, in the course of disputing the significance of a different portion of Defendants' evidence, that "there were actually two `Napo Agreements' โ the 1965 Joint Operating Agreement ("JOA") between Texaco and... Gulf ... and another agreement executed years later." (Pl. Reply Mem. in Supp. of Mot. for Summ. J. at 2.) Their evidence for this proposition is a statement in a 1974 letter sent by a TexPet manager to the then General Manager of CEPE, that has been translated as follows:
As you know, some years ago our Companies reached an agreement on operations that we call the "Napo Operating Agreement." Later on, the Companies prepared a new draft Operating Agreement, which included the experience obtained during that time. Copies of both texts have been sent to you for your review.
(Perez Aff. Ex. G at 1.) The reference to a "new draft Operating Agreement," however, could well refer to an agreement that had not yet been executed by the parties, and there is no evidence in the record that such a new operating agreement was in fact executed until 1991. At the summary judgment stage, where "all ambiguities ... are viewed in a light most favorable to the nonmoving party," Vona, 119 F.3d at 206, the 1974 letter therefore cannot be read to indicate the existence of another Napo Agreement that was binding on the parties during the 1970s and 1980s. It is more significant insofar as it implies that CEPE was provided with a copy of the 1965 JOA, as Mr. Perez states in his affidavit (Perez Aff. ถ 36).
At this stage, therefore, the November 1986 letter from Mr. Herrera must be read to suggest that CEPE's auditor believed that the 1965 JOA had survived the 1973 Contract and continued to bind the parties, and believed that CEPE was entitled to benefits under the 1965 JOA. Admittedly, as Plaintiffs point out, the letter made no specific reference to the arbitration clause of the 1965 JOA. But on an estoppel theory, the test is whether CEPE/Petroecuador "`knowingly exploited' the ... contract and thereby received a direct benefit from the contract," MAG Portfolio Consultant, 268 F.3d at 62 (quoting Thomson-CSF, 64 F.3d at 778), not whether it explicitly acknowledged the existence of the contract's arbitration clause.
2. Doctrine of Waiver
Plaintiffs assert that even if Petroecuador did at some point agree to arbitration, "Texaco" has waived its right to arbitrate by its conduct during the Aguinda litigation. Even leaving aside any potential complications arising from the different identities of the parties to which Plaintiffs collectively refer as "Texaco" in the context of the instant case, the Aguinda litigation, and the Lago Agrio litigation, the evidence viewed in the light most favorable to ChevronTexaco and TexPet does not demonstrate a waiver sufficiently clearly to preclude arbitration under the relevant legal standard.
a. Governing Law
As previously discussed, see supra Parts II.A.2 and III.B.1.a, the contract under which arbitration is sought in this case is subject to either the New York Convention *364 or the Inter-American Convention, both of which have been incorporated into the FAA and both of which explicitly incorporate Chapter One of the FAA to the extent that it is not "in conflict" with their more specific provisions, 9 U.S.C.A. งง 208, 307 (West 2005). The Second Circuit "ha[s] long held that `once a dispute is covered by the [FAA], federal law applies to all questions of interpretation, construction, validity, revocability, and enforceability.'" Gutfreund v. Weiner (In re Salomon Inc. Shareholders Derivative Litig.), 68 F.3d 554, 559 (2d Cir.1995) (quoting Coenen v. R.W. Pressprich & Co., 453 F.2d 1209, 1211 (2d Cir.1972)) (alteration in original). Nothing in the specific provisions of either of the Conventions is in conflict with the Coenen rule, which therefore applies here.
The question of whether a right to arbitrate has been waived goes to the continued "enforceability" of the arbitration contract. Therefore, under Coenen, it is governed by federal law. In applying that law,
the Supreme Court has instructed that `any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.' Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). This bias in favor of arbitration, `is even stronger in the context of international transactions.' Deloitte Noraudit A/S v. Deloitte Haskins & Sells, U.S., 9 F.3d 1060, 1063 (2d Cir.1993).
Chelsea Square Textiles, Inc. v. Bombay Dyeing & Mfg. Co., 189 F.3d 289 (2d Cir.1999).
b. Merits
Plaintiffs' waiver argument is not strong enough to overcome the bias in favor of arbitration established by Moses H. Cone, Deloitte Noraudit, and Chelsea Square Textiles. Plaintiffs contend that Texaco should have moved in Aguinda to compel arbitration against Petroecuador. Unfair prejudice resulted, Plaintiffs say, when Texaco instead relied on the fact that the Republic and Petroecuador could not be impleaded in the United States as a ground for transfer of the case to Ecuador, and then reversed its position on the sovereign immunity of Ecuador and Petroecuador after they had spent eleven years basing their litigation strategy on its former position. Although this argument is superficially attractive, its logic does not survive close scrutiny.
Sovereign immunity for purposes of arbitration, and sovereign immunity for other purposes, do not necessarily go hand in hand. An FSIA provision cited by Plaintiffs abrogates sovereign immunity where
the action is brought ... to enforce an agreement made by the foreign state with ... a private party to submit to arbitration... any differences ... which may arise between the parties with respect to a defined legal relationship ... concerning a subject matter capable of settlement by arbitration under the laws of the United States, or to confirm an award made pursuant to such an agreement to arbitrate, if (A) the arbitration... is intended to take place in the United States, [or] (B) the agreement ... is or may be governed by a treaty or other international agreement in force for the United States calling for the recognition and enforcement of arbitral awards....
28 U.S.C.A. ง 1605(a)(6)(A) (West 2005). By its terms, however, this abrogation applies only to an action brought to enforce the arbitration agreement or confirm the arbitration award. It is perfectly consistent to say that a foreign state is immune from jurisdiction in a context other than a *365 petition to enforce an arbitration agreement or confirm an arbitration award, but may nevertheless be compelled to arbitrate under ง 1605(a)(6)(A).
That being the case, Plaintiffs are left to argue that Texaco should have responded to the Aguinda lawsuit by seeking to compel arbitration against Petroecuador. As Defendants do not claim a right to arbitration against the Republic of Ecuador, however, they can reasonably answer that such arbitration would not have solved the problems created in Aguinda by the inability to implead Ecuador itself, see Aguinda v. Texaco, Inc., 142 F.Supp.2d 534, 542 (S.D.N.Y.2001). Moreover, such arbitration would not even have enabled the Aguinda Plaintiffs, or Texaco, to implead Petroecuador in the Aguinda litigation, because Petroecuador would have been subject to jurisdiction under 28 U.S.C. ง 1605(a)(6)(A) only with respect to the arbitration. Thus, the Aguinda court's perceived inability to order effective equitable relief, see 142 F.Supp.2d at 542, likely would not have been significantly altered.
While it might have been possible for Texaco to somehow have invoked its purported right to arbitration on behalf of the Aguinda Plaintiffs and brought their claims into the arbitration, the legal feasibility of such an action is unclear at best. It is also unclear whether, even if this could have been done, Texaco would have had any obligation to assist the Aguinda Plaintiffs in joining parties that the Aguinda Plaintiffs could not themselves join, so as to enable litigation in a forum that Texaco opposed; litigants do not generally have an obligation to provide procedural aid to their adversaries. Texaco's failure to attempt such a maneuver is therefore insufficient basis for a finding of waiver.
Plaintiffs also suggest that Defendants have also waived any right to arbitrate through their conduct in this litigation, by asserting counterclaims seeking indemnification, rather than immediately moving to compel arbitration. The counterclaims against Petroecuador, however, are explicitly conditional: Defendants state in their Answer that they "will not seek to litigate these counterclaims against Petroecuador in this Court unless the arbitrability question raised by the Amended Complaint is decided in favor of Petroecuador." (Countercls. ถ 5.) In a procedural system that explicitly permits pleading in the alternative, see Fed. R. Civ. Pro. 8(e)(2), such conditional claims do not constitute a waiver of rights that will exist if the condition is not met. Plaintiffs would likely argue that the (unconditional) counterclaims against the Republic of Ecuador are also, in reality, counterclaims against Petroecuador, because on their view the two parties are legally the same. But Defendants have provided sufficient evidence in opposition to this proposition that it does not make sense to find a waiver based upon their refusal to accept it without question. On Defendants' reasonably supported view of the situation, they have sought arbitration while bringing a conditional counterclaim against the party involved in the arbitration, in case arbitrability is found lacking, and a related unconditional counterclaim against a party not involved in the arbitration. This is not sufficient to create a waiver, given the governing law's strong bias in favor of arbitration.
To the extent that Plaintiffs complain of Texaco's failure, during the pendency of the Aguinda litigation, to initiate arbitration against Petroecuador simply seeking indemnification for Texaco's costs in defending that litigation, they do not state the sort of waiver claim that this Court may properly evaluate. "Ordinarily a defense of waiver brought in opposition to a motion to compel arbitration ... is a matter to be decided by the arbitrator." Bell v. Cendant Corp., 293 F.3d 563, 564 (2d Cir.2002); S & R Co. of Kingston v. Latona *366 Trucking, Inc., 159 F.3d 80, 82-83 (2d Cir.1998). This rule does not apply where "the party seeking arbitration ha[s] already participated in litigation on the dispute" that it seeks to arbitrate. Bell, 293 F.3d at 564; S & R Co., 159 F.3d at 83. Here, however, where litigation enters the picture purely as the subject of a claim for indemnification from a third party, it cannot be said that "the party seeking arbitration ha[s] already participated in litigation on the dispute" that it seeks to arbitrate, Bell, 293 F.3d at 564; S & R Co., 159 F.3d at 83. Such an ordinary waiver claim is therefore "a matter to be decided by the arbitrator." Bell, 293 F.3d at 564; S & R Co., 159 F.3d at 83.
3. Act of State Doctrine Applied to 1973 Contract
Plaintiffs' final argument for summary judgment is that allowing arbitration would contravene the 1973 Contract, and that because the 1973 Contract was "an official act of the Ecuadorian State implementing its oil policy" (Pl. Mem. in Supp. of Mot. for Summ. J. at 15), the act of state doctrine compels that it must be followed as a rule of decision. The 1973 Contract, Plaintiffs contend, requires that all disputes related to the Napo Consortium be resolved in Ecuador. Thus, to allow arbitration in the United States, according to Plaintiffs, would be to treat the 1973 Contract as invalid, which would violate the act of state doctrine given the 1973 Contract's official status.
The act of state doctrine, however, does not apply here. The FAA explicitly provides that "[e]nforcement of arbitration agreements ... shall not be refused on the basis of the Act of State doctrine." 9 U.S.C.A. ง 15 (West 2005). Although this provision is located in Chapter One of the FAA rather than in the Convention-implementing Chapters Two and Three, Chapter One of the FAA applies to actions brought under the New York and Inter-American Conventions unless it is "in conflict" with Chapters Two or Three or the Conventions as ratified. 9 U.S.C.A. งง 208, 307. No reason is apparent why 9 U.S.C. ง 15 would be in conflict with either of the Conventions or either of the FAA Chapters that implemented them. Thus, 9 U.S.C. ง 15 applies here, and enforcement of the arbitration agreement at issue, if otherwise appropriate, "shall not be refused on the basis of the Act of State doctrine." Plaintiffs' third and final argument in favor of summary judgment therefore fails, and their motion for summary judgment must be denied.
IV. Plaintiffs' Motion to Dismiss Counterclaims Under Rule 12(b)
Although Plaintiffs have styled their motion to dismiss the counterclaims under Rule 12(b) as a single motion, it is in substance two conceptually distinct motions, the first seeking to dismiss the counterclaims for lack of subject matter jurisdiction, pursuant to Rule 12(b)(1), and the second seeking to dismiss the counterclaims for failure to state a claim, pursuant to Rule 12(b)(6). Plaintiffs' success with regard to lack of subject matter jurisdiction would moot the portion of their motion to dismiss that asserts failure to state a claim: if this Court lacked subject-matter jurisdiction over Defendants' counterclaims, it would have no authority to determine whether or not they state claims for which relief can be granted. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). Thus, the portion of Plaintiffs' motion claiming lack of subject matter jurisdiction will be addressed first.
A. Motion to Dismiss for Lack of Subject Matter Jurisdiction
1. Legal Standard
"A case is properly dismissed for lack of subject matter jurisdiction under Rule *367 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000). As a general matter, "[t]he burden of proving jurisdiction is on the party asserting it." Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir.1994). "Jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." APWU v. Potter, 343 F.3d 619, 623 (2d Cir.2003); Shipping Fin. Services Corp v. Drakos, 140 F.3d 129, 131 (2d Cir.1998).
"When ... a jurisdictional challenge under Fed.R.Civ.P. 12(b)(1) is addressed to the complaint, a court accepts as true all the factual allegations in the complaint and must draw all reasonable inferences in favor of the plaintiff." Lunney v. United States, 319 F.3d 550, 554 (2d Cir.2003). "Where jurisdictional facts are placed in dispute," however, "the court has the power and obligation to decide issues of fact by reference to evidence outside the pleadings, such as affidavits." APWU, 343 F.3d at 627; LeBlanc v. Cleveland, 198 F.3d 353, 356 (2d Cir.1999). Plaintiffs' motion to dismiss the counterclaims under Rule 12(b) comes at the initial pleading stage, but both parties have submitted affidavits in connection with the motion. Thus, the Court will assume unchallenged allegations to be true but will not automatically assume the truth of any disputed jurisdictional facts.
2. Analysis
The Foreign Sovereign Immunities Act (FSIA), which establishes a background rule of sovereign immunity accompanied by a specifically enumerated list of exceptions, "provides the sole basis for obtaining [subject matter] jurisdiction over a foreign sovereign in the United States." Virtual Countries, Inc. v. Republic of South Africa, 300 F.3d 230, 236 (2d Cir.2002) (alteration in original) (quoting Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 611, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992)). There is no dispute that Ecuador and Petroecuador both qualify as foreign states for FSIA purposes. (Am. Compl. ถถ 16-17; Ans. ถถ 16-17; Countercls ถ 1.[18]) Thus, the FSIA governs the presence or absence of subject-matter jurisdiction here.
The FSIA bestows upon district courts original jurisdiction without regard to amount in controversy of any nonjury civil action against a foreign state as defined in [28 USC ง 1603(a)] as to any claim for relief in personam with respect to which the foreign state is not entitled to immunity either under [28 USC งง 1605-1607] or under any applicable international agreement.
28 U.S.C.A. ง 1330(a) (West 2005). The general rule, however, is that "[s]ubject to ... international agreements [predating the FSIA] ... a foreign state shall be immune from the jurisdiction of the courts of the United States except as provided in [28 U.S.C. ง] 1605 to [28 U.S.C. ง] 1607." 28 U.S.C.A. ง 1604. Thus, this Court has *368 subject matter jurisdiction if, and only if, plaintiffs Ecuador and Petroecuador are stripped of immunity under 28 U.S.C. งง 1605-1607, or an applicable international agreement, with respect to Defendants' counterclaims โ that is, if and only if one of the FSIA's enumerated exceptions applies. ChevronTexaco and TexPet, as counterclaim plaintiffs, "have the burden of going forward with evidence showing that, under exceptions to the FSIA, immunity should not be granted, although the ultimate burden of persuasion remains with the alleged [here conceded] foreign sovereign[s]." Cabiri v. Government of the Republic of Ghana, 165 F.3d 193, 196 (2d Cir.1999); Cargill Int'l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1016 (2d Cir.1993).
The sole exception claimed by Defendants to be applicable to this case is 28 U.S.C. ง 1607(b), known as "the counterclaim exception to the FSIA," Cabiri, 165 F.3d at 196. That section provides in relevant part that "[i]n any action brought by a foreign state ... in a court of the United States... the foreign state shall not be accorded immunity with respect to any counterclaim ... arising out of the transaction or occurrence that is the subject matter of the claim of the foreign state." 28 U.S.C.S. ง 1607(b) (2005).
In construing the "transaction or occurrence" test of ง 1607(b), the Second Circuit has "look[ed] for guidance" to the identically worded test for compulsory counterclaims under Fed. R. Civ. Pro. 13(a). Cabiri, 165 F.3d at 197. The Rule 13(a) test is "construed ... liberally," as "`not requiring an absolute identity of factual backgrounds ... but only a logical relationship between them.'" Cabiri, 165 F.3d at 197 (quoting United States v. Aquavella, 615 F.2d 12, 22 (2d Cir.1979)). "The transaction or occurrence standard .... `looks to the logical relationship between the claim and the counterclaim, and attempts to determine whether the essential facts of the various claims are so logically connected that considerations of judicial economy and fairness dictate that all the issues be resolved in one lawsuit.' " Cabiri, 165 F.3d at 197 (quoting Aquavella, 615 F.2d at 22).
To apply the Cabiri test, we must first determine the nature and "essential facts" of Plaintiffs' claims. The contents of the Amended Complaint are foreshadowed in its first paragraph, where Plaintiffs are described as
seek[ing] injunctive and declaratory relief against Defendants ChevronTexaco Corporation and Texaco Petroleum Company (collectively "Texaco") for making a meritless arbitration demand against... Petroecuador before the American Arbitration Association ("AAA"); for asserting a position before this ... Court that directly contradicts the position upon which Texaco prevailed in Aguinda v. Texaco ... and for making a claim for indemnification against ... Petroecuador which Texaco waived through its conduct in the Aguinda case.
(Am.Compl. ถ 1.) That is, the first paragraph of the Amended Complaint indicates that three things are at issue: an allegedly meritless arbitration demand, an alleged inconsistency between Defendants' positions in this case and Texaco's positions in the Aguinda litigation, and a waiver of any claim Defendants might otherwise have had for indemnification against Petroecuador that Texaco allegedly effected by its conduct in the Aguinda litigation.
In accordance with this introduction, essentially all of the allegations that follow the first paragraph of the Amended Complaint fall into one of two categories. The first set of allegations pertains to the contractual relationship among CEPE/Petroecuador, TexPet, Gulf, and the other related companies involved in the exploitation of the Napo Concession, or between those *369 companies and the Republic of Ecuador. This set of allegations is offered to establish the lack of an arbitration agreement binding Petroecuador. The second set of allegations recounts the history of the Aguinda litigation and related post-1993 events such as the 1995 Settlement, the 1998 Final Release, and the Lago Agrio litigation. This set of allegations forms the basis for Plaintiffs' claims of waiver and inconsistency.
These two categories of allegations correspond to the two categories of claims for relief that Plaintiffs put forward. Recall that according to the Claims for Relief section of the Amended Complaint, Plaintiffs purport to state four claims. The first three, for collateral estoppel, judicial estoppel, and waiver, assert that Texaco's conduct in the Aguinda litigation has caused the Defendants to lose certain rights against Plaintiffs that Defendants might otherwise have had. The fourth claim asserts that Defendants have no valid grounds upon which to demand arbitration against Plaintiffs in the United States, and that Plaintiffs are entitled to a permanent stay of arbitration. That is, the fourth claim corresponds approximately to what we have described as the first set of allegations (pertaining to lack of a contractual obligation to arbitrate), and the first three claims correspond approximately to what we have described as the second set of allegations (pertaining to Texaco's conduct in the Aguinda litigation and related post-1993 events).
The Prayer for Relief in Plaintiffs' Amended Complaint, while extensive, is not inconsistent with this view of their claims and allegations. The first two prongs of their requested ten-part declaratory judgment address their collateral estoppel and judicial estoppel claims, both based on Plaintiffs' view of Texaco's conduct in the Aguinda litigation. The third prong states that Aguinda "involved the same claims, brought by many of the same plaintiffs, as the case currently pending in Lago Agrio, Ecuador on which Texaco seeks indemnification in this matter," which is a logical element of Plaintiff's waiver argument based on the Aguinda litigation and related post-1993 events, and the fourth prong states specifically that "Texaco waived any right it may have had to seek indemnification" from Ecuador or Petroecuador in a U.S. forum "[t]hrough its conduct in the Aguinda case." (Am. Compl. Prayer for Relief ถถ (A)(c)-(A)(d).) The fifth prong states that the 1973 Contract "controls the contractual relationship between the Plaintiffs and the Defendants" (id. ถ (A)(e)), and the seventh prong that "[n]either the Republic of Ecuador nor Petroecuador has ever become a party to the October 22, 1965 Joint Operating Agreement between the Texaco Petroleum Company and the Ecuadorian Gulf Company" (id. ถ (A)(g)). These two statements embody key elements of Plaintiffs' argument that no arbitration agreement binding on Petroecuador exists, an argument that the Court is requested to explicitly confirm by declaring further in the ninth prong that "[n]either the Republic of Ecuador nor Petroecuador has ever agreed to arbitrate any disputes with Texaco in any American forum" and in the tenth prong that "[u]nder either the Federal Arbitration Act or Article 75 of the New York Civil Practice Law and Rules, there are no valid grounds upon which Texaco may demand arbitration against the Republic of Ecuador or Petroecuador in this matter." (Id. ถถ (A)(i)-(A)(j).) The two prongs of the requested declaratory judgment least obviously related to the waiver argument and the argument against arbitration are the sixth, demanding judgment that "[t]he Republic of Ecuador and Petroecuador are a single party for the purposes of their contractual relationship with Texaco" (id. ถ (A)(f)), *370 and the eighth, demanding judgment that "[n]either the Republic of Ecuador nor Petroecuador has ever made a clear statement waiving its sovereign immunity in the United States in this matter, and there are no grounds upon which to find such a waiver by implication" (id. ถ (A)(h)). Even these, however, both seek to establish portions, if somewhat tangential portions, of the arguments Plaintiffs have put forward in support of their claims that Petroecuador has no obligation to arbitrate and that Defendants have waived or otherwise forfeited any claim to indemnification from Petroecuador. Thus, all portions of the requested declaratory judgment can be understood as related to those two sets of claims and allegations.
The three injunctions requested by the Prayer for Relief in Plaintiffs' Amended Complaint have a similar relationship with those same two sets of claims and allegations. The request for a permanent injunction staying the arbitration proceedings clearly relates to the claim that arbitration is inappropriate. The request for an injunction "barring Texaco from asserting a right to indemnification against the Republic of Ecuador and Petroecuador in this matter" (id. ถ C), broad as it is, can be understood in the context of the Amended Complaint as stemming from the claim that any such right was lost because of Texaco's conduct in the Aguinda litigation. The request for an injunction "estopping Texaco from denying that the Republic of Ecuador and Petroecuador enjoy sovereign immunity in the United States in this matter" (id. ถ B) adds little to the corresponding declaratory-judgment request discussed above.
Having ascertained "the essential facts of [Plaintiffs'] claims," we can now determine whether they "are so logically connected" with the essential facts of the counterclaims "that considerations of judicial economy and fairness dictate that all the issues be resolved in one lawsuit." Cabiri, 165 F.3d at 197. Following the example of the Second Circuit in Cabiri, this determination shall be made separately with respect to each substantively distinct counterclaim. 165 F.3d at 198 (stating that "[w]e analyze the applicability of the counterclaim exception to each of the claims separately"). Where nominally distinct claims are based "essentially on the same allegations," however, they may be treated together in determining the applicability of the counterclaim exception to the FSIA. Id.
Here, although Defendants nominally bring four counterclaims, there are in substance two sets of counterclaims. Defendants' first counterclaim, and a portion of Defendants' fourth counterclaim for declaratory judgment, allege that Petroecuador is obligated to indemnify Defendants for litigation expenses, costs, and any final judgment in the Lago Agrio litigation because of an implied agency relationship between TexPet and Petroecuador with respect to TexPet's operation of the Napo Consortium. Defendants' second and third counterclaims, as well as the remaining portion of the fourth counterclaim for declaratory judgment, are based on alleged breaches by Ecuador and Petroecuador of the 1995 Settlement and 1998 Final Release. The implied-agency counterclaims are based "essentially on the same allegations" as one another, Cabiri, 165 F.3d at 198, and the same can be said of the settlement-based counterclaims. Thus, only two separate determinations are necessary regarding the applicability of the counterclaim exception to the FSIA.
a. Counterclaims Based on an Implied Agency Relationship Between Petroecuador and TexPet
In analyzing whether subject matter jurisdiction is present as to the counterclaims *371 based on an implied agency relationship between Petroecuador and TexPet, it is important to note that because those counterclaims run against Petroecuador only, they have explicitly been made conditional on the Court's finding for Plaintiffs with respect to the arbitrability issue. Thus, the implied-agency counterclaims would only be litigated in the event that the arbitration petition filed by Defendants was determined to lack merit. In analyzing the presence or absence of jurisdiction over the implied-agency counterclaims, we may therefore assume that the initial arbitration petition was meritless. If this is determined not to be the case, then the implied-agency counterclaims will vanish of their own accord and our analysis will be moot.
Proceeding on that assumption, the Court is unwilling to conclude that the FSIA permits what would be colloquially referred to as "sandbagging." Defendants are ultimately responsible for the initiation of this litigation, in that it would not have occurred had Defendants not commenced arbitration proceedings against Petroecuador. If those arbitration proceedings were meritless, then finding Plaintiffs' reaction to them to have created jurisdiction over counterclaims going to the merits of the underlying dispute would result in a significant and unreasonable gap in the wall of sovereign immunity established by the FSIA. Such a result is not compelled by the text of the FSIA or by a proper application of the Cabiri standard.
To find counterclaim jurisdiction here would be to say that a would-be plaintiff who wishes to sue an entity possessing sovereign immunity may simply take the following steps. First, file a meritless arbitration petition against that entity in the United States, and wait for that entity to go to court in an effort to stop the groundless arbitration. Second, if the immune entity chooses to sue in state court to stop the arbitration, remove to federal court, either on the basis of diversity, or on the basis that you have alleged the existence of "an arbitration agreement ... falling under the [New York or Inter-American] Convention," 9 U.S.C.A. งง 205, 302 (West 2005); see Sarhank Group v. Oracle Corp., 404 F.3d 657, 660 (2d Cir.2005) (holding that a challenge to the existence of any binding arbitration agreement does not defeat subject matter jurisdiction under the New York Convention). Third, utilize the counterclaim exception to the FSIA to bring an action against the otherwise immune entity. On the theory implied by Defendants' position, this counterclaim will be within the district court's jurisdiction, so long as it is logically related to the reasons why the arbitration petition lacked merit in the first instance. By alleging that an arbitration agreement existed with respect to any particular contractual relationship, for example, one could utilize this maneuver to obtain federal-court jurisdiction over the merits of a dispute regarding that relationship.
It seems apparent that the policy underlying the FSIA would be frustrated if such a maneuver were allowed to succeed, which suggests that a foreign state lured into the United States courts by a meritless arbitration proceeding should not be stripped of its immunity by the counterclaim exception with respect to counterclaims going beyond the issue of arbitrability. The text of ง 1607(b) and the standard enunciated by the Second Circuit in Cabiri lead to the same conclusion. Where a foreign state has been lured into court by a meritless arbitration proceeding that it seeks to halt, the "transaction or occurrence that is the subject matter of the claim of the foreign state," 28 U.S.C.A. ง 1607(b) (West 2005), is really the meritless arbitration proceeding itself, as distinct from the underlying dispute *372 with respect to which the meritless arbitration proceeding was brought. Therefore, any counterclaims going to the merits of a dispute rather than to arbitrability are not counterclaims "arising out of the transaction or occurrence that is the subject matter of the claim of the foreign state," id., and "considerations of ... fairness" do not "dictate that all the issues be resolved in one lawsuit," Cabiri, 165 F.3d at 197. The entrapped foreign state thus does not lose its sovereign immunity in such a case.
With respect to the counterclaims based on an implied agency relationship between TexPet and Petroecuador, this must be considered as such a case. Although we do not hold that the arbitration demand in this case was meritless, the conditional implied-agency counterclaims against Petroecuador will become effective only if we eventually so hold. Thus, the jurisdictional viability of those counterclaims must be analyzed on the assumption that we will so hold, because that is the only circumstance under which those counterclaims are actually asserted.
Admittedly, even on the assumption that the arbitration demand in this case lacked merit, Defendants can be held responsible for the initiation of this litigation only insofar as it seeks to enjoin the arbitration, and not insofar as Plaintiffs have chosen to state broader claims. To the extent that Plaintiffs have freely chosen to avail themselves of this Court's jurisdiction with regard to matters other than the (possibly meritless) petition for arbitration, and have thereby created jurisdiction over counterclaims, they have only themselves to blame. Defendants' arguments in favor of finding a logical relationship between Plaintiffs' claims and the implied-agency counterclaims, however, are not significantly stronger because of Plaintiffs' broader claims for relief than they would have been if Plaintiffs had restricted themselves to requesting a permanent stay of arbitration.
As discussed above, Plaintiffs' allegation and claims for relief fall into two substantive categories: those challenging the applicability of the 1965 JOA and its arbitration clause, and those asserting waiver or forfeiture of any indemnification rights that Defendants may previously have possessed, based on Texaco's conduct in the Aguinda litigation and related post-1993 events. It is only the first class of allegations and claims to which Defendants could reasonably suggest their implied-agency counterclaims are related. That first set of allegations and claims, however, is precisely the set that Defendants provoked by making their arbitration demand. Plaintiffs' gratuitous additions in their Amended Complaint relate to the Aguinda litigation and other "occurrences" dating from 1993 onward; they do not have a logical relationship to counterclaims regarding the Petroecuador-TexPet relationship over the life of the Napo Concession.
Thus, with respect to counterclaims regarding the Petroecuador-TexPet relationship over the life of the Napo Concession, such as the implied-agency counterclaims at issue here, Defendants can invoke in support of jurisdiction only those claims and allegations by Plaintiffs that relate to Plaintiffs' request for a permanent stay of arbitration. Having themselves provoked that request by filing an arbitration petition that for these purposes we must assume was meritless, Defendants cannot rely on it to breach Plaintiffs' sovereign immunity.
b. Counterclaims Based on the 1995 Settlement and 1998 Final Release
The counterclaims based upon the 1995 Settlement and 1998 Final Release do not suffer from the same jurisdictional flaw as the implied-agency counterclaims. *373 They are logically related to portions of Plaintiffs' claims that are not mere defenses against a possibly meritless arbitration demand, and which therefore arise out of a transaction distinct from the arbitration demand.
The Amended Complaint complains several detailed allegations regarding the 1995 Settlement and 1998 Final Release. Plaintiffs first allege that on December 30, 1994, based on the 1994 Memorandum of Understanding that preceded the 1995 Settlement, "Texaco requested that the District Court in Aguinda v. Texaco dismiss the Aguinda Plaintiffs' claims `in light of the settlement entered into between Texaco and Ecuador.'" (Am.Compl. ถ 41.) They go on to describe the 1995 Settlement in several respects, alleging that it "specifically stated that the Republic of Ecuador and Petroecuador entered into the agreement `as one Party'," and that while it "released all of the Government's and Petroecuador's claims against the Releasees [i.e., Texaco and its subsidiaries] for Environmental Impact arising from the Operations of the Consortium ....," it "made no mention of third-party claims against Texaco or its subsidiaries for environmental damage caused by Texaco during the period in which it operated the Napo Concession." (Id. ถ 43 [alterations in original].) Plaintiffs then imply that the 1995 Settlement was incorporated into the purported request by Texaco to dismiss the Aguinda action based on an Ecuador-Texaco settlement, alleging that "Texaco's request to the Aguinda Court for dismissal of the Aguinda Plaintiffs' claims based on the 1994 and 1995 remediation agreements was rejected by United States Magistrate Judge Lisa Margaret Smith on June 20, 1995 ... [and] Texaco never appealed t[his] ruling...." (Id. ถ 44.) They further refer to the district court's August 12, 1997 decision in Aguinda as having "noted that the Republic of Ecuador and Petroecuador had released Texaco from any claims that they might have had against it through the May 4, 1995 settlement agreement." (Id. ถ 54.) Finally, they describe the 1998 Final Release, alleging that in that agreement as in the 1995 Settlement "the Republic of Ecuador and Petroecuador [were] again[] acting together as one party, the party of the first part," and that "the 1998 Final [Release] made no mention of third-party claims against Texaco or its subsidiaries for environmental damage caused by Texaco during the period in which it operated the Napo Concession." (Id. ถ 55.)
These allegations do not relate to Plaintiffs' claim that Petroecuador never agreed to arbitrate with TexPet. Rather, they must relate to Plaintiffs' claim that Texaco's conduct in the Aguinda litigation and related post-1993 events effected a waiver of any arbitration or indemnification rights that Texaco and its subsidiaries might previously have possessed. They serve as a portion of the basis for the requested declaratory judgment that "[t]he Republic of Ecuador and Petroecuador are a single party for the purposes of their contractual relationship with Texaco" (Am. Compl. Prayer for Relief ถ (A)(f)), and insofar as they support the indemnification-waiver theory, they are a portion of the basis for the requested injunction "barring Texaco from asserting a right to indemnification against the Republic of Ecuador and Petroecuador in this matter" (id. ถ C).
To the extent that the waiver claim is based on the allegations discussed above, therefore, the 1995 Settlement and 1998 Final Release are among the transactions or occurrences giving rise to it. This supports the contention that counterclaims based on the 1995 Settlement and 1998 Final Release are "logically related" to the broader claims made by Plaintiffs in their Amended Complaint. As part of that Amended Complaint, Plaintiffs have asserted *374 that the 1995 Settlement and 1998 Final Release do not address third-party claims against Texaco and its subsidiaries; Defendants now seek to prove that they were intended to do so. Plaintiffs' assertions in this regard may be insufficiently central to their claims to serve as a basis for counterclaim jurisdiction if they were the only such basis, but they do provide some support for the exercise of counterclaim jurisdiction, and they are in fact not the only basis.
Further support for jurisdiction over the counterclaims based upon the 1995 Settlement and 1998 Final Release can be found in Plaintiffs' request for a declaratory judgment that "Aguinda v. Texaco involved the same claims, brought by many of the same plaintiffs, as the case currently pending in Lago Agrio, Ecuador on which Texaco seeks indemnification in this matter." One of the key issues in the determination whether Plaintiffs have breached the 1995 Settlement and 1998 Final Release in connection with the Lago Agrio litigation, as Defendants claim, is whether the Lago Agrio litigation indeed involves the same claims as were brought in Aguinda. Defendants contend that it does not. In their view, while Aguinda was an action for relief of damages to individuals, the Lago Agrio litigation is an attempt to vindicate public rights to remediation, rights that according to Defendants were formerly possessed by Ecuador itself and were released by Ecuador in 1995 and 1998. Absent this contention by Defendants, it would be extremely difficult for Defendants to establish that claims nominally brought by third parties in the Lago Agrio litigation were covered by the 1995 and 1998 agreements between Texaco and Ecuador: it is highly unlikely that a settlement entered into while Aguinda was pending would have neglected to mention the third-party claims being contemporaneously made in Aguinda if it had been intended to release those claims or to create an obligation to indemnify against them. The declaratory judgment requested by Plaintiffs with respect to the identity of the claims in Aguinda and in the Lago Agrio litigation therefore runs directly against a core aspect of Defendants' settlement-related counterclaims.
Plaintiffs have chosen, in their Amended Complaint, to allege that the 1995 Settlement and 1998 Final Release "made no mention of third-party claims against Texaco or its subsidiaries for environmental damage caused by Texaco during the period in which it operated the Napo Concession" (Am.Compl. ถถ 43, 55), and to seek a declaration that the Aguinda action "involved the same claims ... as the case currently pending in Lago Agrio, Ecuador." Having thus invoked this Court's jurisdiction with respect to two of the core elements of Defendants' counterclaims based on the 1995 Settlement and 1998 Final Release, Plaintiffs cannot assert sovereign immunity against counterclaims that in large part seek to establish the opposite of what they themselves have already contended. The "essential facts" of the waiver claim insofar as it relies on the 1995 Settlement and 1998 Final Release, and of the request for a declaratory judgment regarding the identity of the claims in Aguinda and in the Lago Agrio litigation, "are so logically connected" to the counterclaims based on the 1995 Settlement and 1998 Final Release "that considerations of judicial economy and fairness dictate that all the issues be resolved in one lawsuit." Cabiri, 165 F.3d at 197.
Plaintiffs argue that Defendants have taken inconsistent positions by successfully asserting in the Aguinda litigation that Ecuador and Petroecuador were immune from suit in the United States, and nevertheless contending here that the Court has jurisdiction over counterclaims against Ecuador and Petroecuador in this case. Because *375 the Court's jurisdiction under 28 U.S.C. ง 1607(b) derives from the relationship between Defendants' counterclaims and the claims brought by Plaintiffs in their Amended Complaint, this is a non sequitur. That Ecuador and Petroecuador had sovereign immunity before they filed this action, and as a general matter still do, does not imply that they have the same degree of sovereign immunity in this action after voluntarily coming to this Court, making the allegations that they have made, and seeking the relief that they have sought. The circumstances affecting the sovereign-immunity determination have been changed by Plaintiffs themselves.
Plaintiffs' statement at oral argument that all of their claims beyond that for a permanent stay of arbitration are conditional on the failure of their claim for a permanent stay of arbitration does not suffice to justify a dismissal of the settlement-based counterclaims for lack of jurisdiction. Leaving aside that this conditional nature of the broader claims is not apparent from the Amended Complaint, the fact remains that even under Plaintiffs' theory of the pleadings, they now hold out the possibility of pursuing claims sufficiently broad to confer jurisdiction over Defendants' settlement-based counterclaims. If Plaintiffs suffer defeat on the question of arbitrability, they do not dispute that the Court will then have to address their requests for broader relief. Plaintiffs cannot logically ask the Court to dismiss the counterclaims at this stage in the litigation, while such a possibility remains, based on the assumption that the possibility will not come to fruition. If Plaintiffs are victorious on the arbitrability issue, a renewed motion to dismiss any then-surviving counterclaims for lack of jurisdiction would raise the question whether their declaration of conditionality at oral argument came too late; at this point, that question need not be reached.
B. Motion to Dismiss Counterclaims for Failure to State a Claim
With respect to the implied-agency counterclaims against Petroecuador, the portion of Plaintiffs' motion to dismiss that asserts failure to state a claim, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, is mooted by Plaintiffs' victory on the portion of their motion that asserts lack of subject matter jurisdiction. With respect to the counterclaims based on the 1995 Settlement and 1998 Final Release, however, the motion to dismiss for failure to state a claim remains to be adjudicated.
1. Legal Standard
A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure should be granted "if, accepting all the allegations in the complaint as true and drawing all reasonable inferences in plaintiff[s'] favor, the complaint fails to allege any set of facts that would entitle plaintiff[s] to relief." Hartford Courant Co. v. Pellegrino, 380 F.3d 83, 89-90 (2d Cir.2004); Emergent Capital Inv. Mgmt., LLC v. Stonepath Group, Inc., 343 F.3d 189, 194 (2d Cir.2003). As to the counterclaims, of course, the "plaintiffs" for Rule 12(b)(6) purposes are Defendants Chevron Texaco and TexPet.
In evaluating the allegations of a complaint on a motion to dismiss, a court may also consider "documents attached to the complaint as an exhibit or incorporated in it by reference ... matters of which judicial notice may be taken, or ... documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit." Brass v. American Film Technologies, Inc., 987 F.2d 142, 150 (2d Cir.1993). Here, the set of such documents includes the 1965 JOA, the 1994 Memorandum of Understanding, the 1995 Settlement and the 1998 Final Release. Also, as "courts routinely take judicial notice *376 of documents filed in other courts... to establish the fact of such litigation and related filings," Kramer v. Time Warner, Inc., 937 F.2d 767, 774 (2d Cir.1991), the Court may take notice of the filings made in the Aguinda litigation and the subsequent Lago Agrio litigation in Ecuador.
2. Analysis
a. Act of State Doctrine as Applied to 1973, 1974, and 1977 Contracts
Plaintiffs assert that the Act of State doctrine as applied to the 1973, 1974 and 1977 Contracts requires Texaco to submit its counterclaims to the courts of Ecuador rather than bringing them in this Court. With respect to the counterclaims based on the 1995 Settlement and 1998 Final Release, this argument fails for two independent reasons. First, as previously discussed, see supra Part III.B.1.b.iii, the forum selection clause in paragraph 50.1 of the 1973 Contract, upon which Plaintiffs rely,[19] is not unambiguously exclusive, as it would have to be to be enforceable under John Boutari & Son, Wines & Spirits, S.A. v. Attiki Importers & Distributors Inc., 22 F.3d 51, 52 (2d Cir.1994), at the motion to dismiss stage. Second, the 1995 Settlement recites that "the '1973 Contract' expired on June 6, 1992," and contains an integration clause stating in part that "[n]o other agreements, oral or otherwise, regarding this Contract, shall be deemed to exist or to bind the Parties hereto." (Veiga Aff. Ex. B at 3, 14.) The integration clause alone would likely be sufficient to establish that the 1995 Settlement is not governed by a forum selection clause contained in a previous contract, and it is certainly not governed by a forum selection clause contained in a contract that it explicitly declares to be defunct.
b. Relevance of 1995 Settlement and 1998 Final Release
Plaintiffs contend that "[t]he 1995 and 1998 agreements between the Republic and Texaco are immaterial to this case." (Pl. Mot. to Dismiss Countercls. at 20.) Those agreements, they say, address only claims by Ecuador and Petroecuador, not claims by third parties. Defendants counter that at least some of the claims brought in the Lago Agrio action effectively are claims by Ecuador, prosecuted on Ecuador's behalf by individual plaintiffs acting as private attorneys general under a 1999 law, and that such claims were intended to be included in the 1995 Settlement and 1998 Final Release.
Plaintiffs argue that they "did not settle any rights for third parties," and in fact "couldn't" have done so. (Oral Ar. Tr. at 23). This argument implicitly relies on the assumption that a settlement in which a sovereign state releases claims can never affect similar claims brought by citizens of that state, an assumption which is at least overbroad. Within the United States, it is an accepted rule of law that "[w]hen a state litigates common public rights, the citizens of that state are represented in such litigation by the state and are bound by the judgment." Satsky v. Paramount Communications, 7 F.3d 1464, 1470 (10th Cir.1993), quoted with approval in New York by Vacco v. Reebok Int'l, 96 F.3d 44, 48 (2d Cir.1996). A settlement embodied in a consent decree can constitute a final judgment for Satsky purposes. *377 Satsky, 7 F.3d at 1468. The question is whether something like the Satsky rule applies here, where the settlement is not alleged to have been entered as a consent decree, the relief sought is against the sovereign rather than the individuals alleged to be asserting public rights, and American substantive law may not govern in any event because the 1995 Settlement and 1998 Final Release had little connection with the United States.
The Second Circuit has held that "the FSIA requires courts to apply the choice of law rules of the forum state" in order to "ensure that foreign states are liable `in the same manner and to the same extent as a private individual under like circumstances,'" at least in a case where "the ... court would have applied [forum state] choice of law rules to ... [an] action if the parties before it were all private individuals." Barkanic v. General Admin. of Civil Aviation of People's Republic of China, 923 F.2d 957, 960-61 (2d Cir.1991) (quoting 28 U.S.C. ง 1606). Defendants' counterclaims, like the claims at issue in Barkanic, do not raise a federal question in any respect other than having been brought under the FSIA. If the parties before the Court were all private individuals, the counterclaims would be subject to either the Court's diversity jurisdiction under 28 U.S.C. ง 1332(a)(2) or its supplemental jurisdiction under 28 U.S.C. ง 1367(a). The Court would thus apply the choice of law rules of the forum state. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Rogers v. Grimaldi, 875 F.2d 994, 1002 (2d Cir.1989). Therefore, under Barkanic, the choice of law rules of the forum state govern here as well.
"In New York, the forum state in this case, the first question to resolve in determining whether to undertake a choice of law analysis is whether there is an actual conflict of laws." Curley v. AMR Corp., 153 F.3d 5, 12 (2d Cir.1998) (citing In re Allstate Ins. Co., 81 N.Y.2d 219, 597 N.Y.S.2d 904, 613 N.E.2d 936 (1993)). To ascertain whether there is an actual conflict of laws with respect to the counterclaims at issue here, it is necessary to know what the law of Ecuador is: because Ecuador was the place of execution and performance of the contracts at issue, as well as the place of business of at least some of the parties, it is a logical candidate for the source of governing substantive law, see Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 84 N.Y.2d 309, 618 N.Y.S.2d 609, 642 N.E.2d 1065, 1068-69 (1994).
It has been said that "[i]f the party urging a choice of law analysis fails to demonstrate a true conflict between New York and another state's laws, no choice of law analysis need be undertaken." Bass v. World Wrestling Fed'n Entm't, Inc., 129 F.Supp.2d 491, 504 (E.D.N.Y.2001) (citing Portanova v. Trump Taj Mahal Assocs., 270 A.D.2d 757, 759-60, 704 N.Y.S.2d 380 (3d Dep't 2000).) While Plaintiffs have indicated that they believe the law of Ecuador to control, they have not specifically demonstrated a conflict between Ecuadorian law and New York law. The Second Circuit in Curley, however, "urge[d] district courts to invoke the flexible provisions of Rule 44.1 [of the Federal Rules of Civil Procedure] to determine issues relating to the law of foreign nations," rather than "avoid[ing] a full analysis of [that] law simply on the basis of an inadequate submission by one party." 153 F.3d at 13. With respect to this issue relating to the law of a foreign nation, we will not simply rely on Plaintiffs' failure to demonstrate a true conflict, but will instead look to the broader sources of information permitted by Rule 44.1 in order to ascertain Ecuadorian law and thereby determine whether a true conflict exists.
*378 One important source of information under Rule 44.1, although not the only permissible source, is submissions by the parties. While Defendants have submitted an affidavit from Dr. Gustavo Romero-Ponce addressing certain aspects of the Ecuadorian law of contract interpretation, this affidavit does not address whether any special rule exists for contracts or settlements entered into by the Ecuadorian state. Plaintiffs also have not addressed what Ecuadorian law would be with respect to a contract or settlement entered into by the state and subsequent assertion of related public rights by third parties. Nor has either side addressed whether Ecuadorian law permits the government in power at a given time to make a contractual commitment to a private party that would bind a future government not to pass certain legislation on pain of liability for damages, as Defendants arguably assert that the 1995 Settlement and the 1998 Final Release did with respect to the 1999 environmental law on which Defendants allege many of the claims in the Lago Agrio litigation to be based. Rather than "avoid[ing] a full analysis of [Ecuadorian] law simply on the basis of ... inadequate submission[s]," Curley, 153 F.3d at 13, we will follow the example of the Second Circuit in Curley and request further briefing regarding Ecuadorian law.[20] This briefing may be accompanied by affidavits if the parties so desire, but the parties are reminded that Rule 44.1 does not require materials considered in the determination of foreign law to be admissible under the Federal Rules of Evidence.
In their supplemental submissions regarding the Ecuadorian law that would apply to the counterclaims based on the 1995 Settlement and 1998 Final Release, the parties should also address whether they agree that Ecuadorian law governs. Because under New York law "parties to a civil litigation, in the absence of a strong countervailing public policy, may consent, formally or by their conduct, to the law to be applied," Martin v. Cohoes, 37 N.Y.2d 162, 371 N.Y.S.2d 687, 332 N.E.2d 867, 869 (1975), agreement on this question could render a choice of law analysis unnecessary.
V. Further Proceedings and Other Motions
A. Stay of Arbitration
Pending final resolution of the arbitrability issue, it is appropriate to continue the stay of arbitration proceedings that is presently in effect. In Bensadoun v. Jobe-Riat, 316 F.3d 171 (2d Cir.2003), the Second Circuit, remanding an action for an injunction barring arbitration after holding that material issues of fact existed as to arbitrability, instructed that "[u]pon remand, the District Court should stay arbitration pending resolution of this lawsuit." 316 F.3d at 178. The situation here is analogous to that upon remand in Bensadoun. See also Ryan, Beck & Co., LLC v. Fakih, 268 F.Supp.2d 210, 231 (E.D.N.Y.2003) (citing Bensadoun and staying arbitration pending resolution of suit for a declaration of non-arbitrability).
B. Motion for Stay of Discovery
Plaintiffs moved for a stay of discovery pending resolution of the dispositive motions to which this Opinion and Order is addressed, a request that is now largely but not entirely moot given the Court's *379 resolution of all aspects of the dispositive motions other than the motion to dismiss the settlement-based counterclaims under Rule 12(b)(6). The arguments made by Plaintiffs in support of their request for a stay rely in large part on the "threshold" nature of questions of law regarding "jurisdiction and arbitrability" (Pl. Mem. in Supp. of Mot. to Stay Disc. at 4), and the specific discovery requests to which they object also appear to be related to aspects of this case other than Defendants' settlement-based counterclaims. The extant motion for a stay of discovery is therefore denied on the ground that the only portion of it not now moot is inadequately supported.
This denial is without prejudice to a renewal of the motion with respect to the counterclaims as to which the Motion to Dismiss has not been fully resolved, if supported by reasons specific to those counterclaims and restricted to discovery requests that can be justified only by reference to those counterclaims. Absent any such renewed motion, Plaintiffs shall have thirty days to respond to Defendants' discovery requests, as the parties appear to agree that this amount of time is appropriate.
C. Motions Regarding Filings
There remain three outstanding motions regarding the propriety of certain of the parties' filings. The only portion of Plaintiffs' motion to strike certain of Defendants' filings as untimely, or, in the alternative, for a preliminary injunction and additional time to reply, that is not now moot is the portion requesting that Defendants' filings be stricken. No sufficient cause to strike Defendants' filings having been shown, the motion is denied. Also outstanding are Defendants' motion for permission to file sur-replies in opposition to Plaintiffs' motions for summary judgment and to dismiss the counterclaims, and Plaintiffs' motion for permission to file a response to those sur-replies. Defendants' sur-replies having contained relevant information that actually tended to support Plaintiffs (in particular the text of the 1991 Agreement), it would not make sense to strike them from the record at this juncture, but the submission of those sur-replies was sufficiently irregular to justify Plaintiffs' response; the two motions for permission are therefore granted.
D. Sequence of Further Proceedings
Resolution of Plaintiffs' broader claims beyond that for a permanent stay of arbitration will necessarily await resolution of their demand for such a stay, now that the broader claims have been declared conditional on such a permanent stay being denied.
VI. Conclusion
For the reasons set forth above, Plaintiff's Motion for Summary Judgment (dkt. no. 36) is DENIED. Plaintiff's Motion to Dismiss Counterclaims Under Rule 12(b) (dkt. no. 31) is GRANTED IN PART, insofar as it asserts that the Court lacks subject-matter jurisdiction over the counterclaims based on an alleged implied-agency relationship between Petroecuador and TexPet, and is DENIED IN PART, insofar as it asserts that the Court lacks subject-matter jurisdiction over the counterclaims based on the 1995 Settlement and 1998 Final Release; DECISION IS RESERVED IN PART with respect to that portion of the Motion to Dismiss Counterclaims Under Rule 12(b) that asserts that the counterclaims based on the 1995 Settlement and 1998 Final Release fail to state a claim upon which relief can be granted. Plaintiffs' Motion to Stay Discovery Pending Resolution of Dispositive Motions (dkt. no. 45) is DENIED, in part as moot and in part on the merits. Plaintiffs' Motion to Strike Defendants' Responses *380 as Untimely and For Entry of Judgment or, in the Alternative, For a Preliminary Injunction and Additional Time to Reply (dkt. no. 49) is DENIED, in part as moot and in part on the merits. Defendants' Motion for Leave to File Sur-Replies in Opposition to the Republic of Ecuador's and Petroecuador's Motion for Summary Judgment and Motion to Dismiss (dkt. no. 59) is GRANTED, and Plaintiffs' Motion for Leave to File Response to Defendants' Sur-Replies (dkt. no. 63) is GRANTED.
The parties are directed to submit supplemental memoranda within ninety (90) days of the date of this Opinion and Order, addressing the law of Ecuador as it applies to the counterclaims based on the 1995 Settlement and 1998 Final Release, and addressing whether in their view the law of Ecuador does govern those counterclaims. The parties are further directed to advise the Court in writing when they would be ready for a trial of Plaintiffs' claim for a permanent stay of arbitration. Pending final resolution of the arbitrability question or further order of this Court, the presently effective temporary stay of arbitration proceedings is continued.
SO ORDERED.
NOTES
[1] The factual background in this section is drawn largely from the Local Rule 56.1 statement of undisputed material facts submitted by Plaintiffs in support of their motion for summary judgment, and Defendants' response thereto, as well as the allegations of Plaintiffs' Amended Complaint insofar as they are admitted in Defendants' Answer. In certain instances the contents of documents submitted in connection with the motions for summary judgment and to dismiss the counterclaims, the authenticity of which neither side has disputed, are also described.
[2] The concession was originally granted to companies related to, but not identical to, those that possessed it in 1965. As no party appears to consider the distinction significant, it will not be pursued further.
[3] Plaintiffs' Local Rule 56.1 statements of undisputed facts vary with respect to whether the various decrees of the Ecuadorian government are described as "Decree No. ___" or "Supreme Decree No. ___." In the absence of any suggestion that the distinction matters, the Court follows Plaintiffs' usage.
[4] Plaintiffs often refer to ChevronTexaco and TexPet collectively as "Texaco," see Am. Compl. ถ 1, and with respect to certain portions of Plaintiffs' Local Rule 56.1 statement where the distinction makes little or no substantive difference, Defendants have admitted the truth of statements that refer to Texaco collectively when a reference to TexPet might have been more appropriate.
[5] Defendants object to Plaintiffs' characterization of the 1974 Contract as a "purchase agreement," on the ground that the June 14, 1974 "Acta" was "a government edict" rather than an agreement involving "some semblance of negotiation." (Def. R. 56.1 Resp. ถ 22.)
[6] The 1974 Contract, like most of the documents other than the 1965 JOA that are at issue in this case, was originally written in Spanish rather than English. This quotation is from the English translation, as are many of the other quotations in this Opinion and Order.
[7] "The caption of this order incorrectly spells the plaintiffs' name `Aquinda,' instead of `Aguinda.'" Jota, 157 F.3d at 157 n. 5.
[8] Perhaps because of a typographical error, the Prayer for Relief in Plaintiffs' Amended Complaint states not that Plaintiffs request the relief described, but rather that "the Aguinda Plaintiffs" request such relief. Neither party has suggested, in the briefing on any of the motions currently before the Court, that this error should have substantive consequences.
[9] When Plaintiffs use the term "Texaco," they generally refer not to Texaco, Inc., but to "Defendants ChevronTexaco Corporation and Texaco Petroleum Company (collectively `Texaco')," as they describe the parties from whom they seek relief. (Compl. ถ 1.)
[10] The constitutional grant of alienage jurisdiction extends to "Controversies ... between a State, or the Citizens thereof, and foreign States, Citizens or Subjects," U.S. Const. Art. III. ง 2, so it is certainly constitutionally permissible to follow 1 USC ง 1 and construe ง 1332(a)(4) as extending to suits brought by two or more "foreign States [or] Citizens." The inclusion of suits brought by foreign states or foreign citizens in the constitutional grant of jurisdiction also renders it immaterial whether one considers an instrumentality of a foreign state, such as Petroecuador is according to Defendants' view, to be more aptly described in a constitutional sense as a foreign state or as a citizen of that foreign state.
[11] The Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 is often referred to as the "New York Convention" because it was drafted, enacted, and opened for signature in New York City. Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys "R" Us, Inc., 126 F.3d 15, 18 (2d Cir.1997); Spier v. Calzaturificio Tecnica, S.p.A., 663 F.Supp. 871, 872 n. 1 (S.D.N.Y.1987).
[12] Productos Mercantiles quotes the House Report on the Inter-American Convention as stating that
The New York Convention and the Inter-American Convention are intended to achieve the same results, and their key provisions adopt the same standards, phrased in the legal style appropriate for each organization. It is the Committee's expectation, in view of that fact and the parallel legislation under the Federal Arbitration Act that would be applied to the Conventions, that courts in the United States would achieve a general uniformity of results under the two conventions.
23 F.3d at 45 (quoting H.R.Rep. No. 501, 101st Cong., 2d Sess. 4 (1990), reprinted in 1990 U.S.C.C.A.N. 675, 678). The President's transmittal message also described the Inter-American Convention as "similar in purpose and effect to the New York Convention." Id. (quoting President's Message to the Senate Transmitting the Inter-American Convention on Commercial Arbitration, 1981 Pub. Papers 517 (June 15, 1981)).
[13] Unlike the New York Convention, the Inter-American Convention contains no specific instruction that a court should refer parties to arbitration when seized of an action involving such an agreement.
[14] An analogous addition of state claims to a complaint that had originally stated only a federal question would not deprive the Court of federal-question jurisdiction; the only issue would be whether to exercise supplemental jurisdiction over the state claims pursuant to 28 U.S.C. ง 1367.
[15] Plaintiffs' position on this issue is relatively clear: they contend that "the federal substantive law of arbitration applies to this dispute" and that "[w]hen one party claims the existence of an arbitration agreement and the other party denies it, federal law employs `generally accepted principles of contract law' to determine whether there is a valid agreement to arbitrate." (Pl. Mem. in Supp. of Mot. for Summ. J. at 4-5) (quoting Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 845 (2d Cir.1987)). Defendants, in contrast, cite to cases applying New York substantive law, cases applying federal common law, and an affidavit regarding Ecuadorian law (presumably made relevant by the application of either New York or federal choice of law rules), while not explicitly arguing for the application of any particular one of the three. No party has contended that significant differences exist between the applicable portions of these three different possible sources of substantive law. We nonetheless proceed to resolve the question of which law applies because of its critical role in our analysis, and because in a case that comes to this Court under both diversity jurisdiction and federal-question jurisdiction, it is not at all clear whether forum-state law or federal law would be the default option where a true conflict was not demonstrated.
[16] Neither the Second Circuit's opinion in Thomson-CSF nor the district court's opinion in that case, Thomson-CSF v. Evans & Sutherland Computer Corp., 94 Civ. 6181, 1994 WL 593805, 1994 U.S. Dist. LEXIS 15501 (S.D.N.Y. Oct. 28, 1994), specified the basis of jurisdiction.
[17] As its section designation makes apparent, 9 U.S.C. ง 206 is part of Chapter Two of the FAA, implementing the New York Convention.
[18] Defendants do not dispute Plaintiffs' allegation that "Petroecuador is an agency and instrumentality of the Republic of Ecuador and a foreign state as defined by the Foreign Sovereign Immunities Act, 28 U.S.C. ง 1603" (Compl. ถ 17), except insofar as they describe that allegation as "stat[ing] legal conclusions to which no response is required" (Ans. ถ 17). In their counterclaims, Defendants then describe Petroecuador as Ecuador's "state-owned oil company" (Countercls. ถ 1), which implies that Petroecuador is an "agency or instrumentality of a foreign state" under 28 U.S.C. ง 1603(b) (and thus a "foreign state" under 28 U.S.C. ง 1603(a)) because "a majority of [its] shares or other ownership interest is owned by a foreign state," 28 U.S.C.A. ง 1603(b)(2) (West 2005). See supra Part II.A.1.
[19] Defendants do not dispute that the text of the 1973 Contract may be considered on this motion to dismiss. While the 1973 Contract is not incorporated by reference into Defendants' Counterclaims or relied on by the Counterclaims to any significant degree, its contents have been acknowledged by all parties, and excluding it from consideration under Rule 12(b) would be a pointless exercise in formalism inconsistent with the command of Rule 1 that the Federal Rules of Civil Procedure "be construed and administered to secure the just, speedy, and inexpensive determination of every action."
[20] The request for further briefing in Curley was made "after oral argument" rather than in the Second Circuit's initial opinion, 153 F.3d at 12, but in Curley subject matter jurisdiction over the relevant claim was not in doubt; here, an immediate call for further briefing could have been wasteful if the Court had found a lack of subject matter jurisdiction as to all of the counterclaims.
| {
"pile_set_name": "FreeLaw"
} |
275 Kan. 271 (2003)
64 P.3d 419
STATE OF KANSAS, Appellee,
v.
TRACY D. BOYD, Appellant.
No. 86,553
Supreme Court of Kansas
Opinion filed March 7, 2003.
Nathan B. Webb, assistant appellate defender, argued the cause, and Randall L. Hodgkinson, deputy appellate defender, was with him on the briefs for appellant.
Lesley A. Isherwood, assistant district attorney, argued the cause, and Nola Foulston, district attorney, and Carla J. Stovall, attorney general, were with her on the briefs for appellee.
*272 The opinion of the court was delivered by
ALLEGRUCCI, J.:
Tracy D. Boyd was convicted of possession of crack cocaine. She was a passenger in a vehicle stopped for a traffic violation. The driver consented to a search of the vehicle, Boyd was told to leave her purse on the floorboard when she got out of the vehicle, police found a crack pipe in the console of the vehicle, and then the officer searched Boyd's purse. It contained crack cocaine. Boyd's motion to suppress the evidence was denied by the trial court, and Boyd appealed. The Court of Appeals affirmed. State v. Boyd, 30 Kan. App. 2d 720, 47 P.3d 419 (2002). Boyd's petition for review was granted by this court September 24, 2002.
Officers Real and Herman were conducting surveillance of a residence in Wichita for suspected drug activity. Approximately a week earlier, they had arrested the woman who lived in the house and a man who was there for possession of cocaine. At approximately 1:30 a.m., a vehicle that had been parked in front of the residence drove away and made a turn without signaling. The officers stopped the vehicle.
Officer Real asked the driver, Richard Lassiter, for his license and proof of insurance. At the same time, Officer Herman approached the passenger's side of the vehicle and obtained identification from Boyd. Boyd retrieved her identification from her purse and placed her purse back on the floorboard of the vehicle.
Because Lassiter appeared "a lot more nervous than most," Real asked him to get out of the vehicle. Lassiter got out and went to the rear of the vehicle to talk with the officer. Lassiter said they were coming from seeing Betty DeMarco, the woman who had been arrested earlier at the watched residence. Officer Real asked Lassiter if he had any illegal substances on him, and Lassiter responded negatively. Lassiter consented to a search of his person, and no illegal substance was found. Real asked Lassiter if the vehicle was his and, if so, whether he could search it. Lassiter responded affirmatively to both questions.
When Officer Herman was told that Lassiter had consented to a search of the vehicle, Herman asked Boyd to get out. Boyd testified that when she left the vehicle, she reached for her purse to *273 take it with her but was told by Officer Herman to leave it inside the vehicle. Boyd put her purse down and stepped out of the vehicle. She further testified that, after she was out of the vehicle, the officer who had gotten into the passenger compartment asked if it was her purse and if he could search it. She told him her purse was a personal belonging and that she did not want him to search it.
Officer Real began searching the passenger compartment around the area where Lassiter had been sitting. In the center console ashtray, he found a crack pipe. Boyd's purse was sitting on the floorboard in front of the console. Real searched it and found a plastic bag containing off-white nuggets, which were later confirmed to be crack cocaine.
Boyd was arrested and charged with possession of cocaine. She filed a motion to suppress the evidence. After a hearing, the trial court denied Boyd's motion to suppress, finding that Wyoming v. Houghton, 526 U.S. 295, 143 L. Ed. 2d 408, 119 S. Ct. 1297 (1999), controlled. The Court of Appeals agreed. Boyd filed a petition for review of the Court of Appeals' decision. Boyd argues that Houghton is not controlling and the trial court erred in denying suppression based upon Houghton.
When a motion to suppress evidence is filed, the State bears the burden of proving to the trial court the lawfulness of the search and seizure. State v. Damm, 246 Kan. 220, 222, 787 P.2d 1185 (1990). Where, as here, the facts material to a decision on a motion to suppress evidence are not in dispute, the question whether to suppress is a question of law subject to unlimited review. State v. Rexroat, 266 Kan. 50, 53, 966 P.2d 666 (1998).
"`"The Fourth Amendment proscribes all unreasonable searches and seizures, and it is a cardinal principle that `searches conducted outside the judicial process, without prior approval by judge or magistrate, are per se unreasonable under the Fourth Amendmentsubject only to a few specifically established and well-delineated exceptions.' [Citation omitted.]"'" State v. Jaso, 231 Kan. 614, 620, 648 P.2d 1 (1982).
The general rule that warrantless searches and seizures are unreasonable has five exceptions: (1) consent; (2) hot pursuit; (3) incident to a lawful arrest; (4) stop and frisk; and (5) probable cause *274 to search with exigent circumstances. State v. Box, 28 Kan. App. 2d 401, 404, 17 P.3d 386 (2000).
In this case, the trial court denied Boyd's motion to suppress based upon probable cause with the exigent circumstances exception. This exception allows a warrantless search where there is probable cause for the search and exigent circumstances justify an immediate search. State v. Platten, 225 Kan. 764, 769, 594 P.2d 201 (1979). The most common example of a warrantless search based on exigent circumstances is the search of a vehicle. The United States Supreme Court and the Kansas Supreme Court have both recognized that exigent circumstances may allow the warrantless search of a vehicle when probable cause has been established to justify a search. Carroll v. United States, 267 U.S. 132, 69 L. Ed. 543, 45 S. Ct. 280 (1925); Jaso, 231 Kan. 614, Syl. ¶ 2. Exigent circumstances, however, do not include situations where only a mere possibility exists that evidence could be destroyed or concealed. State v. Hardyway, 264 Kan. 451, 465, 958 P.2d 618 (1998).
The trial court and the Court of Appeals considered Wyoming v. Houghton, 526 U.S. 295, to be controlling. In that case, officers stopped an automobile for speeding and driving with a faulty brake light. While questioning the driver, the officer noticed a hypodermic syringe in the driver's shirt pocket. The driver told the officer he used it to take drugs. Having probable cause to believe there were illegal drugs in the car, officers ordered the two female passengers out and searched the passenger compartment for contraband. The officers searched a purse, which they found on the back seat. It belonged to Houghton, one of the passengers, and it contained drugs and drug paraphernalia. She was arrested.
United States v. Ross, 456 U.S. 798, 72 L. Ed. 2d 572, 102 S. Ct. 2157 (1982), held that officers with probable cause to search a lawfully stopped vehicle may conduct a warrantless search of any container found in the vehicle that is capable of concealing the object of the search. In Houghton, the Supreme Court extended the Ross rule to searches of containers belonging to passengers, including personal belongings such as purses. "A passenger's personal belongings, just like the driver's belongings or containers attached to the car like a glove compartment, are `in' the car, and *275 the officer has probable cause to search for contraband in the car." 526 U.S. at 302. The Supreme Court further reasoned that
"[p]assengers, no less than drivers, possess a reduced expectation of privacy with regard to the property that they transport in cars, which `trave[l] public thoroughfares,'. . . `seldom serv[e] as . . . the repository of personal effects,'. . . are subjected to police stop and examination to enforce `pervasive' governmental controls `[a]s an everyday occurrence,'. . . and, finally, are exposed to traffic accidents that may render all their contents open to public scrutiny. [Citations omitted.]" 526 U.S. at 303.
Weighing the passenger's privacy expectations against the governmental interest in effective law enforcement "with an eye to the generality of cases," 526 U.S. at 305, the Supreme Court concluded that the needs of law enforcement outweighed a personal privacy interest in the circumstances. 526 U.S. at 306.
The Court of Appeals opinion contains mixed references to consent and probable cause as possible bases for the search of Boyd's purse. The Court of Appeals' citation of Houghton would indicate that it viewed the officer's search of Boyd's purse to have been based on probable cause, once the crack pipe had been found, to believe there were illegal drugs in the vehicle. The Court of Appeals stated "that probable cause to search Boyd's purse was directly connected to the discovery of the crack pipe in the vehicle's console." 30 Kan. App. 2d at 725. Consideration, however, also was given by the Court of Appeals to the driver's consent, and it does not appear that consent was ruled out as a possible basis for the search. 30 Kan. App. 2d at 728. The Court of Appeals concluded its opinion in Boyd with this dual message: "We hold that under the totality of the circumstances, no illegal search or seizure of any item in a vehicle takes place when probable cause has been established and the officers receive voluntary consent to search from the driver of the vehicle." 30 Kan. App. 2d at 728.
On appeal, the State argues that the search of Boyd's purse was justified by the "probable cause established upon discovery of the crack pipe in the console." Lassiter's consent to search his van was voluntary and is not disputed. The State does not argue that Boyd's purse was subject to search based upon Lassiter's consent. Rather it contends that the search of the van was lawful due to Lassiter's *276 consent and, in conducting the search, officers discovered the crack pipe in the console. The State concedes the purse was not searched incident to an arrest.
The State relies on language in Houghton: "If probable cause justifies the search of a lawfully stopped vehicle, it justifies the search of every part of the vehicle and its contents that may conceal the object of the search." 526 U.S. at 301. However, Houghton is distinguishable from the present case and is not, in our view, controlling.
There are factual differences between Houghton and the present case. There seems to be no question that, once the officer found a crack pipe in Lassiter's vehicle, he had probable cause to believe that illegal drugs would be found there. In Houghton, probable cause to believe that illegal drugs would be found in the vehicle existed before the officer entered it. The driver of the vehicle had a hypodermic syringe in his shirt pocket, which was obvious to the officer who had stopped the vehicle and gave probable cause to search. In searching the passenger compartment of the vehicle, the officer found a passenger's purse, which had been left on the back seat when the passengers got out of the vehicle. In the present case, the driver of the vehicle gave consent to the officer to search the passenger compartment of the vehicle. Boyd was told to get out of the vehicle. She tried to take her purse with her but was told to leave it in the vehicle. She refused consent to search her purse. After finding the crack pipe, the officer searched Boyd's purse, which she had left in the vehicle as directed. The question for the court is whether Boyd's attempt to take her purse with her when she got out of the vehicle, which was before the officers had probable cause to search the vehicle, separates this case from Houghton so as to indicate a different result.
Boyd directs the court's attention to Justice Breyer's concurring opinion in Houghton, where he noted that the Ross rule
"does not extend to the search of a person found in the automobile. As the Court notes, and as United States v. Di Re, 332 U.S. 581, 586-587 (1948), . . . makes clear, the search of a person, including even `"a limited search of the outer clothing,"' [citation omitted] is a very different matter in respect to which the law provides `significantly heightened protection.' [Citation omitted.]" 526 U.S. at 308.
*277 Justice Breyer stated that it was important to him that Houghton's purse "was found at a considerable distance from its owner, who did not claim ownership until the officer discovered her identification while looking through it." 526 U.S. at 308. He continued:
"Purses are special containers. They are repositories of especially personal items that people generally like to keep with them at all times. So I am tempted to say that a search of a purse involves an intrusion so similar to a search of one's person that the same rule should govern both. However, given this Court's prior cases, I cannot argue that the fact the container was a purse automatically makes a legal difference, for the Court has warned against trying to make that kind of distinction. . . . But I can say that it would matter if a woman's purse like a man's billfold, were attached to her person. It might then amount to a kind of `outer clothing,' . . . which under the Court's cases would properly receive increased protection. . . . In this case, the purse was separate from the person, and no one has claimed that, under those circumstances, the type of container makes a difference. For that reason, I join the Court's opinion." 526 U.S. at 308.
In U.S. v. Di Re, 332 U.S. 581, 92 L. Ed. 210, 68 S. Ct. 222 (1948), the car was stopped based upon information provided by an informant. The contraband found in the defendant's possession was counterfeit gasoline ration coupons. The informant was in the back seat; he fingered the driver. Di Re was sitting in front next to the driver. All three were taken into custody, searched, and arrested. The government defended the search of Di Re as incident to a lawful arrest and "as incident to search of the vehicle reasonably believed to be carrying contraband." The court disagreed, stating:
"Assuming, however, without deciding, that there was reasonable cause for searching the car, did it confer an incidental right to search Di Re? It is admitted by the Government that there is no authority to that effect, either in the statute or in precedent decision of this Court, but we are asked to extend the assumed right of car search to include the person of occupants because `common sense demands that such right exist in a case such as this where the contraband sought is a small article which could easily be concealed on the person.'" 332 U.S. at 586.
The Court ruled that the existence of reasonable cause for searching an automobile believed to be carrying contraband does not warrant the search of an occupant thereof, although the contraband *278 sought is of a character which might be concealed on the person. 332 U.S. at 587.
As Justice Stevens noted in his dissent in Houghton:
"In all of our prior cases applying the automobile exception to the Fourth Amendment's warrant requirement, either the defendant was the operator of the vehicle and in custody of the object of the search, or no question was raised as to the defendant's ownership or custody. In the only automobile case confronting the search of a passenger defendantUnited States v. Di Re, 332 U.S. 581 (1948)the Court held that the exception to the warrant requirement did not apply. Id., at 583-587 (addressing searches of the passenger's pockets and the space between his shirt and underwear, both of which uncovered counterfeit fuel rations). In Di Re, as here, the information prompting the search directly implicated the driver, not the passenger." 526 U.S. at 309.
Noting that the majority opinion in Houghton reaffirms Di Re's heightened protection against a body search in distinguishing it from passengers' reduced expectation of privacy with regard to their property, a commentator poses the question whether a purse in the car will always be subject to search under the Houghton rule and concludes: "It is impossible to say for sure, though the answer ought to be no for the reasons given in the Breyer concurring opinion." 3 LaFave, Search and Seizure § 7.2(d), p. 507 (3d ed. Supp. 2003).
In the supplemental brief filed after this court granted review, Boyd correctly notes that the four cases from other states that were cited by the Court of Appeals as applying Houghton all involve searches incident to a lawful arrest, which are subject to the rule of New York v. Belton, 453 U.S. 454, 69 L. Ed. 2d 768, 101 S. Ct. 2860 (1981). See 30 Kan. App. 2d at 727-28. The Court of Appeals cited State v. Ray, 260 Neb. 868, 620 N.W.2d 83 (2000); State v. Lopez, 198 Ariz. 420, 10 P.3d 1207 (2000); State v. Pallone, 236 Wis. 2d 162, 613 N.W.2d 568 (2000); and State v. Steele, 613 N.W.2d 825 (S.D. 2000). Boyd contends that Belton should not be extended to circumstances, such as those in the present case, in which the search was undertaken before an arrest was made.
In Ray, cocaine was found in Ray's knapsack, which was in the passenger compartment of a vehicle. Ray had been a passenger, and the driver had been arrested. The vehicle was searched incident *279 to the driver's arrest. The trial court's denial of Ray's motion to suppress the evidence was affirmed on the ground that Belton "established a bright-line rule which permits a warrantless search of the passenger compartment of a vehicle and containers situated therein incident to the lawful arrest of any occupant of the vehicle." 260 Neb. at 876. The court further stated that the reasoning of Houghton "leads to the logical conclusion that the scope of such search extends to items of property within the passenger compartment at the time of the search belonging to an occupant of the vehicle who was not arrested." 260 Neb. at 877.
In Lopez, cocaine was found in the pockets of jeans that were in Lopez' backpack, which was in the passenger compartment of a vehicle. Lopez had been a passenger, and the driver had been arrested. The vehicle was searched incident to the driver's arrest. Applying Belton and Houghton, the Arizona Court of Appeals held that the police were entitled to search Lopez' belongings, including his jeans, as a search incident to arrest of the driver. 198 Ariz. at 424.
In Pallone, cocaine was found in Pallone's duffel bag, which was in the passenger compartment of a vehicle. Pallone had been a passenger, and the driver had been arrested. The vehicle was searched incident to the driver's arrest. Applying Belton and Houghton, the Wisconsin court concluded "that the search of the duffel bag was proper under both the search incident to arrest exception and the probable-cause-to-search-a-motor-vehicle exception to the constitutional warrant requirements." 236 Wis. 2d at 200-01.
In Steele, methamphetamine was found in Steele's purse, which was in the passenger compartment of a vehicle. Steele had been a passenger, and the driver had been arrested. 613 N.W.2d at 826. The vehicle was searched incident to the driver's arrest. Applying Belton and Houghton, the South Dakota court held that the search of the passenger's purse was proper as a search incident to arrest of the driver.
Steele, although decided under Belton, is of particular interest for the present case because it involves the question whether a passenger is entitled to take her purse with her when asked to get *280 out of the vehicle so that it can be searched incident to the driver's arrest. Steele was not allowed to take her purse with her when she got out of the vehicle, and she argued that the officer's "ordering her to leave her purse resulted in an unconstitutional search." 613 N.W.2d at 827. The South Dakota court majority rejected the argument: "[I]f Steele's argument prevailed and passengers were permitted to remove containers from the vehicle prior to the search, the Belton rule would be nullified. Weapons and contraband, the objects of a lawful search, would be removed from the vehicle and the arrestee able to hide these items from police." 613 N.W.2d at 827. The South Dakota court quoted Houghton for the principle that "[a] passenger's personal belongings, just like the driver's belongings or containers attached to the car like a glove compartment, are `in' the car, and the officer has probable cause to search for contraband in the car." 526 U.S. at 302. Two justices concurred, without opinion. 613 N.W.2d at 830.
Two justices dissented in Steele, disagreeing with the majority's reliance on Belton. 613 N.W.2d at 830-32. They would distinguish Belton on the ground that the passenger in that case was subject to a lawful custodial arrest and was searched incident to his arrest. According to the dissenting justices, "[t]hat is not the situation before this Court. In the present case, Steele was not arrested, she was merely a passenger in a vehicle where the driver was stopped for speeding and later arrested. The search of Steele's purse was not incident to a lawful custodial arrest." 613 N.W.2d at 830.
The dissenting justices cited and discussed State v. Newsom, 132 Idaho 698, 979 P.2d 100 (1998), and State v. Nelson, 89 Wash. App. 179, 948 P.2d 1314 (1997). 613 N.W.2d at 830-32. The same cases are relied on by Boyd, even though they are cases of search incident to arrest.
The facts in Newsom are similar to those in Steele. Officers stopped the vehicle for a turn signal violation. A registration check showed that there was an outstanding felony warrant for the owner of the vehicle. The driver was arrested, and Newsom, a passenger, was directed to get out of the car. She had her purse in her lap and was ordered to leave it in the car. The car was searched incidental to the driver's arrest. In searching the car, the officer *281 searched Newsom's purse, finding two glass vials and methamphetamines. The trial court denied Newsom's motion to suppress, stating: "[I]t was a search incidental to a valid arrest under the Belton case." On appeal, the Idaho Supreme Court stated that the following rule was announced in Belton:
"[W]hen a policeman has made a lawful custodial arrest of the occupant of an automobile, he may, as a contemporaneous incident of that arrest, search the passenger compartment of that automobile.
"It follows from this conclusion that the police may also examine the contents of any containers found within the passenger compartment, for if the passenger compartment is within reach of the arrestee, so also will containers in it be within his reach. Such a container may, of course, be searched whether it is open or closed." 132 Idaho at 699.
The Idaho Supreme Court reversed the trial court, concluding that
"Belton does not authorize the search of another occupant of the automobile merely because the other occupant was there when the arrest occurred. As the Supreme Court carefully pointed out in Belton, `the lawful custodial arrest justifies the infringement of any privacy interest the arrestee may have.' 453 U.S. at 461, 101 S. Ct. at 2864, 69 L.Ed. 2d at 775. Therefore, in the present case Belton does not authorize a search of the passenger based solely on the arrest of the driver." 132 Idaho at 700.
The court found that Newsom had the purse on her lap when she was directed to get out of the car. The court held:
"In these circumstances, the passenger's purse was entitled to as much privacy and freedom from search and seizure as the passenger herself. The undisputed evidence is that the passenger did not leave the purse in the vehicle voluntarily.. . . Therefore, we conclude that when the passenger left the vehicle she was entitled to take her purse with her and was not required by Belton to leave it in the vehicle for the first officer to search." 132 Idaho at 700.
In Nelson, the passenger was arrested based upon an outstanding valid warrant. Nelson was the driver; she was asked to get out of the truck but directed to leave her purse in the truck. The officers searched the truck and Nelson's purse, finding methamphetamine and drug paraphernalia. Nelson was placed under arrest. The trial court ordered evidence suppressed because the officer could not order her to leave her purse in the truck so he could search it. On appeal, the State argued the search was justified as a search incident *282 to a warrant. In affirming the trial court, the Washington Court of Appeals acknowledged:
"The valid arrest of a driver justifies a search of the car's passenger compartment, not including locked containers. The valid arrest of a passenger justifies a search of the car's passenger compartment, not including locked containers. The valid arrest of either the driver or passenger justifies a search of a purse found in the car, and without so holding, we assume this is true regardless of whether the purse belongs to the driver or the passenger. It is our view, however, that the valid arrest of a driver does not justify the search of a purse known to belong to a passenger, where the purse is not in the car at the time of the search, but rather is on the passenger's person and the passenger is outside the car." 89 Wash. App. at 182.
The court then held:
"Thus, if the police do not believe a person presents a danger, they cannot search the person and their clothing. This would include a purse they are carrying. Although Ms. Nelson was not carrying her purse, she was prevented from doing so by Officer Maynard. Up to the time she exited the truck, she had kept control of the purse by keeping it between her legs." 89 Wash. App. at 183.
In the supplemental brief filed in this court, the State attempts to distinguish the present case from Newsom and Nelson on the degree of control each exercised over the purse when directed to leave it in the vehicle. Newsom had the purse in her lap, Nelson had the purse secure between her legs. The State seems to say that if Boyd's purse had been in her lap or secured between her legs, it would not have been subject to search. That is a distinction without a difference. There is no question the purse was Boyd's personal property, in her possession, and under her control. Like Newsom and Nelson, she attempted to take it with her but was directed to leave it in the van. Under these circumstances her purse was entitled to the same increased protection from search and seizure as afforded to her person. The search of Boyd's purse violated her Fourth Amendment right to be secure in her person and effects from unreasonable search and seizure.
No cases factually similar to the present one have been brought to the court's attention, nor has our research revealed any. All the cases discussed in this opinion, including Houghton, are distinguishable from the present case. In Houghton, probable cause to *283 believe illegal drugs would be found in the car existed before the officer entered the car. The officer found a passenger's purse, which had been voluntarily left in the back seat. Here the officer found no drugs on Lassiter and had no probable cause to believe illegal drugs were in the car when Boyd was told by the officer to get out of the car. Thus, at that point, the officer did not have probable cause to search Boyd or her purse. The officer had no right to order her to leave her purse in the car. The State conceded at oral argument that if Boyd would have been allowed to take her purse with her the officer could not have lawfully searched her or her purse. If we hold an officer can lawfully order a passenger to leave her purse in the car and thereby make it subject to search, then what prevents the officer from ordering the passenger to remain in the car, thus subjecting her to be subsequently searched along with the car. The protection of the Fourth Amendment cannot be defined at the discretion of a law enforcement officer. The heightened privacy interest and expectation in the present case is sufficient to tip the balance from governmental interest in effective law enforcement, which outweighed the privacy interest in Houghton where the purse was voluntarily left in the back seat unclaimed. We hold that where a passenger is told by a police officer to get out of a lawfully stopped vehicle and in response to the officer's order to leave her purse in the vehicle, puts the purse down and exits the vehicle, a subsequent search of the purse as part of a search of the vehicle violates the passenger's Fourth Amendment right against unreasonable search and seizure. The motion to suppress should have been granted.
The State also asserts that discovery of the drugs was inevitable because Boyd admitted that her purse contained cocaine. Officer Herman's testimony, however, shows that Boyd was under arrest when she gave him a list of the contents of her purse. We do not accept the State's rationale that the end justifies the means.
The judgments of the Court of Appeals and the district court are reversed, and the case is remanded for a new trial.
| {
"pile_set_name": "FreeLaw"
} |
COURT OF APPEALS OF VIRGINIA
Present: Judges Benton, Humphreys and Senior Judge Duff *
GRACE C. RUTLEDGE
MEMORANDUM OPINION **
v. Record No. 0488-01-4 PER CURIAM
JULY 31, 2001
E. PRESTON RUTLEDGE
FROM THE CIRCUIT COURT OF ARLINGTON COUNTY
Paul F. Sheridan, Judge
(Grace C. Rutledge, pro se, on briefs).
(James Ray Cottrell; Christopher W.
Schinstock; Gannon & Cottrell, P.C., on
brief), for appellee.
Grace C. Rutledge appeals the decision of the circuit court
holding her in contempt for failing to pay $65,000 for attorneys'
fees and costs to E. Preston Rutledge, her husband. She contends
that the trial judge erred in finding her in contempt (1) for
failure to pay an award that was not based on child support, and
(2) without having first determined whether she had the ability to
make the payment. Upon reviewing the record and the briefs of the
parties, we conclude that this appeal is without merit as to the
first issue and that a transcript or written statement of facts is
*
Retired Judge Charles H. Duff took part in the
consideration of this case by designation pursuant to Code
§ 17.1-400(D).
**
Pursuant to Code § 17.1-413, this opinion is not
designated for publication.
necessary for a determination of the second issue. Accordingly,
we summarily affirm the judgment of the trial court in part and
dismiss in part. See Rule 5A:27.
Procedural Background
In a May 10, 2000 order, the trial judge ordered wife to
pay husband $65,000 for attorneys' fees and costs incurred in a
protracted dispute over the custody of their minor children. On
January 26, 2001, the trial judge found wife in contempt of
court for failing to obey the order to pay. He ordered her to
appear in court in ninety days to either demonstrate she had
purged herself of contempt or provide evidence why she should
not be sentenced.
Analysis
I.
"Willful disobedience to any lawful . . . order of court is
contempt and . . . punishable as such." Board of Supervisors v.
Bazile, 195 Va. 739, 745, 80 S.E.2d 566, 571 (1954). "A trial
court 'has the authority to hold [an] offending party in
contempt for acting in bad faith or for willful disobedience of
its order.'" Alexander v. Alexander, 12 Va. App. 691, 696, 406
S.E.2d 666, 669 (1991) (citation omitted). The May 10, 2000
order contains the following specific direction to the wife:
"[T]he Court orders that . . . [the wife] pay $65,000 to [the
husband] in fees and costs." This order "contain[s] a command
or direction," as required by French v. Pobst, 203 Va. 704, 710,
- 2 -
127 S.E.2d 137, 141 (1962), and does not "merely [declare] the
rights of the parties." Id. Thus, the trial judge had the
discretionary power to hold the wife in contempt and did not
abuse his discretion. See Wells v. Wells, 12 Va. App. 31, 36,
401 S.E.2d 891, 894 (1991).
II.
The wife also asserts that the trial judge erred by not
determining whether she had the ability to pay the judgment
before holding her in contempt. A transcript or statement of
facts is indispensable to a determination of this issue.
Because neither was filed, we must dismiss the appeal as it
pertains to this issue. See Anderson v. Commonwealth, 13 Va.
App. 506, 508-09, 413 S.E.2d 75, 76-77 (1992); Turner v.
Commonwealth, 2 Va. App. 96, 99-100, 341 S.E.2d 400, 402 (1986).
Accordingly, we summarily affirm the judgment of the trial
court in part and dismiss in part. See Rule 5A:27.
Affirmed, in part
and dismissed in part.
- 3 -
| {
"pile_set_name": "FreeLaw"
} |
189 Cal.App.4th 1278 (2010)
In re DANNY HARE on Habeas Corpus.
No. B222061.
Court of Appeals of California, Second District, Division Seven.
October 18, 2010.
*1281 Edmund G. Brown, Jr., Attorney General, Julie L. Garland, Assistant Attorney General, Jessica N. Blonien, Julie A. Malone, Kathleen R. Frey and Michael Rhoads, Deputy Attorneys General, for Appellant Danny Hare.
Nancy L. Tetreault, under appointment by the Court of Appeal, for Respondent State of California.
*1282 OPINION
PERLUSS, P. J.
Danny Hare, sentenced in 1985 to an indeterminate term of 15 years to life in state prison for second degree murder, became eligible for parole in August 1992. The Board of Parole Hearings (Board) granted Hare parole in January 2009. However, the Governor, exercising his authority under article V, section 8, subdivision (b), of the California Constitution and Penal Code section 3041.2, reversed the Board's decision. In December 2009 the superior court granted Hare's petition for a writ of habeas corpus, finding the Governor's reversal was untimely and not supported by "some evidence" that Hare currently posed an unreasonable risk of danger to society if released. The warden of the California State Prison, Solano, where Hare is incarcerated, appeals. We reverse.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Commitment Offense; Hare's Fugitive Status and Plea After Arrest; Imposition of Sentence
On August 15, 1980 Hare, then a 27-year-old drug abuser,[1] shot his drug supplier, Oscar Ramos, while purchasing cocaine. At his 2008 parole suitability hearing Hare explained his "motives were . . . greed for the cocaine and money, clouded by a terrible drug habit and [I was also] full of anger and rage at the same time and misplaced projection of blame of . . . my addiction upon Oscar." According to Hare, his anger was due, in part, to the fact his wife had recently begun marriage dissolution proceedings.
After the murder Hare enlisted his girlfriend and 15-year-old brother, who were living at the house where Hare had shot Ramos, to help him clean up the crime scene, telling them a third party had killed Ramos. Hare and his brother buried Ramos's body in the desert.
Hare was arrested in November 1980. After he was released on bail, Hare married his girlfriend and fled the state. Hare and his new wife ultimately moved to Washington, where he lived under a false identity until November 1983 when his wife, tired of living as a fugitive, notified the authorities.
*1283 Hare was charged with murder while engaged in the commission of robbery. (Pen. Code, § 190.2, subd. (a)(17).) He pleaded guilty to second degree murder and was sentenced to an indeterminate term in state prison of 15 years to life.
2. Hare's Prison Record
a. Disciplinary record
During his incarceration Hare received three serious misconduct violations (reported on CDC form 115 and commonly referred to as a "115"). The most recent violation occurred in October 2002 when correctional officers discovered an altered toothbrush in Hare's cell.[2] The rules violation report, which charged Hare with possession of a dangerous weapon, stated, "The toothbrush confiscated was similar and fashioned the same as two (2) other weapons recently found in L-3. . . . I examined the toothbrush and observed that the cut behind the bristles appeared to be cut with a handsaw or an electric saw. This conclusion and observation was based on the fact that the cut behind the bristles was very straight and clean. These types of tools are located in the Prison Industries Authority (PIA) where Inmate Hare is currently assigned."
Hare denied the charge. At a November 17, 2002 disciplinary hearing Hare admitted he possessed the toothbrush but explained, "I did not know that a toothbrush with a slit in it could be consider[ed] a dangerous weapon." The hearing panel found Hare guilty of the amended (lesser) charge of possession of dangerous contraband.
At his 2007 and 2008 parole suitability hearings Hare explained to the panel he had altered the toothbrush to clean his hairbrush and wire fan. Hare told the panel in 2007 he had appealed the 115 "all the way through the whole system and all the way up into the eastern district," where it was then still pending. He complained it was "hypocritical or marginal at best" that the prisoner's standard-issue toothbrush had a slit in the handle, "which is already a ready-made weapon stock," but he could be disciplined for possessing a toothbrush that he contended he had altered for cleaning purposes.
b. Participation in rehabilitation, college courses and other programs and laudatory reports
As both the Board and Governor have acknowledged, Hare has made significant efforts to improve himself while in prison and to enhance his *1284 ability to obey the law upon release. Hare earned an associate in arts degree in 1990, has obtained a certificate in biblical studies and has completed vocational programs in electrical, mill and cabinet, airframe, air powerplant and lens manufacturing and fitting, as well as an employment workshop. Hare received laudatory reports for his work in the PIA (California Prison Industry Authority) optical lab, which commended him for his positive behavior, sincere attitude, professionalism and work ethic.
Hare has also participated in numerous therapeutic and other self-help programs, including stress management, emotional awareness and healing, parolee recidivism prevention and creative conflict resolution. Hare has been sober since November of 1980, about the time he was first arrested, and has participated in Narcotics Anonymous since 1989.
3. Hare's 2008 Psychological Evaluation
In July 2008 Dr. Geca submitted a psychological evaluation of Hare to the Board. Dr. Geca found Hare "has a significant history of drugs and alcohol abuse and meets full necessary criteria for the Polysubstance Dependence in a controlled environment (which also in this case suggests a state of remission)." Regarding Hare's potential dangerousness, Dr. Geca concluded, consistent with prior psychological evaluations, he was "at the low level of recidivism" for future violence if released.
4. Hare's Parole Plans
In November 2007 Hare was accepted into a 12-month residential treatment program with the Union Rescue Mission in Los Angeles upon his release from prison. The program, at no cost to Hare, will provide him with food, clothing and housing. Hare will also be offered educational programs and counseling services, including anger management, spiritual and emotional development, vocational education and work therapy, physical education, substance abuse recovery, random drug testing and religious worship. After graduating from the yearlong program, Hare may become an apprentice with the mission, earning a stipend, or enter the transitional program, allowing him to continue living rent free while seeking work.
5. The Board's Determination Hare Is Suitable for Parole; the Letter to Hare Informing Him the Board's Decision Became Final on January 20, 2009
After a number of adverse decisions, including in 2005 and 2007, on September 8, 2008 a Board panel for the first time found Hare suitable for parole. The panel concluded Hare would not pose an unreasonable risk of *1285 danger to society if released, finding he had shown signs of remorse, taken responsibility for the crime and, during his 23 years of incarceration, had "enhanced his ability to function within the law upon release through participation in educational program[s], self-help, vocational programs, and institutional job assignments," becoming "a model of propriety in this institutional environment." The panel further found Hare, whose risk factors for violence at the time of the commitment offense (that is, a dysfunctional and unstable family history, impulsivity, antisocial attitudes and poor judgment) were greatly increased by severe substance dependence, had been sober throughout his incarceration and had internalized the tools necessary to maintain sobriety. Finally, the panel found Hare had realistic parole plans and marketable skills.
In a letter dated February 2, 2009 Linn Austen, chief of the Board's "Decision Processing and Scheduling Unit," informed Hare, "Decision Review is completed and the final decision date of your hearing is January 20, 2009. . . . [¶] Therefore, the decision finding you suitable for parole may be subject to review by the Governor. [¶] Attached is the last `Decision Page' with the stamped file date and a front cover sheet to your transcript." Consistent with the letter, the date stamped on the transcript after the typed phrase "THIS DECISION WILL BE FINAL ON:______" was January 20, 2009.
6. The Governor's Reversal
On February 20, 2009 the Governor reversed the Board's decision, concluding, notwithstanding the positive factors considered,[3] Hare "still poses a risk of recidivism and violence, and that his release from prison at this time would pose an unreasonable risk to public safety." After describing the murder as especially atrocious because Hare's motive was trivial in relation to the magnitude of the crime, the Governor explained the steps Hare took to cover up the crime and the fact he fled the state while released on bail and lived under a false identity in Washington for three years "indicate[] to me that Mr. Hare is a person who tries to avoid responsibility for his crime and takes elaborate steps to hide the truth."
The Governor found Hare's "inclination to hide the truth and avoid responsibility" surfaced again when Hare was disciplined for possession of *1286 the altered toothbrush.[4] The Governor explained, "According to the information in the confidential file, Mr. Hare said he used the altered toothbrush `to clean his comb.' But he told his 2008 mental health evaluator that he modified the toothbrush to `clean his fan.' The evaluator appears to have accepted this explanation, and observed that Mr. Hare `has not been a management problem or concern,' but I do not accept Mr. Hare's changing story or his explanation for having altered a toothbrush. His history of avoiding responsibility and covering up the truth indicates to me that he is not yet ready to follow the rules on parole and still poses a risk to society if released at this time."
Finally, the Governor was concerned Hare's parole plan did not include an offer of employment even though the panel had urged him at the 2007 parole hearing to develop an employment plan. Although the Governor acknowledged Hare had obtained vocational skills in prison that would assist him in finding a job, the Governor believed, "having a stable means to support himself immediately upon release from prison will be essential to his success on parole."
7. The Petition for Writ of Habeas Corpus
In August 2009 Hare petitioned for writ of habeas corpus, contending the Governor's reversal was untimely because it had been made one day after the 30-day period for the Governor's review had passed and, even if timely, was not supported by any evidence he continued to pose an unreasonable risk to public safety. In his return to the superior court's order to show cause, the warden argued the reversal was timely because the Board's decision was not final until January 21, 2009-120 days after the date of the hearing pursuant to Penal Code sections 3041, subdivision (b), and 3041.2, not January 20, 2009 as Hare had been informedand the Governor's reversal was made within 30 days of January 21, 2009. Although the warden's argument as to timeliness appeared to be based solely on his interpretation of the relevant statutes and regulations, the warden provided the court with a copy of the transcript from the 2008 parole consideration hearing that differs from Hare's in one significant respect: The final page of the decision states, "THIS DECISION WILL BE FINAL ON: January 21, 2009." The warden, however, did not provide the superior court with a citation to this page of the exhibit or refer to it in his return or supporting memorandum.
On December 24, 2009 the superior court granted Hare's petition, finding the Governor's reversal was untimely and thus a "legal nullity because the *1287 Governor lacked the jurisdiction to intervene in the matter." The court explained, "[T]here is nothing in either the controlling statute or regulation to indicate that Board decisions only become final on the 120th day after a parole hearing. Instead, the statute and the regulation are both set forth in terms that explicitly envision decisions which become final before the 120th day. Here, the Board decided to finalize its decision on the 119th day. That decision was permissible under the law, and the Governor's jurisdictional window opened on January 20, 2009. Accordingly, it closed on February 19, 2009."
The court also found the Governor's decision was not supported by "some evidence" Hare continued to pose an unreasonable risk to public safety notwithstanding the heinousness of the commitment offense, as required by In re Lawrence (2008) 44 Cal.4th 1181 [82 Cal.Rptr.3d 169, 190 P.3d 535] (Lawrence) and In re Rosenkrantz (2002) 29 Cal.4th 616 [128 Cal.Rptr.2d 104, 59 P.3d 174] (Rosenkrantz). The court explained Hare's possession of the altered toothbrush seven years earlier was his only act of misconduct since 1987 and was not probative of current dangerousness: "Just like the commitment offense, [Hare's] single act of prison misconduct in the last 22 years is an immutable fact of [Hare's] history, and its relevance to [Hare's] risk of current dangerousness has grown stale over the last seven years. [Citation.] The Court finds that on the basis of this institutional record, there is no rational nexus between [Hare's] institutional behavior and his current dangerousness."
With respect to Hare's lack of a specific employment offer, the court found it did "not support a finding that he remains a current threat to public safety." The court explained, "The law requires that a prisoner have made realistic plans for release or has developed marketable skills that can be put to use. [Citation.] The Governor does not dispute that [Hare] has realistic housing plans and there is ample evidence in the record which was considered by the Board to support a finding that he has marketable skills. [Hare] has obtained five vocational certifications, including one in optical lens making as recently as 2006, and has researched numerous private employers who hire ex-inmates in the lens-making field. Even if he does not have a firm job offer, [Hare] does have both a housing plan and marketable skills as required by the regulations."
8. The Superior Court's Denial of the Warden's Motion for Reconsideration
The warden moved for reconsideration on grounds including new information established the Governor's reversal was timely. The warden argued, and submitted to the court, a memorandum to the Governor's office by the Board *1288 transmitting the record considered by the Board during the 2008 hearing, stating, "The Governor's review deadline is February 20, 2009." The court denied the motion.
DISCUSSION
1. Governing Law
(1) As the California Supreme Court and Courts of Appeal have repeatedly stated in decisions reviewing denials of parole by the Board or the Governor, the purpose of parole is to help prisoners "reintegrate into society as constructive individuals as soon as they are able," without being confined for the full term of their sentences. (Morrissey v. Brewer (1972) 408 U.S. 471, 477 [33 L.Ed.2d 484, 92 S.Ct. 2593].) Parole release decisions are essentially discretionary; they "entail the Board's attempt to predict by subjective analysis" the inmate's suitability for release on parole. (Rosenkrantz, supra, 29 Cal.4th at p. 655.) That prediction requires analysis of individualized factors on a case-by-case basis, and the Board's (and, ultimately, the Governor's) discretion in that regard is "`"almost unlimited."'" (Ibid.)
Notwithstanding the breadth of that discretion, however, Penal Code section 3041,[5] which governs the substance and procedure for the Board's parole release decisions, creates a cognizable liberty interest in parole protected by the due process clause of the California Constitution. (Cal. Const., art. I, § 7, subd. (a); Lawrence, supra, 44 Cal.4th at p. 1205 ["the judiciary is empowered to review a decision by the Board or the Governor to ensure that the decision reflects `an individualized consideration of the specified criteria' and is not `arbitrary and capricious'"].)
(2) As an inmate's minimum eligible parole release date approaches, Penal Code section 3041, subdivision (b), requires the Board to set a release date "unless it determines . . . that consideration of the public safety requires a more lengthy period of incarceration for this individual, and that a parole date, therefore, cannot be fixed." In making its decision the Board must *1289 consider all relevant, reliable information. Factors tending to indicate suitability include (1) the absence of a juvenile record, (2) stable social history, (3) signs of remorse, (4) significant life stress motivated the crime, (5) battered woman syndrome, (6) no significant history of violent crime, (7) inmate's age, (8) realistic plans for the future, and (9) institutional behavior. (Cal. Code Regs., tit. 15, § 2402, subd. (d).) Circumstances tending to show unsuitability include (1) commitment offense was committed "in an especially heinous, atrocious or cruel manner,"[6] (2) previous record of violence, (3) unstable social history, (4) sadistic sexual offenses, (5) psychological factors, and (6) serious misconduct while incarcerated. (Cal. Code Regs., tit. 15, § 2402, subd. (c).)
In exercising its discretion, the Board "must consider all relevant statutory factors, including those that relate to postconviction conduct and rehabilitation." (Lawrence, supra, 44 Cal.4th at p. 1219.) "It is not the existence or nonexistence of suitability or unsuitability factors that forms the crux of the parole decision; the significant circumstance is how those factors interrelate to support a conclusion of current dangerousness to the public." (Id. at p. 1212.)
The Board can, of course, rely on the aggravated circumstances of the commitment offense as a reason for finding an inmate unsuitable for parole; however, "the aggravated nature of the crime does not in and of itself provide some evidence of current dangerousness to the public unless the record also establishes that something in the prisoner's pre- or postincarceration history, or his . . . current demeanor and mental state, indicates that the implications regarding the prisoner's dangerousness that derive from his . . . commission of the commitment offense remain probative of the statutory determination of a continuing threat to public safety." (Lawrence, supra, 44 Cal.4th at p. 1214.)
(3) Once the Board sets a parole date, the California Constitution empowers the Governor to review the parole decision of an inmate who has been convicted of murder and sentenced to an indeterminate prison term. (Cal. Const., art. V, § 8, subd. (b).)[7] The Governor's decision to affirm, *1290 modify or reverse the decision of the Board rests on the same factors that guide the Board's decision (Cal. Const., art. V, § 8, subd. (b)) and must be based on "materials provided by the parole authority." (Pen. Code, § 3041.2, subd. (a).)[8] "Although these provisions contemplate that the Governor will undertake an independent, de novo review of the prisoner's suitability for parole, the Governor's review is limited to the same considerations that inform the Board's decision." (Rosenkrantz, supra, 29 Cal.4th at pp. 660-661.)
2. Standard of review
(4) "[W]hen a court reviews a decision of the Board or the Governor, the relevant inquiry is whether some evidence supports the decision of the Board or the Governor that the inmate constitutes a current threat to public safety, and not merely whether some evidence confirms the existence of certain factual findings." (Lawrence, supra, 44 Cal.4th at p. 1212; see id. at p. 1213 ["[E]vidence in the record corresponding to both suitability and unsuitability factors . . . must, by statute, be considered and relied upon by both the Board and the Governor . . . . By reviewing the evidence, a court may determine whether the facts relied upon by the Board or the Governor support the ultimate decision that the inmate remains a threat to public safety."].)[9] The standard is "unquestionably deferential," and "`limited to ascertaining whether there is some evidence in the record that supports the Governor's decision.'" (Lawrence, at p. 1210, italics added; accord, In re Shaputis (2008) 44 Cal.4th 1241, 1258 [82 Cal.Rptr.3d 213, 190 P.3d 573] ["[w]hen a court reviews the record for some evidence supporting the Governor's conclusion that a petitioner currently poses an unreasonable risk to public safety, it will *1291 affirm the Governor's interpretation of the evidence so long as that interpretation is reasonable and reflects due consideration of all relevant statutory factors"].) Nonetheless, the standard "certainly is not toothless, and `due consideration' of the specified factors requires more than rote recitation of the relevant factors with no reasoning establishing a rational nexus between those factors and the necessary basis for the ultimate decisionthe determination of current dangerousness." (Lawrence, at p. 1210.)
We review de novo an appeal from the superior court's decision to grant the petition for writ of habeas corpus that, as here, was based solely on documentary evidence. (Rosenkrantz, supra, 29 Cal.4th at p. 677.)
3. The Governor's Reversal of the Board's Decision Was Timely
(5) A decision by a Board panel finding an inmate suitable for parole becomes final "within 120 days of the date of the hearing." (Pen. Code, § 3041, subd. (b); see also Cal. Code Regs., tit. 15, §§ 2041, subd. (h) ["[a]ny proposed decision of the panel shall become final within 120 days of the hearing"], 2043 ["[a]ny proposed decision granting, modifying, or denying a parole date for a life prisoner, exclusive of those made during Progress Hearings, shall become final no later than 120 days after the hearing at which the proposed decision was made"].) During the 120-day period, the Board may review the panel's decision. (Pen. Code, § 3041, subd. (b).)[10] Once final, the Governor has 30 days to review a decision granting parole to an inmate serving an indeterminate life sentence for murder. (Cal. Const., art. V, § 8, subd. (b); Pen. Code, § 3041.2, subd. (a); see In re Arafiles (1992) 6 Cal.App.4th 1467, 1474 [8 Cal.Rptr.2d 492] ["Governor's authority to review a parole decision commences on the effective date of the [Board's] decision."].)
In the case at bar there is a dispute as to the final, or effective, date of the Board's decision. Hare contends the effective date was January 20, 2009, 119 days after the panel's parole suitability hearing, as evidenced by the letter to him from Linn Austen and the date stamped on the last page of the panel decision accompanying the letter. The Governor contends the information provided to Hare was a clerical error and the effective date was January 21, 2009, 120 days after the hearing, as reflected on the warden's copy of the decision and further supported by the memorandum from the Board to the Governor stating the Governor's review deadline was February 20, 2009.[11] However, before the superior court the warden presented only a legal *1292 argument, insisting the parole decision was not final for 120 days whether or not the panel had indicated an earlier effective datean argument the court rejected.[12]
(6) We need not address whether the superior court correctly rejected the warden's statutory argument because the conflict in the evidence regarding the effective date of the Board decision, if properly presented to the superior court, should have been resolved in favor of the warden. There is a presumption that official duties have been regularly performed. (Evid. Code, § 664 ["[i]t is presumed that official duty has been regularly performed"].) That presumption may be rebutted when "irregularity is clearly shown." (In re Elsholz (1964) 228 Cal.App.2d 192, 197 [39 Cal.Rptr. 356]; see People v. Martinez (2000) 22 Cal.4th 106, 125 [91 Cal.Rptr.2d 687, 990 P.2d 563] ["presumption `affect[s] the burden of proof' [citation], meaning that the party against whom it operates . . . has `the burden of proof as to the nonexistence of the presumed fact'"].) Irregularity has not been clearly shown here. Indeed, the notion the Governor could be deprived of his constitutional authority to review parole decisions for inmatesestablished by a 1988 voter amendment to the California Constitution (Rosenkrantz, supra, 29 Cal.4th at pp. 658-659)by what appears to be a clerical error would be an unwarranted thwarting of the will of the people. Thus, the presumption favoring resolution of the evidentiary conflict to support the conclusion that timely action was taken is especially appropriate in this situation.[13]
*1293 4. The Governor's Decision to Reverse the Board's Grant of Parole Is Supported by "Some Evidence" Hare Continues to Pose a Threat to Public Safety
The superior court did not dispute, and we agree, at least some evidence supports the Governor's determination the murder of Oscar Ramos during the course of a drug transaction was especially atrocious because the motive for the crimegreed for a relatively small sum of money (approximately $4,400) and drugswas trivial in comparison to its magnitude. Accordingly, the limited question before us is whether the Governor reasonably interpreted Hare's possession of an altered toothbrush, his differing explanations for it and his lack of a job offer upon release as evidence that, together with the gravity of the commitment offense, is probative of his current dangerousness. (See Lawrence, supra, 44 Cal.4th at p. 1212 ["under the statute and the governing regulations, the circumstances of the commitment offense (or any of the other factors related to unsuitability) establish unsuitability if, and only if, those circumstances are probative of the determination that a prisoner remains a danger to the public"].)
Bearing in mind the extremely limited and deferential standard of judicial review in parole cases, we conclude some evidence in the record supports the Governor's decision that Hare remains dangerous. To be sure, the Governor's explanation Hare's likelihood of success on parole was jeopardized because he did not have an offer of employment and needed "a stable means to support himself immediately upon release" appears suspect. Hare has been admitted into a yearlong treatment program that will provide him with shelter, food, counseling and educational programs at no cost. The program also provides transitional services after Hare graduates until he is able to support himself. Thus, Hare does not need a job to support himself immediately upon release.[14]
*1294 Additionally, the Governor's characterization of Hare's slightly differing explanations on separate occasions that he used the altered toothbrush to clean his wire fan and hairbrush as a lie demonstrating he continues to "hide the truth and avoid responsibility" seems unduly harsh. As the superior court observed, "the two uses are clearly not mutually exclusive." Nevertheless, the Governor also rejected Hare's explanation he modified the toothbrush as a cleaning tool (to clean either his fan or his brush), implying Hare possessed it for use as a weapon or was in the process of fabricating a weapon. This is not an unreasonable interpretation of the evidence. (See In re Shaputis, supra, 44 Cal.4th at p. 1258 [court "will affirm the Governor's interpretation of the evidence so long as that interpretation is reasonable and reflects due consideration of all relevant statutory factors"].) The 115 report stated the altered toothbrush was "similar and fashioned the same as two (2) other weapons recently found," and Hare's explanation he did not know the retooled toothbrush could be considered a dangerous weapon lacks credibility. Given his lengthy incarceration, it is simply unbelievable Hare did not know that fashioning a weapon out of a toothbrush (see People v. Wallace (2008) 44 Cal.4th 1032, 1081 [81 Cal.Rptr.3d 651, 189 P.3d 911] ["a bare razor blade could be affixed to an object, such as a toothbrush, to create a weapon"]) is not uncommon in prison or that altering a toothbrush, even for benign purposes, was likely to result in disciplinary action if discovered. Moreover, it is difficult to envision how placing a slit in the toothbrush as Hare did would render it more effective as a cleaning utensil. Indeed, although Hare was convicted of possession of dangerous contraband, not possession of a dangerous weapon, Hare's appeal of the 115 was apparently not successful, suggesting correctional authorities also did not find his explanation of benign use plausible.
(7) Although we reverse the order granting Hare's petition for a writ of habeas corpus, we agree with the superior court that Hare is a strong candidate for release on parole; and the Board's decision to release him was certainly reasonable. In fact, were it our responsibility to evaluate the various factors appropriate to a determination whether Hare constitutes a current threat to public safety, we might very well conclude that evidence in the record tending to establish his suitability for parole far outweighs any evidence demonstrating unsuitability for parole. Nonetheless, the Governor did not act arbitrarily or capriciously in reversing the grant of parole in this case: There is at least a modicum of evidence in the recordHare's *1295 possession of the altered toothbrushsupporting the Governor's conclusion that the circumstances of the commitment offense continue to be predictive of current dangerousness despite the many positive factors that demonstrate Hare's suitability for parole. (See Lawrence, supra, 44 Cal.4th at p. 1226 ["[o]ur deferential standard of review requires us to credit the Governor's findings if they are supported by a modicum of evidence"].) Although the superior court found the 2002 violation's relevance to Hare's risk of current dangerousness had waned over time, we cannot agree that in the context of this particular violation seven years is too old to be probative. That is precisely the kind of balancing and weighing that is left to the Board's and the Governor's discretion.
In sum, the Governor's decision Hare is unsuitable for parole is supported by some evidence. Accordingly, the superior court erred in granting Hare's petition for writ of habeas corpus and vacating the Governor's reversal of the Board's grant of parole.
DISPOSITION
The superior court's order vacating the Governor's reversal of the Board's decision granting parole, reinstating the Board's decision and directing Hare's immediate release is reversed.
Zelon, J., and Jackson, J., concurred.
NOTES
[1] Hare began smoking marijuana when he was 19 years old. At 21 he began using barbiturates and later amphetamines, LSD and cocaine. Prior to the commitment offense Hare had been arrested in Missouri for possession of amphetamines, for which he received a three-year suspended sentence, and cited for possession of marijuana (Health & Saf. Code, § 11357, subd. (b)), for which he paid a fine. At the time of the commitment offense Hare was addicted to cocaine, but had stopped using other drugs.
[2] In 1987 Hare received two 115's for damaging or destroying state property: the first in August for using a sheet to block his window; the second in September for altering two pairs of state-issued shorts.
[3] The positive factors considered by the Governor, who acknowledged Hare had "enhanced his ability to function within the law upon release," included Hare's educational and vocational accomplishments, his participation in numerous self-help and therapy programs and his "seemingly solid relationships and close ties with a supportive family and friends during his incarceration."
[4] The Governor mistakenly characterized the 115 as "possession of an inmate-manufactured weapon," not the reduced charge of "possession of dangerous contraband" that was ultimately sustained.
[5] Penal Code section 3041, subdivision (a), provides, "One year prior to the inmate's minimum eligible parole release date a panel of two or more commissioners or deputy commissioners shall again meet with the inmate and shall normally set a parole release date as provided in Section 3041.5. . . . The release date shall be set in a manner that will provide uniform terms for offenses of similar gravity and magnitude with respect to their threat to the public, and that will comply with the sentencing rules that the Judicial Council may issue and any sentencing information relevant to the setting of parole release dates. The board shall establish criteria for the setting of parole release dates and in doing so shall consider the number of victims of the crime for which the inmate was sentenced and other factors in mitigation or aggravation of the crime."
[6] The regulation specifies the factors to be considered in determining whether the offense was committed in an especially heinous, atrocious or cruel manner as: "(A) Multiple victims were attacked, injured or killed in the same or separate incidents. [¶] (B) The offense was carried out in a dispassionate and calculated manner, such as an execution-style murder. [¶] (C) The victim was abused, defiled or mutilated during or after the offense. [¶] (D) The offense was carried out in a manner which demonstrates an exceptionally callous disregard for human suffering. [¶] (E) The motive for the crime is inexplicable or very trivial in relation to the offense." (Cal. Code Regs., tit. 15, § 2402, subd. (c)(1).)
[7] Article V, section 8, subdivision (b), of the California Constitution provides, "No decision of the parole authority of this State with respect to the granting, denial, revocation, or suspension of parole of a person sentenced to an indeterminate term upon conviction of murder shall become effective for a period of 30 days, during which the Governor may review the decision subject to procedures provided by statute. The Governor may only affirm, modify, or reverse the decision of the parole authority on the basis of the same factors which the parole authority is required to consider. The Governor shall report to the Legislature each parole decision affirmed, modified, or reversed, stating the pertinent facts and reasons for the action."
[8] Penal Code section 3041.2 provides, "(a) During the 30 days following the granting, denial, revocation, or suspension by a parole authority of the parole of a person sentenced to an indeterminate prison term based upon a conviction of murder, the Governor, when reviewing the authority's decision pursuant to subdivision (b) of Section 8 of Article V of the Constitution, shall review materials provided by the parole authority. [¶] (b) If the Governor decides to reverse or modify a parole decision of a parole authority pursuant to subdivision (b) of Section 8 of Article V of the Constitution, he or she shall send a written statement to the inmate specifying the reasons for his or her decision."
[9] As the warden argues in his reply brief and contrary to a suggestion advanced at oral argument, in reviewing the Governor's decision under Lawrence, we properly look not only to those factors specifically identified as the basis for the Governor's decision but also to factors "not expressly advanced" as grounds for the unsuitability finding where "there is an implication in the Governor's statement . . ." that the factors supported the unsuitability finding. (Lawrence, supra, 44 Cal.4th at p. 1223.)
[10] No separate or different finality date has been created for a Board decision modifying the panel's decision.
[11] As discussed, the superior court was not directly presented with this conflict before making its decision. Although the court was provided with the warden's copy of the transcript from the hearing and decision110 pages with the date of decision on page 109the warden failed to identify this conflicting date in his briefs or to provide any citation to it.
[12] The warden did refer to the conflicting evidence, and particularly the memorandum to the Governor, in his motion for reconsideration. The superior court could have reasonably concluded the memorandum simply reflected the warden's position the Board's decision would not be final until 120 days after the panel hearing regardless whether it had stated an earlier effective date.
[13] Even if the Governor had missed the deadline by one day because of confusion as to the date on which the 30-day period expired, it would not necessarily deprive the Governor of jurisdiction to review the parole decision. Not all statutory time limits are mandatory and jurisdictional. (See California Correctional Peace Officers Assn. v. State Personnel Bd. (1995) 10 Cal.4th 1133, 1147 [43 Cal.Rptr.2d 693, 899 P.2d 79] ["[w]hen the Legislature has specified a time within which an administrative board is to render a decision, that time limit may be mandatory in the obligatory sense, but this `does not necessarily mean that a failure to comply with its provisions causes a loss of jurisdiction'"]; cf. People v. Allen (2007) 42 Cal.4th 91, 101-105 [64 Cal.Rptr.3d 124, 164 P.3d 557] [time provision held mandatory but its violation did not deprive court of fundamental jurisdictional]; see generally 2 Witkin, Cal. Procedure (5th ed. 2008) Jurisdiction, § 103, pp. 676-678 [explaining whether statutes of limitations and other time provisions are "mandatory" or "directory"].) Similarly, a one-day delay in the exercise of the Governor's constitutional authority to review parole decisions does not necessarily implicate an inmate's due process rights. The liberty interest in parole protected by the due process clause of the California Constitution requires that denial of parole be supported by some evidence of current dangerousness after individualized consideration of the specified criteria (see Lawrence, supra, 44 Cal.4th at p. 1205; In re Prather (2010) 50 Cal.4th 238, 251 [112 Cal.Rptr.3d 291, 234 P.3d 541] ["petitioner is entitled to a constitutionally adequate and meaningful review of a parole decision . . ."]), not that review be completed or the inmate released on a particular date. Indeed, even when a Board decision denying parole is not supported by some evidence in the record, the remedy is not immediate release, but remand to the Board for reconsideration of the full record. (See In re Prather, at p. 258 ["although a reviewing court may expressly limit the Board's reliance upon evidence the court already has considered and rejected as insufficient, the court should avoid issuing directives that improperly limit the Board's statutory authority to review and evaluate the full recordincluding evidence previously considered by the Board, as well as additional evidence not presented at prior parole hearings"].) As discussed, however, we properly leave resolution of these issues to another case.
[14] In re Cerny (2009) 178 Cal.App.4th 1303 [101 Cal.Rptr.3d 200], cited by the warden, presented quite a different situation. Cerny, who had an extensive history of drug abuse before his incarceration for murder, had marketable skills but did not have an offer of employment or confirmed admittance into the residential drug treatment facility that had indicated a willingness to assist him. (Id. at pp. 1313-1314.) The court, acknowledging its limited power of review, reluctantly found Cerny's uncertain plan for employment, housing and drug treatment were some evidence supporting the Board's denial of parole. (Id. at p. 1315.) Here, however, Hare has a solid plan for housing and treatment and, as discussed, does not need employment for at least a year, at which time he will be assisted in making the transition to gainful employment.
| {
"pile_set_name": "FreeLaw"
} |
United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT July 27, 2005
Charles R. Fulbruge III
Clerk
No. 04-51150
Summary Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JOSE GARZA MENDEZ, also known as Jose Garza,
Defendant-Appellant.
--------------------
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:03-CR-327-ALL
--------------------
Before JOLLY, JONES, and OWEN, Circuit Judges.
PER CURIAM:*
Following his conditional guilty plea, Jose Garza Mendez was
convicted of one charge of illegal reentry into the United States
and sentenced to serve 27 months in prison. Garza Mendez appeals
the district court’s denial of his motion to dismiss the
indictment. Garza Mendez further argues that his sentence was
improper under Apprendi v. New Jersey, 530 U.S. 466, 488 (2000).
Garza Mendez argues that his indictment was invalid because
the underlying deportation order, which was based on his prior
*
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. 04-51150
-2-
conviction for driving while intoxicated, is invalid under United
States v. Chapa-Garza, 243 F.3d 921, 927 (5th Cir. 2001). The
denial of a motion to dismiss an indictment is reviewed de novo.
United States v. Wilson, 249 F.3d 366, 371 (5th Cir. 2001). To
prevail on a challenge to the validity of an underlying
deportation order, an alien must establish that: (1) the prior
deportation hearing was fundamentally unfair, (2) the hearing
effectively eliminated his right to seek judicial review of the
removal order, and (3) the procedural deficiencies caused actual
prejudice. United States v. Lopez-Vasquez, 227 F.3d 476, 483
(5th Cir. 2000); 8 U.S.C. § 1326(d).
Garza Mendez has not shown that his deportation hearing
violated his due process rights. See United States v. Lopez-
Ortiz, 313 F.3d 225, 230 (5th Cir. 2002). He concomitantly has
not shown that this hearing was fundamentally unfair. See id.
Consequently, Garza Mendez has not shown that the district court
erred in denying his motion to dismiss the indictment, and we
need not consider his remaining arguments in relation to this
claim.
Garza Mendez also argues that his sentence is invalid under
Apprendi v. New Jersey, 530 U.S. 466 (2000). This claim is, as
Garza Mendez concedes, foreclosed. See Almendarez-Torres v.
United States, 523 U.S. 224, 247 (1998); United States v. Dabeit,
231 F.3d 979, 984 (5th Cir. 2000).
No. 04-51150
-3-
Garza Mendez has shown no error in the district court’s
denial of his motion to dismiss the indictment or in the judgment
of conviction. Consequently, the judgment of the district court
is AFFIRMED.
| {
"pile_set_name": "FreeLaw"
} |
Nebraska Advance Sheets
764 290 NEBRASKA REPORTS
CONCLUSION
For the reasons stated above, we vacate the district court’s
May 8, 2014, resentencing order and we remand the cause with
directions to reinstate the original sentences imposed by the
district court ordering that the sentences for counts I and II
be served consecutively and that the sentence for count III be
served concurrently.
Judgment vacated, and cause
remanded with directions.
Melanie M., individually and as next friend of
Gaige M. et al., her minor children, appellant,
v. K erry T. Winterer and Ryan C. Gilbride,
in their individual and official capacities
as employees and agents of the State of
Nebraska, Department of Health and
Human Services, and the State of
Nebraska, Department of Health
and Human Services, appellees.
___ N.W.2d ___
Filed April 23, 2015. No. S-14-538.
1. Summary Judgment: Appeal and Error. An appellate court will affirm a lower
court’s grant of summary judgment if the pleadings and admitted evidence show
that there is no genuine issue as to any material facts or as to the ultimate infer-
ences that may be drawn from the facts and that the moving party is entitled to
judgment as a matter of law.
2. ____: ____. In reviewing a summary judgment, an appellate court views the
evidence in the light most favorable to the party against whom the judgment was
granted, and gives that party the benefit of all reasonable inferences deducible
from the evidence.
3. Administrative Law: Statutes: Appeal and Error. To the extent that the mean-
ing and interpretation of statutes and regulations are involved, questions of law
are presented which an appellate court decides independently of the decision
made by the court below.
4. Constitutional Law: Due Process. The process required under the Due Process
Clause of the 14th Amendment is that necessary to provide “fundamental fair-
ness” under the particular facts of the case.
Nebraska Advance Sheets
MELANIE M. v. WINTERER 765
Cite as 290 Neb. 764
5. Due Process. There are three factors a court considers in resolving a procedural
due process claim: first, the private interest that the official action will affect;
second, the risk of an erroneous deprivation of such interest through the proce-
dures used and the probable value, if any, of additional or substitute procedural
safeguards; and finally, the government’s interest, including the function involved
and the fiscal and administrative burdens that the additional or substitute proce-
dural requirement would entail.
6. Evidence. The importance of demeanor evidence depends on the role that cred-
ibility plays in a particular determination.
7. Administrative Law. Agency regulations properly adopted and filed with the
Secretary of State of Nebraska have the effect of statutory law.
8. ____. Regulations bind the agency that promulgated them just as they bind indi-
vidual citizens, even if the adoption of the regulations was discretionary.
9. ____. An agency does not generally have the discretion to waive, suspend, or
disregard a validly adopted rule.
10. ____. For purposes of construction, a rule or regulation of an administrative
agency is generally treated like a statute.
11. ____. In the absence of anything to the contrary, language in a rule or regulation
is to be given its plain and ordinary meaning.
12. Administrative Law: Appeal and Error. A court accords deference to an agen-
cy’s interpretation of its own regulations unless plainly erroneous or inconsistent.
13. Attorney Fees. Generally, a party may recover attorney fees and expenses in a
civil action only if provided for by statute or if a recognized and accepted uni-
form course of procedure allows the recovery of attorney fees.
14. Federal Acts: Attorney Fees. A plaintiff is a prevailing party under 42 U.S.C.
§ 1988 (2012) if the plaintiff obtains actual relief on the merits of his or her claim
that alters the legal relationship between the parties by modifying the defendant’s
behavior in a way that directly benefits the plaintiff.
15. ____: ____. A plaintiff who obtains temporary injunctive relief is not a prevail-
ing party under 42 U.S.C. § 1988 (2012) if the plaintiff eventually loses on
the merits.
16. Injunction: Intent. The purpose of a temporary restraining order is only to
maintain the status quo until a court can hear both parties on the propriety of a
temporary injunction.
17. Federal Acts: Attorney Fees. The catalyst theory does not apply to claims for
attorney fees under 42 U.S.C. § 1988 (2012).
18. Federal Acts: Attorney Fees: Civil Rights. A plaintiff who prevails under state
law can obtain fees under 42 U.S.C. § 1988 (2012) if the claim on which the
plaintiff prevailed is accompanied by a substantial, though undecided, claim aris-
ing under 42 U.S.C. § 1983 (2012) from the same nucleus of facts.
Appeal from the District Court for Lincoln County: Richard
A. Birch, Judge. Affirmed in part, and in part reversed and
remanded for further proceedings.
Nebraska Advance Sheets
766 290 NEBRASKA REPORTS
William J. Erickson and Blaine T. Gillett for appellant.
Jon Bruning, Attorney General, and Blake E. Johnson for
appellees.
Heavican, C.J., Wright, Connolly, Stephan, McCormack,
Miller-Lerman, and Cassel, JJ.
Connolly, J.
SUMMARY
Melanie M. requested an administrative hearing after the
Department of Health and Human Services (Department)
informed her that it was going to change her benefits under
the Supplemental Nutrition Assistance Program (SNAP).
The Department informed Melanie—a resident of North
Platte, Nebraska—that it would hold the hearing in Lincoln,
Nebraska. Melanie could participate telephonically at the
Department’s North Platte office or travel to Lincoln and par-
ticipate in person.
Melanie filed a complaint in district court, asserting that the
Department’s regulations and the Due Process Clause required
a “face-to-face” hearing in North Platte. The court entered a
temporary restraining order, but overruled Melanie’s motion
for a temporary injunction and sustained the defendants’
motion for summary judgment. After applying the three-factor
test under Mathews v. Eldridge,1 we affirm the summary judg-
ment as to Melanie’s due process claim. But we reverse, and
remand for further proceedings on her prayer for relief under
the Department’s regulations.
BACKGROUND
Melanie is the mother of four minor children who reside
with her in North Platte. She works 15 to 20 hours per week
in a retail position. Her husband is estranged, but sometimes
helps care for the children.
According to Melanie, caring for one of her children, Ethan
M., presents “logistical problems” that are “more than simply
extraordinary.” Ethan was born without kidneys and suffered
1
Mathews v. Eldridge, 424 U.S. 319, 96 S. Ct. 893, 47 L. Ed. 2d 18 (1976).
Nebraska Advance Sheets
MELANIE M. v. WINTERER 767
Cite as 290 Neb. 764
a brain embolism. He cannot care for himself. Ethan’s former
attending physician opined that Melanie’s absence from Ethan
“is far more than a mere inconvenience” because Melanie is
Ethan’s “primary caregiver.” Melanie said that it is very dif-
ficult to find someone else to care for Ethan.
Melanie receives benefits under “SNAP,” formerly known
as the Food Stamp Program. In Nebraska, the Department
administers SNAP and issues electronic benefits transfer cards
to eligible households, which they can use to purchase food.2
In early 2014, the Department notified Melanie that her
SNAP benefits were going to change because her net adjusted
income had changed. The Department also informed Melanie
that it planned to recover overpayments. Melanie requested
an administrative hearing regarding the proposed changes.
Her attorney sent a letter to the Department demanding
an “in-person, face-to-face hearing in the local office in
North Platte.”
The Department sent Melanie notices informing her that it
would hold a hearing in Lincoln and that Melanie could par-
ticipate “in person” or telephonically. The notices informed
Melanie that she had certain rights, including the right to
testify, present testimony from other witnesses, submit docu-
mentary evidence, and confront adverse witnesses. Ryan C.
Gilbride signed the notices as the hearing officer.
Before any administrative hearing occurred, Melanie filed
a complaint in district court individually and as next friend of
her four minor children. The complaint named as defendants
Kerry T. Winterer and Gilbride (identified as “Employees and
Agents of State of Nebraska- Department of Health and Human
Services”) in their individual and official capacities. Melanie
also sued “The State of Nebraska- Department of Health and
Human Services.”
Citing 42 U.S.C. § 1983 (2012), Melanie alleged that the
defendants’ refusal to grant her a face-to-face hearing at the
Department’s North Platte office deprived her of procedural
due process. She stated that her “ability to confront and
2
See 475 Neb. Admin. Code, ch. 5, § 001 (2005). See, also, U.S. v.
Mohamed, 727 F.3d 832 (8th Cir. 2013).
Nebraska Advance Sheets
768 290 NEBRASKA REPORTS
cross-examine witnesses is certainly crippled by the Hobson’s
choice of either travelling approximately 450 miles round-
trip, or participating by telephone without the ability to even
see the fact-finder or the adverse witnesses.” Melanie also
alleged that regulations required the Department to offer
her a face-to-face hearing in North Platte and, pending the
administrative hearing, to maintain her SNAP benefits at their
original level.
Melanie requested injunctive relief requiring the defendants
to hold a face-to-face hearing in North Platte, the restoration
of SNAP benefits pending an administrative hearing, damages,
and attorney fees under 42 U.S.C. § 1988 (2012).
Along with the complaint, Melanie moved for a temporary
restraining order and injunction. “Because of the medical con-
ditions of [Melanie’s] children,” the court entered on the same
day a temporary order that restrained the defendants from hold-
ing an administrative hearing and ordered them to “continue
or resume SNAP benefits.” The temporary restraining order
remained in effect until the court overruled Melanie’s motion
for a temporary injunction. The court stated that Melanie had
not shown a clear right to her requested relief.
In their answer, the defendants admitted that they offered
Melanie a face-to-face hearing only in Lincoln. Winterer and
Gilbride affirmatively alleged that they were entitled to quali-
fied immunity. Gilbride also affirmatively alleged that he was
entitled to “quasi-judicial immunity since his participation in
this matter was limited to his role as a hearing officer.”
The court sustained the defendants’ motion for summary
judgment. First, the court considered whether the Department’s
regulations entitled Melanie to a face-to-face hearing at the
North Platte office. Giving deference to the Department’s
interpretation of its own rules, the court decided that the
Department’s reading was consistent with the regulation’s
plain language. As to Melanie’s due process claim, the court
acknowledged that she had a property interest in her SNAP
benefits and that the Due Process Clause entitled her to a hear-
ing. But it could “find no case that extends [Melanie’s] right
to participate in the hearing to the right to control the location
of the hearing.” Alternatively, the court held that Winterer
Nebraska Advance Sheets
MELANIE M. v. WINTERER 769
Cite as 290 Neb. 764
and Gilbride were entitled to qualified immunity in their indi-
vidual capacities and that Gilbride was entitled to absolute
immunity because he acted in a quasi-judicial capacity.
ASSIGNMENTS OF ERROR
Melanie generally assigns that the court erred by sustaining
the defendants’ motion for summary judgment. She specifi-
cally assigns, renumbered and restated, that the court erred by
(1) finding that the defendants offered Melanie a hearing that
“met the regulatory and constitutional requirements of due
process,” (2) finding that the “individual defendants” were
entitled to qualified immunity, and (3) not awarding attor-
ney fees.
STANDARD OF REVIEW
[1,2] We will affirm a lower court’s grant of summary judg-
ment if the pleadings and admitted evidence show that there is
no genuine issue as to any material facts or as to the ultimate
inferences that may be drawn from the facts and that the mov-
ing party is entitled to judgment as a matter of law.3 In review-
ing a summary judgment, we view the evidence in the light
most favorable to the party against whom the judgment was
granted, and give that party the benefit of all reasonable infer-
ences deducible from the evidence.4
[3] To the extent that the meaning and interpretation of
statutes and regulations are involved, questions of law are pre-
sented which an appellate court decides independently of the
decision made by the court below.5
ANALYSIS
P rocedural Due P rocess
Melanie argues that the Due Process Clause of the 14th
Amendment requires the defendants to offer her a face-to-face
hearing before reducing her SNAP benefits. Because of Ethan’s
3
D-CO, Inc. v. City of La Vista, 285 Neb. 676, 829 N.W.2d 105 (2013).
4
deNourie & Yost Homes v. Frost, 289 Neb. 136, 854 N.W.2d 298 (2014).
5
See Liddell-Toney v. Department of Health & Human Servs., 281 Neb.
532, 797 N.W.2d 28 (2011).
Nebraska Advance Sheets
770 290 NEBRASKA REPORTS
health problems and the distance between Lincoln and North
Platte, she contends that the defendants effectively restricted
her to a telephonic hearing.
The first step in a due process analysis is to identify a prop-
erty or liberty interest entitled to due process protection.6 The
defendants do not dispute that a property interest is at stake
here. SNAP benefits are a statutory entitlement and, therefore,
“property” protected by the Due Process Clause.7
[4] Once we decide that due process applies, the question
remains what process is due.8 Due process is a flexible concept
that defies precise definition.9 The process required is that nec-
essary to provide “fundamental fairness” under the particular
facts of the case.10
[5] In Mathews,11 the U.S. Supreme Court set forth three
factors relevant to the specific requirements of due process:
first, the private interest that the official action will affect;
second, the risk of an erroneous deprivation of such interest
through the procedures used and the probable value, if any, of
additional or substitute procedural safeguards; and finally, the
government’s interest, including the function involved and the
fiscal and administrative burdens that the additional or substi-
tute procedural requirement would entail.12
But Melanie argues that we do not have to apply a Mathews
analysis because in Goldberg v. Kelly,13 the U.S. Supreme
Court has specifically held that face-to-face hearings are
required in welfare cases. In Goldberg, the Court decided that
6
Hass v. Neth, 265 Neb. 321, 657 N.W.2d 11 (2003).
7
See, Atkins v. Parker, 472 U.S. 115, 105 S. Ct. 2520, 86 L. Ed. 2d 81
(1985); Bliek v. Palmer, 102 F.3d 1472 (8th Cir. 1997).
8
Hass v. Neth, supra note 6.
9
Casey v. O’Bannon, 536 F. Supp. 350 (E.D. Pa. 1982); In re Interest of
Brian B., 268 Neb. 870, 689 N.W.2d 184 (2004).
10
See, State v. Shambley, 281 Neb. 317, 795 N.W.2d 884 (2011); In re
Interest of Brian B., supra note 9.
11
Mathews v. Eldridge, supra note 1.
12
See Hass v. Neth, supra note 6.
13
Goldberg v. Kelly, 397 U.S. 254, 90 S. Ct. 1011, 25 L. Ed. 2d 287 (1970).
Nebraska Advance Sheets
MELANIE M. v. WINTERER 771
Cite as 290 Neb. 764
the government must provide a “pre-termination evidentiary
hearing” before discontinuing welfare benefits.14 The Court
identified six elements of an evidentiary hearing: (1) notice
of the reasons for the proposed termination; (2) an opportu-
nity to confront adverse witnesses and present “arguments
and evidence orally”; (3) retained counsel, if desired; (4) an
“impartial” decisionmaker; (5) a decision that rests “solely on
the legal rules and evidence adduced at the hearing”; and (6) a
statement describing the reasons for the decision and the evi-
dence relied on.15
The procedures challenged in Goldberg allowed a welfare
recipient to contest in writing a proposed termination. But a
recipient could not “appear personally” before the final deci-
sionmaker to “present evidence to that official orally” and
cross-examine adverse witnesses.16 The Court noted that “writ-
ten submissions do not afford the flexibility of oral presenta-
tions” and are a poor basis for a decision, “[p]articularly where
credibility and veracity are at issue . . . .”17 But Goldberg cau-
tioned that a predeprivation evidentiary hearing “need not take
the form of a judicial or quasi-judicial trial.”18
We conclude that Goldberg does not specifically mandate
a predeprivation face-to-face hearing in every welfare case.
Goldberg plainly requires the opportunity to present evidence
orally. But the Court did not decide whether due process
requires the oral presentation of evidence in a face-to-face
hearing. We note that, so far as we can tell, no court has held
that telephonic hearings in welfare cases are categorically defi-
cient under Goldberg.19
So, we must determine the adequacy of a telephonic hear-
ing under the Mathews factors. Melanie’s private interest is
substantial. SNAP recipients “are, by definition, low-income
14
Id., 397 U.S. at 264.
15
Id., 397 U.S. at 268, 271. See Mathews v. Eldridge, supra note 1.
16
Goldberg v. Kelly, supra note 13, 397 U.S. at 268.
17
Id., 397 U.S. at 269.
18
Id., 397 U.S. at 266.
19
See Annot., 88 A.L.R.4th 1094 (1991).
Nebraska Advance Sheets
772 290 NEBRASKA REPORTS
persons who live ‘on the very margin of subsistence.’”20 But
the government’s interest in the efficient use of public resources
weighs in favor of telephonic hearings.21 Contrary to Melanie’s
argument, the state’s interest in efficiency is not irrelevant
when welfare benefits are at stake.22
The last Mathews factor we must consider is the risk of
erroneous deprivation from a telephonic hearing compared to a
face-to-face hearing. The difference between the two is, obvi-
ously, that the hearing officer in a telephonic hearing is unable
to visually observe the witnesses in the flesh. Thus, the officer
is deprived of the full range of demeanor evidence.23
The “‘wordless language’” of a witness’ demeanor is an
important tool for evaluating credibility.24 Even the “best and
most accurate record is like a dehydrated peach; it has neither
the substance nor the flavor of the fruit before it was dried.”25
Of course, a witness’ aural mannerisms are observable tele-
phonically. But a decisionmaker who can hear but not see a
witness does not get the whole picture: “Over the phone, the
fact finder cannot see the way a witness sits, shifts around,
or blushes. Over the phone, the fact finder cannot observe if
the witness shakes nervously, smiles maliciously, or grimaces
with pain.”26
20
Bliek v. Palmer, supra note 7, 102 F.3d at 1476, quoting Mathews v.
Eldridge, supra note 1. See Casey v. O’Bannon, supra note 9.
21
See, Casey v. O’Bannon, supra note 9; Murphy v. Terrell, 938 N.E.2d 823
(Ind. App. 2010). See, also, Mathews v. Eldridge, supra note 1; Penry v.
Neth, 20 Neb. App. 276, 823 N.W.2d 243 (2012).
22
See, e.g., Casey v. O’Bannon, supra note 9.
23
See, id.; State, ex rel. Human Services Dept. v. Gomez, 99 N.M. 261,
657 P.2d 117 (1982); Allan A. Toubman et al., Due Process Implications
of Telephone Hearings: The Case for an Individualized Approach to
Scheduling Telephone Hearings, 29 U. Mich. J.L. Reform 407 (1996).
24
Broadcast Music v. Havana Madrid Restaurant Corp., 175 F.2d 77, 80 (2d
Cir. 1949).
25
Id. See, also, 3 William Blackstone, Commentaries *373.
26
Neil Fox, Note, Telephonic Hearings in Welfare Appeals: How Much
Process is Due?, 1984 U. Ill. L. Rev. 445, 471 (1984).
Nebraska Advance Sheets
MELANIE M. v. WINTERER 773
Cite as 290 Neb. 764
[6] The question here, though, is not whether the in-person
observation of witnesses has value—it does—but whether its
value is so great that the Due Process Clause requires it in
Melanie’s welfare appeals. While “[p]hysical appearance can
be a clue to credibility, . . . of equal or greater importance
is what a witness says and how she says it.”27 Furthermore,
the importance of demeanor evidence depends on the role
that credibility plays in a particular determination.28 Here, the
actions which Melanie administratively appealed are reductions
in her benefits because her net income changed.
We conclude that for this type of hearing, the risk of erro-
neous deprivation is not so great that a face-to-face hear-
ing in North Platte is constitutionally required.29 Credibility
does not play a large role in every welfare case.30 Melanie
argues that SNAP entitlement depends on “‘“an individual-
ized determination of income, expenses, and deductions for
each recipient,” thereby creating substantial risks of erroneous
deprivations.’”31 But, after reviewing the applicable regula-
tions, we believe that determining the amount by which a
recipient’s net income has changed will usually “involve
27
Babcock v. Employment Division, 72 Or. App. 486, 490, 696 P.2d 19, 21
(1985).
28
See, Gray Panthers v. Schweiker, 716 F.2d 23 (D.C. Cir. 1983); Stiver v.
Shalala, 879 F. Supp. 1021 (D. Neb. 1995); In re Suspension of Driver’s
License, 143 Idaho 937, 155 P.3d 1176 (Idaho App. 2006); State, ex rel.
Human Services Dept. v. Gomez, supra note 23; Fox, supra note 26;
Toubman et al., supra note 23.
29
See, Casey v. O’Bannon, supra note 9; Murphy v. Terrell, supra note
21; State, ex rel. Human Services Dept. v. Gomez, supra note 23. See,
also, Penry v. Neth, supra note 21; Sterling v. District of Columbia, 513
A.2d 253 (D.C. 1986); Babcock v. Employment Division, supra note 27;
Greenberg v. Simms Merchant Police Service, 410 So. 2d 566 (Fla. App.
1982).
30
See, Gray Panthers v. Schweiker, supra note 28; Fox, supra note 26.
31
Brief for appellant at 9, quoting Bliek v. Palmer, 916 F. Supp. 1475 (N.D.
Iowa 1996).
Nebraska Advance Sheets
774 290 NEBRASKA REPORTS
relatively straightforward matters of computation.”32 In fact,
Melanie stated at oral argument that her credibility would not
play a large role in the Department’s decision.
In conclusion, after weighing the private interest, the gov-
ernment’s interest, and the risk of erroneous deprivation, we
determine that the Due Process Clause does not require a
face-to-face hearing at the local office in the particular SNAP
appeals in question. We do not consider whether a telephonic
hearing violates the Equal Protection Clause because Melanie
did not specifically assign this issue as error in her opening
brief. For an appellate court to consider an alleged error, a
party must specifically assign and argue it.33
Nebraska R egulations
Apart from her rights under the federal Constitution, Melanie
argues that the Department’s regulations entitle her to a face-
to-face hearing at the local office. The defendants respond that
Melanie did not specifically assign this issue as error. But we
decide that the third assignment in her brief—which asks us to
consider whether a telephonic hearing “met the regulatory and
constitutional requirements of due process”—is sufficient to
put the question before this court.
Section 1983 does not provide a remedy for the violation of
state law.34 But, while Melanie could have been more precise,
we read her complaint to include a prayer for a declaration
that a face-to-face hearing is independently required by the
Department’s regulations.35 Furthermore, an injunction—but
not damages—would be within the scope of such declaratory
32
Califano v. Yamasaki, 442 U.S. 682, 696, 99 S. Ct. 2545, 61 L. Ed. 2d 176
(1979). See 475 Neb. Admin. Code, ch. 3, §§ 002.02A and 002.02B (2005)
and 003 (2013).
33
deNourie & Yost Homes v. Frost, supra note 4.
34
See, e.g., Martin A. Schwartz & Kathryn R. Urbonya, Section 1983
Litigation 26 (2d ed. 2008).
35
See Weeks v. State Board of Education, 204 Neb. 659, 284 N.W.2d 843
(1979).
Nebraska Advance Sheets
MELANIE M. v. WINTERER 775
Cite as 290 Neb. 764
relief.36 The court’s order sustaining the defendants’ motion
for summary judgment treated Melanie’s regulatory and con-
stitutional arguments as separate theories. So, we consider
whether the court erred by entering a summary judgment
against Melanie’s requests for declaratory and injunctive relief
based on the Department’s regulations. We note that the
defendants have not raised sovereign immunity at trial or
on appeal.37
[7-9] Agency regulations properly adopted and filed with
the Secretary of State of Nebraska have the effect of statutory
law.38 Regulations bind the agency that promulgated them just
as they bind individual citizens, even if the adoption of the
regulations was discretionary.39 An agency does not generally
have the discretion to waive, suspend, or disregard a validly
adopted rule.40
[10-12] For purposes of construction, a rule or regulation of
an administrative agency is generally treated like a statute.41 In
the absence of anything to the contrary, language in a rule or
regulation is to be given its plain and ordinary meaning.42 We
accord deference to an agency’s interpretation of its own regu-
lations unless plainly erroneous or inconsistent.43
The regulation in question is 475 Neb. Admin. Code, ch. 1,
§ 007 (2005). Section 007 provides:
36
See, Project Extra Mile v. Nebraska Liquor Control Comm., 283 Neb. 379,
810 N.W.2d 149 (2012); Duggan v. Beerman, 249 Neb. 411, 544 N.W.2d
68 (1996).
37
See, Hall v. County of Lancaster, 287 Neb. 969, 846 N.W.2d 107 (2014);
Doe v. Board of Regents, 280 Neb. 492, 788 N.W.2d 264 (2010).
38
Robbins v. Neth, 273 Neb. 115, 728 N.W.2d 109 (2007).
39
Id.
40
See id.
41
See Utelcom, Inc. v. Egr, 264 Neb. 1004, 653 N.W.2d 846 (2002).
42
Carey v. City of Hastings, 287 Neb. 1, 840 N.W.2d 868 (2013).
43
See Marion’s v. Nebraska Dept. of Health & Human Servs., 289 Neb. 982,
858 N.W.2d 178 (2015).
Nebraska Advance Sheets
776 290 NEBRASKA REPORTS
A fair hearing must be provided to any household
wishing to appeal any action or inaction of the local
office which affects the household’s participation. Fair
hearings may be conducted at the local office either
by telephone with a hearing officer or a hearing offi-
cer coming to the local office. The household mem-
ber requesting the fair hearing will be notified by the
[Department’s] Legal Division of which type of hearing
will be held. The household must be given the option of
requesting a face-to-face hearing if a telephone hearing
was scheduled.
As the district court noted, the second sentence provides
that the Department may hold either a telephonic or a face-
to-face hearing at the local office. The last sentence pro-
vides the household can request a face-to-face hearing if
the Department initially schedules a telephonic hearing. The
court reasoned that “[t]o interpret the last sentence . . . as
allowing [Melanie] to require that the face-to-face hearing
be held in the county of her residence, would contradict the
prior provision of the regulation and essentially turn the word
‘may’ into ‘shall.’” So, the court appeared to conclude that
§ 007 gave Melanie the right to a face-to-face hearing, but
that the location of such hearing was left to the Department’s
discretion.
But the court’s interpretation renders the last sentence mean-
ingless. The plain and ordinary meaning of § 007 requires that
the Department hold the face-to-face hearing at the local office.
Although the choice between a face-to-face or a telephonic
hearing at the local office is initially permissive, a face-to-face
hearing is mandatory if the household requests one. Read in the
context of the regulation as a whole, the household’s right to
request a face-to-face hearing in the last sentence is a right to
request such a hearing at the local office, not at a location of
the Department’s choosing. Thus, Melanie is entitled to a face-
to-face hearing at the North Platte office.
Attorney Fees
Melanie argues that she is entitled to attorney fees under
42 U.S.C. § 1988. Apparently referring to the temporary
Nebraska Advance Sheets
MELANIE M. v. WINTERER 777
Cite as 290 Neb. 764
restraining order, she asserts that the district court “issued
an enforceable order to restore benefits, which [the defend
ants] indisputably did.”44 The defendants argue that Melanie’s
§ 1983 action did not materially alter her legal relationship
with the Department.
[13,14] Generally, a party may recover attorney fees and
expenses in a civil action only if provided for by statute or if
a recognized and accepted uniform course of procedure allows
the recovery of attorney fees.45 The Civil Rights Attorney’s
Fees Awards Act of 1976, 42 U.S.C § 1988(b), provides that
the court may award a reasonable attorney fee to the “pre-
vailing party” in an action that enforces 42 U.S.C. § 1983. A
plaintiff is a “prevailing party” under § 1988 if the plaintiff
obtains actual relief on the merits of his or her claim that alters
the legal relationship between the parties by modifying the
defendant’s behavior in a way that directly benefits the plain-
tiff.46 An injunction or a declaratory judgment, like a damages
award, will usually satisfy the prevailing party test.47 In some
circumstances, a plaintiff can “prevail” by obtaining temporary
injunctive relief.48
[15] But a plaintiff who obtains temporary injunctive relief
is not a prevailing party under § 1988 if the plaintiff even-
tually loses on the merits. In Sole v. Wyner,49 the plaintiff
informed Florida state officials, the defendants, of her intent
to protest war by assembling nude persons in the shape of a
“peace sign.” The defendants told the plaintiff that the par-
ticipants had to wear bathing suits. The plaintiff sued under
44
Reply brief for appellant at 5.
45
See Simon v. City of Omaha, 267 Neb. 718, 677 N.W.2d 129 (2004).
46
Lefemine v. Wideman, ___ U.S. ___, 133 S. Ct. 9, 184 L. Ed. 2d 313
(2012).
47
Id.
48
See, McQueary v. Conway, 614 F.3d 591 (6th Cir. 2010); People Against
Police Violence v. City of Pitts., 520 F.3d 226 (3d Cir. 2008); Annot., 81
A.L.R. Fed. 2d 1 (2014); 2 Rodney A. Smolla, Federal Civil Rights Acts
§ 16:4 (3d ed. 2015).
49
Sole v. Wyner, 551 U.S. 74, 78, 127 S. Ct. 2188, 167 L. Ed. 2d 1069
(2007).
Nebraska Advance Sheets
778 290 NEBRASKA REPORTS
§ 1983, asserting her rights under the First Amendment. The
complaint requested a temporary injunction against inter-
ference with the peace sign demonstration and a perma-
nent injunction against interference with “‘future expressive
activities.’”50 The court issued a temporary injunction. But,
after rogue nudists at the peace sign demonstration refused
to stay behind a partition, the court sustained the defendants’
motion for summary judgment.
The U.S. Supreme Court held that the plaintiff’s victory
at the temporary injunction stage did not entitle her to attor-
ney fees. The Court stated that “a plaintiff who gains a pre-
liminary injunction does not qualify for an award of counsel
fees under § 1988(b) if the merits of the case are ultimately
decided against her.”51 The Court expressed no opinion of
whether attorney fees might be awarded for a preliminary
injunction if the case was resolved without a final decision on
the merits.52 But a “plaintiff who achieves a transient victory
at the threshold of an action” does not deserve an attorney
fee if “her initial success is undone and she leaves the court-
house emptyhanded.”53
[16] Here, the court issued a temporary restraining order
against the defendants, but overruled Melanie’s motion for a
temporary injunction and eventually entered a judgment on the
merits against Melanie’s due process claim. We note that the
purpose of a temporary restraining order is only to maintain
the status quo until a court can hear both parties on the propri-
ety of a temporary injunction.54 The order issued by the court
was not a decision on the merits.55 Furthermore, to the extent
that Melanie prevailed under federal law, her victory was
50
Id., 551 U.S. at 79.
51
Id., 551 U.S. at 86.
52
Id.
53
Id., 551 U.S. at 78.
54
See State ex rel. Beck v. Associates Discount Corp., 161 Neb. 410, 73
N.W.2d 673 (1955).
55
See, e.g., Garcia v. Yonkers School Dist., 561 F.3d 97 (2d Cir. 2009).
Nebraska Advance Sheets
MELANIE M. v. WINTERER 779
Cite as 290 Neb. 764
fleeting.56 The court terminated the temporary restraining order
by overruling Melanie’s motion for a temporary injunction,
and it finally denied her any judicial relief under federal law
by sustaining the defendants’ motion for summary judgment.
Melanie “may have won a battle, but [she] lost the war.”57 She
is not a prevailing party under § 1988(b).
[17] Alternatively, Melanie suggests that she does not have
to prevail in the courtroom to be a prevailing party. She con-
tends that if “a lawsuit produces voluntary action by a defend
ant that affords all or some of the relief sought through a
judgment, the plaintiff is deemed to have prevailed regardless
of the absence of a favorable formal judgment.”58 However,
we have held that the “‘catalyst theory’” does not apply to
claims for attorney fees under § 1988.59 A plaintiff cannot be a
prevailing party under federal fee-shifting statutes without “the
necessary judicial imprimatur on the change.”60
[18] Finally, we note again that § 1983 does not remedy
violations of Nebraska law.61 A plaintiff who prevails under
state law can obtain fees under § 1988 if the claim on which
the plaintiff prevailed is accompanied by a “‘substantial,’”
though undecided, § 1983 claim arising from the same nucleus
of facts.62 But, here, the district court decided Melanie’s due
process claim against her and we have affirmed that part of the
judgment. Thus, in this case, a victory under Nebraska law will
not make Melanie a prevailing party under § 1988.
56
See Sole v. Wyner, supra note 49.
57
See National Amusements Inc. v. Borough of Palmyra, 716 F.3d 57, 65 (3d
Cir. 2013).
58
Reply brief for appellant at 4.
59
Simon v. City of Omaha, supra note 45, 267 Neb. at 727, 677 N.W.2d at
137.
60
Buckhannon Board & Care Home, Inc. v. West Virginia Dept. of Health
and Human Resources, 532 U.S. 598, 605, 121 S. Ct. 1835, 149 L. Ed. 2d
855 (2001). See, also, Schwartz & Urbonya, supra note 34, at 200.
61
See, e.g., Schwartz & Urbonya, supra note 34.
62
Manning v. Dakota Cty. Sch. Dist., 279 Neb. 740, 746, 782 N.W.2d 1, 8
(2010).
Nebraska Advance Sheets
780 290 NEBRASKA REPORTS
CONCLUSION
We conclude that Melanie is entitled to a face-to-face hear-
ing at the Department’s local office under 475 Neb. Admin.
Code, ch. 1, § 007, but not under the Due Process Clause. She
is not a prevailing party for purposes of attorney fees under
42 U.S.C. § 1988, because she lost on the merits of her claim
under federal law. We reverse, and remand for further pro-
ceedings on Melanie’s request for a declaration of rights under
475 Neb. Admin. Code, ch. 1, § 007, and injunctive relief
within the scope of such declaration.
Affirmed in part, and in part reversed and
remanded for further proceedings.
Archer Daniels Midland Company, appellant, v.
State of Nebraska et al., appellees.
___ N.W.2d ___
Filed April 23, 2015. No. S-14-724.
1. Taxation: Judgments: Appeal and Error. An appellate court reviews decisions
rendered by the Tax Equalization and Review Commission for errors appearing
on the record.
2. Judgments: Appeal and Error. When reviewing a judgment for errors appear-
ing on the record, an appellate court’s inquiry is whether the decision conforms
to the law, is supported by competent evidence, and is not arbitrary, capricious,
or unreasonable.
3. Taxation: Appeal and Error. An appellate court reviews questions of law aris-
ing during appellate review of decisions by the Tax Equalization and Review
Commission de novo on the record.
4. Statutes: Appeal and Error. Statutory interpretation is a question of law, which
an appellate court resolves independently of the lower tribunal.
5. ____: ____. Statutory language is to be given its plain and ordinary meaning,
and an appellate court will not resort to interpretation to ascertain the meaning of
statutory words which are plain, direct, and unambiguous.
6. Statutes: Legislature: Intent: Appeal and Error. In discerning the meaning of
a statute, an appellate court must determine and give effect to the purpose and
intent of the Legislature as ascertained from the entire language of the statute
considered in its plain, ordinary, and popular sense.
7. Statutes. If the language of a statute is clear, the words of such statute are the
end of any judicial inquiry regarding its meaning.
| {
"pile_set_name": "FreeLaw"
} |
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
BUCKHORN INC.,
Plaintiff-Appellant
SCHOELLER ARCA SYSTEMS, INC.,
Plaintiff
v.
ORBIS CORPORATION,
Defendant-Appellee
ORBIS MATERIAL HANDLING INC., DOES 1 - 6,
Defendants
______________________
2014-1711
______________________
Appeal from the United States District Court for the
Southern District of Ohio in No. 3:08-cv-00459-TSB-MJN,
Judge Timothy S. Black.
______________________
Decided: July 2, 2015
______________________
JUDY L. WOODS, Benesch, Friedlander, Coplan &
Aronoff LLP, Indianapolis, IN, argued for plaintiff-
2 BUCKHORN INC. v. ORBIS CORPORATION
appellant. Also represented by PRISCILA A. ROCHA, Cleve-
land, OH.
GASPARE JOSEPH BONO, McKenna Long & Aldridge,
LLP, Washington, DC, argued for defendant-appellee.
Also represented by JOHN WILLIAM LOMAS, JR., STEPHEN
M. CHIPPENDALE.
______________________
Before LOURIE, PLAGER, and DYK, Circuit Judges.
DYK, Circuit Judge.
Orbis Corporation and Orbis Material Handling, Inc.
(collectively, “Orbis”), the defendant and prevailing party
in a patent infringement suit, seeks attorney’s fees
against Buckhorn, Inc. (“Buckhorn”), one of the plaintiffs
in the infringement action. Buckhorn’s co-plaintiff,
Schoeller Arca Systems, Inc. (“SAS”), had previously been
held liable to Orbis for fees pursuant to an agreement
between it (SAS) and Orbis. Orbis argues that it is enti-
tled to recover fees against Buckhorn under an indemnifi-
cation provision in a patent licensing agreement (the
“PLA”) between Buckhorn and SAS. Orbis also relies on
the district court’s inherent power to award attorney’s
fees.
The district court awarded fees to Orbis against
Buckhorn under the PLA. But Orbis cannot recover
under the PLA because Orbis is neither a party to the
PLA nor a third-party beneficiary. Moreover, the district
court neither invoked nor had inherent power to award
fees in this case. We therefore reverse the district court’s
award of fees to Orbis.
BACKGROUND
On December 12, 2008, Buckhorn filed suit against
Orbis, alleging infringement of U.S. Patent No. 5,199,592
BUCKHORN INC. v. ORBIS CORPORATION 3
(“the ’592 patent”), relating to improved hinges on trans-
portation containers. The ’592 patent was not owned by
Buckhorn. Rather, SAS owned the patent, and Buckhorn
was the (purportedly) co-exclusive licensee of the patent
under the PLA. The license granted under the agreement
was described as co-exclusive because SAS retained the
right to practice the patent as well. 1 The agreement
contained an indemnity clause, under which Buckhorn
would be obligated to “pay all costs and expenses associ-
ated with” SAS’ cooperation if Buckhorn “require[d] [SAS’]
cooperation in the maintenance of [an] infringement
action.” J.A. 93 § 3.03. Orbis moved to dismiss the com-
plaint brought by Buckhorn on standing grounds; in order
to avoid dismissal, SAS joined the suit, and Buckhorn and
SAS filed a joint amended complaint.
SAS had previously granted Orbis a license to use the
same patent. That license was granted pursuant to a
Settlement and License Agreement entered into on Sep-
tember 15, 1992 (“the RX agreement”). Buckhorn was
apparently unaware of this license when it commenced
the infringement suit against Orbis. 2 The RX agreement
contained a fee provision clause:
1 The PLA was originally between SAS and the
parent company of Buckhorn, Myers Industries, Inc.
(“Myers”). Myers subsequently transferred the agreement
to Buckhorn. It is undisputed that Buckhorn is now a
party to the PLA. For simplicity, in this opinion we will
omit chain-of-title details with respect to the agreements
in question, since they are irrelevant to the issues before
us. We will thus refer to the parties to the various
agreements as SAS, Orbis, and Buckhorn.
2 Indeed, SAS expressly warranted to Buckhorn in
the PLA that it was the “owner of the entire right, title
4 BUCKHORN INC. v. ORBIS CORPORATION
In any litigation based on a controversy or dispute
arising out of or in connection with this Agree-
ment or its interpretation, the prevailing party
shall be entitled to recover all fees, costs, reasona-
ble attorneys fees, and other expenses attributa-
ble to the litigation.
J.A. 164. Buckhorn was not a party to the RX agreement.
On November 22, 2011, the district court granted
summary judgment of non-infringement in favor of Orbis
because Orbis was licensed under the RX agreement.
Orbis subsequently requested fees against SAS and
Buckhorn. It originally relied on the RX agreement’s fee
provision and 35 U.S.C. § 285. The district court denied
the fee request. With respect to § 285, the district court
declined to award fees because the case was not “excep-
tional” and “both sides contributed to the dilatory tactics,
discovery disputes, and frivolous motions for sanctions.”
J.A. 211, 213. With respect to the RX agreement, the
district court concluded that the fee provision did not
apply because the litigation was not “based on a contro-
versy or dispute arising out of or in connection with the
License” and that it would be unconscionable, in light of
the amount of time it took Orbis to produce the document,
to award fees under it. J.A. 203.
Orbis appealed and challenged only the denial of fees
under the RX agreement. Although Orbis listed both SAS
and Buckhorn as appellees, Orbis expressly admitted in
its briefing before this court: “Buckhorn filed the Initial
Complaint, but [it] is not a party to the [RX agreement].
Orbis does not argue in this appeal that Buckhorn is
liable under the Fee Provision [of the RX agreement].”
and interest in and to the Licensed Patents.” J.A. 93
§ 5.02.
BUCKHORN INC. v. ORBIS CORPORATION 5
Brief for Appellant at 21, Buckhorn Inc. v. Orbis Corp.,
547 F. App’x 967 (Fed. Cir. 2013) (No. 2012-1643). We
agreed that Buckhorn had no liability under the RX
agreement. See Buckhorn, 547 F. App’x at 971 n.3. We
determined that SAS was liable to pay Orbis’ fees under
the RX agreement because the language was broad
enough to cover infringement disputes arising out of the
licensed patents and because an award of fees was not
unconscionable. Id. at 971–73. We remanded for the
district court to determine a reasonable fee award under
that agreement. Id. at 974.
On remand, Buckhorn moved to be dismissed from the
case, arguing that the remand proceedings only pertained
to the amount of SAS’ liability under the RX agreement.
In opposition, Orbis for the first time argued that Buck-
horn was liable under the PLA. Although the district
court acknowledged that “[t]he only remaining issue being
litigated is the request for attorney fees by Defendant
Orbis pursuant to the [RX] [a]greement,” J.A. 258, the
district court refused to dismiss Buckhorn. It reasoned
that Buckhorn was liable to pay SAS’ costs under the
PLA, and that “[t]his contractual obligation established
Buckhorn’s ongoing significance to this lawsuit.” J.A.
261. Additionally, the court reasoned that the “prosecu-
tion of this litigation has been controlled entirely by
Buckhorn for its own benefit” and that “leav[ing] [SAS] to
foot the bill” would be “not just.” Id. (citing DirectTV, Inc.
v. Leto, 467 F.3d 842, 845 (3d Cir. 2006)). Subsequently,
the district court awarded Orbis $2,788,594.50 in attor-
ney’s fees. Buckhorn moved for clarification that it was
not liable to Orbis under the RX agreement, which it
argued was the only basis for Orbis’ fee award. In the
district court’s clarification order, the district court
acknowledged that “Buckhorn is not liable for attorneys’
fees under the terms of the [RX] [a]greement.” J.A. 43.
However, the district court held Buckhorn liable to Orbis
6 BUCKHORN INC. v. ORBIS CORPORATION
under the PLA, even though Orbis was not a party to the
PLA, because, according to the district court, “the unam-
biguous language of the PLA requires Buckhorn to pay
any fees that may be ultimately awarded to Orbis.” J.A.
44 (citation and punctuation omitted).
Buckhorn appeals. We have jurisdiction pursuant to
28 U.S.C. § 1295(a)(1). The RX agreement states that it is
governed by and construed under California law, and the
PLA states that it is governed by and construed under
New York law. In such circumstances, California law
governs the RX agreement, and New York law governs
the PLA. See Power Lift, Inc. v. Weatherford Nipple-Up
Sys., Inc., 871 F.2d 1082, 1085 (Fed. Cir. 1989); Tele-Save
Merch. Co. v. Consumers Distrib. Co., 814 F.2d 1120,
1122–24 (6th Cir. 1987). Questions concerning interpre-
tation of settlement and licensing agreements generally
do not raise issues unique to patent law. See Novamedix,
Ltd. v. NDM Acquisition Corp., 166 F.3d 1177, 1180 (Fed.
Cir. 1999) (citations omitted). Thus, we apply the law of
the appropriate regional circuit—here, the Sixth Circuit—
to questions not governed by our law, California law, or
New York law. 3
3 Orbis argues that Buckhorn’s failure to appeal the
district court’s order denying Buckhorn’s motion to dis-
miss precludes us from reviewing the district court’s
decision to award fees under the PLA. This argument is
frivolous. A denial of a motion to dismiss in a case such
as this is not an interlocutory order appealable under 28
U.S.C. § 1292. See Texas Health Choice, L.C. v. Office of
Pers. Mgmt., 400 F.3d 895, 898 (Fed. Cir. 2005) (denial of
motion to dismiss not an interlocutory appeal under
§ 1292). Buckhorn appealed the award of fees, which the
district court characterized as a “final enforceable judg-
ment.” J.A. 41 n.1. It is beyond dispute that:
BUCKHORN INC. v. ORBIS CORPORATION 7
DISCUSSION
Orbis cannot recover fees from Buckhorn under the
RX agreement. Orbis disclaimed this theory in its previ-
ous appeal: “Buckhorn filed the Initial Complaint, but is
not a party to the Settlement License. Orbis does not
argue in this appeal that Buckhorn is liable under the Fee
Provision.” Brief for Appellant at 21, Buckhorn, 547 F.
App’x 967 (No. 2012-1643). In our prior opinion, we
described SAS as being “the only plaintiff with obligations
under the fee provision” of the RX agreement. Buckhorn,
547 F. App’x at 971 n.3. After remand, the district court
noted that “[a]t no point has any party suggested that
Buckhorn is a party to or successor-in-interest to the [RX]
[a]greement” and concluded that “[n]o contract was ever
made between Buckhorn and Orbis. Accordingly, Buck-
horn is not liable for attorney’s fees under the terms of the
[RX] [a]greement.” J.A. 42–43. In its brief on this appeal,
Orbis admits: “Buckhorn’s joint-and-several liability does
not rest on the [RX] [a]greement.” Appellee’s Br. 26.
Thus, the sole questions are whether the district court
properly awarded fees against Buckhorn under the PLA
and whether it could have awarded fees based on its
inherent authority.
An appeal from the final judgment usually draws
into question all prior nonfinal orders and all rul-
ings which produced the judgment. Thus, a fail-
ure of the notice of appeal to specifically refer to a
preliminary or interlocutory order does not pre-
vent the review of that order on appeal. Having
appealed from the judgment, the appellant is free
to attack any nonfinal order or ruling leading up
to it.
20 James Wm. Moore et al., Moore’s Federal Practice
§ 303.21[3][c][iii] (3d ed. 2012).
8 BUCKHORN INC. v. ORBIS CORPORATION
To sue under a contract such as the PLA, a plaintiff
must be a party to that contract or be an intended third-
party beneficiary of the contract. See 13 Williston on
Contracts § 37:9 (4th ed. 2013) (“[Unless they are intend-
ed beneficiaries,] third parties are neither bound by the
contract nor otherwise subject to its terms . . . .”); 9 Corbin
on Contracts §§ 44.1, 46.2 (rev. ed. 2007) (only contracting
promisees or intended beneficiaries may sue to enforce a
contract); German Alliance Ins. Co. v. Home Water Supply
Co., 226 U.S. 220, 230 (1912) (“Before a stranger can avail
himself of the exceptional privilege of suing for a breach of
an agreement to which he is not a party, he must, at least,
show that it was intended for his direct benefit.”).
Our case law recognizes this fundamental require-
ment. In Alpine County, California v. United States, 417
F.3d 1366 (Fed. Cir. 2005), we noted: “In order to sue for
damages on a contract claim, a plaintiff must have either
direct privity or third-party beneficiary status.” Id. at
1368. Similarly, in Anderson v. United States, 344 F.3d
1343 (Fed. Cir. 2003), we explained: “Without either
direct privity or third-party beneficiary status,” the plain-
tiff lacks standing to sue. Id. at 1352. So too in Flexfab,
L.L.C. v. United States, 424 F.3d 1254 (Fed. Cir. 2005), we
noted: “Because Flexfab was not a direct party to the
contract between Capital City and DSCC, it has standing
to enforce the contract only if it was an intended third-
party beneficiary.” Id. at 1259 (citing Castle v. United
States, 301 F.3d 1328, 1339 (Fed. Cir. 2002)).
Most importantly, party or third-party beneficiary
status is required under New York law, which governs the
PLA. See Fourth Ocean Putnam Corp. v. Interstate
Wrecking Co., 66 N.Y.2d 38, 41 (1985) (“[I]ncidental
beneficiar[ies can]not maintain an action for breach of
contract.”); Mendel v. Henry Phipps Plaza W., Inc., 6
N.Y.3d 783, 786–87 (2006) (non-signatories who are not
third-party beneficiaries lack standing to sue); Artwear,
BUCKHORN INC. v. ORBIS CORPORATION 9
Inc. v. Hughes, 615 N.Y.S. 2d 689, 692 (App. Div. 1994)
(“Only an intended beneficiary of a contract may maintain
an action as a third party; an incidental beneficiary may
not.”).
Orbis is not a party to the PLA. As described above,
the PLA is an agreement between SAS and Buckhorn and
requires Buckhorn to indemnify SAS under certain cir-
cumstances. Nor is Orbis an intended third-party benefi-
ciary.
Parties asserting third-party beneficiary rights
under a contract must establish “(1) the existence
of a valid and binding contract between other par-
ties, (2) that the contract was intended for [their]
benefit and (3) that the benefit to [them] is suffi-
ciently immediate, rather than incidental, to indi-
cate the assumption by the contracting parties of
a duty to compensate [them] if the benefit is lost.”
Mendel, 6 N.Y.3d at 786 (quoting Burns Jackson Miller
Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 336 (1983));
see also Alpine, 417 F.3d at 1368 (“Third-party beneficiary
status requires that the contracting parties had an ex-
press or implied intention to benefit directly the party
claiming such status.”); 13 Williston on Contracts § 37:1
(“[A] third party beneficiary contract arises when a prom-
isor agrees with a promisee to render performance to a
third party instead of to the promisee . . . .”); id. § 37:8
(citing cases showing that a party suing as a third-party
beneficiary has the burden of showing that a contract
provision was for his direct benefit). Orbis does not argue
it was the intended beneficiary of the PLA. Nor could it
have made such an argument. The PLA expressly stated:
Nothing expressed or implied in this Agreement is
intended or shall be construed to confer upon or
give to any party, other than the parties to this
Agreement and their respective successors and
10 BUCKHORN INC. v. ORBIS CORPORATION
permitted assigns, any rights or remedies under
or by reason of this Agreement.
J.A. 94 § 7.05.
Alternatively, Orbis asserts that district courts have
“broad discretion in fashioning joint-and-several liability,”
and that we should affirm the district court’s award on
that ground, see Appellee’s Br. 23, even though the dis-
trict court did not rely on it. Significantly, the district
court did not purport to award fees under its inherent
powers. The district court previously stated that fees
were not appropriate under 35 U.S.C. § 285 or as sanc-
tions under Fed. R. Civ. P. 11 because the case was not
“exceptional” and “both sides contributed to the dilatory
tactics, discovery disputes, and frivolous motions for
sanctions.” J.A. 211, 213. Focusing on the equities, the
court additionally noted that an award of fees under the
RX agreement would be “unconscionable.” J.A. 203. The
district court’s award of fees was based on the PLA, not
its “inherent power to impose sanctions for bad faith
conduct.” See Chambers v. NASCO, Inc., 501 U.S. 32, 46
(1991).
While it is true that federal courts may exercise “in-
herent power to sanction bad-faith misconduct,” id.,
“courts are not free to fashion drastic new rules with
respect to the allowance of attorneys’ fees to the prevail-
ing party in federal litigation.” Alyeska Pipeline Serv. Co.
v. Wilderness Soc’y, 421 U.S. 240, 269 (1975). Rather,
“the narrow exceptions to the American Rule effectively
limit a court’s inherent power to impose attorney’s fees as
a sanction to cases in which a litigant has engaged in bad-
faith conduct or willful disobedience of a court’s orders.”
Chambers, 501 U.S. at 47. This situation does not exist
here, nor does Orbis argue that it does.
At oral argument, Orbis suggested it is unfair to pre-
vent it from collecting fees from Buckhorn because it has
BUCKHORN INC. v. ORBIS CORPORATION 11
had a problem collecting its fee award against SAS, and
Buckhorn is (allegedly) liable to SAS under the PLA
agreement for any fees that Orbis collects against SAS.
That is not a basis for ignoring basic principles of contract
law. We note, moreover, that Orbis has no basis for
complaining about unfairness when it has not pursued
alternative remedies. For example, federal law allows a
judgment creditor to seize any asset of a judgment debtor
allowably seized under applicable state law. See Fed. R.
Civ. P. 64(a) (“At the commencement of and throughout
an action, every remedy is available that, under the law of
the state where the court is located, provides for seizing a
person or property to secure satisfaction of the potential
judgment.”).
Under Ohio state law, if SAS lacks sufficient tangible
property to satisfy Orbis’ judgment against it for attor-
ney’s fees, Orbis can potentially obtain an interest in SAS’
chose in action against Buckhorn under the PLA. Ohio
Rev. Code § 2333.01 provides:
When a judgment debtor does not have sufficient
personal or real property subject to levy on execu-
tion to satisfy the judgment, . . . a money contract,
claim, or chose in action, due or to become due to
him, . . . shall be subject to the payment of the
judgment by action.
The Ohio Supreme Court defines a “chose in action” as
“the right to bring an action to recover a debt, money, or
thing.” Pilkington N. Am., Inc. v. Travelers Cas. & Sur.
Co., 861 N.E.2d 121, 125 (Ohio 2006) (quoting Black’s
Law Dictionary 258 (8th ed. 2004)). “It embraces de-
mands arising out of a tort, as well as causes of action
originating in breach of a contract.” Id. SAS has a poten-
tial indemnity claim against Buckhorn. Orbis has made
no effort to acquire an interest in SAS’ chose in action
against Buckhorn.
12 BUCKHORN INC. v. ORBIS CORPORATION
The difference between allowing Orbis to directly re-
cover from Buckhorn as the district court did and requir-
ing Orbis to obtain an interest in SAS’ claim against
Buckhorn is significant in two respects. First, the PLA
requires that the agreement “be governed by and con-
strued in accordance with the laws of the state of New
York” and that the parties bring suit in New York. 4 J.A.
95–96. Under the express terms of the agreement, an
Ohio court cannot enforce the agreement. Second, Buck-
horn has potential defenses to the indemnity provision. If
the claim is pursued in New York court, Buckhorn will be
able to raise those applicable defenses. See Hopple v.
Cleveland Disc. Co., 157 N.E. 414, 416 (Ohio Ct. App.
1927) (choses in action are “subject to defenses by the
obligor to which the original owner [of the chose] was
subject”); Fairbanks, Jr. v. Sargent, 9 N.E. 870, 875 (N.Y.
1887) (the acquirer “of a chose in action takes the interest
[acquired] subject to all defenses, legal and equitable, of
the debtor” (quoting Bush v. Lathrop, 22 N.Y. 535, 538
(1860))). We express no opinion on the relative merits of
that hypothetical action.
We have considered Orbis’ other arguments and find
them to be wholly without merit.
CONCLUSION
For the foregoing reasons, the district court’s award of
fees against Buckhorn is reversed.
REVERSED
4 Buckhorn and SAS are currently litigating issues
relating to the PLA in the Southern District of New York.
See Myers Indus., Inc. v. Schoeller Arca Sys., Inc., Case
No. 1:14-cv-07051-JFK (S.D.N.Y. filed Aug. 29, 2014).
BUCKHORN INC. v. ORBIS CORPORATION 13
COSTS
Costs to Buckhorn.
| {
"pile_set_name": "FreeLaw"
} |
108 F.3d 246
36 Fed.R.Serv.3d 1244, 97 Cal. Daily Op. Serv. 1632,97 Daily Journal D.A.R. 3106
Catherine GILLIGAN; Maurice Gilligan; David Gilligan andWayne Gilligan, minors, by their guardian adlitem, Catherine Gilligan, Plaintiffs-Appellants,v.JAMCO DEVELOPMENT CORPORATION, and Ruth Fischer,individually and d/b/a Verdugo Gardens,Defendants-Appellees.
No. 95-56290.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted Feb. 3, 1997.Decided March 5, 1997.
Elizabeth Brancart, Brancart & Brancart, Pescadero, California, for plaintiffs-appellants.
Robert P. Beckham, Horgan, Rosen, Beckham & Coren, Woodland Hills, California, for defendants-appellees.
Appeal from the United States District Court for the Central District of California, A. Andrew Hauk, District Judge, Presiding. D.C. No. CV-94-04382-AAH.
Before: D.W. NELSON, and TROTT, Circuit Judges, and BRYAN,* District Judge.
D.W. NELSON, Circuit Judge:
1
Catherine and Maurice Gilligan and their minor children, David and Wayne Gilligan (collectively, "the Gilligans"), appeal the dismissal of their action brought under the Fair Housing Act ("FHA" or "Title VIII"), 42 U.S.C. §§ 3604, 3613 (1994), and their pendent claim brought under the California Fair Employment and Housing Act, Cal. Gov't Code § 12955 (1995). The Gilligans allege that Jamco Development Corporation ("Jamco") and Ruth Fischer, the manager of Jamco's Verdugo Gardens apartment complex, refuse applications from all prospective tenants who receive benefits from the federal Aid to Families with Dependent Children program ("AFDC"). In their complaint, the Gilligans assert that such a restriction constitutes discrimination on the basis of familial status in violation of the FHA. We have jurisdiction under 28 U.S.C. § 1291, and we reverse the district court's dismissal of the Gilligans' claims.
FACTUAL BACKGROUND
2
Congress extended the FHA's protection to familial status in the Fair Housing Act Amendments of 1988, Pub.L. No. 100-430, 102 Stat. 1620. The FHA makes it unlawful to "refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of ... familial status." 42 U.S.C. § 3604(a). The FHA also proscribes statements with respect to the rental of a dwelling that indicate "any preference, limitation, or discrimination" based on familial status as well as representations "to any person because of ... familial status ... that any dwelling is not available for inspection, sale, or rental when such dwelling is in fact so available." 42 U.S.C. § 3604(c)-(d). "Familial status" refers to the presence of minor children in the household. 42 U.S.C. § 3602(k).
3
Catherine and Maurice Gilligan live with their two minor children, David and Wayne Gilligan. Since January 1993, they have received monthly AFDC benefits, which are available only to families with minor children residing in the home. See 42 U.S.C. § 606.
4
In January 1994, Catherine Gilligan contacted Ruth Fischer about renting an apartment at Verdugo Gardens in Burbank, California. According to the Gilligans' complaint, she informed Fischer that her family's source of income was AFDC, and Fischer replied that the Gilligans could not inspect or apply to rent an apartment because they were receiving AFDC benefits. The Gilligans maintain that Fischer never inquired about the amount of their monthly income or informed Catherine Gilligan of the monthly rent at Verdugo Gardens. They further allege that Fischer was aware of a vacant apartment unit in the building when she refused to discuss a rental with Catherine Gilligan.
5
On February 16, 1994, a fair housing tester posing as a prospective tenant contacted Fischer to inquire about the rental of an apartment unit for her family. The tester told Fischer that she received welfare payments, and Fischer responded that Verdugo Gardens was not a "welfare building." Fischer also stated that she had no apartments available to show until the following week.
6
Fifteen minutes later, a second fair housing tester contacted Fischer and inquired about the possibility of renting a unit for her family. In response to Fischer's questions, the second tester stated that she was working and did not receive welfare payments. Fischer promptly showed her an apartment that was being vacated.
PROCEDURAL HISTORY
7
On June 29, 1994, the Gilligans filed a complaint in federal district court alleging that Jamco enforces a discriminatory occupancy restriction in the operation of its apartments based on prospective tenants' source of income. The Gilligans claim that since March 12, 1989, Jamco has imposed a "no AFDC" policy on applicants for units at Verdugo Gardens. Because only households with children qualify for AFDC benefits, the Gilligans contend that Jamco's refusal to consider applicants receiving AFDC benefits is a pretext for intentional discrimination against families with children. They also assert that the source of income restriction, even if it is neutral on its face, has the effect of discriminating against families.
8
On October 13, 1994, Jamco moved to dismiss the complaint for failure to state a claim. The Gilligans responded that they had alleged sufficient facts to state claims of both disparate treatment and disparate impact. Pointing to their failure to allege that they were financially qualified, the district court dismissed the complaint without prejudice and granted the Gilligans leave to amend.
9
On January 23, 1995, the Gilligans filed their first amended complaint, which the district court again dismissed with leave to amend. The district court insisted that the Gilligans could not sustain a fair housing claim without alleging that they were financially qualified to rent at Verdugo Gardens. The Gilligans responded that Jamco enforced a blanket proscription, without making any inquiry into individual applicants' financial qualifications.
10
On May 4, 1995, the Gilligans filed a second amended complaint, and Jamco moved to dismiss a third time. The Gilligans had argued consistently that financial qualification, though relevant at the proof stage, need not form part of the pleadings in a Title VIII case. The district court, however, dismissed the Gilligans' second amended complaint with prejudice on July 10, 1995, stating that the plaintiffs had failed to "cure the deficiencies" in their complaint because they had not alleged that they "have enough money to pay the rent."
DISCUSSION
11
A dismissal for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) is a ruling on a question of law subject to de novo review. Stone v. Travelers Corp., 58 F.3d 434, 436-37 (9th Cir.1995). The reviewing court considers only the contents of the complaint and construes all allegations of material fact in the light most favorable to the nonmoving party. Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir.1996); Allarcom Pay Television, Ltd. v. General Instrument Corp., 69 F.3d 381, 385 (9th Cir.1995). A complaint should not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Parks Sch. of Business, Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995).
12
The Gilligans' complaint states that they are a family, that only families receive AFDC benefits, that Jamco has a policy prohibiting all AFDC recipients from applying for apartments, and that Jamco has relied on its "no AFDC" policy to "refuse to negotiate for the sale or rental of, or otherwise make unavailable" units at Verdugo Gardens. 42 U.S.C. § 3604(a). Thus, the Gilligans allege that they are members of a class protected under the FHA, identify a policy that affects only members of that class, and set forth facts that demonstrate the enforcement of that policy in the form of actions prohibited by the FHA. We hold that these allegations are sufficient to state a claim under the FHA.
13
The federal rules require only a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a). The Rule 8 standard contains "a powerful presumption against rejecting pleadings for failure to state a claim." Auster Oil & Gas, Inc. v. Stream, 764 F.2d 381, 386 (5th Cir.1985); see also Hall v. City of Santa Barbara, 833 F.2d 1270, 1274 (9th Cir.1986) ("It is axiomatic that '[t]he motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted.' ") (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1357, at 598 (1969)).
14
The Supreme Court has explained that "it may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). In reviewing the sufficiency of a complaint, "[t]he issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Id. In particular, the Court has stated that the FHA must be given a "generous construction" to carry out a "policy that Congress considered to be of the highest priority." Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 209, 211-12, 93 S.Ct. 364, 366-68, 34 L.Ed.2d 415 (1972) (noting that private suits are "the primary method of obtaining compliance with the Act"). Moreover, the Court recently rejected the concept of a "heightened pleading standard" for civil rights cases and concluded that "federal courts and litigants must rely on summary judgment and control of discovery to weed out unmeritorious claims sooner rather than later." Leatherman v. Tarrant County Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 168, 113 S.Ct. 1160, 1163, 122 L.Ed.2d 517 (1993).
15
By demanding of the Gilligans that they establish each element necessary to survive a motion for summary judgment, the district court asked far more of them than the federal rules require at the pleading stage. To plead their disparate treatment claim, the Gilligans need not make out a prima facie case of discrimination. Jamco's argument that the Gilligans must allege financial qualification in their pleadings relies on the McDonnell Douglas/Burdine structure for burdens of proof in Title VII cases, which has been imported into the Title VIII context. See Gamble v. City of Escondido, slip op. at 230, 104 F.3d 300, 304 (9th Cir. 1997) ("We apply Title VII discrimination analysis in examining [FHA] claims."); Pfaff v. United States Dep't of Hous. & Urban Dev., 88 F.3d 739, 745 n. 1 (9th Cir.1996) (stating that in fair housing cases, the court "may look for guidance to employment discrimination cases"). Adapted to a disparate treatment claim under the FHA, the McDonnell Douglas/Burdine proof standard requires a plaintiff to establish that she is a member of a protected class who applied for and was qualified to rent housing, that she was rejected, and that the housing opportunity remained available. See Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 252-56, 101 S.Ct. 1089, 1093-95, 67 L.Ed.2d 207 (1981); McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668 (1973).
16
We hold that, while the McDonnell Douglas/Burdine standard orchestrates the burdens of proof in a Title VIII case, it does not dictate the required elements of a complaint. Our conclusion tracks the Eighth Circuit's analysis of the sufficiency of a fair housing complaint in Ring v. First Interstate Mortgage, Inc.:
17
[T]he three-stage McDonnell Douglas/Burdine analysis applies to Fair Housing Act cases. However, the prima facie case under this analysis is an evidentiary standard-it defines the quantum of proof plaintiff must present to create a rebuttable presumption of discrimination that shifts the burden to defendant to articulate some legitimate, nondiscriminatory reason for its conduct. Under the Federal Rules of Civil Procedure, an evidentiary standard is not a proper measure of whether a complaint fails to state a claim.
18
984 F.2d 924, 926 (8th Cir.1993). We agree with the Ring court's statement that it is inappropriate, for "practical reasons," to "measure a plaintiff's complaint against a particular formulation of the prima facie case at the pleading stage." Id. at 927.1
19
We note two practical considerations that counsel against imposing the McDonnell Douglas/Burdine standard on the pleadings. First, dismissal of the Gilligans' claim on an undeveloped record was premature. The McDonnell Douglas/Burdine elements will be irrelevant if the Gilligans are able to advance direct evidence of discrimination. Id.; see also Kormoczy v. United States Dep't of Hous. & Urban Dev., 53 F.3d 821, 824 (7th Cir.1995) ("Where direct evidence is used to show that a housing decision was made in violation of the statute, the burden shifting analysis is inapposite."); Lowe v. City of Monrovia, 775 F.2d 998, 1006 (9th Cir.1985) ("[A] plaintiff can establish a prima facie case of disparate treatment without satisfying the McDonnell Douglas test.").
20
Moreover, without any responsive pleadings or record evidence, the Gilligans do not have the facts they need to allege each of the elements of a prima facie case. The information the district court demanded about the rent at Verdugo Gardens was within Jamco's control. Although Jamco's counsel acknowledged at oral argument that "plaintiffs may not know what the rent is," he insisted that "it is their burden" to allege financial qualification. These statements underscore the danger of dismissing a discrimination case on a minimal record. Notwithstanding the demands of Federal Rule of Civil Procedure 11, the standard Jamco advances would require plaintiffs to plead facts they may have no way of knowing.
21
Second, we recognize that the "McDonnell Douglas/Burdine analysis varies depending upon the facts of the particular case." Ring, 984 F.2d at 927. It would be impractical to identify an "inflexible formulation" for every discrimination claim. International Bhd. of Teamsters v. United States, 431 U.S. 324, 358, 97 S.Ct. 1843, 1866, 52 L.Ed.2d 396 (1977); see also Furnco Constr. Corp. v. Waters, 438 U.S. 567, 577, 98 S.Ct. 2943, 2949-50, 57 L.Ed.2d 957 (1978) (stating that the prima facie case requirement was "never intended to be rigid, mechanized, or ritualistic"). For example, the FHA prohibits discrimination in the application process itself, and the Gilligans were denied the opportunity to inspect, or even inquire about, a rental at Verdugo Gardens. See 42 U.S.C. § 3604(a). The Gilligans' status as AFDC recipients should not render them unqualified to apply, even though a review of their application might reveal that they are unqualified to rent.
22
By adopting the Eight Circuit's rule from Ring, we extend a precedent from our Title VII jurisprudence to the fair housing context. We previously have stated that a Title VII plaintiff "need not make a prima facie showing to survive a motion to dismiss provided he otherwise sets forth a short and plain statement of his claim showing that he is entitled to relief." Ortez v. Washington County, 88 F.3d 804, 808 (9th Cir.1996). Here, we clarify that the vitality of a fair housing complaint should be judged by the statutory elements of an FHA claim rather than the structure of the prima facie case. See Ring, 984 F.2d at 927. The FHA provides a private right of action for an "aggrieved person" subjected to "an alleged discriminatory housing practice." 42 U.S.C. § 3613(a)(1)(A). The Gilligans are "aggrieved persons" under the statutory definition because they "claim to have been injured by a discriminatory housing practice." § 3602(i). The definition of "discriminatory housing practice" includes acts unlawful under 42 U.S.C. § 3604. Thus, the Gilligans' complaint is adequate to state a claim for relief under the FHA.
23
Finally, we note that the failure to plead financial qualification does not diminish the Gilligans' additional disparate impact claim. See Pfaff, 88 F.3d at 745 (stating that to set forth a prima facie case of disparate impact, a plaintiff need only identify outwardly neutral practices that have a disproportionate impact on members of a protected class). Even if the McDonnell Douglas/Burdine structure were applied to the pleadings, the Gilligans' finances are not relevant to the prima facie case of disparate impact; qualifications come into play with respect to the affirmative defense of business necessity after the burden shifts to the defendant.
CONCLUSION
24
We conclude that the district court erred in requiring the Gilligans to allege each element of a prima facie case under the FHA in the pleadings. To insist on such a showing in the complaint would contradict both the spirit of the federal rules and the nature of civil rights cases. The Gilligans' complaint meets the standards set forth in the federal rules and applied to the fair housing context in Ring. 984 F.2d at 926-27. Accordingly, we reverse the district court's dismissal of the Gilligans' claims and remand for further proceedings.
25
REVERSED and REMANDED.
*
The Honorable Robert J. Bryan, United States District Judge for the Western District of Washington, sitting by designation
1
Our decision in Gamble v. City of Escondido should not be interpreted to the contrary. Although we stated that "on its face" a complaint did not present a prima facie case, we were reviewing a grant of summary judgment rather than assessing the sufficiency of the complaint. Moreover, our reasoning in Gamble rested on subsequent steps in the McDonnell Douglas/Burdine analysis. See 104 F.3d at 305
| {
"pile_set_name": "FreeLaw"
} |
946 S.W.2d 20 (1997)
Steve SOKOL, Appellant,
v.
LABOR AND INDUSTRIAL RELATIONS COMMISSION OF MISSOURI, Missouri Department of Employment Security, Respondents,
TAI Services, Inc., Defendant.
No. WD52145.
Missouri Court of Appeals, Western District.
June 3, 1997.
*21 Steve Sokol, Overland Park, Appellant pro se.
Ronnae L. Coleman, Kansas City, for Respondent Missouri Division of Employment Sec.
Victorine Robben Mahon, Jefferson City, for Respondent Labor & Indus. Relations Com'n.
Before ELLIS, P.J., and LOWENSTEIN and LAURA DENVIR STITH, JJ.
LAURA DENVIR STITH, Judge.
Appellant Steve Sokol appeals the decision of the Labor and Industrial Relations Commission that he was not entitled to unemployment benefits because he left work voluntarily without good cause attributable to his employer. Because we find that Mr. Sokol did not leave his employment voluntarily, and further that, had he done so, it would have been for good cause, we reverse.
I. Factual Background of Termination of Claimant
Mr. Sokol was employed by respondent TAI Services, Inc. (TAI), a Georgia corporation. TAI's business principally involves eddy current testing of air conditioning equipment. TAI is based in Georgia, and operates in the Southeastern United States. It also, however, has customers in other parts of the country, including the Midwest. On October 10, 1988, TAI Services hired Mr. Sokol to run its Kansas City regional operations.
When hired, Mr. Sokol signed an employment contract which provided that either party could terminate his employment with or without cause upon 30 days written notice. It also provided that for two years after termination of his contract by either party for any reason, he could not "engage generally in direct competition with the Employer in the business of eddy current testing of tubes" and that this limitation would apply "within the existing marketing area of the Employer in the southeastern states of the United States or any future marketing area of the Employer began [sic] during employment under the terms of this Agreement."
*22 Mr. Sokol continued in TAI's employ until he was terminated on July 15, 1994. The parties disagree as to whether Mr. Sokol was involuntarily discharged or whether he voluntarily left employment. Both agree, however, that he left employment because he refused to sign a revised employment contract.
It is undisputed that the revised contract was offered to Mr. Sokol on July 5, 1994. That morning, TAI President Ray Joseph called Mr. Sokol from Georgia. Mr. Joseph said he was flying into Kansas City and wanted to meet Mr. Sokol at the airport. Mr. Sokol later testified that when they met, Mr. Joseph demanded that Mr. Sokol immediately sign a new contract. Mr. Sokol objected that he did not understand the contract, but Mr. Joseph insisted that he would not leave until the document was signed and allegedly made numerous threats to Mr. Sokol. Mr. Joseph also allegedly told Mr. Sokol that the new contract had only minor changes from the old contract.
According to Mr. Sokol, he tired after three hours of wrangling and agreed to sign the new contract with a handwritten modification that it would be in effect for one year and would be renewed yearly thereafter unless written notice of termination was given within 30 days of the termination date.
The following day Mr. Sokol consulted with an attorney. He was told that some of the basic provisions of the contact were very one-sided, and further that some major changes had been made between the first and second contracts. A comparison of the two contracts reveals that most important among the changes were: (1) a requirement that Georgia law would apply; (2) an increase in the guaranteed base salary to an amount above that of the original contract but below that which Mr. Sokol was actually then earning; and (3) a complete revision to the non-competition clause.
Whereas the non-competition clause in the first contract had barred Mr. Sokol from competing with TAI only in the eddy current testing business and only in the Southeastern United States and in future marketing areas[1] for two years after termination, the new clause barred Mr. Sokol from competing throughout the United States, barred him from soliciting business from or contacting any TAI customer with whom he had worked, and applied to both eddy current testing and any other product, equipment or service sold, provided or under development by TAI, for 18 months after termination.
Believing that he had been lied to in an effort to coerce him into signing the new contract, Mr. Sokol sent a letter to Mr. Joseph on July 6, 1994, rescinding the new contract.[2] The letter stated:
This letter is to notify you that the contract which I signed yesterday should be considered null and void.
I feel I was coerced into signing the contract without the benefit of consulting with my lawyer or receiving any counsel...
... Again, this letter should be considered a formal rescission of the above mentioned contract.
I truly would like to work for TAI Services for many years to come and I hope this doesn't effect our working relationship. If you wish to discuss this matter further, please feel free to call.
On July 15, 1994, Mr. Joseph called Mr. Sokol and told him that he accepted the rescission letter. He then told Mr. Sokol to again sign the new contract. Mr. Sokol claims that when he refused, Mr. Joseph told him that he would take Mr. Sokol's July 6, 1994 letter as a letter of resignation. Mr. Sokol said that he was not resigning and that he wanted to continue to work for TAI. Mr. Joseph finally told him that he would have the weekend to reconsider and if he did not *23 sign by Monday then he would be terminated. On July 18, 1994, Mr. Sokol received a notice from TAI that he was terminated effective July 15, 1994. He received four weeks severance pay.
Mr. Sokol applied for unemployment benefits, claiming that he had been discharged without cause. His employer contested his claim, stating that he had been fired for refusing to sign the second contract, and that this was in effect a voluntary quit because the changed provisions were not unreasonable and thus Mr. Sokol had it within his power to remain employed just by signing the second contract.
II. GOVERNING LAW AND STANDARD OF REVIEW
The burden is on the claimant to prove eligibility for benefits. See Kansas City Club v. Labor & Indus. Relations Comm'n, 840 S.W.2d 273, 275 (Mo.App.1992). In determining whether this burden has been met, we are guided by the public policy set out in Section 288.020. It states that we should liberally construe the provisions of that Chapter so as to achieve the purpose of promoting economic security for those unemployed through no fault of their own:
1. As a guide to the interpretation and application of this law, the public policy of this state is declared to be as follows: ... setting aside of unemployment reserves to be used for the benefit of persons unemployed through no fault of their own.
2. This law shall be liberally construed to accomplish its purpose to promote employment security both by increasing opportunities for jobs through the maintenance of a system of public employment offices and by providing for the payment of compensation to individuals in respect to their unemployment.
§ 288.020. Under this standard, the provisions of § 288.040 governing eligibility for benefits are liberally construed to provide coverage.
The employer, TAI Services, has not contested Mr. Sokol's qualification for benefits under Section 288.040. Instead, it claims that Mr. Sokol is disqualified from receiving benefits for which he would otherwise be eligible by reason of Section 288.050. Section 288.050 provides reasons for disqualifying otherwise eligible individuals from receiving benefits. It states in relevant part that:
Notwithstanding the other provisions of this law, a claimant shall be disqualified... if the deputy finds:
(1) That he has left his work voluntarily without good cause attributable to his work or to his employer; ...
§ 288.050.1. This and the other disqualifying provisions of Section 288.050 are strictly and narrowly construed in favor of finding that an employee is entitled to compensation. Citizens Bank of Shelbyville v. Industrial Comm'n, 428 S.W.2d 895, 898 (Mo.App.1968); Kroger Co. v. Industrial Comm'n, 314 S.W.2d 250, 254 (Mo.App.1958).[3] Nonetheless, where, as here, the employer claims that the employee voluntarily left his employment without good cause attributable to his employer, the employee has the burden of proving that this is not the case, either by showing that he left work for good cause attributable to his employer, or by showing that he did not voluntarily leave work but rather was discharged. Id.
The Commission found that Mr. Sokol did not meet his burden. In support, it stated that it believed that the new contract "was substantially and predominantly similar" to Mr. Sokol's original contract and that the changes to which Mr. Sokol objected were "minor changes to the contract [which] did not constitute a substantial change in wages or working conditions." It found that because the changes were minor and reasonable, it was unreasonable of Mr. Sokol to *24 refuse to sign the new contract, and thus he should be considered to have voluntarily quit without good cause attributable to his work or to his employer. It thus disqualified him from benefits. Mr. Sokol appealed to the circuit court, which affirmed.
We review the determination of the Commission, not of the circuit court. Charles v. Missouri Div. of Employment Sec., 750 S.W.2d 658, 661 (Mo.App.1988). We will affirm a factual determination by the Commission as to whether an employee voluntarily left his employ or was discharged if it is supported by competent and substantial evidence on the record as a whole. Chilton v. Labor & Indus. Relations Comm'n, 805 S.W.2d 722, 723 (Mo.App.1991). We will, however, engage in a de novo review of whether the facts found by the Commission can, as a matter of law, be considered to constitute a voluntary departure from employment. Haynes v. Unemployment Compensation Comm'n, 353 Mo. 540, 183 S.W.2d 77 (1944).
III. WHETHER THE CLAIMANT IS CONSIDERED TO HAVE VOLUNTARILY QUIT HIS EMPLOYMENT WITHOUT GOOD CAUSE ATTRIBUTABLE TO HIS EMPLOYER WHERE HE WAS TERMINATED FOR REFUSING TO SIGN A NEW CONTRACT
A. Mr. Sokol did Not Voluntarily Leave Employment.
We first address the issue whether the Commission erred in the first instance in holding that Mr. Sokol should be considered to have voluntarily left his employment where he was terminated for refusing to sign a new contract. He claims that he did not quit, but was fired after making clear to the employer that he wanted to continue his employment with TAI. The employer claims, to the contrary, that the Commission properly considered Mr. Sokol to have, in effect, voluntarily left his work in that it was within his power to continue working by signing the second contract offered to him by his employer.
We find the Commission's determination that Mr. Sokol's dismissal should be considered a voluntary quit because he could have signed the second contract offered by his employer is in conflict with the law as set out in Von Hoffman Press, Inc. v. Industrial Comm'n, 478 S.W.2d 403 (Mo.App.1972).
In Von Hoffman Press, the court discussed the same issue: whether a discharge for failure to agree to new terms of employment can be considered a voluntary quit. In that case, the claimant was employed part-time. Her employer offered her full-time employment with benefits, but at a lesser hourly wage. The claimant declined the offer, and the employer located and trained someone else for the full-time position. The employer then fired the claimant and the new full-time employee took over her old job.
The employer opposed the claimant's application for unemployment benefits on the basis that she in effect voluntarily left her work without good cause. It argued that because she was only discharged for refusing to accept the offered full-time employment, she thus had it within her power to continue working. The court rejected that argument, stating:
Obviously, the plain meaning of the words used prevent us from construing this portion of the section to include a termination of employment by dismissal or discharge. Mrs. Lorenzen did not voluntarily quit her job at Von Hoffman Press. She wanted to continue, but only on a part-time basis. All through her testimony she characterized her termination of employment as a dismissal. She did not voluntarily sever her employment relations with Von Hoffman.
Von Hoffman Press, 478 S.W.2d at 404-05.
Other cases have also held that where the employer tells the employee to take a certain action or accept a certain situation or be fired, and the employee refuses to agree to what was asked by the employer and is fired, then the employee should be considered to have been discharged for cause rather than to have voluntarily left employment. For example, in Francis Howell Sch. Dist. v. Labor & Indus. Relations Comm'n, 687 S.W.2d 681 (Mo.App.1985), we held that employees *25 fired for engaging in a wrongful strike may not have been entitled to benefits because their firing was justified by their illegal strike. We remanded the case for a finding on whether the employees were available for work. However, we decided that the employees did not quit, but were discharged. We found that the employees could not be considered to have quit their jobs just because they refused to return to work in protest of the firing of two fellow employees. We reasoned that the employer's ultimatum to return to work or be fired, combined with the fact that the employees picketed the employer, indicated that the employees were on strike, and not that they quit. Thus, we considered the employees discharged, and not as having quit.
We applied similar reasoning, but reached the opposite result in Price v. Labor & Indus. Relations Comm'n, 811 S.W.2d 457 (Mo. App.1991). In Price, a store manager with a new baby was fired after she refused to report to work for two evenings per week. We held that competent and substantial evidence supported the finding that the manager voluntarily quit her job. A preexisting store policy stated the evening work requirement, and the manager refused temporary alternative daytime employment at a lower paying job.
In Francis Howell School we relied on Diversified Case Co., Inc., 263 N.L.R.B. No. 119, 111 LRRM (BNA) 1145 (1982), a case applying federal law. In Diversified Case Co., two employees failed to return to work after lunch because they were dissatisfied with certain pay deductions and shop conditions. The workers told their employer of their intent not to return, and were warned that failure to return would end their jobs. When they failed to return to work until the next morning, the employer refused to allow them to work. The NLRB held that the workers were discharged. The fact that they came in the next day indicated that they did not intend to quit.
Similarly, in Ridgeway Trucking Co., 243 N.L.R.B. 1048, 1049 n. 8 (1979), enforced, NLRB v. Ridgeway Trucking Co., 622 F.2d 1222 (5th Cir.1980), an employer's telling recalcitrant employees to "work or leave" was held to be a discharge ultimatum. They were not considered to have quit, but to have been fired.
Here, Mr. Sokol was discharged for refusing to accept a new contract which, as discussed below, substantially changed his terms of employment. As in Von Hoffman Press and the other cited cases, Mr. Sokol did not voluntarily sever his employment relationship. Rather, he specifically refused to allow the employer to consider his refusal to sign the new contract as a resignation, stating that he wanted to continue employment under his initial contract. It was the employer who decided to terminate Mr. Sokol rather than have him continue to work under his existing contract.
This distinguishes this case from those cited by the employer in which an employee quit rather than accept reasonable changes in employment proposed by the employer and then argued that he or she had quit for good cause.[4] Here, the employee did not quit and had a right to continue employment under his first contract, which was still in effect because he rescinded the second contract.[5]
Of course, under the terms of the first contract, the employer could have given Mr. Sokol thirty days notice and terminated him *26 with or without cause at any time. If he had done so, however, Mr. Sokol would have been entitled to unemployment compensation benefits unless the employer met the burden of showing that the employee was dismissed for misconduct connected with his work. See § 288.040(2); General Motors Corp. v. Labor & Indus. Relations Comm'n, 653 S.W.2d 702, 703 (Mo.App.1983) (worker fired for fighting at work who showed that he acted in self-defense was entitled to benefits).
But TAI does not claim that Mr. Sokol was fired for misconduct connected with his work, and in any event TAI did not take the option of terminating Mr. Sokol's contract in accordance with its provisions. Mr. Joseph instead offered Mr. Sokol a new and substantially changed contract and ordered him to immediately sign it or be fired. This in itself violated the 30-day notice provision of Mr. Sokol's contract. Now the employer wants us to hold that it could not only violate Mr. Sokol's contract rights with impunity, but could also benefit from that violation by preventing Mr. Sokol from recovering unemployment benefits to which he would otherwise be entitled. We decline to adopt this approach.
For these reasons, we hold that the Commission erred in reaching the legal conclusion that Mr. Sokol voluntarily left his employment where he was terminated for refusing to sign a new contract. Under the law, this conduct did not constitute a voluntary quit; to the contrary, Mr. Sokol was discharged.[6]
B. The Contract Changes Were Substantial and Constituted Good Cause for Mr. Sokol to Leave His Employment
The dissent indicates that he believes that Mr. Sokol should be considered to have been discharged rather than to have voluntarily quit because he had it within his power to sign the new contract offered to him by his employer. It therefore goes on to address the issue whether Mr. Sokol quit for good cause attributable to his employer, and concurs with the Commission's determination that the addition of a non-competition clause in the circumstances of this case does not constitute good cause.
We disagree. We hold that, even if Mr. Sokol were considered to have voluntarily quit, he had good cause to do so in that the changes in the contract were substantial and were pushed on him in a manner which violated his prior contract. We disagree with the Commission's determination that the reasons Mr. Sokol did not sign the second contractsuch as dissatisfaction with the revised non-competition agreement and with other contract provisionsdid not constitute substantial changes in his employment and thus did not constitute good cause to quit attributable to his employer.
Whether Mr. Sokol's reason for leaving his employment constituted "good cause" is a legal issue on which we do not defer to the Commission's determination below. Heavy Duty Trux v. Labor & Industrial Relations Comm'n, 880 S.W.2d 637, 641 (Mo.App.1994). The phrase "good cause" has no fixed or precise meaning, and is judged by the facts of each case. Belle State Bank v. Industrial Comm'n, 547 S.W.2d 841, 846 (Mo.App.1977). The standards by which good cause is judged can be summarized, however, as an objective determination of what a reasonable person would do in the same or similar circumstances. In this regard, we have previously stated that:
the circumstances motivating an employee to terminate employment must be "real not imaginary, substantial not trifling, and reasonable not whimsical and good faith is an essential element." Belle State Bank v. Industrial Commission, 547 S.W.2d 841, 846 (Mo.App.1977). Good cause is limited to instances where the unemployment is caused by external pressures so compelling that a reasonably prudent person would be justified in terminating employment.
Charles, 750 S.W.2d at 661. Charles further explains that absent "discriminatory or *27 unfair or arbitrary treatment, mere dissatisfaction with working conditions does not constitute good cause for quitting employment unless the dissatisfaction is based upon a substantial change in wages or working conditions from those in force at the time the claimant's employment commenced." Id.
The rule that one is justified in quitting in the face of arbitrary or unfair treatment was applied in Heavy Duty Trux, 880 S.W.2d at 644. In that case an employee accidentally caused his truck to go into a ditch. He received oral permission to have the truck towed out of the ditch, and the employer never conducted any investigation to determine whether the accident was caused by the employee. Instead, the employer simply charged the driver the substantial cost of the towing. The employee objected to this treatment and quit. The employer said that it was a voluntary quit and opposed the worker's application for unemployment compensation. Heavy Duty Trux concluded that the arbitrary and unfair approach taken by the employer provided good cause for the driver's decision to quit, and found the driver qualified for unemployment.
Here, as in Heavy Duty Trux, we find that the employer engaged in arbitrary and unfair treatment of Mr. Sokol. The employer failed to comply with the contract provision requiring thirty days notice of termination by insisting that Mr. Sokol sign the new contract immediately without advice of counsel. This is just the type of arbitrary behavior which we believe justifies a voluntary quit.
In addition, we believe that Mr. Sokol had good cause for quitting because he faced the very type of situation described in the quotation from Charles above, a "substantial change in wages or working conditions from those in force at the time the claimant's employment commenced." Id.
First, we note that the second contract required the application of the law of Georgia, where TAI was incorporated. The rights of employees vary greatly from state to state. While Mr. Sokol does not rely on this change on appeal, we believe that as an objective matter an agreement to change the applicable law is at least an important change in the contract which can be considered in combination with other changes in determining whether the new contract provided good cause to refuse to sign the new contract.
Most important of those other changes was the change in the non-competition clause. The Appendix to this opinion contains a side-by side comparison of the clauses. It reveals that one provision of the proposed new clause was beneficial to Mr. Sokolthe non-competition period was shortened from two years to 18 months. The remainder of the changes in this clause were far from beneficial to Mr. Sokol, however.
The non-competition clause in the first contract just limited Mr. Sokol in the Southeastern United States, and did so only in the field of eddy current testing. As Mr. Sokol did not work in the Southeastern United States, this clause really did not affect him negatively. Even if he quit or were fired, it would not affect his future employment or ability to undertake his line of work. The non-competition clause was basically of no practical effect.
The dissent argues, and the Commission found, that the new contract simply "updated" the non-competition clause with "minor" changes. We agree with Mr. Sokol, however, that the changes were far from minor. The non-competition clause in the revised contract was much broader in scope and far more onerous in potential application. While it prohibited competition for only 18 months, it did so throughout the United States and in every field in which TAI might offer products, equipment or services, and applied to all of the customers that Mr. Sokol had worked with in the prior six years. It thus barred Mr. Sokol from undertaking his current work or even related work with any of the persons with whom he had built up contact. As a result, the new contract effectively barred Mr. Sokol from employment in his chosen field anywhere in the United States for 18 months, while the former contract had barred him from employment in that field only in a part of the country in which he was not working.
In this situation we think the analysis of Ryan v. Employment Div., 87 Or.App. 471, *28 742 P.2d 707 (1987), is applicable. Mr. Ryan was operations director of his employer's racquetball club. His contract was oral. Six weeks after he began work the method of compensation was changed, and a few weeks thereafter he was asked to sign a written contract which contained a non-competition clause which barred him from being connected "in any manner with any business of the type conducted by the employer within a 50-mile radius of employer's business." Id. at 708. When Mr. Ryan objected, his employer told him that if he refused to sign he would be fired. Mr. Ryan said "Do you want me to leave right now?" His employer answered "Okay," and Mr. Ryan left the premises after gathering his personal effects.
The employer opposed Mr. Ryan's claim for unemployment benefits by claiming that Mr. Ryan had voluntarily left his employment without good cause. The appeals board agreed and denied compensation. The court of appeals reversed, finding that Mr. Ryan had good cause to leave work. In so doing, it applied a definition of good cause which is not unlike that in Missouri, stating that good cause is cause:
such that a reasonable and prudent person of normal sensitivity, exercising ordinary common sense would leave work. The reason must be of such gravity that the individual has no reasonable alternative but to leave work.
Id. at 709. The court of appeals found that the employer's attempt to require Mr. Ryan to sign a non-competition clause provided good cause for him to refuse to sign the new contract, stating:
[t]he imposition of the noncompetition clause was a matter of such gravity that claimant had no reasonable alternative but to leave work. We do not agree with the referee's conclusion that the alternatives of signing the contract and latter challenging it or negotiating a more limited geographical area of coverage of the clause were reasonable. We hold that EAB's findings and reasoning did not support the conclusion that claimant left work without "good cause."
Id. (emphasis added).[7]
Here, as in Ryan, we find that the imposition of the non-competition clause was a matter of such gravity that Mr. Sokol could have determined in good faith that he had no reasonable alternative but to leave work. If he did not sign the second contract and then left work, he could still work in his chosen field. If he did sign the second contract, he could not do so.
Indeed, for all TAI's claims that the change in the contract was minor, it fired Mr. Sokol for refusing to sign it, brought suit to enforce it, and was actually permitted to enforce it against Mr. Sokol despite the fact that the second contract was rescinded before Mr. Sokol was discharged. Mr. Sokol was out of work for 18 months. The new non-competition clause barred Mr. Sokol from engaging in the business for which he was trained. It is hard to conceive of a more critical or substantial change in the terms of employment to which Mr. Sokol was subject. On these facts, we simply disagree with the dissent and with the Commission below that the change was minor and did not constitute "a substantial change in wages or working conditions from those in force at the time the claimant's employment commenced." Charles, 750 S.W.2d at 661.
For these reasons we reverse the decision of the Commission and remand for a determination of Mr. Sokol's unemployment benefits in accordance with this opinion.
ELLIS, J., concurs in this opinion.
LOWENSTEIN, J., dissents in separate dissenting opinion filed.
LOWENSTEIN, Judge, dissenting.
Bad facts in a case can lead an appellate court to strain to attempt to do what it feels to be "the right thing." The fact that the employer's conduct here was shabby in its method of changing the contract with Sokol, does not change or negate eligibility requirements *29 of a worker under Missouri's unemployment compensation law so as to bestow benefits in this case. For all the rhetoric and logic put forth either in the court's opinion, or in this dissent, this case will now be the common law in Missouri, and will stand for the following proposition: an employment contract, terminable by either party on 30 days notice, if modified by the employer, only as to, 1) the non-compete clause by broadening the area limitation to reflect current area limitations and reducing the time limitation, 2) reflecting increased current compensation; and 3) adding language that the law governing the contract will be that of the state of situs of the employer's home office, will all be sufficient to allow an employee to reject those terms and to then collect unemployment benefits. Such a result goes against the purpose of and reason for this law.
The effort to help the claimant receive benefits has resulted in the following:
1) It has caused the scope of review to be mentioned and then ignored. In the interest of brevity a few examples are noted. The question of termination versus quit (pages 712 of the majority) is a fact question for the Commission, and the courts are not at liberty to over turn the determination of the Commission of a voluntary quit by Sokol. Whether the employee voluntarily quit, as opposed to being terminated, is a matter of fact to be determined by the Commission. If there is competent and substantial evidence to support a finding of a quit, or resignation by the employee's actions, the Commission's finding is binding on the court. Allen v. Green Ridge R-VIII Sch. Dist., 892 S.W.2d 635, 637 (Mo.App.1994); Chilton v. Labor & Industrial Relations Comm'n, 805 S.W.2d 722, 723 (Mo.App.1991). In addition, and by way of example, on page 2 of the facts, the majority's conclusion that "[M]r. Sokol continued in TAI's employ until he was terminated ..." (emphasis added), makes a 180° turn via a leap over the Commission's express findings of a quit. Although judges may not have found a quit as did the Commission, nevertheless, the Commission's finding was supported by competent and substantial evidence and may not be now ignored or altered. Campbell v. Labor and Industrial Relations Commission, 907 S.W.2d 246249 (Mo.App.1995).
2) It has caused this court to discount and ignore the facts as found by the Commission on the issues presented to it, and take as gospel such statements of appellant as, "they lied to me." There is nothing in the transcript to back up Sokol's conclusions, and should not now be considered here. Crestwood Commons Redevelopment Corp. v. 66 Drive-In, 812 S.W.2d 903, 909 (Mo.App. 1991); Woodard v. Director of Revenue, 876 S.W.2d 810, 816 (Mo.App.1994).
No matter how the majority attempts to interpret (at page ____) the Commission's failure to include as a finding that Sokol had somehow been "lied to" as a justification that this court could now on appeal, make such a finding of fact, it simply remains and results in this court's making findings not in the record and not made by the fact-finder.
The findings of the Commission are printed in the Appendix to this Dissent. Also shown in the Appendix are the pertinent provisions of both the first and second contracts on non-competition.
3) The court has seized upon the additional language that Georgia law shall govern the contract as another reason for the reversal. It was simply never in the record what effect, if any, this provision would have. Sokol has not, other than pointing to the addition of this provision, made any mention, nor cited any authority regarding how this provision impacted his employment. It is not the duty of a court to search for error nor to raise matters not presented or argued by an appellant School Dist. of Springfield v. Transamerica Ins. Co., 633 S.W.2d 238, 253 (Mo. App.1982); Morovitz v. Morovitz, 693 S.W.2d 189, 191 (Mo.App.1985); Brown v. Michigan Millers Mut. Ins., Co., 665 S.W.2d 630, 632 (Mo.App.1983). Also on page 2 of the facts, the majority recognizes the salary increase included in the second contract but says it was, "... below that which Mr. Sokol was actually earning." This reflects on an unproven fact which was not found by the Commission and not addressed prior to this court's opinion. Neither Sokol's salary nor his commissions were at issue at the hearing.
*30 The sole issue both at the hearing and presented on appeal is the effect of the non-competition clause. What is inescapable is the fact the second contract, rescinded by Sokol, calls for a salary of $23,922 based on his testimony of a salary of $24,000, while the first contract has a figure of $14,400.
4) It has caused the court to lose sight of the fact that claims here are claims against a state fund. This is not a suit versus an employer, so repeated references in the majority opinion that "the employer wants us to hold that it could not only violate Mr. Sokol's contract rights with impunity ...," though seized upon by the court to justify a reversal, are not relevant. The following language from Haynes v. Unemployment Compensation Comm'n., 353 Mo. 540, 183 S.W.2d 77, 80 (1944) a case cited by the majority as part of the scope of review is apropos.
While it has been said that the "unemployment compensation laws are not necessarily designed for the adjustment of rights between employees and employers in the sense that they are adversary litigants," S.S. Kresge Co. v. Unemployment Compensation Comm'n., 349 Mo. 590, 162 S.W.2d 838, 841 (1942), we think it is apparent that the burden of proof to establish a claimant's right to benefits under the Unemployment Compensation Law rests upon the claimant. Queener v. Magnet Mills, Inc., 179 Tenn. 416, 167 S.W.2d 1 (1942). An unemployed individual is eligible to receive benefits only if the commission finds that the required conditions have been met. The claimant assumes the risk of non-persuasion and we think the general rule applicable to ordinary court proceedings applies.
As a postscript, the Court in Haynes considered only the issue of whether an employee had made herself available for work after she quit for health reasons. Most importantly here, Haynes reversed a circuit court's legal conclusions based on facts found by the Commission somewhat in line with paragraph above.
5) The court's result is based on contract law principles. This is not a contract case. While I do not condone the lack of 30 days notice called for in the first contract, the lack of notice doesn't seep into an unemployment compensation case under these facts, any more than an evaluation under contract law of the effect of Sokol's rescission. The focus here is whether Sokol may collect unemployment benefits against and out of a state fund which is to be a safety net for workers unemployed through no fault of their own, for the changes made in the contract of employment and his working conditions.
The second matter, also a contract law question, concerns TAI's separate circuit court suit that resulted in the employer's being able to enforce the second contract's noncompete clause nationwide, but particularly in the states of Missouri, Kansas, Nebraska and Iowa. Sokol was represented by counsel in that case. He did not appeal that judgment, so he is barred to compete for TAI customers for eighteen months, while under this action, he is unable to collect benefits. I am not unsympathetic to the anomaly created, but this appeal is solely for unemployment benefits, and the other two matters are strictly in contract and cannot alter or divert the inquiry of this case: Did Sokol have good cause to reject the second contract? As the Supreme Court points out in Kresge and Haynes, this action is for unemployment benefits under the applicable law of Chapter 228, and not for an adjudication of all matters between the parties.
The controlling statute here is § 288.050.1(1) which disqualifies a claimant from benefits if the deputy finds "... he has left his work voluntarily without good cause attributable to his work or his employer ..." The determination of a voluntary quit is one of fact for the Commission, and will be affirmed if supported by competent and substantial evidence. Price v. Labor & Industrial Relations Comm'n., 811 S.W.2d 457, 459 (Mo.App.1991); Schomaker v. Labor & Industrial Relations Com. of Missouri, 675 S.W.2d 450, 451 (Mo.App.1984). Despite all the efforts of the majority at page 12, to the contrary, this court is stuck with case law firmly holding the issue of termination versus quit is a fact question to be reviewed as such by this court. Our attempts to do otherwise constitute a departure from the common law of this state.
*31 Once a determination is made the leave is voluntary, it is then necessary to determine if it was for "good cause." Allen, 892 S.W.2d at 637. The burden of proof is on the claimant to establish the right to benefits. Producers Produce, Co. v. Industrial Com. of Missouri, 365 Mo. 996, 291 S.W.2d 166, 173 (1956). The claimant has the burden to prove "good cause," which is reviewed as question of law. Heavy Duty Trux v. Labor and Industrial Relations Comm'n., 880 S.W.2d 637, 641 (Mo.App.1994). St. John's Regional Medical Center v. Labor and Industrial Relations Comm'n, 814 S.W.2d 698, 699 (Mo.App.1991).
"Good cause," is what would motivate an average worker in a similar situation, with known wages, working conditions, etc., to enter the ranks of the unemployed. Belle State Bank v. Industrial Comm'n., 547 S.W.2d 841, 846 (Mo.App.1977). The circumstances motivating termination must be real, substantial, reasonable and in good faith, and result from external pressures so compelling a reasonably prudent person would give up the employment. Clark v. Labor & Industrial Relations Comm'n, 875 S.W.2d 624, 627 (Mo.App.1994). Good cause must emanate from the work itself or from the employer, as opposed to the employee. Chilton, 805 S.W.2d at 723. The good cause requirement shows the legislative intent of Chapter 288 to create an incentive for employed persons to remain employed by withholding benefits to those who quit without good cause. Hessler v. Labor and Industrial Relations Comm'n., 851 S.W.2d 516, 518 (Mo.1993).
There appears to be a discrepancy in the cases as to the review of the disqualifying provisions such as § 288.050.1. The majority points to Citizens Bank of Shelbyville v. Industrial Comm'n, 428 S.W.2d 895, 898 (Mo. App.1968); Kroger Co. v. Industrial Comm'n, 314 S.W.2d 250, 254 (Mo.App.1958) for a construction in favor of entitlement. On the other hand, even though there is to be a liberal construction of the law, the disqualifying provisions in § 288.050 "must be strictly construed." Citizens Bank of Shelbyville, 428 S.W.2d at 89798.
With the sole issue of whether the changes in the contract were of such a nature that Sokol could, without disqualification of Unemployment benefits, refuse to abide by the changes proposed by his employer, several cases need be examined. As the Eastern District said in Citizens Bank of Shelbyville 428 S.W.2d at 899, "We must interpret the words `good cause' by their plain and rational meaning in the light of the purpose of the Employment Security Law.... [G]ood cause for voluntary unemployment is caused by external pressures so compelling that a reasonably prudent person would be justified in giving up employment." The words "good cause" have no fixed meaning and are read in light of the unique facts of each case. Belle State Bank, 547 S.W.2d at 846. The employee in Citizens Bank of Shelbyville quit because her supervisor gave her the "cold treatment," and "she didn't speak to me ... unless she had to." The court held a lack of cordiality did not amount to an external pressure so compelling to justify a prudent person in giving up her employment, and did not give her good cause for a quit. Citizens Bank of Shelbyville, 428 S.W.2d at 901.
Most common factors causing the employee to quit involve pay reduction, substantial changes in either working conditions or other terms of the employment.
Here are some factual examples of cases delineating good cause:
CHANGES IN WORKING CONDITIONS
S.S. Kresge Co., 162 S.W.2d at 841 held there is no provision in the law to plant a ruling that the former work or the new work is more suitable, and each case rests on its own merits. The opinion tells the Unemployment laws "are not necessarily designed for the adjustment of rights between employees and employers in the sense that they are adversary litigants...," but contemplates the settling of issues under the stated public policy of providing reserves to benefit persons unemployed through no fault of their own.
Allen, 892 S.W.2d at 636, was a claim by a para-professional to help a blind student in the employer school district. The student moved to a neighboring school district some eleven miles away and the employer *32 assigned Allen to the new district. After a few months Allen decided not to work in the new district and wanted another job in the defendant district. This was denied. This court held Allen's objection to the extra travel time, "without further explanation as to why this imposes a hardship, does not represent a `compelling' external pressure." Id. at 638.
In Bank of Shelbyville, 428 S.W.2d at 899, the opinion contains a compendium of out-of-state cases revolving around workplace conditions and what constitutes good cause, and holds that a person who quit when her supervisor failed to speak to her, or would "snap her off" was "not enough," to constitute "external pressure so compelling that a reasonably prudent person would be justified in giving up employment." Id. 900-01.
In a management reorganization the claimant's responsibilities were divided, a salary cut and job title changed. Under a statute that required a substantial change in working conditions that were less favorable to the employee, the court held the employee was entitled to benefits. Musgrave v. Eben Ezer Lutheran Institute, 731 P.2d 142, 143-44 (Colo.App.1986).
Changes In Terms Of Employment
In Belle State Bank, the court said good cause means, "a cause reasonably sufficient to justify an employee in voluntarily leaving the ranks of the employed and joining the ranks of the unemployed" Belle State Bank, 547 S.W.2d at 846. Otherwise, said the court, if every reason which appeals to the claimant's head or heart counted as good cause, then the law would fail in its stated purpose. Applying the standard of reasonableness to the facts that the employer changed the dates of payment, minor changes in working hours, and minimal changes in sick leave benefits, the court said such changes had only a limited and relatively minor economic impact on the claimant and did not amount to good cause. Id. at 847.
The employee in Charles v. Missouri Div. of Employment Sec., 750 S.W.2d 658, 659-661 (Mo.App.1988) left a job expecting to make more with her new employer. She resigned. This court held the employee's expectations were not those as outlined by the employer, so mere dissatisfaction with working conditions does not constitute good cause unless it is based on a substantial change in wages or working conditions "from those in force at the time the claimant's employment commenced."
Good cause was found in Heavy Duty Trux, 880 S.W.2d at 644 where the employer docked the pay of the driver for the tow, when the truck slid into a ditch during an ice storm. The quit was determined to be for good cause since the quit "was in response to appellant's unreasonable actions; i.e., determining that claimant was negligent without any investigation of the incident...."
Olson v. Employment Appeal Board, 460 N.W.2d 865, 867-68 (Iowa App.1990), presented the court with an employee who had his hours reduced, pay cut, and was employed for seven months in the lesser job before the quit. The court held the changes were substantial, but the claim was disallowed because the employee had accepted the changes and worked for seven months, so a dissatisfaction with conditions did not constitute good cause.
The Supreme Court of Utah in Larry Munger Enterprises, Inc. v. Industrial Comm'n. of Utah, Department of Employment Security, 716 P.2d 808, 809 (Utah 1986), was faced with an over-the-road trucker who abandoned his rig after being tendered "a lengthy proposed contract of employment" containing what the employee thought were "unfair and possibly even illegal terms." Those terms were on employee liability, bonding requirements, pay advances and cost reimbursement policies, and work quotas and standards. The employee was told to sign the contract without modification. The Utah Board found some of the contract provisions were unreasonable and indeed unlawful and constituted conditions caused by external pressures so compelling a reasonable person would be justified in the quit. Id. at 810. The Supreme Court affirmed.
*33 In re Claim of Aquilina v. New York Telephone Company, 62 A.D.2d 1096, 404 N.Y.S.2d 424 (1978) presented the question of a hire of a temporary employee for six months, who after the temporary period might or might not have been offered permanent employment with fringe benefits. The employer did not make a permanent hire after six months, but allowed the employee to stay on. The employee quit because she could not get the fringe benefits. The court denied benefits since good cause did not exist because the employee suffered no economic loss. The court referred back to the purpose of the law was to ease the hardship of involuntary employment "due to economic conditions or other conditions beyond the control of the employee". Id. at 425.
Pay Reduction
A forty-four percent pay reduction due to an announced demotion to a lesser job constitutes good cause under the "accepted rule" that a substantial reduction in wages does indeed constitute good cause. Armco Steel Corp. v. Labor and Industrial Relations Comm'n, Div. of Employment Sec., 553 S.W.2d 506, 508 (Mo.App. 1977). A substantial reduction of earnings ($165 down to $130) due to loss of guaranteed overtime constitutes good cause. Tombigbee Lightweight Aggregate Corp. v. Roberts, 351 So.2d 1388, 1390 (Ala.App. 1977). Delaney v. Unemployment Compensation Board of Review, 133 Pa. Cmwlth. 107, 574 A.2d 1198, 1199-1201 (1990), involved an investment broker who, for a period of months continued to negotiate an employment contract, but refused to sign a final offer of the same salary with substantial yearly increases and benefit package, with rights to accrue commissions and equity over what he was making. The new contract reduced his commissions on certain transactions. The court affirmed the denial of his claim for benefits under the statute saying "[C]laimants who, while employed, refuse to accept an offer of continued employment are deemed to have quit their position ...," and in order to gain benefits must show the voluntary quit was of a "necessitous and compelling nature." Id. at 1200 and 1201. The court said there was "no talismanic percentage figure" that defines a substantial reduction in pay, but the fact the claimant was offered in the proposed contract of continued employment, substantial gains in other areas, as a matter of law, supported a denial. Id. at 1201.
In Brewster v. Rutledge, 176 W.Va. 265, 342 S.E.2d 232, 233 (1986), a night watchman's pay was reduced from $3.25 an hour to $2.25, and he was given extra duties as a janitor. The court held these unilateral changes were substantial and constituted good cause and benefits were allowed.
None of the facts on compulsion to give up the job and collect benefits under Chapter 288 are present. Sokol suffered no loss of wages, no undue burden of added duties, nor any change in his working conditions. The vast majority of the new contract was the same as the 1988 contract of hire.
The relatively simple explanation for the result in this unemployment compensation claim is this: the employee had no practical or legal right to have the 1988 contract of employment remain unchanged forever, the changes proposed by the employer were not so substantial and harmful to the employee so he should have given up the employment and become eligible for unemployment benefits.
The Ryan case from Oregon relied on by the majority should not be used to supply good cause under Missouri law. In Ryan the situation changed from the employee having a no compete clause in his contract as a health club manager, to the employer including one. In fact, and even more glaring, Ryan went from an oral to a written agreement and his compensation was changed (presumably downward). In the case at bar, Sokol's remuneration was increased, the non-compete clause was changed to reflect his current conditions. Here, rather than packing belongings and leaving as a victim as in Ryan, Sokol negotiated changes in other parts of the contract, signed it, and then later had second thoughts and cancelled. Here, as can be seen in the contracts in the Appendix, an employer dealing in sophisticated heating, *34 ventilating and air conditioning equipment products and their testing, sought to update a previous agreement with one of its salesmen, so he couldn't use its products and techniques with its customers after he left.
The only other avenue for Sokol's recovery would be to utilize the theory of "constructive discharge" as set out in Div. of Employment Sec. v. Labor and Industrial Relations Commission of Missouri, 739 S.W.2d 747, 748-49 (Mo.App.1987), but the facts here do not justify such a finding.
I cannot abide by the conclusion that the change in a non-competition clause constitutes, without any other factors, a substantial change allowing this claimant to collect from the fund. "An appellate court should not become an advocate for one of the parties in an effort to see if it can find a theory for reversal." Stroup v. Facet Automotive Filter Co., 919 S.W.2d 273, 277 (Mo.App.1996).
I would deny the other two points raised by Sokol and would affirm the judgment affirming the Commission.
Contrary to Allen, 892 S.W.2d at 635, Chilton, 805 S.W.2d at 722 and Campbell v. Labor and Industrial Relations Commission, 907 S.W.2d 246, 249 (Mo.App.1995), which hold that the determination and review of the Commission's finding of a resignation to be a finding of fact, the majority opinion in this case treats and reviews this determination as a matter of law.
APPENDIX
1988 Contract Provision
In consideration of the Employer employing the Employee in a position wherein he will gain specialized knowledge and experience and will establish personal relationships with the Employer's customers, suppliers, and other employees, the Employee covenants and agrees as follows:
On termination of his employment whether by termination of this Agreement, by wrongful discharge, or otherwise, the Employee shall not directly or indirectly within the existing marketing area of the Employer in the southeastern states of the United States or any future marketing area of the Employer began during employment under the terms of this Agreement, enter into or engage generally in direct competition with the Employer in the business of eddy current testing of tubes either as an individual on his own or as a partner or joint venturer, or as an employee or agent for any person, or as an officer, director, or shareholder, or otherwise for a period of two years after the date of termination of his employment hereunder. This covenant on the part of the Employee shall be construed as an agreement independent of any other provision of this Agreement; and the existence of any claim or cause of action of the Employee against the Employer whether predicated on this agreement or otherwise shall not constitute a defense to the enforcement by the Employer of this covenant. In the event of a breach or threatened breach by the Employee of his obligations under this restrictive covenant, the Employee acknowledges that the Employer will not have any adequate remedy at law and shall be entitled to such equitable and injunctive relief as may be available to restrain the Employee from the violation of the provisions hereof. Nothing herein shall be construed as prohibiting the Employer from pursuing any other remedies available for such breach or threatened breach, including the recovery of damages from the Employee.
July 1994 Provision
In consideration of the Employer employing the Employee in a position wherein he will gain specialized knowledge and experience and will establish personal relationships with the Employer's customers, suppliers and other employees, the Employee covenants and agrees as follows:
Employee agrees that during the term of this Agreement and for a period of eighteen months immediately following cessation for any reason of Employee's employment with TAI SERVICES, INC., Employee shall not, on Employee's own behalf or on behalf of any person, firm, partnership, association, corporation or business organization, entity or enterprise, solicit, contact, call upon, communicate with, or attempt to communicate with any current customer of TAI SERVICES, *35 INC., with a view to the sale or providing of any product, equipment or service competitive or potentially competitive with any product, equipment or service sold or then being provided or under development by TAI SERVICES, INC., provided that the restrictions set forth in this section shall apply to customers of TAI SERVICES, INC., or representatives of customers of TAI SERVICES, INC. with Employee had contact during his employment with TAI SERVICES, INC. The actions prohibited by this section shall not be engaged in by Employee directly or indirectly, whether as a manager, salesman, agent, sales or service representative, engineer, technician or otherwise. It is expressly understood that the restrictions imposed hereby will survive the termination of this agreement for a period of 18 calendar months.
State of Missouri
DIVISION OF EMPLOYMENT SECURITY
Jefferson City
FINDINGS OF FACT:
The claimant worked for the employer for nearly six years as an analyst, last working on July 15, 1994. The claimant was hired under the terms of a written employment contract which was in effect from his date of hire until July 5, 1994. The employer decided to implement minor changes in such contract in order to properly update same, notifying the claimant of its decision on July 5, 1994, and requiring the claimant to sign the new contract in order to continue his employment. The claimant signed the contract on July 5 after having negotiated a minor change which was handwritten at the end of the contract and signed by both parties. The next day the claimant faxed a letter to the employer notifying the employer of the claimant's intent to void the contract he signed the previous day, claiming he was coerced into signing the contract without the benefit of legal counsel and that he did not understand the contract or its implications, expressing a desire to continue working for the employer. After mailing the claimant a copy of the signed contract and permitting him sufficient time to evaluate its contents, the employer contacted the claimant on July 15 to discuss the matter. The claimant refused to sign the contract based upon advice of counsel, believing the contract was unfair and unreasonable, referring to three specific provisions of the contract at the hearing. The evidence indicated those three provisions were substantially, if not exactly, the same as was included in the original contract of hire. The claimant could have continued in his employment had he signed the contract as required. The employer notified the claimant on July 15 that his refusal to sign the written employment contract would be considered as a termination of the employment relationship, providing the claimant with three days to reconsider his decision. The claimant's continued refusal to sign a contract resulted in his termination of employment. The employer considered the claimant's letter of July 6 to constitute notice of the claimant's intent to terminate the contract he signed on July 5, consistent with the provision in such contract permitting either party to terminate same upon thirty days advanced written notice to the other.
NOTES
[1] Respondent does not claim that the portion of this clause barring competition in future marketing areas applied to Mr. Sokol. We therefore will not further address that aspect of the non-competition clause in the first agreement.
[2] The dissent suggests that we have accepted Mr. Sokol's version of the facts rather than that of the Commission. The Commission did not anywhere suggest it disbelieved Mr. Sokol's chronology of events, however. It simply found that the changes in the contracts were so minor as to be of no legal significance. For the reasons set out below, we disagree on the legal effect of the facts, not the facts themselves.
[3] We disagree with the dissent that there is a discrepancy between the statement in Citizens Bank of Shelbyville that the provisions of the employment security law will be liberally construed in favor of coverage and the statement in the same case that the disqualifying provisions will be strictly construed. To the contrary, the strictthat is, narrowconstruction of exceptions or disqualifying provisions called for in that case, in reliance on Kroger, is fully consistent with a liberal interpretation of the law so as to effect entitlement to benefits. See Kroger, 314 S.W.2d at 254.
[4] See, e.g., Bank of Shelbyville, 428 S.W.2d at 899; Belle State Bank v. Industrial Comm'n, 547 S.W.2d 841, 846-47 (Mo.App.1977); Charles, 750 S.W.2d at 659-61.
[5] The evidence below was that the employer accepted Mr. Sokol's rescission letter of July 6, 1994, and told Mr. Sokol that it had been effective. He apparently did not raise any issues with Mr. Sokol as to whether he was entitled to rescind based on the facts he stated, but instead asked him to reconsider and then fired him for refusing to do so. We thus consider the second contract to have been rescinded. Where a contract is rescinded, it is void and of no effect. The parties are put back in the positions they held prior to the signature of the rescinded contract. Ballenger v. Castle Rock Bldg. Corp., 904 S.W.2d 62, 64 (Mo.App.1995); Haas v. Town & Country Mortgage Co., 886 S.W.2d 225, 228 (Mo.App. 1994); Phillips v. Bradshaw, 859 S.W.2d 232, 235 (Mo.App.1993). Here, that means that they were continuing to operate under the contract signed in 1988.
[6] The dissent suggests that we are second guessing the Commission on an issue of fact by so holding. We disagree. We accept the facts found by the Commission, but hold that as a matter of law they do not constitute a voluntary quit. Rather, they constitute a discharge. As in Von Hoffman Press and Francis Howell School District, supra, this is a proper issue for determination by this court on appeal.
[7] The court stated that because it found that Mr. Ryan had not left without good cause, it did not need to address claimant's alternative argument that he did not leave work voluntarily when he was fired for refusing to sign the proposed contract.
| {
"pile_set_name": "FreeLaw"
} |
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Fritz Lee Dickerson IV, Ashton Chase :
Dickerson, Thomas N. Steele, Ann M. :
Korb and Fritz Lee Dickerson III, :
:
Appellants :
:
v. : No. 1544 C.D. 2018
: Argued: September 10, 2019
Lower Swatara Township Zoning :
Hearing Board :
:
v. :
:
Lower Swatara Township :
BEFORE: HONORABLE P. KEVIN BROBSON, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE WOJCIK FILED: November 13, 2019
Applicants1 appeal the October 22, 2018 order of the Court of Common
Pleas of Dauphin County (trial court), dismissing Applicants’ land use appeal and
affirming the January 26, 2017 decision and order of the Zoning Hearing Board
(ZHB) of Lower Swatara Township (Township), denying Applicants’ request for a
1
Applicants are Fritz Lee Dickerson, IV (Dickerson, IV), Ashton Chase Dickerson
(Dickerson), Thomas N. Steele (Steele), Ann M. Korb (Korb), and Fritz Lee Dickerson, III
(Dickerson, III).
use variance under the Township’s Zoning Ordinance (Ordinance).2 Applicants
contend they met their burden of establishing all of the elements for a variance set
forth in Section 910.2(a) of the Pennsylvania Municipalities Planning Code (MPC),3
and the ZHB’s denial of the variance request is not supported by substantial
evidence, and is therefore an abuse of discretion. Upon review, we affirm.
I. Background
Applicants are individuals who own or have an ownership interest in
the five contiguous residential parcels (Property)4 at issue in the variance request.
The Property, totaling 17.08 acres, is located in a Residential-Suburban (R-S)
district. The Property is bounded by Pennsylvania Route 283 (Rt. 283) to the north,
North Union Street to the west, the Swatara Creek to the east, and residential parcels
to the south.
On April 28, 2016, Applicants collectively submitted an application for
a land use variance to the ZHB for the Property. Applicants requested relief from
Section 27-502 of the Ordinance,5 regarding the permitted uses within an R-S
2
The Ordinance was enacted on July 17, 1993.
3
Act of July 31, 1968, P.L. 805, as amended, added by the Act of December 21, 1988, P.L.
1329, 53 P.S. §10910.2(a).
4
The Property includes: (1) Dickerson Parcel I, owned by Dickerson, IV and Dickerson;
(2) Dickerson Parcel II, owned by Dickerson, IV and Dickerson; (3) Steele Parcel, owned by
Steele; (4) Korb Parcel, owned by Korb; and (5) Church Parcel, owned by Robert R. Church, Linda
E. Church, and Derek S. Nakamura, as co-trustees. Dickerson, III has the option to purchase a
portion of the Church Parcel, which is a section of the Proposed Development.
5
Section 27-502 states:
A building may be erected or used and a lot may be used or occupied
for any of the following purposes:
2
district, and from Section 27-508 of the Ordinance, imposing a 30% impervious
coverage limit for R-S zoned lots. If the variance is granted, Applicants intend to
combine the Property’s five residential parcels into a single parcel, which they will
subdivide and develop as a five-lot commercial property (the Proposed
Development). The Proposed Development will consist of one restaurant, one office
building, two small retail buildings, and a 79-room hotel. As a self-imposed
condition, Applicants agreed that they, or their successor(s) in interest, will expand
public water and sewer services to the Proposed Development, thereby bringing the
services to the residential area immediately south of the Proposed Development.
A. Single family detached dwellings, with the exception of
manufactured/mobile home dwellings which are
prohibited.
B. Churches or similar places of worship, including
associated social facilities.
C. Public recreation areas.
D. Agricultural activities.
E. Municipal buildings and facilities.
F. Public and parochial schools, libraries and museums.
G. Home occupations.
H. Public utility services and facilities.
I. Signs.
J. Accessory uses and buildings incidental to any permitted
use.
Reproduced Record (R.R.) at 1a.
3
The ZHB held four public hearings on Applicants’ variance application.
Applicants testified and presented four additional witnesses: (1) Robert Shaffer, a
professional engineer and a sewage enforcement officer; (2) William Gladstone, a
commercial real estate agent; (3) Jarred Neal, a licensed professional traffic
engineer; and (4) Thomas Luttrell, a development consultant. The Township
presented the testimony of two witnesses: (1) Eric Stump, a licensed professional
traffic engineer; and (2) Jamie Keener, a certified land planner. The ZHB granted
intervenor party status to 11 neighboring property owners (Intervenors).6
The testimony revealed that the Property is currently improved with
eight residential dwellings. Several Applicants reside in homes located on the
Dickerson I, Dickerson II, and Korb Parcels, which rely on private wells and septic
systems. The Steele Parcel, which contains four homes, is not currently used for
residential purposes. The Church Parcel is undeveloped.
Steele testified that he purchased the Steele Parcel in 2002 and lived in
one of the homes from 2002 to 2007. During that time, Steele rented the other three
homes out as residences. However, in 2007, Steele began having septic issues on
the parcel. In 2008, Steele built a new private septic system and connected two of
the four homes. The size and topography of the lot prevented the connection of the
two remaining homes to the new septic system, rendering them unsuitable for human
occupancy. Steele, who does not currently reside on the parcel, testified that it would
be possible for him to live in one of the two serviced homes. However, he said that
all four of the homes have fallen into disrepair. R.R. at 42a-56a.
6
Intervenors are Nancy Avolese; Sherry and Tim Santoro; Deborah Keim-Beynon and
Richard Benyon; Joe and Marianne Hoover; David Zavoda; Tom Librandi; and Margaret and
Wilfred Anfang.
4
Applicants testified about significant industrial growth in the area north
of the Property over the last decade. Many large warehouses have been constructed,
including an expansive FedEx facility. The FedEx facility operates 24/7, creating
significant noise, light, and dust pollution, as well as increased vehicle and foot
traffic in the vicinity. Additionally, directly across North Union Street from the
Property, there is a 200-acre parcel of land zoned as “Commercial Highway,” known
as the Shope Property. The Shope Property has been zoned Commercial Highway
since 2008 and remains undeveloped. R.R. at 35a-37a, 39a, 64a, 73a, 82a-83a, 90a-
92a.
Applicants who currently reside on the Property testified that they wish
to move to a more desirable residential location, and believe that they will be unable
to market and sell their properties as residences. However, they have not attempted
to place their properties on the market in recent years, and both Dickerson, IV and
Dickerson testified that they have not had their homes appraised. R.R. at 32a-33a,
36a, 39a-40a, 65a, 69a, 70a, 75a, 77a.
Shaffer, Applicants’ professional engineer, testified that connecting the
Property to public water and sewer services would cost between $400,000 and
$500,000. These costs would be paid by a developer if the variance was granted,
per Applicants’ stipulation. Otherwise, the Property will either continue without
access, or the costs will be borne by the Township. Shaffer conceded that the
Property could be developed residentially without connecting it to public water and
sewer services, but added that there would “not [be] a lot of room for density” of
development, due to the space required for private septic systems. R.R. at 475a-
482a.
5
Gladstone, Applicants’ commercial real estate expert, testified that the
highest and best use of the Property is a commercial-type use because of the
Property’s location. R.R. at 526a. However, Gladstone conceded that the Property
could be marketed for a permitted use under the current R-S zoning. R.R. at 517a.
Similarly, Luttrell, Applicants’ development consultant, testified that if each parcel
of land in the Property was sold for residential purposes, the prices would not be
anywhere close to what the parcel could sell for if it could be developed
commercially. R.R. at 840a.
The Township’s expert land planner, Keener, testified that the Property
was suitable for multiple uses permitted in an R-S district. R.R. at 918a-919a.
Keener testified that the Property was also suitable for uses allowed by special
exception in an R-S district, such as a medical or dental clinic. R.R. at 919a.
Moreover, with respect to intensity, Keener testified that the Ordinance establishes
districts allowing uses that are more intense than are allowed in an R-S district, but
less intense than allowed in the Commercial Highway district. R.R. at 921a. These
districts include Residential-Urban, Residential Multi-Family, and Commercial
Neighborhood. Id.
Both Applicants’ and the Township’s professional traffic engineers
offered extensive testimony regarding the potential traffic impact of the Proposed
Development. Their testimony established that the Proposed Development would
result in 3,434 new daily motor vehicle trips on North Union Street. Of these 3,434
additional daily trips, 20% would be heading south of the Proposed Development,
towards Intervenors’ properties. In the aggregate, the portion of North Union Street
south of the Proposed Development would see an 18% increase in traffic volume.
R.R. at 544a-605a, 876a-904a.
6
Intervenors objected to Applicants’ variance request because they
believe the Proposed Development would increase traffic, noise, light, and dust
pollution that North Union Street already experiences. Intervenors corroborated
Applicants’ testimony regarding the negative impacts of the FedEx facility. Hoover
testified that the noise and light from the FedEx facility has gotten to a point where
it is “not pleasurable.” R.R. at 1110a. Librandi testified about the “constant” truck
noise coming from the FedEx facility. R.R. at 1135a, 1098a-99a, 1111a-29a, 1134a-
49a, 1154a-55a, 1158a-70a.
On January 26, 2017, the ZHB issued a decision and an order denying
Applicants’ request for a variance with respect to the Property. The ZHB’s findings
and conclusions include the following:
12. The [] Property is currently improved with eight
residential dwellings. All of the dwellings are currently or
potentially habitable.
***
18. Applicants testified at the hearing that their
properties are adversely affected by the noise, light and
other factors caused by the proximity to [Rt.] 283 and the
industrially developed properties located on the north side
of [Rt.] 283.
19. None of the Applicants provided documentation
with regards to any septic system or water issues on the
[P]roperty subject to this Application.
***
24. [] Shaffer testified that the [P]roperty at issue
could be developed residentially without public water and
public sewer and is already developed residentially.
***
7
27. [] Gladstone testified that the “highest and best
use” for the [P]roperty would be commercial
development, but acknowledged the [P]roperty is
currently used for residential purposes.
28. [] Gladstone also acknowledged that the []
Property might be used for some permitted uses in the
current R-S District.
***
3. The [] Property does not have unique physical
circumstances or conditions. The parcel has existed in its
present configuration for an extended period of time and
borders on a major highway and the Swatara Creek. There
are similar residential districts abutting commercial
districts in the Township.
4. Not only is there a possibility of using the
[P]roperty in conformity with the existing zoning, but the
[P]roperty is currently being used in conformity with the
existing zoning district’s requirements.
5. The hardships cited by [Applicants] included
traffic, noise and light issues, topography, and soil issues.
[Applicants] did not cause the hardships cited and are not
responsible for the same, however, [Applicants] are
currently using the properties, at least partially, consistent
with the existing zoning district.
6. Granting of the variance would [not] significantly
alter the essential character of the neighborhood, changing
it from residential to commercial.[7]
7. The requested variance does not represent the
minimum variance that will afford relief. The [P]roperty
could be developed for several permitted uses in the R-S
District. In addition, a lesser variance is possible, thus
7
See ZHB Opinion at 11 (explaining that granting the variance would not change the
character of the neighborhood nor be detrimental to the health, safety, and welfare of the public);
see also Trial Court 10/22/2018 Opinion at 16-17 (same).
8
making the requested variance one that is beyond the
minimum to afford relief. For instance, a residential multi-
family use might provide the economic wherewithal to
allow the property to be further developed.
8. Not all of the five requirements for granting a
variance application were met, therefore the application
for variance is denied.
ZHB Opinion, Findings of Fact (F.F.) Nos. 12, 18, 19, 24, 27-28, Conclusions of
Law (C.L.) Nos. 3-8 (emphasis in original).
Applicants appealed the ZHB’s decision to the trial court, which
affirmed. Applicants now appeal to this Court.8
II. Discussion
On appeal, Applicants argue the ZHB’s denial of the use variance
application is an abuse of discretion because it is not supported by substantial
evidence. Specifically, Applicants assert that they have satisfied the variance criteria
set forth in the MPC.
To begin, the ZHB abuses its discretion when its findings are not
supported by substantial evidence. Hawk v. City of Pittsburgh Zoning Board of
Adjustment, 38 A.3d 1061, 1065 n.5 (Pa. Cmwlth. 2012). Substantial evidence is
such relevant evidence that a reasonable mind might accept as adequate to support a
conclusion. Id. In determining whether substantial evidence exists, the Court is
mindful that the credibility of witnesses and the weight to be accorded to their
testimony is within the sole province of the ZHB in its capacity as a fact-finder. Id.
The ZHB is free to accept or reject the testimony of any witnesses, in whole or in
8
Where, as here, the trial court did not take any additional evidence, our review is limited
to determining whether the ZHB committed an abuse of discretion or an error of law in rendering
its decision. Marshall v. City of Philadelphia, 97 A.3d 323, 331 (Pa. 2014).
9
part. Id. This Court may not substitute its interpretation of the evidence in place of
the ZHB. Marshall v. City of Philadelphia, 97 A.3d 323, 331 (Pa. 2014). If the
record contains substantial evidence, this Court is bound by the ZHB’s findings
resulting from resolutions of credibility and conflicting testimony. Taliaferro v.
Darby Township Zoning Hearing Board, 873 A.2d 807, 811 (Pa. Cmwlth.), appeal
denied, 887 A.2d 1243 (Pa. 2005).
A ZHB may grant a variance when the following criteria are met:
(1) [A]n unnecessary hardship will result if the variance is
denied, due to the unique physical circumstances or
conditions of the property; (2) because of such physical
circumstances or conditions the property cannot be
developed in strict conformity with the provisions of the
zoning ordinance and a variance is necessary to enable the
reasonable use of the property; (3) the hardship is not self-
inflicted; (4) granting the variance will not alter the
essential character of the neighborhood nor be detrimental
to the public welfare; and (5) the variance sought is the
minimum variance that will afford relief.
Ruddy v. Lower Southampton Township Zoning Hearing Board, 669 A.2d 1051,
1053 (Pa. Cmwlth. 1995).
Applicants allege that they have shown the Ordinance imposes an
unnecessary hardship based on the Property’s unique physical characteristics,
including its proximity to Rt. 283 and the lack of public water and sewage services,
which render it unsuitable for any permitted purpose under the current R-S zoning.
Applicants also contend they have shown the Property cannot be developed in
conformity with the current R-S zoning. Finally, Applicants argue that the variance
requested is the minimum necessary to afford Applicants relief.
10
A. Unnecessary Hardship
An applicant for a variance must demonstrate that the ordinance from
which the applicant seeks relief imposes an unnecessary hardship on the property.
Ruddy, 669 A.2d at 1053.
[The Pennsylvania Supreme] Court has previously
held that, in the context of use variances, “unnecessary
hardship is established by evidence that: (1) the physical
features of the property are such that it cannot be used for
a permitted purpose; or (2) the property can be conformed
for a permitted use only at a prohibitive expense; or (3)
the Property has no value for any purpose permitted by the
zoning ordinance.”
Marshall, 97 A.3d at 329 (quoting Hertzberg v. Zoning Board of Adjustment of the
City of Pittsburgh, 721 A.2d 43, 47 (Pa. 1998)) (emphasis in original). The
Pennsylvania Supreme Court has made clear that “an applicant for a variance is not
required to show that the property at issue is valueless without the variance or that
the property cannot be used for any permitted purpose.” Marshall, 97 A.3d at 330
(emphasis in original).
However, “mere evidence that the zoned use is less financially
rewarding than the proposed use is insufficient to justify a variance.” Marshall, 97
A.3d at 330 (quoting Valley View Civic Association v. Zoning Board of Adjustment,
462 A.2d 637, 640 (Pa. 1983)). Particularly where a variance is sought to change
from an existing use consistent with the zoning code to an inconsistent use, the fact
that the property would increase in value if a variance was granted is not a sufficient
basis for a finding of unnecessary hardship. Marshall, 97 A.3d at 330. A variance
will not be granted simply because a zoning ordinance deprives the property owner
of the most lucrative and profitable uses. Wilson v. Plumstead Township Zoning
Hearing Board, 936 A.2d 1061, 1070 (Pa. 2007).
11
Here, the ZHB made the necessary findings of fact regarding hardship.
The ZHB found that the Property is currently being used for residential purposes.
F.F. Nos. 12, 24, 27. The ZHB further found that Applicants failed to prove that the
Property’s soils are unsuitable for private septic systems. F.F. No. 19. Additionally,
the ZHB found Applicants’ stipulation that, upon obtaining the variance, either they
or their successor(s) in interest will acquire public water and sewer services to the
Proposed Development supported the conclusion that the Property could be used for
conforming purposes under the current R-S zoning. ZHB Opinion at 9-10. The ZHB
stated that “on this record, we cannot conclude that the [] Property possesses unique
physical [characteristics] that would support public sewer only in a non-residential
building.” Id. While the ZHB found that Applicants did not cause the traffic, noise,
and light pollution testified to, C.L. No. 5, the ZHB found that the Property “has
existed in its present configuration for an extended period of time and borders on a
major highway and the Swatara Creek. There are similar residential districts
abutting commercial districts in the Township.” C.L. No. 3.
Upon review, we conclude that the ZHB’s findings regarding hardship
are supported by Applicants’ and their experts’ testimony. Several Applicants
testified that they are currently residing in homes on the Property. R.R. at 29a, 61a,
74a, 79a. Applicants’ experts testified that the Property could be further developed
in accordance with the R-S zoning. R.R. at 447a, 517a, 840a. The record lacks
evidence on the unsuitability of the Property’s soils for private septic systems.
Dickerson, III testified that Rt. 283 has bordered the Property to the north since the
1960s. R.R. at 80a. All Applicants acknowledged that the area across Rt. 283 where
the FedEx facility is located has been zoned as Industrial since 1970. R.R. at 37a,
50a, 68a, 78a. Lastly, the record shows that there are similar tracts of land zoned for
12
residential use abutting highways and commercial areas throughout Central
Pennsylvania. R.R at 510a, 815a-819a. Despite Applicants’ extensive presentation
of evidence regarding the “highest and best use” of the Property, the fact remains
that the Property is currently used and can be further developed in accordance with
the current R-S zoning. See R.R. at 510a-12a, 517a, 529a, 840a. Therefore, the
ZHB’s finding that Applicants failed to prove unnecessary hardship is supported by
substantial evidence.
B. Cannot be Developed in Conformity With Ordinance
Next, to obtain a variance, Applicants must demonstrate that the
Property cannot be developed in strict conformity with the current R-S zoning. See
Ruddy, 669 A.2d at 1053. As discussed above, the Property is currently being used
for residential purposes in conformity with the R-S zoning. R.R. at 29a, 61a, 74a,
79a. Applicants’ experts conceded that the Property could be developed for
residential purposes under its current zoning. R.R. at 477a, 517a, 840a. Further, the
Township’s experts testified that the Property could be developed in conformity with
the permitted uses or as a use permitted by special exception in the R-S zoning
district. R.R. at 918a-919a, 921a. Therefore, the ZHB’s determination that
Applicants failed to prove they are unable to develop the Property in conformity with
the Ordinance is supported by substantial evidence.
C. Minimum Variance Necessary
Further, Applicants were required to show that the requested variance
was the minimum variance necessary to afford relief. Ruddy, 669 A.2d at 1053. The
ZHB concluded that “[b]ecause the Property may be used for a number of Permitted
13
Uses without relief from the current R-S zoning . . . the requested relief is in excess
of that needed to afford relief.” ZHB Opinion at 11. This finding is supported by
Applicants’ testimony confirming that the Property is currently used for residential
purposes, and both Applicants’ and the Township’s experts’ testimony indicating
the Property could be developed in conformity with the R-S zoning. R.R. at 29a,
61a, 74a, 477a, 517a, 840a, 918a-919a, 921a. Further, the Township’s expert land
planner testified that the Property is suitable for uses permitted by special exception
in an R-S district, and that there are other uses permitted under the Ordinance that
are more intense than are permitted in an R-S district, but less intense than the uses
permitted in a Commercial Highway district that Applicants had not considered.
R.R. at 919a, 921a. The ZHB’s finding that the variance requested is greater than
the minimum variance necessary to afford relief is supported by substantial
evidence.
III. Conclusion
Our review confirms that the ZHB’s findings are supported by
substantial evidence and support the conclusion that Applicants did not meet the
variance criteria. Thus, we conclude that the ZHB did not err or abuse its discretion
in denying Applicants’ request for a use variance.
Accordingly, we affirm.
MICHAEL H. WOJCIK, Judge
14
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Fritz Lee Dickerson IV, Ashton Chase :
Dickerson, Thomas N. Steele, Ann M. :
Korb and Fritz Lee Dickerson III, :
:
Appellants :
:
v. : No. 1544 C.D. 2018
:
Lower Swatara Township Zoning :
Hearing Board :
:
v. :
:
Lower Swatara Township :
ORDER
AND NOW, this 13th day of November, 2019, the order of the Court of
Common Pleas of Dauphin County dated October 22, 2018, is AFFIRMED.
__________________________________
MICHAEL H. WOJCIK, Judge
| {
"pile_set_name": "FreeLaw"
} |
708 F.2d 719
(fn*)Hilliardv.Foti
82-3657
UNITED STATES COURT OF APPEALS Fifth Circuit
6/10/83
1
E.D.La.
AFFIRMED
2
---------------
* Fed.R.App. P. 34(a); 5th Cir. R. 18.
| {
"pile_set_name": "FreeLaw"
} |
266 F.Supp. 213 (1967)
UNITED STATES of America, Plaintiff,
v.
James B. BARTHOLOMEW, Defendant.
Civ. No. 66-349.
United States District Court W. D. Oklahoma.
April 3, 1967.
Michael C. Stewart, Asst. U. S. Dist. Atty., Western Dist. Oklahoma, Oklahoma City, Okl., for plaintiff.
David W. Edmonds, Foliart, Shepherd & Mills, Oklahoma City, Okl., for defendant.
ORDER OVERRULING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
EUBANKS, District Judge.
Defendant herein filed his Motion For Summary Judgment March 6, 1967, under the provisions of Rule 56 of the Federal Rules of Civil Procedure, and the Court having examined the files, the Stipulation of Facts filed March 6, 1967, and all briefs filed herein, is of the opinion that said Motion For Summary Judgment on behalf of defendant should be denied.
This is an action by the United States of America praying for judgment against the defendant, James B. Bartholomew, in the sum of $277.50 together with the costs under Title 42, United States Code, Section 2651 to Section 2653, commonly known as the Medical Care Recovery Act. *214 The action grows out of an automobile accident which occurred on October 15, 1965, at Southeast 89 Street and Eastern in Oklahoma City involving a vehicle driven by the defendant, James B. Bartholomew, and another car operated by William R. Smith, a member of the United States Army. William R. Smith and Lisa Smith, his eight month old daughter, were given medical treatment by the United States as a result of injuries they sustained in the aforesaid collision and plaintiff claims the accident was caused by the negligence of Bartholomew.
The Stipulation of Facts contains Exhibit "B" which is a Release executed by William R. and Betty Jean Smith on October 28, 1965, in favor of Bartholomew, and Exhibit "C" which is a Parents-Guardian Release executed by William R. and Betty Jean Smith in behalf of their minor daughter, Lisa, likewise to defendant. It is stipulated that the first notice to the defendant of the claim by the government is the letter by Assistant Claims Officer marked Exhibit "A" dated December 17, 1965, over sixty days after the accident and some six weeks after releases had been signed. It is admitted in the Stipulation of Facts, paragraph 4, that the plaintiff herein has not obtained assignment from William R. or Betty Jean Smith in their individual capacities or an Assignment from Lisa Ann Smith's parents in regard to the claims mentioned for medical expenses and hospital care.
In support of his Motion For Summary Judgment the defendant cites United States v. Ammons, D.C., 242 F.Supp. 461 and United States v. York, D.C., 261 F.Supp. 713.
I agree with the results reached in "Ammons" and "York" but neither case is in point here. In "York" the injured sailor did, within six months (42 U.S.C. A. § 2651(b) (2)) file his suit against the third party tort-feasor but the government failed to intervene. It is clear that the Act allows a direct suit by the government against the third party only where no suit has been commenced by the injured party within six months after the first day in which care and treatment is furnished by the government. [Sec. 2651(b) (2)] If such suit be brought by the injured party within the six month period then the government, to enforce its claim, must intervene. [Sec. 2651(b) (1)] In "Ammons" the sole question was whether the government could recover from the injured party who had received government medical care and who had settled with and released the negligent third party. In answering this question in the negative the court properly notes "nowhere in the law is the United States permitted to bring an action against the serviceman, as they are seeking to do in this case."
The defendant argues that the failure of the government to obtain an assignment from the injured party in this case and its further failure to notify the third party of its claim are each fatal. With reference to the failure to obtain an assignment it should be noted that the Act, after giving the government broad rights of subrogation [Sec. 2651(a)] adds the permissive clause, "The head of the department or agency * * * may also require the insured * * * to assign his claim or cause of action against the third person * *". The question then arises of what claim could the injured assign in a case like this? It is well demonstrated in the brief of defendant that under Oklahoma law a plaintiff may recover, in a personal injury action, only medical expenses incurred or which he has obligated himself to pay. (Denco Bus Lines v. Hargis, 204 Okl. 339, 229 P.2d 560; Sweet v. Henderson, 72 Okl. 51, 178 P. 666) Herein the serviceman Smith meets neither of these requirements for the medical expenses incurred by the government in treating him and his daughter were without any financial burden to him, therefore he had no assignable claim.
With reference to the proposition that the claim is barred by reason of the failure of the government to notify defendant of its existence we must again refer to the Act. As has heretofore been *215 mentioned in distinguishing "York" the government can enforce its claims under the Act by (1) intervening in any action brought by the injured against the third party regardless of when commenced or (2) by instituting its own action (either independently or in conjunction with the injured party) if no suit is commenced by others within six months. The Act places no burden on the government to notify the third party of its claim as a condition precedent to recovery. Further in this connection I think we can assume that before any settlement of a personal injury claim the tort-feasor would have checked medical records and thereby have gotten actual knowledge as to who furnished the treatment. If this be an invalid or unfair assumption it must certainly be recognized that a serviceman cannot collect for medical expenses furnished him free by the government and thereby foreclose the rights of the United States. Tortfeasors who attempt to settle in this way do so at their peril.
If further reason be needed that notice to the liable third party is not a prerequisite to recovery it is noted from the briefs filed herein that the Legislative History of this Act [2 U.S.Code, Congressional and Administrative News, 1962, p. 2637 et seq. and particularly at page 2642] shows that the insurance companies proposed a legislative requirement that notice be given by the government to the third party and his insurance carrier. This proposal was not adopted as a part of the Act nor in the regulations adopted pursuant thereto although the regulations do [28 C.F.R. 43.1 to 43.4] allow the department or agency concerned (43.2 subsection 3) to require any person furnished care "to notify the department or agency concerned of a settlement with or an offer of settlement from a third person." The stipulation herein is silent as to whether this regulation is involved in this case.
The case of Phillips v. Trame, D.C., 252 F.Supp. 948, cited by the government is not in point because there the United States intervened to assert its claim under the Medical Care Recovery Act. The same intervention was made in Tolliver v. Shumate, W.Va., 150 S.E. 2d 579 so that case can be distinguished.
It is accordingly ordered, adjudged, and decreed, by the Court that Motion For Summary Judgment filed March 6, 1967, by defendant, James B. Bartholomew, be and the same is hereby overruled.
| {
"pile_set_name": "FreeLaw"
} |
398 F.2d 825
Edward ASKEW, Appellant,v.STATE OF ALABAMA, Appellee.
No. 25666.
United States Court of Appeals Fifth Circuit.
July 16, 1968.
William H. Hardie, Jr., Mobile, Ala., for appellant.
Paul T. Gish, Jr., Asst. Atty. Gen., Macdonald Gallion, Atty. Gen. of Alabama, Montgomery, Ala., for appellee.
Before AINSWORTH and SIMPSON, Circuit Judges, and SINGLETON, District Judge.
PER CURIAM:
1
This is an appeal from the District Court's order dismissing appellant's petition for the writ of habeas corpus without first conducting an evidentiary hearing. We agree with the District Court that the petition before it contained no allegations which would have warranted an evidentiary hearing. Accordingly, we affirm.
2
In his petition before the District Court, appellant alleged (1) that he was arrested illegally, there being no probable cause for his arrest, (2) that he was held incommunicado without benefit of counsel, (3) that he was denied the right to confront witnesses against him at his preliminary hearing, and (4) that he was denied the right to counsel at his preliminary hearing. Because appellant had plead guilty at his state trial, however, the District Court dismissed the petition. Appellant made no contention that his plea of guilty was involuntary either because of the alleged violations of his constitutional rights or because of any other alleged state of facts. The voluntariness of his plea was simply not challenged. Moreover, the records show that he entered his plea of guilty at trial with the advice and benefit of counsel. Therefore, the District Court's dismissal was proper in light of the well settled rule that a guilty plea, if voluntarily and understandingly made, waives all non-jurisdictional defects in the prior proceedings against an accused.1 E. g., Busby v. Holman, 356 F.2d 75, 77 (5th Cir. 1966); Cooper v. Holman, 356 F.2d 82 (5th Cir. 1966); United State ex rel. Glenn v. McCann, 349 F.2d 1018 (2d Cir. 1965); Harris v. United States, 338 F.2d 75, 80 (9th Cir. 1964); United States v. Spada, 331 F.2d 995, 996 (2d Cir. 1964). As long as the guilty plea stands, appellant is not entitled to an evidentiary hearing on any of the allegations contained in his petition before the District Court.2
3
Affirmed.
Notes:
1
A guilty plea, however, does not waive the right of an accused to challenge the constitutionality of the statute under which he is convicted. See, e. g., Haynes v. United States, 390 U.S. 85, 88 S.Ct. 722, 19 L.Ed.2d 923 (1968); United States v. Ury, 106 F.2d 28, 124 A.L.R. 569 (2d Cir. 1939). Rather, the waiver extends only to violations of those procedural rights guaranteed by due process which are incident to the criminal investigation and prosecution
2
It should be noted that, standing alone, appellant's contention that his arrest was illegal does not warrant an evidentiary hearing in any event, for it does not raise a substantial federal question. E. g., Sutherland v. Wainwright, 399 F.2d 303 (5th Cir. 1968) [May 22, 1968]; Miller v. Eklund, 364 F.2d 976 (9th Cir. 1966); Fernandez v. Klinger, 346 F.2d 210 (9th Cir. 1965)
| {
"pile_set_name": "FreeLaw"
} |
690 F.Supp. 1451 (1988)
In the Matter of the GRAND JURY SUBPOENA OF JUNE 12, 1986.
Civ. No. N-86-2126.
United States District Court, D. Maryland.
June 15, 1988.
*1452 Jerald J. Oppel, Kevin A. Dunne, and Ober, Kaler, Grimes & Shriver, Baltimore, Md., for Corporation.
Anita Johnson, Office of Consumer Litigation, Dept. of Justice, Washington, D.C., and Breckinridge L. Willcox, U.S. Atty. and Max Lauten, Esquire, Asst. U.S. Atty., Baltimore, Md., for Government.
MEMORANDUM
NORTHROP, Senior District Judge.
I.
On November 20, 1987, this Court held a certain corporation (the Corporation) in contempt for failing to comply with an Order issued October 3, 1986. The October Order directed the Corporation to begin producing documents sought by a Grand Jury subpoena issued June 12, 1986 in connection with the Grand Jury's investigation of illegal practices in the manufacture of prescription drugs. Contempt was entered after over a year of litigation by the government in this Court and others. Even after the entry of judgment against it, the Corporation elected not to produce the materials requested, but rather to pursue its petition for certiorari in the United States Supreme Court. That petition was denied on February 22, 1988 (citation omitted). Since then, the Court has held three hearings[1] in an effort to secure complete production of documents requested almost two years ago. At the second of those proceedings, held March 29, 1988, the Court ordered the government to prepare a memorandum detailing the compensatory damages it has incurred in prosecuting the contempt. That request for relief is now pending before the Court. The Corporation opposes the government's motion.
After reviewing the parties' pleadings, the Court finds that no hearing is necessary. Local Rule 6. For the reasons that follow, the government's motion is granted in part.
II.
A. Civil Contempt
The principle that civil contempt sanctions may be awarded to compensate an aggrieved litigant is not a new one. In *1453 United States v. United Mine Workers, 330 U.S. 258, 302, 67 S.Ct. 677, 700, 91 L.Ed. 884 (1947), the Supreme Court stated:
Judicial sanctions in civil contempt proceedings may in a proper case be employed for either or both of two purposes: to coerce the defendant into compliance with the court's order, and to compensate the complainant for losses sustained. Gompers v. Bucks Stove & Range Co., [221 U.S. 418, 448-49, 31 S.Ct. 492, 501, 55 L.Ed. 797 (1911)]. Where compensation is intended, a fine is imposed payable to the complainant. Such fine must of course be based upon evidence of the complainant's actual loss, and his right as a civil litigant, to the compensatory fine is dependent upon the outcome of the basic controversy. (Emphasis added).
Thus, a compensatory sanction is not imposed to vindicate the court's authority or to punish the contemnor, but rather serves to make reparation to the injured party, restoring that party to the position it would have held had the court's order been obeyed. Vuitton et Fils v. Carousel Handbags, 592 F.2d 126, 130 (2nd Cir.1979).[2] Such fines have been likened to a tort judgment caused by wrongful conduct. Thompson v. Cleland, 782 F.2d 719, 722 (7th Cir.1986); Vuitton et Fils, supra, 592 F.2d at 130; Parker v. United States, 153 F.2d 66, 70 (1st Cir.1946). Once the complainant demonstrates actual losses stemming from the contumacious behavior, the Court is not free to exercise its discretion and withhold an order awarding compensatory damages. Thompson, supra, 782 F.2d at 722; G. & C. Merriam Co. v. Webster Dictionary Co., Inc., 639 F.2d 29, 41 (1st Cir.1980); Vuitton et Fils, supra, 592 F.2d at 130; Yanish v. Barber, 232 F.2d 939, 946 (9th Cir.1956); Parker, supra, 153 F.2d at 70; Waterman Co. v. Standard Drug Co., 202 F. 167, 172 (6th Cir.1913). There is but one caveat to that rule. A remedial award of attorney's fees and costs is committed to the sound discretion of the district court.[3]
*1454 It follows from this that the Corporation's citation to this Circuit's decision in Wilson v. Volkswagen of America, Inc., 561 F.2d 494 (4th Cir.1977), cert. denied, 434 U.S. 1020, 98 S.Ct. 744, 54 L.Ed.2d 768 (1978) is unhelpful. The factors relevant to that caseone not involving a request for compensatory civil damagesare simply not applicable here. Furthermore, as the government points out, there is ample authority in this jurisdiction for the remedial award it seeks. Carbon Fuel Co. v. United Mine Workers of America, supra, 517 F.2d at 1349; Folk v. Wallace Business Forms, Inc., supra, 394 F.2d at 244.[4] That the government proved by clear and convincing evidence that the Corporation violated the Court's October 3, 1986 Order is not disputed. That the Corporation had no legal basis for doing so was, in the Court's judgment, never seriously in question. In any event, the Corporation's good faith in resisting the subpoena based upon its view of the prevailing case law determines neither the fact nor the level of civil contempt. Cook v. Ochsner Foundation Hospital, supra, 559 F.2d at 272 ("Because damages assessed in civil contempt are oftentimes compensatory ... the mental state of the violater should not determine the level of compensation due."); Matter of Trinity Industries, Inc., supra, 674 F.Supp. at 339. The Court finds particularly persuasive the reasoning of the Ninth Circuit in Donovan v. Burlington Northern, Inc., supra. In that case, the Ninth Circuit reversed a district court decision refusing to consider a remedial award of attorney fees to the Secretary of Labor. The lower court based its determination upon the Corporation's good faith legal argument in declining to comply with an administrative search warrant. The Ninth Circuit stated:
The company knew at all pertinent times that a warrant authorizing the search had been issued. True the validity of the warrant's breath remained uncertain in fact until this court determined the issue. In law, however, that determination fixed its validity in all respects at the time of its issuance. See Donovan v. Burlington Northern, Inc., 694 F.2d 1213, 1216 (9th Cir.1982), cert. denied, 463 U.S. 1207, 103 S.Ct. 3538, 77 L.Ed.2d 1388 (1983). Were this not so, the government could never be reimbursed for the expenses incurred in enforcing a warrant determined to be valid only after an appeal. Resistance to a valid warrant need not be without financial risk even in a free society. Id. at 683-84 (emphasis added).
Those principles obtain here. The only real issue is whether the government has demonstrated by clear and convincing evidence actual losses entitling it to a compensatory award. The Court is satisfied that it has.
B. Attorney Fees
Substantial precedent supports an award of attorney fees and costs to the government in circumstances like these. Id.; Donovan v. Hackney, Inc., 769 F.2d 650 (10th Cir.1985), cert. denied, 475 U.S. 1081, 106 S.Ct. 1458, 89 L.Ed.2d 715 (1986); Donovan v. Enterprise Foundry, Inc., 751 F.2d 30 (1st Cir.1984); Commodity Futures Trading Commission v. Premex, Inc., supra; Northside Realty Assocs. Inc. v. United States, 605 F.2d 1348, 1356 n. 23 (5th Cir.1979); NLRB v. Johnson Manuf. Co. of Lubbock, 511 F.2d 153, 158 (5th Cir.1975); United States v. Far East Suppliers, 682 F.Supp. 1215, 1216 (S.D.Fla. 1988); Matter of Trinity Industries, supra, 674 F.Supp. at 339; Matter of St. Charles Manuf. Co., 663 F.Supp. 310 (N.D. Ill.1987). Those fees and costs are limited to "the efforts expended that were necessary to secure the contemptor's [sic] compliance *1455 with the court's order and to obtain compensation for damages done." United States v. Far East Suppliers, supra, 682 F.Supp. at 1216; Thompson v. Johnson, 410 F.Supp. 633, 643 (E.D.Pa.1976), aff'd, 556 F.2d 568 (3d Cir.1977). That is, "[c]ompensatory civil contempt `includes losses flowing from noncompliance and expenses reasonably and necessarily incurred in the attempt to enforce compliance.'" Matter of Trinity Industries, Inc., supra, 674 F.Supp. at 339 (quoting Norman Bridge Drug Co. v. Banner, 529 F.2d 822, 827 (5th Cir.1976)); accord Rickard v. Auto Publisher, Inc., 735 F.2d 450, 458 (11th Cir. 1984). The decision as to the amount of fees falls within the equitable discretion of the Court. Sizzler Family Steak Houses v. Western Sizzlin Steak, 793 F.2d 1529, 1534-35, reh'g denied, 797 F.2d 982 (11th Cir.1986); Cook v. Ochsner Foundation Hospital, supra, 559 F.2d at 272-73. An award of fees and costs is independent of any other civil contempt sanction imposed. United States v. Far East Suppliers, Inc., supra, 682 F.Supp. at 1216; cf. Commodity Futures Trading Commission v. Premex, Inc., supra, 655 F.2d at 785.
1. Fees and Costs Requested From November 10, 1988-May 11, 1988
A review of the government's request confirms that it seeks fees and costs incurred in prosecuting the contempt. Those expenses would necessarily include fees generated from the commencement of the contempt action until complete compliance with the Court's orders. Based on the government's motion and affidavits, the relevant figures are these:
Attorneys' Fees
Anita Johnson
November 1986-November 1987 145 hours @ $64.51/hr.
December 1987-March 8, 1988 50 hours @ $64.51/hr.
March 8, 1988-May 11, 1988 86 hours @ $64.51/hr.
Total: 281 hours
Agent Time
J. Donald Sherry
March 8, 1988 2 hours @ $38.00/hr.
April 8, 1988 16 hours @ $38.00/hr.
April 29, 1988 2 hours @ $38.00/hr.
May 11, 1988 48 hours @ $38.00/hr.
Total: 70 hours
Travel
March 8, 1988 hearing $41.20
March 29, 1988 hearing $41.30
April 29, 1988 hearing $80.00
Total: $162.50
In this Circuit, the twelve factors to be considered in evaluating the reasonableness of attorney fees are:
(1) the time and labor involved; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the customary fees; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of the attorney; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases. Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-719 (5th Cir.1974).
Barber v. Kimbrell's Inc., 577 F.2d 216, 226 n. 28 (4th Cir.), cert. denied, 439 U.S. 934, 99 S.Ct. 329, 58 L.Ed.2d 330 (1978).[5] Several courts have observed that the Johnson factors are not readily adaptable to a request by a government agency for attorney fees.[6]See e.g., Commodity Futures Trading Commission v. Premex, Inc., supra, 655 F.2d at 786 & n. 14 (concluding that the government's detail of *1456 hours expended and related hourly rate appeared reasonable as a whole); Stubbs v. Commissioner, 797 F.2d 936, 939 (11th Cir. 1986) (approving an award of attorney fees to the Internal Revenue Service without requiring an affidavit on hours and rate because the amount requested compared favorably to average award in such cases). Notwithstanding this, it is clear that some control must be exercised over government fee requests. Recognizing that, as a practical matter, some of the Johnson factors have no application to the government's request, the Court believes the reasonableness inquiry should focus principally on the work performed and the value of the attorney's services.[7]
The government submits an affidavit and time logs detailing the hours spent by its attorney. After reviewing those documents, as well as all the pleadings for which an award of fees is sought, the Court does not find the time claimed excessive. Several factors support the Court's conclusion.
First, there can be no disagreement that the legal issues merited a substantial expenditure of time. The Corporation's resistance to the Court's October 3, 1986 Order rested on its claim of privilege under the Fifth Amendment. That decided law confirmed the inapplicability of those protections in this case does not diminish the difficulty of the legal principles involved or the time required to address them. Moreover, the Court's review of the record establishes that in pressing its claim, the Corporation filed a series of lengthy pleadings over almost a two year period. That effort undoubtedly necessitated a substantial commitment of time and resources by defense counsel and support staff. In these circumstances, the Court cannot say that the time claimed by the government in opposing those motions was unreasonable. This is particularly true when the Court considers that government counsel was obliged to perform certain tasks which, in private practice, would otherwise be assigned to non-attorneys.
Second, nothing in the records and files of this case suggests that counsel's efforts were wasteful or duplicative. In addition to the substantial work required to address the Corporation's legal arguments, government counsel was obligated to attend three hearings. Following each proceeding, additional documents were produced to the Grand Jury.
It follows from this that the Court believes that the results obtained justify the time spent. No court accepted the Corporation's legal theories.[8] After almost two years, full compliance with Court's orders to produce has been accomplished. In sum, it is clear that the hours expended were appropriate for the issues litigated, the stakes involved and the results obtained.
The Corporation does not dispute, nor does the Court perceive, a problem in the government's claimed rate for attorney services. The government contends that its attorney is entitled to $64.51 per hour and appends to its request a fee schedule set by the United States Department of Justice. Correlation of the hourly rate sought to the applicable government service level confirms that government counsel is a senior staff attorney. That her hourly compensation nevertheless falls below that accorded private practitioners in this jurisdiction is beyond question. For this reason, the Court does not believe that it is appropriate to compare the hourly rate applicable to government counsel to corresponding rates in private practice. That comparison would *1457 invariably favor the government. In the Court's judgment, however, it is sufficient that the rate claimed falls within the range held reasonable for government attorneys in actions identical to this one. U.S. v. Far East Suppliers, supra, 682 F.Supp. at 1216-17 ($54.53 per hour held reasonable).
Nor has there been any objection to the costs claimed for agent time and travel time. By affidavit, the government claims reimbursement for the costs incurred by its investigator, Mr. J. Donald Sherry, traveling to and attending the many hearings in this case. The government also seeks compensation for the time spent by Mr. Sherry reviewing documents produced pursuant to the contempt proceedings. In light of the number of hearings held, and the volume of documents produced, the Court is satisfied that the hours claimed are reasonable. The government contends that Mr. Sherry is compensated at a rate of $38.00 per hour. In the absence of any objection to that figure, and in light of the evidence on oath in support of it, the Court finds that hourly rate to be reasonable.
2. Investigatory Expenses for Repeat Interviews & Grand Jury Testimony
The government also seeks reimbursement for the compensatory damages, attorney fees and costs it will incur in reinterviewing witnesses and conducting additional Grand Jury proceedings. The government acknowledges that these are not "actual" but merely "anticipated" losses. Whether the government is entitled to be compensated for these expenses cannot be determined until those losses are incurred. In these circumstances, the government is granted leave to file a supplemental memorandum demonstrating the basis for those claims. The Corporation is granted leave to file an opposition to that motion.
In light of the foregoing analysis, the Court finds by clear and convincing evidence, that the government is entitled to the following items as attorney fees and costs:
Anita Johnson 281 hours × $64.51/hr. = $ 18,127.31
Agent time is computed as follows:
J. Donald Sherry 70 hours × $38.00/hr. = $ 2,660.00
Travel costs are computed as follows:
March 8, 1988 hearing $ 41.20
March 29, 1988 hearing $ 41.30
April 29, 1988 hearing $ 80.00
No exceptional circumstances having been presented, the Court finds that the government is entitled to an award of attorney fees and costs totalling $20,949.81.
ORDER
In accordance with the foregoing Memorandum, and for the reasons stated therein, IT IS, this 15th day of June, 1988, by the United States District Court for the District of Maryland, ORDERED:
1. That the government's motion for attorney fees and expenses BE, and the same hereby IS, GRANTED;
2. That the Corporation shall pay to the government $20,949.81, representing attorney fees and costs;
3. That the government is granted leave to file a supplemental memorandum detailing any additional compensatory damages attributable to its prosecution of this civil contempt action.
4. That the Corporation is granted leave to file an opposition thereto.
5. That the Clerk of Court shall mail copies of this Order and the foregoing Memorandum to counsel in this case.
NOTES
[1] Contempt proceedings were held in this case on March 8, 1988, March 29, 1988 and April 29, 1988.
[2] The distinction between civil and criminal contempt lies in "what ... the court primarily seek[s] to accomplish by imposing sentence" in the proceedings. Shillitanti v. United States, 384 U.S. 364, 370, 86 S.Ct. 1531, 1535, 16 L.Ed.2d 622; Carbon Fuel Co. v. United Mine Workers of America, 517 F.2d 1348, 1349 (4th Cir.1975); International Business Machines Corp. v. United States, 493 F.2d 112, 114-15 (2d Cir.1973), cert. denied, 416 U.S. 995, 94 S.Ct. 2409, 40 L.Ed.2d 774 (1974). The purpose of the sanction imposed today is remedial and compensatory. The Court has fashioned its fine to do no more than compensate the government for its actual losses. The sum awarded herein is to be paid to the government, not to the registry of the court. In these circumstances, there can be no doubt that the sanction is not a punitive one. McComb v. Jacksonville Paper Co., 336 U.S. 187, 191, 69 S.Ct. 497, 499, 93 L.Ed. 599 (1949); Jaques v. Reiss Steamship Co., 761 F.2d 302, 305-06 (6th Cir.1985), cert. denied sub nom, Jacques v. Aldrich, 475 U.S. 1044, 106 S.Ct. 1259, 89 L.Ed.2d 570 (1986); TWM Manufacturing Co. v. Dura, 722 F.2d 1261, 1273 (6th Cir.1983), cert. denied sub nom, Dura Corp. v. TWM Manuf. Co., Inc., 107 S.Ct. 183, 99 L.Ed.2d 117 (1986); Perfect Fit Industries v. Acme Quilting Co., 673 F.2d 53, 57 (2d Cir.), cert. denied, 459 U.S. 832, 103 S.Ct. 73, 74 L.Ed.2d 71 (1982); Carbon Fuel Co. v. United Mine Workers of America, supra, 517 F.2d at 1349-50; Folk v. Wallace Business Forms, Inc., 394 F.2d 240 (4th Cir.1968).
[3] There is a split among the circuits over whether there must be a willful contempt of a court order before attorneys' fees may be awarded. Although the Court of Appeals for the Fourth Circuit has not addressed this issue, the Fifth, Sixth, Seventh and Ninth Circuits have permitted fee awards in civil contempt proceedings even though the contempt was not willful. Cook v. Ochsner Found. Hosp., 559 F.2d 270 (5th Cir.1977); TWM Mfg. Co. v. Dura Corp., supra, 722 F.2d at 1273; Commodity Futures Trading Comm'n v. Premex, Inc., 655 F.2d 779 (7th Cir. 1981); Perry v. O'Donnell, 759 F.2d 702 (9th Cir.1985). The Third Circuit has expressly held that this is an open question. See International Brotherhood of Teamsters v. Western Pennsylvania Motor Carriers Ass'n., 660 F.2d 76, 84, n. 13 (3d Cir.1981). Only the Second Circuit has required a showing of willful noncompliance. Vuitton et Fils v. Carousel Handbags, supra, 592 F.2d at 130.
Defendant has not raised this point. But, were the Court required to do so, it would find the Corporation's refusal to honor the Court's October 3, 1986 order "willful." At the hearing in this matter held March 8, 1988, counsel for the corporation confirmed as much when he informed the Court that the defendant had elected to pursue its legal theories rather than comply. That action placed the Corporation in civil contempt; its good faith, standing alone, does not immunize its conduct. Donovan v. Burlington Northern, Inc., 781 F.2d 680, 683-84 (9th Cir.1986); Matter of Trinity Industries, 674 F.Supp. 337, 339 (M.D.Fla.1987).
[4] The Folk Court emphasized:
No one seriously questions the right of the Court to award civil contempt damages which have long been recognized. Parker v. United States, 153 F.2d 66, 163 A.L.R. 379 (1st Cir. 1946); Gompers v. Buck's Stove and Range Co., 221 U.S. 418, 31 S.Ct. 492, 55 L.Ed. 797 (1911); United States v. United Mine Workers, 330 U.S. 258, 67 S.Ct. 677, 91 L.Ed. 884 (1947); Weston v. John L. Roper Lumber Co., 158 N.C. 270, 73 S.E. 799 (1912). So also as to the right to include attorneys' fees as an element of the award. Toledo Scale Co. v. Computing Scale Co., 261 U.S. 399, 43 S.Ct. 458, 67 L.Ed. 719 (1923); Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 87 S.Ct. 1404, 18 L.Ed.2d 475 (1967). Folk, supra at 244.
[5] Previously, courts in this Circuit were required to consider only Johnson factors one and five in setting the base or lodestar fee. The remaining factors were then considered in determining whether to adjust the lodestar fee up or down. Anderson v. Morris, 658 F.2d 246 (4th Cir.1981). Recently, however, the Fourth Circuit held that all twelve factors must be evaluated in setting the lodestar amount. Daly v. Hill, 790 F.2d 1071 (4th Cir.1986).
[6] One district court commenting on this problem suggested a reason for the difficulty:
Since Johnson developed these criteria in the context of a civil rights attorney fees statute that excludes the government by its terms, this awkwardness is not surprising. See 42 U.S.C. § 1988 ("The court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee"). Matter of Trinity Industries, Inc., supra, 674 F.Supp. at 340 n. 2.
[7] It is readily apparent that Johnson factors four, six, ten and eleven have little or no application to cases involving government counsel. On the other hand, the Court's assessment must necessarily address the novelty and difficulty of the questions involved, as well as the results obtained.
[8] Defendant resisted the subpoena on the ground that compliance would involve testimonial acts of production on the part of its president and dominant shareholder. On December 18, 1986, this Court concluded that defendant's Fifth Amendment claim was meritless on the basis of the Supreme Court's decision in Bellis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678 (1974) and this Circuit's decision in United States v. Lang, 792 F.2d 1235 (4th Cir. 1986). That judgment was subsequently affirmed by the Fourth Circuit. In re Grand Jury Subpoena, 831 F.2d 290 (4th Cir.1987).
| {
"pile_set_name": "FreeLaw"
} |
139 Ill.2d 1 (1990)
563 N.E.2d 431
THE PEOPLE OF THE STATE OF ILLINOIS, Appellee,
v.
EMMALINE WILLIAMS et al. (Emmaline Williams, Appellant).
No. 68876.
Supreme Court of Illinois.
Opinion filed September 26, 1990.
Rehearing denied November 30, 1990.
*2 *3 *4 *5 *6 Gary Ravitz, of Chicago, for appellant.
Neil F. Hartigan, Attorney General, of Springfield, and Cecil A. Partee, State's Attorney, of Chicago (Terence M. Madsen, Assistant Attorney General, of Chicago, and Renee Goldfarb, James E. Fitzgerald and *7 Gayle L. Terry, Assistant State's Attorneys, of counsel), for the People.
Affirmed.
JUSTICE CLARK delivered the opinion of the court:
On December 4, 1986, appellant, Emmaline Williams, was convicted in the circuit court of Cook County of indecent liberties with a child (Ill. Rev. Stat. 1983, ch. 38, par. 11-4(a)(1)). Her husband and codefendant, Roy Williams, who is not a party to this appeal, was convicted at the same trial of rape (Ill. Rev. Stat. 1983, ch. 38, par. 11-1(a)) and indecent liberties with a child (Ill. Rev. Stat. 1983, ch. 38, par. 11-4(a)(1)). Both appellant and codefendant were represented at trial by the same attorney. The appellate court, with one justice dissenting, affirmed. (182 Ill. App.3d 598.) We granted appellant's petition for leave to appeal (107 Ill.2d R. 315(a)).
The State introduced evidence at trial to establish the following. Appellant and codefendant adopted complainant, then 11 years old, in 1983. Appellant and codefendant lived in a house in Chicago with their daughter, several foster children and complainant. Complainant's bedroom was located on the second floor of the residence. On April 1, 1984, complainant went to bed at approximately 9 p.m. She was awakened from her sleep later that evening by appellant's calls to her from a bathroom on the first floor of the residence. Complainant went to appellant in the bathroom. Appellant asked complainant to do a "favor" for her, to which complainant agreed.
Appellant led complainant from the bathroom to the bedroom appellant shared with codefendant on the first floor of the residence. Codefendant was lying naked on the bed. Appellant closed the bedroom door and told complainant that she wanted her to "do something" with the codefendant. Complainant refused and attempted to leave the bedroom. Appellant prevented her exit from *8 the bedroom by blocking the bedroom door. Appellant removed complainant's clothing and pulled complainant to the bed despite complainant's protests. Appellant then removed her own clothing and got into the bed, placing complainant between herself and codefendant. Codefendant sexually molested and raped complainant while appellant restrained her. Appellant then sexually molested complainant and did so again when complainant went into the bathroom shortly thereafter.
Complainant told appellant's elder daughter of the incidents, but the young woman did not believe complainant. Approximately two weeks after the incidents, complainant described the events in a letter to her former foster mother. Complainant never mailed or otherwise delivered the letter to the woman.
Complainant left appellant's house in June 1985, and returned to her former foster mother's home. Complainant described the incidents of April 1984 to the woman, who then notified the Illinois Department of Children and Family Services (DCFS). After DCFS notified the Chicago police department, Chicago police officer Joseph Lux interviewed complainant and, based upon the information gathered in the interview, appellant was arrested on June 17, 1985.
At police headquarters, Officer Lux advised appellant of her Miranda rights. Appellant waived those rights and admitted to Officer Lux and two other police officers that she was present while codefendant and complainant engaged in sexual intercourse. Appellant claimed, however, that the act was consensual.
Codefendant was arrested that evening by Officer Lux and advised of his Miranda rights. Codefendant waived those rights and, during an interview with Officer Lux after his arrest, admitted having had sexual intercourse with complainant. Codefendant stated that he and appellant had to restrain complainant during the incident *9 and added that, thereafter, both he and appellant forcibly sexually fondled complainant.
The statement given by codefendant was reduced to writing and read aloud to codefendant. Codefendant then reviewed the statement before signing it. The written statement was later read to appellant, who stated that the events in question must have occurred if codefendant admitted them.
Both appellant and codefendant testified at trial. Both denied making any pretrial admissions and denied engaging in any acts which would constitute the offenses with which they were charged.
Appellant was found guilty of indecent liberties with a child (Ill. Rev. Stat. 1983, ch. 38, par. 11-4(a)(1)) and sentenced to 12 years in the Illinois Department of Corrections. Codefendant was found guilty of rape (Ill. Rev. Stat. 1983, ch. 38, par. 11-1(a)) and indecent liberties with a child (Ill. Rev. Stat. 1983, ch. 38, par. 11-4(a)(1)) and was sentenced to 19 years in the Illinois Department of Corrections. After appellant's conviction was affirmed on appeal (182 Ill. App.3d at 604), the appellate court granted appellant's petition for a certificate of importance (107 Ill.2d R. 316). We granted leave to appeal (107 Ill.2d R. 315).
Appellant argues that her conviction should be reversed for the following reasons. First, appellant argues that a conflict of interest existed between appellant and codefendant which precluded representation by the same counsel during their joint bench trial. Next, appellant argues that she was denied her rights guaranteed by the sixth amendment to effective assistance of counsel and to confront witnesses. Lastly, appellant argues that reversible error occurred when complainant's letter which detailed the crimes with which appellant was charged was allowed into evidence at trial.
*10 The United States Supreme Court has considered conflict of interest in multiple representation in two contexts: where the defendant makes a timely objection to the trial court before or at an early stage in the proceedings (United States v. Glasser (1942), 315 U.S. 60, 86 L.Ed. 680, 62 S.Ct. 457; Holloway v. Arkansas (1978), 435 U.S. 475, 55 L.Ed.2d 426, 98 S.Ct. 1173) and on appeal where a defendant who failed to object to joint representation at trial demonstrates that the conflict adversely affected his representation (Cuyler v. Sullivan (1980), 446 U.S. 335, 64 L.Ed.2d 333, 100 S.Ct. 1708). The Court addressed the first situation in its decision in United States v. Glasser, holding that the sixth amendment right to effective assistance of counsel (U.S. Const., amend. VI) "contemplates that such assistance be untrammeled and unimpaired by a court order requiring that one lawyer should simultaneously represent conflicting interests." (Glasser, 315 U.S. at 70, 86 L.Ed. at 699, 62 S.Ct. at 465.) Although the Court did not establish that multiple representation is per se violative of the sixth amendment, it did state that the trial court's error in appointing one attorney to represent two defendants at trial was one that "require[d] that the verdict be set aside and a new trial ordered." (Emphasis added.) Glasser, 315 U.S. at 76, 86 L.Ed. at 702, 62 S.Ct. at 468.
In a subsequent discussion of this statement in Holloway v. Arkansas, the Court held that a defendant's right to effective assistance of counsel is denied where a trial court, after being advised that a possible conflict of interest exists which could adversely affect the defendants' assistance of counsel, appoints counsel to represent multiple defendants. (Holloway, 435 U.S. at 484, 55 L.Ed.2d at 434, 98 S.Ct. at 1178.) The Court explained that such a denial of a defendant's sixth amendment right can never constitute harmless error because the *11 "evil [involved in conflict of interest situations] is in what the advocate finds himself compelled to refrain from doing, not only at trial but also as to possible pretrial plea negotiations and in the sentencing process." (Emphasis in original.) (Holloway, 435 U.S. at 490, 55 L.Ed.2d at 438, 98 S.Ct. at 1182.) The Court held that a defendant is not required to show how a conflict of interests "prejudiced him in some specific fashion" because "it would be difficult to judge * * * the impact of a conflict on the attorney's representation of a client." (Holloway, 435 U.S. at 490-91, 55 L.Ed.2d at 438, 98 S.Ct. at 1182.) The defendant need not show that he in fact suffered prejudice as a result of the conflict. Holloway, 435 U.S. at 490-91, 55 L.Ed.2d at 438, 98 S.Ct. at 1182.
In Cuyler v. Sullivan, the Court resolved two issues that had been expressly reserved in Holloway. First, the Court held that a State trial judge need not inquire into the propriety of multiple representation where no party lodges an objection to such representation unless there are "special circumstances" in the case that the trial judge "knows or reasonably should know" create a conflict. Cuyler, 446 U.S. at 347, 64 L.Ed.2d at 346, 100 S.Ct. at 1717.
The second issue left unresolved by Holloway was whether a defendant who failed to raise an objection to multiple representation at trial can establish ineffective assistance of counsel on appeal by showing that a possibility of a conflict existed at trial. (Cuyler, 446 U.S. at 345, 64 L.Ed.2d at 344-45, 100 S.Ct. at 1716.) The Court in Cuyler resolved this question in the negative, holding that "a defendant who raised no objection at trial must demonstrate that an actual conflict of interest adversely affected his lawyer's performance." (Emphasis added.) (Cuyler, 446 U.S. at 348, 64 L.Ed.2d at 346-47, 100 S.Ct. at 1718.) That is, "the defendant must point *12 to some specific defect in his counsel's strategy, tactics, or decision making attributable to the conflict." (People v. Spreitzer (1988), 123 Ill.2d 1, 18.) The defendant need not, however, "demonstrate prejudice in order to obtain relief." Cuyler, 446 U.S. at 349-50, 64 L.Ed.2d at 347, 100 S.Ct. at 1719.
With these principles in mind, we now turn to an examination of the instant case. At trial, appellant did not raise any objections or indicate any concerns about possible conflicts in the joint representation of appellant and codefendant. The issue of a conflict between appellant's and codefendant's interests was first raised in the final sentencing hearing on December 30, 1986, in a motion for new trial filed by appellant's appellate counsel. As noted above, trial courts have no independent duty, "absent special circumstances," to initiate inquiries into the propriety of multiple representations, and appellant does not argue that such "special circumstances" existed in this case. We conclude, therefore, that not having raised an objection in the trial court to the joint representation, appellant must now demonstrate an "actual conflict of interest [and how it] adversely affected [her] lawyer's performance." Cuyler, 446 U.S. at 348, 64 L.Ed.2d at 346-47, 100 S.Ct. at 1718.
Although appellant vigorously maintains that trial counsel was operating under a conflict of interest, her argument is composed of speculative allegations and conclusory statements, neither of which are sufficient to establish ineffective assistance of counsel. (See Spreitzer, 123 Ill.2d at 22-23.) Appellant does not point to any actual conflict of interest or demonstrate that such a conflict had any effect on her counsel's performance. Nowhere, for instance, does appellant argue that trial counsel could or should have advanced a "`lesser culpability'" argument on behalf of appellant (see Burger v. Kemp (1987), 483 U.S. 776, 784, 97 L.Ed.2d 638, 651, *13 107 S.Ct. 3114, 3121), and further, there is no evidence in the record that reveals trial counsel affirmatively avoided this argument out of deference to codefendant's interests. Likewise, appellant does not maintain that trial counsel failed to negotiate a plea bargain with the State to receive a lesser charge against the appellant in exchange for her cooperation. See Burger, 483 U.S. at 785-86, 97 L.Ed.2d at 652, 107 S.Ct. at 3121.
The most specific allegation of conflict appellant makes is her statement that the conflict in this case "was manifested by [codefendant's] testimony that [appellant] had back problems." At trial, the State argued that a reason appellant participated in the crimes was because appellant had back problems which prevented her from having sex with her codefendant-husband. Appellant, however, testified that she did not have any back problems in April 1984 (the time that the crimes occurred) and codefendant testified on cross-examination that although both he and appellant had back problems on occasion, he could not recall whether appellant had any back problems at the time the crimes occurred.
Appellant argues that because codefendant's testimony undermined her claim that she did not have back problems in April 1984, counsel should have raised questions about codefendant's credibility through cross-examination. Appellant maintains that because of the alleged conflict of interest, counsel could not engage in such cross-examination.
We reject appellant's argument because we are not persuaded that codefendant's testimony undermined appellant's claim. Appellant testified that she did not have back problems in April 1984, while codefendant testified that he did not know if appellant had back problems in April 1984. As such, there was no contradiction between appellant's and codefendant's testimonies about which counsel should have cross-examined codefendant; codefendant's *14 testimony neither supported nor undermined appellant's claim.
The appellate court opinion addressed the question of whether a conflict of interest arose in this case out of the fact that both appellant and codefendant made pretrial statements implicating each other. (182 Ill. App.3d at 603.) Although it is not entirely clear from the appellate court's opinion, it appears that the question was raised by codefendant, who was a party to the appeal below. In any event, because appellant has not raised the question before this court, we decline to address it. (See Taylor v. St. Clair (1974), 57 Ill.2d 367; see also Dineen v. City of Chicago (1988), 125 Ill.2d 248.) We therefore conclude that appellant has failed to establish "that an actual conflict of interest adversely affected [her] lawyer's performance." Cuyler, 446 U.S. at 348, 64 L.Ed.2d at 346-47, 100 S.Ct. at 1718.
We turn now to appellant's argument that she was denied her constitutional right to a fair trial by the admission of complainant's letter into evidence, which letter appellant argues is hearsay. Appellant argues that this error constitutes reversible error. The appellate court concluded that the letter was simply cumulative evidence and found no reversible error in its admission. (182 Ill. App.3d at 603.) We conclude that appellant waived this issue for purposes of appeal by failing to object at trial and by failing to raise the issue in her post-trial motion. People v. Enoch (1988), 122 Ill.2d 176; see also 107 Ill.2d R. 366(b)(2)(iii).
The law is well settled that the failure to object at trial to the admissibility of evidence and the failure to complain of the alleged error in a post-trial motion results in waiver of the issue for purposes of appeal. (Enoch, 122 Ill.2d at 186; see also 107 Ill.2d R. 366(b)(2)(iii).) The only exception to the waiver rule is where the complained-of error constitutes plain error. *15 (Enoch, 122 Ill.2d at 190-91.) Moreover, the failure to object to hearsay during trial not only waives the issue on appeal, but allows such evidence to be considered by the trier of fact and to be given its natural probative effect. (People v. Collins (1985), 106 Ill.2d 237, 263.) In the instant case, appellant failed to object to the admission of the letter at trial and failed to allege error in a post-trial motion. In so doing, appellant did not preserve the issue of the letter's admissibility for appeal.
Notwithstanding appellant's waiver of this issue, we will consider the admissibility of the letter into evidence in response to appellant's argument that trial counsel's failure to object to its admission amounted to ineffective assistance of counsel.
In People v. Robinson (1978), 73 Ill.2d 192, 195, this court affirmed defendant's convictions for rape, armed robbery and deviate sexual assault. The defendant argued that the victim's statement, entered into evidence through the testimony of other witnesses, did not fall under any exception to the hearsay rule and was therefore inadmissible hearsay. (Robinson, 73 Ill.2d at 199.) Defendant argued that the admission of the statement constituted reversible error.
This court agreed that the hearsay statement should not have been admitted, but held that the hearsay revelations concerning the crime and the identity of the assailant did not amount to reversible error. (Robinson, 73 Ill.2d at 200.) This court observed that there was no fact introduced by the State which was not later corroborated by the complainant's testimony. (Robinson, 73 Ill.2d at 200.) We conclude the same in the instant case.
In her brief to this court, appellant argues that complainant testified that the motive for the sexual assault by appellant and codefendant was that appellant was unable to have sexual intercourse with codefendant as a result of a back injury. Appellant notes that complainant's *16 letter, however, states that appellant and codefendant engaged in intercourse at the time of the crimes, thereby contradicting complainant's testimony.
We note initially that appellant fails to indicate in her brief that the testimony regarding appellant's inability to have sex with codefendant pertained to an entirely separate sexual assault that occurred in May 1984 and was introduced at appellant's sentencing hearing. Complainant's letter, on the other hand, recounted the sexual assault which is the basis for appellant's conviction and which took place in April 1984. Complainant's testimony therefore does not contradict her handwritten letter.
Assuming that the letter did indeed conflict with the portion of complainant's testimony pertaining to the condition of appellant's back, we fail to see how this fact would support appellant's claim that she was prejudiced by the letter's admission. To the contrary, to the extent the letter is inconsistent with the State's motive theory in this case, the letter's admission helped rather than prejudiced appellant's defense.
We further note admission of the letter did not constitute reversible error because, with the possible exception of the alleged conflict pertaining to the condition of appellant's back, the facts set forth in the letter were corroborated by complainant's testimony. (See Robinson, 73 Ill.2d at 200.) Furthermore, appellant was able to cross-examine the maker of the hearsay statement. As this court observed in Robinson, "[a]side from the unsworn and sometimes cumulative nature of hearsay evidence, * * * the main rationale underlying its exclusion, is the opposing party's inability to test the real value of the testimony by exposing the source of the assertion to cross-examination." (Robinson, 73 Ill.2d at 200.) In the instant case, defense counsel had an opportunity to and did in fact cross-examine complainant. We therefore find no reversible error in the admission of the letter.
*17 We turn now to appellant's claim that she was denied effective assistance of counsel under the two-part test of Strickland v. Washington (1984), 466 U.S. 668, 80 L.Ed.2d 674, 104 S.Ct. 2052. Under the first prong of the Strickland test, a defendant must show that trial counsel's performance "fell below an objective standard of reasonableness." (Strickland, 466 U.S. at 688, 80 L.Ed.2d at 693, 104 S.Ct. at 2064.) To establish this first prong, a defendant must do more than make a general, conclusory allegation of ineffectiveness. Rather, the defendant must identify with specificity "the acts or omissions of counsel that are alleged not to have been the result of reasonable professional judgment." (Strickland, 466 U.S. at 690, 80 L.Ed.2d at 695, 104 S.Ct. at 2066.) Furthermore, the defendant must overcome the "strong presumption" that the tactics used by counsel were "within the wide range of reasonable professional assistance." Strickland, 466 U.S. at 689, 80 L.Ed.2d at 694-95, 104 S.Ct. at 2065.
The second prong of the Strickland test requires that a defendant demonstrate 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 694, 80 L.Ed.2d at 698, 104 S.Ct. at 2068.
In the instant case, appellant has presented us with a myriad of allegations and conclusions regarding counsel's performance. With few exceptions, however, appellant has failed to identify the specific acts or omissions which "are alleged not to have been the result of * * * professional judgment." (Strickland, 466 U.S. at 690, 80 L.Ed.2d at 695, 104 S.Ct. at 2066.) For example, appellant argues that trial counsel "entirely failed to subject the prosecution's case to meaningful adversarial testing" and that "trial counsel * * * objected not often enough," objecting "a grand total of six times." Neither allegation *18 is supported by references to specific instances where trial counsel should have acted differently. As such, neither of appellant's allegations establishes ineffective assistance of counsel.
Appellant makes a number of other unsubstantiated allegations of ineffectiveness. We need not discuss the merits of each of these individual allegations other than to note that, as with the two examples cited above, appellant fails to support her allegations with any specific instances where counsel should have acted differently. Instead, we will address only those few instances in which appellant's claim of ineffectiveness is made with any specificity.
Appellant argues that counsel's failure to object to the admission of complainant's letter was prejudicial to her defense. Because we have already concluded that admission of the letter, if questioned at all, did not amount to reversible error, we find no merit in appellant's claim. Likewise, our conclusion that the contents of complainant's letter were merely cumulative evidence disposes of appellant's claim that the fact trial counsel was unaware of the existence of the letter was an impairment of her right to effective assistance of counsel. Although we agree that a thorough preparation for trial includes familiarity with a case file, we do not believe that because trial counsel in the instant case was unfamiliar with and claimed never to have seen complainant's letter prior to trial, appellant's defense received ineffective assistance of counsel. As we noted above, there was nothing contained in complainant's letter that was not repeated in her testimony. Even if he had been aware of the letter's contents well in advance of the trial, counsel would not have had any new evidence that would or could have changed the outcome of the trial. Moreover, complainant testified to the contents of the letter and was available for and was in fact cross-examined by trial counsel. (See *19 Robinson, 73 Ill.2d at 200.) Appellant's claim, therefore, is without merit.
With regard to appellant's exception to counsel's general failure to object to testimony and evidence ("Counsel's * * * 10-page cross examination * * * [is] indicative of his ineffective assistance"), we note that effective advocacy is not measured by the number of objections raised or the number of pages of cross-examination. Appellant's argument that the sheer number of objections reveals counsel's ineffectiveness is without merit.
Appellant argues that trial counsel should have objected to the reference in the State's closing argument to appellant and codefendant's plan to open an out-of-State business. Trial counsel objected to the reference at trial, which objection was sustained. We conclude that trial counsel's failure to repeat the objection during the State's closing argument had no prejudicial effect on appellant's defense, given the collateral nature of the matter on the issue before the trial court.
Appellant argues that trial counsel's failure to call appellant's daughter, Tanya Bergen, as a defense witness was another example of trial counsel's ineffectiveness. Complainant testified that immediately after being sexually assaulted by appellant and codefendant, she told Tanya what had just taken place. Complainant testified that " `I told [Tanya] what happened and she didn't believe me.'" Appellant argues that trial counsel should have had Tanya testify as a defense witness based on complainant's testimony that "Tanya thought [complainant] was a liar." Complainant did not in fact testify that Tanya thought she was "a liar." Complainant's testimony that Tanya did not believe her story may have simply been Tanya's understandable incredulity at the nature of the crimes, especially in light of the fact that complainant was alleging the crimes were committed by Tanya's parents. We are in no way persuaded that trial *20 counsel's failure to call Tanya as a witness was evidence of his ineffectiveness and therefore conclude that this is another of appellant's unsubstantiated arguments.
Appellant argues that trial counsel failed to effectively cross-examine complainant through the use of leading questions. While use of leading questions is allowed and, in fact, may be expected in examining a witness on cross-examination, and while this technique may lend control to the attorney examining the witness, we must presume that trial counsel's failure to exercise this style of questioning was a result of "sound trial strategy." (Strickland, 466 U.S. at 689, 80 L.Ed.2d at 694-95, 104 S.Ct. at 2065.) Appellant has failed to overcome this presumption. Likewise, we conclude that the fact trial counsel chose not to use complainant's letter as a source of impeachment, which appellant cites as an example of ineffective assistance of counsel, was a reasonable defensive tactic. Other than the alleged inconsistency between complainant's testimony and the letter concerning appellant's ability to have sex with codefendant, we fail to find examples of where the contents of the letter in fact impeached complainant's testimony.
Appellant's next argument is that trial counsel should have introduced evidence in the form of testimony from complainant's seventh- and eighth-grade teachers saying that complainant was an "inveterate liar." Appellant bases this argument upon the fact that two letters were introduced at appellant's sentencing hearing on December 30, 1987, in which complainant's seventh- and eighth-grade teachers spoke about complainant's behavior at school. As we shall explain, we conclude that such testimony would have been inadmissible.
A witness in a criminal case may be impeached by proof of reputation for untruthfulness. (People v. Nash (1966), 36 Ill.2d 275; People v. Melnick (1916), 274 Ill. 616; M. Graham, Cleary & Graham's Handbook of Illinois *21 Evidence § 608.2 (5th ed. 1990).) In all cases, the proper procedure to introduce evidence of truthfulness is to ask the witness whether he knows the general reputation of the defendant's truthfulness in the neighborhood in which the defendant lives or at his workplace. (M. Graham, Cleary & Graham's Handbook of Illinois Evidence § 608.3 (5th ed. 1990).) Where a trait of character, such as truthfulness, is at issue, opinion testimony is not permitted. (People v. Moretti (1955), 6 Ill.2d 494; People v. Willy (1921), 301 Ill. 307; M. Graham, Cleary & Graham's Handbook of Illinois Evidence § 405.2 (5th ed. 1990).) The letters introduced at the sentencing hearing are the opinions of only the individual teachers. There is nothing in the contents of either letter to indicate that complainant's character for truthfulness was ever discussed between the two teachers or among any of complainant's other teachers. Clearly, testimony from these teachers as to their opinion of complainant's character for truthfulness would not have been allowed at trial. Accordingly, we reject appellant's claim that trial counsel's failure to introduce this evidence impaired her defense.
In her brief to this court, appellant states that "counsel also suggested during his cross-examination of [complainant] that a hospital examination proved she had not been penetrated, but [trial counsel] failed to produce any supporting medical records or hospital personnel. Inasmuch as these records were readily discoverable and may have affected the outcome of the case, counsel's failure to produce them cannot be easily or cavalierly dismissed." Appellant argues that trial counsel's failure to produce these records resulted in prejudicial error. Appellant's argument is based on the assumptions that (1) the records and personnel exist and that (2) examination of the records and testimony by the hospital personnel would corroborate appellant's claims that complainant *22 was not sexually molested. Appellant fails to demonstrate, however, that there are either hospital records or personnel indicating that complainant had not been penetrated. (See People v. Holman (1989), 132 Ill.2d 128, 167.) Because appellant has not proven otherwise, this court can only assume that trial counsel's failure to produce such evidence was because the evidence does not exist.
Appellant argues that trial counsel erred by failing to seek a severance. In fact, appellant argues that trial counsel's failure to recognize that a conflict existed between the interests of appellant and codefendant was itself an example of counsel's ineffectiveness. We reject what is essentially an argument that counsel's failure to recognize the conflict was per se ineffectiveness; we cannot assume that trial counsel did not make a motion for severance because he did not recognize a potential conflict. We will indulge the presumption, which appellant has failed to overcome, that counsel's actions were part of a "`sound trial strategy'" (see People v. Caballero (1989), 126 Ill.2d 248, 260, quoting Strickland, 466 U.S. at 689, 80 L.Ed.2d at 294-95, 104 S.Ct. at 2065).
Moreover, appellant neglects to indicate on what basis trial counsel should have made a motion for severance. Both appellant and codefendant testified at trial and denied that they were involved in any sexual misconduct with complainant. Their defenses, therefore, were compatible and we believe that it was a sound trial strategy to present the defenses of the two jointly (" '[a] common defense * * * gives strength against a common attack'" (Spreitzer, 123 Ill.2d at 17, quoting Cuyler, 446 U.S. at 348, 64 L.Ed.2d at 346, 100 S.Ct. at 1718)). If appellant believes there is a reason other than conflict of interests for which a severance should have been sought, she has failed to indicate the reason and we are unable to discern one from the record.
*23 Appellant argues that trial counsel should have made a motion to suppress codefendant's pretrial statement. Codefendant made a confession of the crimes recounted by complainant and indicated that appellant had participated in the events in substantially the same manner as complainant had stated.
Appellant adopted codefendant's statement in an oral admission to the police and both the statement and appellant's admission were introduced into evidence at trial. At trial, appellant repudiated her admission, as did codefendant during his testimony.
Appellant cites to no evidence, other than codefendant's uncorroborated testimony that his confession was coerced, that there was a basis for trial counsel to have sought to have appellant or codefendant's pretrial statements suppressed. (See People v. Hall (1986), 114 Ill.2d 376.) Appellant wholly fails to demonstrate the merits of a motion to suppress, and we are unable to derive any from the record before us. Appellant has therefore failed to demonstrate a reasonable probability that the outcome of her trial would have been different had counsel moved to have codefendant's pretrial statement suppressed.
We therefore reject appellant's claim that she was denied effective assistance of counsel under Strickland. For the foregoing reasons we affirm the appellate court's decision which affirmed appellant's conviction in the circuit court.
Affirmed.
| {
"pile_set_name": "FreeLaw"
} |
474 N.W.2d 63 (1991)
Marvin L. KAISER, Plaintiff and Appellee,
v.
Lillian KAISER, a/k/a Lillian Walters Kaiser, Defendant and Appellant.
Civ. No. 900276.
Supreme Court of North Dakota.
July 31, 1991.
*64 Serkland, Lundberg, Erickson, Marcil & McLean, Ltd., Fargo, for plaintiff and appellee; argued by Ronald H. McLean. Appearance by Maureen Holman.
Thomas F. Topel (argued) of Dorsey & Whitney, Billings, Mont., Freed, Dynes, Reichert, Buresh & Herauf, PC, Dickinson, for defendant and appellant; argued by Ronald A. Reichert.
ERICKSTAD, Chief Justice.
Lillian Walters Kaiser appealed from a district court order denying her motion for a new trial in the parties' divorce action. We affirm in part, reverse in part, and remand for further proceedings.
Lillian and Marvin Kaiser were married in 1972. At the time of their marriage, Lillian had a daughter, Shannon, from a previous marriage. A daughter, Susan, was born of the marriage in 1974. The parties were divorced on December 30, 1987. The issues of property distribution, child custody, spousal support and child support were tried in 1988. Among other things, the judgment entered: (1) awarded Lillian the primary care, custody, and control of Susan; (2) required Marvin to pay child support of $750 per month for Susan and to provide an appropriate major medical health insurance policy for Susan; (3) awarded Marvin assets that the court valued at $1,268,849.96 and imposed upon him liabilities of $395,500, for a net award of $873,349.96; (4) awarded Lillian assets that the court valued at $1,243,137.41 and imposed upon her liabilities of $60,000, for a net award of $1,183,137.41; and (5) required Marvin to pay Lillian spousal support of $250 per month for 24 months.
*65 Judgment was entered November 21, 1989, and notice of entry was given December 7, 1989. Lillian did not take an appeal from the judgment. Instead, on February 9, 1990, Lillian filed a motion for a new trial pursuant to Rule 59(b)(1), (3), (4), (6) and (7), N.D.R.Civ.P.[1] The trial court denied the motion and Lillian appealed, contending that the trial court erred in denying a new trial because: (1) the trial court overvalued her interest in Imperial Oil of North Dakota, Inc., (Imperial) which the court valued at $600,000 and awarded to her; (2) the amounts awarded for child and spousal support are inadequate; (3) the trial court undervalued Sun Well Service, Inc., which it awarded to Marvin, by accepting Marvin's liquidation value of $167,000, reached by valuing its assets and subtracting auction expenses and corporate and personal taxes asserted to be due upon liquidation; and (4) the trial court undervalued Marvin's retirement accounts, law practice, and buckskins by reducing their values by possible tax liabilities.
We will not disturb a trial court's ruling on a motion for a new trial unless there is an affirmative showing of a manifest abuse of discretion. Kraft v. Kraft, 366 N.W.2d 450 (N.D.1985); Olson v. A.W. Chesterton Co., 256 N.W.2d 530 (N.D.1977). "A trial court abuses its discretion when it acts arbitrarily, capriciously, or unreasonably." Smith v. Anderson, 451 N.W.2d 108, 112 (N.D.1990). "Ordinarily, events occurring subsequent to trial are not grounds to justify a new trial under Rule 59(b), NDRCivP." Hoge v. Hoge, 281 N.W.2d 557, 560 (N.D.1979). A trial court's determinations with regard to matters of property division, spousal support, and child support are findings of fact subject to the clearly erroneous standard of Rule 52(a), N.D.R.Civ.P.[2]Kraft v. Kraft, supra. A trial court's valuation of marital property is treated as a finding of fact. Dick v. Dick, 414 N.W.2d 288 (N.D.1987).
The trial court valued Lillian Kaiser's shares of Imperial Oil of North Dakota, Inc., at $600,000. Lillian argues:
"The trial court did not indicate how it arrived at this figure. Presumably, it accepted Marvin's calculations concerning the value of Imperial Oil at $8.5 million and of Lillian's shares of Imperial Oil at $957,000 (App. 32), and reduced that figure by approximately forty percent because her `share is a minority interest and there is no ready market for sale of the stock.' (App. 30)."
Lillian contends that the trial court erred in accepting Marvin Kaiser's valuations of Imperial's nonproducing minerals and nonproducing leases, rather than accepting the *66 valuations of her expert witness or another expert's valuation of Lillian's shares of Imperial stock.
Marvin valued Imperial's mineral and leasehold interests at $7,104,245 and valued all of Imperial's assets at $8,561,855.84. Marvin valued Imperial's nonproducing mineral interests by using a lease value of $500 per acre, multiplied by three, multiplied by the total acres. He testified that it was reasonable to use a lease value of $500 because:
"It's Imperial's policy that they lease for a thousand dollars an acre if you want to acquire a lease from Imperial. I thought that even though that is a policy of the company, that in reviewing the records over the past years as disclosed in the tax returns, there was substantial evidence that what they did lease for was in the vicinity of $500. I saw a number 450 and saw a transaction higher. I know from experiences together with them that we leased at 500 and some at a thousand, so I thought conservatively between what I knew and the tax returns revealed and the location of their minerals, I thought a conservative approach would be to use $500 an acre rather than the thousand that I'm familiar with."
Marvin also valued Imperial's nonproducing leaseholds at $500 per acre, on the following, somewhat confusing, basis:
"Imperial doesn't buy leases to broker them. They buy leases as a matter of development generally, when buying minerals or unleased minerals at least is not available to them. With that in mind, I know that they valued the leasesif they were going to grant a lease at $500 an acre, so I made a reasonable assumption that they would value the acquisition of leases if they were buying them for their own development portfolio at $500 an acre."
Marvin valued some of his own interests at what he paid for them$150 per acre and $17.50 per acre (other interests he did not value at all, but suggested that they be divided equally).
John Broschat, on behalf of Lillian, valued Imperial's mineral and leasehold interests (which Marvin had valued at $7,104,245) at a fair market value of $1,147,000, considering what could be obtained for nonproducing interests and leaseholds on the market with their proved and estimated reserves, and pricing parameters currently used in the Williston Basin. He valued producing interests using current production rates, estimated monthly cash flow, historical falloff rates, and estimated remaining economic life.
Harry Ness, on behalf of Lillian, testified that he valued Lillian's 9.7 percent interest in Imperial at $135,000, using a combined price/earnings approach and an indicated value approach.
Lillian contends that Marvin used 1986 production and 1986 prices in valuing Imperial's working interests and producing mineral interests, while he "used 1988 production figures and 1988 prices when he calculated the value of his income producing properties and leases." Lillian argues: "In order to be consistent, it is necessary to value the parties' producing properties using production from the same year." After the trial, Lillian sold her shares in Imperial for $100,000. At trial, Marvin testified that he used 1986 income in valuing Imperial's working interests and producing mineral interests because 1986 was "the last year that I had numbers and verification for" and that "It's the last year that discovery provided usthe information that you could relate it to, the propertiesto have any judgment on the validity."[3]
*67 In denying the motion for a new trial, the trial court stated:
"Well, this was a troublesome issue. The valuation of the assets, generally, that was a very difficult issue at trial. It was hotly disputed as to what the values of the various items of property should be, and I found that a very difficult task to come to some resolution of those issues. As to the subsequent sale of Lillian's shares of stock in Imperial Oil, I'm quite frankly not impressed by the fact that she sold them to her mother later on for apparently about one-sixth of the valuation that I placed on those assets. Sale to one's mother of stock in a family corporation is not indicative of a truly armslength [sic] transaction.
* * * * * *
"I realize here there are some good arguments made on both sides, but I don't see that there's anything presented here that would constitute grounds for a new trial. If I made some mistakes, I'd like to correct them, but I'm not sure these are mistakes here. They were just difficult judgment calls, and if they were bad enough to be corrected on appeal, they should have been corrected on appeal, not a new trial being considered and granted now in a case of this nature, much more than one year after the trial was completed and the decision was made. So as to the asset evaluation generally, I deny the motion for a new trial."
In our view of the evidence, there is no explanation for why Marvin valued Imperial's nonproducing mineral and leasehold interests by using a base of $500 per acre when he used bases of $150 per acre and $17.50 per acre in valuing his own nonproducing minerals; Imperial's isolated sales of two parcels for "in the vicinity of $500" per acre is an insufficient foundation for Marvin's use of $500 per acre as a base in valuing all of Imperial's remaining nonproducing minerals and leaseholds; the disparities between Marvin's valuation of Imperial's assets and those of Lillian's experts amounts to several million dollars, resulting in a huge difference in the valuation assigned to Lillian's interest in Imperial, which is one of the largest items in the parties' marital estate. The astounding differences in the valuation of the assets of Imperial are so great that we are forced to conclude that the trial court erred in uncritically accepting, carte blanche, the valuations testified to by Marvin. We further conclude that the trial court manifestly abused its discretion in denying Lillian's motion for a new trial with regard to the valuation of her interest in Imperial.
The trial court required Marvin to pay child support of $750 per month and to provide an appropriate major medical health insurance policy for Susan. The trial court required Marvin to pay spousal support of $250 per month for two years. Lillian moved for a new trial on the ground that those amounts are inadequate.
A trial court's determination with regard to child support is a finding of fact subject to the clearly erroneous standard of Rule 52(a), N.D.R.Civ.P. Kraft v. Kraft, supra. "The objective of the trial court in setting child support must be to strike a balance between the needs of the children and the ability of the non-custodial parent to pay." Heggen v. Heggen, 452 N.W.2d 96, 102 (N.D.1990). The trial court awarded Marvin property with a net valuation of $873,349.96 and awarded Lillian property with a net valuation of $1,183,137.41. The trial court found that Lillian would receive an income of nearly $5,000 per month from her oil producing properties, and that she would "likely receive sporadic but substantial income" from other sources. The trial court also found:
"24. As a result of the division of property in this case, Marvin will have very substantial debt to service. Lillian will have the financial capacity to contribute substantially to the support of Susie. Therefore, the child support guidelines should not be applied in this case. The sum of $750.00 per month is an appropriate and fair share for Marvin's contribution to the support of Susie."
*68 Lillian's affidavit in support of her motion for new trial on the ground of inadequate child support details total living expenses very nearly the same as she estimated at trial. While Lillian characterized child support of $750 per month as "absolutely puny" at the hearing on the motion for a new trial, "[t]he trial court apparently determined that [Susan's] needs would be met by the sum it awarded as child support." Heggen v. Heggen, supra, 452 N.W.2d at 102. In light of the evidence before the trial court at trial and on the motion for new trial, and the court's findings of fact, we will not substitute our judgment for that of the trial court. We conclude that the trial court did not manifestly abuse its discretion in denying the motion for a new trial on the ground that the child support awarded was insufficient.
We are similarly unpersuaded that the trial court manifestly abused its discretion in denying Lillian's motion for a new trial on the ground of insufficiency of the spousal support awarded to her. Lillian "has not demonstrated to us that she was substantially disadvantaged by the divorce and needs support for rehabilitation." Dick v. Dick, supra, 414 N.W.2d at 290. When property is divided in a divorce, it is often insufficient to maintain each of the parties at the same standard of living as they enjoyed during the marriage. Weir v. Weir, 374 N.W.2d 858 (N.D.1985).
Lillian contends that the trial court undervalued Sun Well Service, Inc., by accepting Marvin's liquidation value of $167,000, reached by valuing its assets at their liquidation value and subtracting auction expenses and potential corporate and personal income taxes asserted to be due upon liquidation. Lillian also contends that the trial court undervalued Marvin's retirement accounts, law practice, and buckskins by reducing their values by possible tax liabilities.
The trial court valued Sun Well Service, Inc., on the basis of the liquidation value of its assets. Lillian contends that the court should have valued the company as a going business. "Ordinarily, fair market value, not `liquidation value,' is the proper method of valuing property in a divorce." Heggen v. Heggen, supra, 452 N.W.2d at 99.
Marvin testified that Sun Well Service, Inc., "has no value as a going business", that it has no "recent history of profitability", that its future looks "bleak", and that "the highest value of the company would be an analysis of the liquidation of the assets." Gregory Cleveland, a certified public accountant testifying on behalf of Marvin, testified that Sun Well Service, Inc., "can't be sold as a going business"; that "[f]rom looking at the previous service for three years, the corporation has minimal cash flows, has no long-term contracts. It's paid no shares to stockholders. It's paid no dividends. And there's no probable expectation it ever will. I can't see any reason why anyone would want to buy the business on a going business basis." Cleveland testified that the 1986 Tax Reform Act makes it "extremely improbable that anyone's going to buy the stock of Sun Well Service, because, to do so, they're going to buy substantial assets with no depreciation and incur substantial tax liability." He further testified that, in his opinion, "the stock of Sun Well Service, Inc., has no value. The whole value of the corporation lies in the value of the underlying assets." He also testified that, upon liquidation, a "tax liability is going to be incurred basically because of tax benefits in prior years that were obtained through depreciation." Although Lillian contends that potential taxes should not have been deducted in valuing Sun Well Service, Inc., which we will address later in this opinion, Lillian has not refuted Cleveland's analysis of the effect of the 1986 Tax Reform Act on the marketability of the shares of stock in the company as a going business and valuation of the corporation based on the liquidation value of its assets.
On the other hand, on September 22, 1988, five weeks before Marvin's trial testimony, Sun Well was awarded a Bureau of Land Management contract in the amount of $466,000, of which, Marvin stated in his affidavit in opposition to Lillian's motion for a new trial: "The bid schedule anticipated *69 that approximately 85% of the contract price would be paid to third parties." In addition, Marvin testified that he would "like to retain it now that I've put the years in to keep it alive"; that he had no present intention of liquidating it, but "[u]ltimately, I no doubt will be"; that he wanted to keep it; and that he "wouldn't prefer that the Court order a liquidation" of Sun Well Service, Inc.
In light of the foregoing testimony, we are not persuaded that the trial court erred in valuing Sun Well Service, Inc., on the basis of the liquidation value of its assets. We conclude, however, that since Sun Well Service, Inc., was not going to be liquidated, it should not have been valued by subtracting auction expenses that would only be incurred if its assets were liquidated.
Lillian contends that theoretical tax liabilities should not have been deducted in valuing Sun Well Service, Inc., or in valuing Marvin's retirement accounts, law practice, and buckskins. Except as to Marvin's law practice and buckskins, we agree.
"[A] properly informed trial court must take tax effects into account when it determines divorce transactions." Dick v. Dick, supra, 414 N.W.2d at 291. "We see no error in considering tax liabilities already incurred by divorcing spouses." Id., at 291. A trial court should amend its property distribution if it concludes that an adverse tax consequence would result, which could be avoided by a different equitable allocation of property. Gronneberg v. Gronneberg, 412 N.W.2d 84 (N.D.1987). However, we agree with the decision in Brockman v. Brockman, 373 N.W.2d 664, 666 (Minn.App.1985), holding that the trial court improperly considered the income tax consequences of a future withdrawal of funds from a pension plan when there were no current plans to withdraw funds:
"[A] tax consequence should be considered only where the recognition of tax liability is required by the dissolution or is certain to occur within a short time thereafter.... Consideration of a tax consequence is precluded where to do so requires the trial court to speculate as to the party's future dealing with the property." (Citations omitted.)
See also Gilbert v. Gilbert, 192 Mont. 444, 628 P.2d 1088, 1089 (1981): "The District Court therefore did not abuse its discretion by refusing to consider the theoretical income tax consequences of a present liquidation [of retirement fund assets] which is neither necessary nor probable, but merely conjectural." The Pennsylvania Supreme Court has explained why income tax consequences should be considered when making a property distribution upon divorce only when a taxable event results or is certain to occur shortly:
"... If a taxable event such as a sale or other transfer of property is required by the award of equitable distribution, or is certain to occur shortly thereafter, the tax liability of the parties can be reasonably ascertainable. However, where there is merely a likelihood or possibility that a taxable event will occur, the court is left to speculate as to the tax consequences.
"... [A] present deduction from the value of a marital asset for future tax liability that cannot reasonably be calculated and, in fact, may never be imposed could result in a windfall to Mr. Hovis and a corresponding disadvantage to Mrs. Hovis.
"... In order to insure a `fair and just determination and settlement of property rights' we favor predictability over mere surmise in the valuation and distribution of marital property after divorce. Accordingly, we hold that potential tax liability may be considered in valuing marital assets only where a taxable event has occurred as a result of the divorce or equitable distribution of property or is certain to occur within a time frame such that the tax liability can be reasonably predicted."
Hovis v. Hovis, 518 Pa. 137, 541 A.2d 1378, 1380-81 (1988). We agree with the foregoing decisions holding that a trial court in a divorce action should consider potential taxes in valuing marital assets only if (1) the recognition of a tax liability is required by the dissolution or will occur within a *70 short time; (2) the court need not speculate about a party's future dealing with the asset; (3) the court need not speculate about possible future tax consequences; and (4) the tax liability can be reasonably predicted. In accordance with decisions such as Brockman, Gilbert, and Hovis, those considerations preclude deducting theoretical tax liabilities in valuing Sun Well Service, Inc., and Marvin's retirement accounts. Thus, the trial court's valuation of those marital assets after deducting theoretical tax liabilities was an error in law occurring at the trial under Rule 59(b)(7), N.D.R.Civ.P., and the trial court manifestly abused its discretion in denying Lillian's motion for a new trial in these respects.
With regard to the valuation of Marvin's law practice and buckskins, the trial court did not abuse its discretion. The valuation of Marvin's law practice was based on income received in 1988 ($54,000), subtracting 1987 income received in 1988 ($14,000), and adding accounts receivable of $14,000. All of this was as of the time of Marvin's testimony on October 31, 1988. It was all taxable income, tax would be due relatively soon and could be reasonably predicted. Therefore, the trial court did not abuse its discretion in denying a new trial on the matter of deducting taxes in valuing Marvin's law practice.
We also find no abuse of discretion with regard to the valuation of Marvin's buckskins. They were not valued after deducting a potential tax that might be due upon their sale. Marvin testified that he paid $10,000 for the buckskins, "they also qualify as a tax deductible item and so the cost to the marital estate was half of the purchase price, and, also, they are not unless you find someone of my size and shape and interest, there is a very limited market for these items." Lillian valued the buckskins at $10,000. She testified that they cost $10,000, are museum quality pieces that will appreciate in value, and probably should be valued at more than $10,000. "A choice between two permissible views of the weight of the evidence is not clearly erroneous" (Dick v. Dick, supra, 414 N.W.2d at 290), and the trial court did not abuse its discretion in denying Lillian's motion for a new trial on this ground.
We conclude that the trial court did not manifestly abuse its discretion in denying Lillian's motion for a new trial on the grounds she asserted with regard to spousal support; child support; the trial court's valuation of Sun Well Service, Inc., on the basis of its liquidation value rather than as a going business; the valuation of Marvin's law practice; and the valuation of Marvin's buckskins. To that extent, the order denying Lillian's motion for a new trial is affirmed.
We conclude that the trial court erred in valuing Lillian's interest in Imperial by accepting Marvin's valuations of Imperial's assets; that Sun Well Service, Inc., should not have been valued by deducting auction expenses; and that theoretical tax liabilities should not have been deducted in valuing Sun Well Service, Inc., and Marvin's retirement accounts. We further conclude that the trial court manifestly abused its discretion in denying Lillian's motion for a new trial with respect to those matters. With regard to those matters, the order denying Lillian's motion for a new trial is reversed.
Because the trial court's property distribution is based upon erroneous valuations of substantial assets, we "remand to allow the trial court an opportunity to redetermine the matter of an equitable distribution in light of a correct valuation of the parties' property." Lippert v. Lippert, 353 N.W.2d 333, 337 (N.D.1984). Lippert was a case in which we were able to determine the correct property valuation and remanded for redetermination of an equitable distribution in light of that valuation. Here, we must remand for both a revaluation of some of the parties' property and a redetermination of an equitable distribution of the parties' property. An equitable distribution fashioned after further proceedings on remand will account for disparities in the income-producing capacities of the parties and the property distributed. Sanford v. Sanford, 301 N.W.2d 118 (N.D.1980).
*71 The order denying Lillian's motion for a new trial is affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion to allow the trial court to properly value Sun Well Service, Inc., Marvin's retirement accounts, and Lillian's interest in Imperial Oil of North Dakota, Inc., and to redetermine an equitable distribution of the parties' marital property.
ERICKSTAD, C.J., and MESCHKE, J., concur.
LEVINE and VANDE WALLE, JJ., concur in the result.
PEDERSON, Surrogate Judge, sitting in place of GIERKE, J., disqualified.
PEDERSON, Surrogate Judge, dissenting.
This case was tried to the court without a jury. There was no appeal taken from the judgment. The appeal was taken from the order of the trial court which declined to grant a motion for a new trial. The majority opinion appears to reexamine the evidence in the manner of an appellate trial de novo or as authorized and limited by Rule 52(a) NDRCivP when findings of fact are challenged. I am left with the impression that an appeal from the denial of a motion for new trial can now be used as a substitute for a timely appeal from the judgment.
I plainly do not agree that there has been a showing in this case of "manifest abuse" of trial court discretion. There was nothing "unreasonable, arbitrary, or unconscionable" about the denial of the motion. See Kraft v. Kraft, 366 N.W.2d 450, 453 (N.D.1985); Kerzmann v. Rohweder, 321 N.W.2d 84, 87 (N.D.1982); Hoge v. Hoge, 281 N.W.2d 557, 560 (N.D.1979); Porter v. Porter, 274 N.W.2d 235, 243 (N.D.1979). I would affirm the order denying the motion.
NOTES
[1] Rule 59. NEW TRIALSAMENDMENT OF JUDGMENTS
* * * * * *
(b) Causes for New Trial. The former verdict or other decision may be vacated and a new trial granted on the application of a party aggrieved for any of the following causes materially affecting the substantial rights of the party:
"1. Irregularity in the proceedings of the court, jury, or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial;
* * * * * *
"3. Accident or surprise which ordinary prudence could not have guarded against;
"4. Newly discovered evidence material to the party making the application, which he could not with reasonable diligence have discovered and produced at the trial;
* * * * * *
"6. Insufficiency of the evidence to justify the verdict or other decision, or that it is against law;
"7. Errors in law occurring at the trial and, when required, excepted to by the party making the application; ..."
[2] We recognize that the clearly erroneous rule does not apply in this instance because there is no appeal from the judgment, but only from the order denying a motion for a new trial. A refusal to grant a new trial to correct a judgment based upon clearly erroneous findings of fact may, however, be an abuse of discretion. On the other hand, we have observed that the fact that a trial court may have made a mistake in the law when entering a judgment does not necessarily justify setting the judgment aside under a Rule 60(b), N.D.R.Civ.P., proceeding. See First Nat'l Bank of Crosby v. Bjorgen, 389 N.W.2d 789 (N.D.1986).
[3] Marvin had some difficulty securing information from Imperial Oil of North Dakota, Inc., a closely-held corporation owned by Lillian's family, as reflected in the following excerpt from a trial court order of July 15, 1988:
"While the Court appreciates the vigor and sincerity with which Imperial Oil has resisted its obligation to respond to the pending discovery proceedings, the Court notes that Imperial Oil's protests have been considered and rejected by this Court on at least three occasions and submitted to and rejected by the Supreme Court of North Dakota on two submissions. This Court now expects Imperial to respond promptly, forthrightly, candidly and completely to the discovery requests and it is cautioned that its failure to do so within 20 days of the date of this Order may result in the imposition of severe sanctions."
| {
"pile_set_name": "FreeLaw"
} |
296 F.Supp.2d 758 (2003)
Gretchen SMITH and Patricia Baumbardner, Plaintiffs,
v.
GENTIVA HEALTH SERVICES (USA) INC., et al, Defendants.
No. CIV. 02-73209.
United States District Court, E.D. Michigan, Southern Division.
December 23, 2003.
*759 *760 Darwin D. Dudley, Lansing, MI, for Plaintiffs.
Joseph J. Shannon, III, Detroit, MI, Barry J. Armstrong, Melinda M. Renshaw, Atlanta, GA, for Defendants.
OPINION AND ORDER
FEIKENS, District Judge.
Plaintiffs, both nurses, bring suit against their former employer, referred to herein as Gentiva. Plaintiffs allege they were constructively discharged as retaliation for reporting a possible Medicaid violation and bring their claims under the Michigan Whistleblower's Act. M.C.L. § 15.361 et seq. Defendants move for summary judgment and plaintiffs move for partial summary judgment.
I. FACTUAL BACKGROUND
Plaintiffs Georgia Smith and Pam Baumgardner allege that on or about Mar. 5, 2002, they were ordered by their immediate supervisor, Bette Dejanovich, to alter patient medical care records, which they believed was a violation of the law. On Mar. 10 or 11, 2002, plaintiff Smith called Gentiva's corporate compliance hotline, alleging that she had been asked to change *761 information on a patient's chart. (Br. in Support of Defs.' Mt. for Summ. J., Ex. E (G. Smith Dep. 34).) On or about Mar. 12, 2002, plaintiff Baumgardner called the hot-line and alleged that she had been asked to add additional information to the same patient's medical chart. (Defs. Mt. For Summ. J., 6.) Corporate compliance found no violations. (Id.)
Plaintiff Smith says that retaliation for these reports began in early April by, among other things, a reduction in her assigned patient visits. (G. Smith Dep. 30.) Plaintiff Smith then applied for a position with a new company on April 17, 2002. (Br. in Support of Defs.' Mt. for Summ. J., Ex. K.) The record does not give a date on which Smith was offered that job and accepted, but on May 7, 2002, the company sent a letter to plaintiff Smith confirming that she had accepted their offer of employment. (Defs.' Mt. For Summ. J., Ex. L.) On April 30, 2002, approximately a week before plaintiff Smith received the letter confirming her acceptance of new employment, both plaintiffs contacted a investigator with the Michigan Department of Consumer and Industry Services (CIS) about the alleged request to alter a patient's chart. (Br. in Opposition to Defs.' Second Mt. for Summ. J., Ex. A; G. Smith Dep. 37.)
Ms. Dejanovich of Gentiva stated she first learned of the complaint to the State's CIS on May 11, 2002.[1] (Defs.' Br. in Supp. of Defs.' Mot. for Summ. J., 2, referencing Ex. Q., Dejanovich declaration ¶ 22.) Plaintiffs resigned their employment with Gentiva on May 15 and 16, 2002, and assert they did so because their work assignments had been sharply reduced in retaliation for their reports. (Br. in Opposition to Defs.' Second Mt. for Summ. J., Ex. C.) Plaintiff Smith started her new position on May 20, 2002. (Defs.' Mt. for Summ. J., Ex. P.)
II. ANALYSIS
A. Motion for Summary Judgment Standard
Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). A fact is material only if it might affect the outcome of the case under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The court must view the evidence and any inferences *762 drawn from the evidence in a light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citations omitted), Redding v. St. Eward, 241 F.3d 530, 532 (6th Cir.2001). The burden on the moving party is satisfied where there is an absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986).
B. Michigan Whistleblowers' Act Standard
In order to make a prima facie case under § 2 of the Michigan Whistleblower's Act, the plaintiff must show that:
"(1) he was engaged in protected activity as defined by the act, (2) the defendant discharged him, and (3) a causal connection exists between the protected activity and the discharge." Chandler v. Dowell Schlumberger Inc., 456 Mich. 395, 572 N.W.2d 210 at 212 (1998).
The first prong can be satisfied in two ways applicable to this case: either by reporting or by "being about to report" a suspected violation of law to a public body. Id., citing M.C.L. § 15.362. The suspected violation of the law is judged on a subjectively reasonable standard: the employee must have been acting in good faith and been subjectively reasonable in the belief that the conduct was a violation of the law. Melchi v. Burns Int'l Security Services, Inc., 597 F.Supp. 575 (E.D.Mich. 1984). The plaintiff bears the burden of establishing with clear and convincing evidence that a question of fact exists regarding whether he or she was "about to" report violations to a public body. Shallal v. Catholic Soc. Serv. of Wayne County, 455 Mich. 604, 566 N.W.2d 571 (1997); Koller v. Pontiac Osteopathic Hosp., 2002 WL 1040339 (Mich.App.2002), leave to appeal denied, 661 N.W.2d 232 (Table) (Mich. 2003).
The second prong may be satisfied by a "constructive discharge," which is alleged in this case. Jacobson v. Parda Fed. Credit Union, 457 Mich. 318, 577 N.W.2d 881 (1998). This standard is one of objective reasonableness: "A constructive discharge occurs only where an employer or its agent's conduct is so severe that a reasonable person in the employee's place would feel compelled to resign." Id.; Champion v. Nationwide Sec., Inc., 450 Mich. 702, 545 N.W.2d 596 at 600 (1996), r'hng denied, 451 Mich. 1240, 549 N.W.2d 579 (1996).
In order to satisfy the third prong of "causation," the employer must receive some form of objective notice of the report or the whistleblower's intent to report before the retaliatory activity occurs. Kaufman & Payton, P.C. v. Nikkila, 200 Mich. App. 250, 503 N.W.2d 728 (1993).
Once a prima facie case of retaliation has been established, the burden shifts to the employer, who must offer evidence demonstrating that the discharge was for a legitimate reason; if the defendant meets its burden, the plaintiff can prevail only if he or she can demonstrate that the reason given is a mere pretext. Eckstein v. Kuhn, 160 Mich.App. 240, 408 N.W.2d 131 (1987); Wolcott v. Champion Intern. Corp., 691 F.Supp. 1052 (W.D.Mich.1987).
C. Prima Facie Case Prong I Whether Plaintiffs Engaged in Protected Activity
The first query must be whether or not there is a material issue as to whether plaintiffs engaged in "protected activity." Plaintiffs' complaint to the State's CIS must be both made in good faith and have a subjectively reasonable basis to qualify for protection.
Both Smith and Baumgardner say that Dejanovich asked them to make alterations to a medical chart. (G. Smith Dep. 17-22; *763 Baumgardner Dep. 24-5.) Dejanovich denies asking either one to make alterations to the chart, saying she only asked that an illegible page be rewritten. (Dejanovich Dep. 40-2.) These contradictory accounts create an issue of material fact as to whether the request took place, and therefore whether plaintiffs made their complaint in good faith.
Defendants assert plaintiffs' did not have a subjectively reasonable basis for their complaint because the request made could not reasonably be interpreted as a request to perform an illegal act. (Defs.' Br. in Opposition to Pls.' Mt. for Partial Summ. J., 2, 6-7.) Intentionally placing misleading or inaccurate information in a patient's medical record is a felony under Michigan law. M.C.L. 750.492a. That law also provides that changes to charts should be made "in a manner that reasonably discloses that the supplementation or correction was performed and that does not conceal or alter prior entries." M.C.L. 750.492a(3)(b). Given this law, I find a reasonable perception of illegality is created when an individual is asked to alter a patient's chart without such a notation.
Because a dispute over a material fact is present, summary judgment must be denied on this prong of the prima facie case.
D. Prima Facie Case Prong II-Whether Plaintiffs Were Constructively Discharged
Plaintiffs, who are not salaried, allege Gentiva retaliated against them by drastically reducing their work assignments after they made complaints about their work assignments. (Br. in Opposition to Defs.' Second Mt. for Summ. J., 10; Id., Ex. C; Baumgardner Dep. 94.), Objectively, a reasonable person in the employee's place would be compelled to resign if his or her hours were markedly reduced so that the job no longer provided a sufficient living. Therefore, since I find evidence of a significant reduction in hours can be evidence of constructive discharge, plaintiffs have offered evidence in support of their argument that they were constructively discharged.
Whether the alleged reductions took place is a matter in material dispute. The company's scheduler denies that work assignments were reduced after the plaintiffs complained to the State.[2] (Defs.' Mt. for Partial Summ. J., Ex. A at 30 (Lebel Dep.).) Because there is a question of material fact as to this issue, summary judgment cannot be granted for either party.
E. Prima Facie Case Prong III Whether Sufficient Causation Exists
Defendants argue that Ms. Dejanovich only received notice that the plaintiffs had made a complaint to the State on May 11, 2002, and therefore plaintiff is required to show the alleged "retaliation" for that report occurred on or after that date. (Defs.' Br. in Supp. of Mt. for Summ. J., 2., *764 referencing Ex. Q (Dejanovich declaration.).) Plaintiffs have two arguments for bringing in evidence before May 11, 2002: first, that Gentiva was notified before that date, and second, that the "about to report" language of the statute allows them to introduce evidence prior to that date. As discussed in footnote 1, plaintiffs' evidence does not put the May 11, 2002 date in dispute. Therefore, I will only consider the "about to report" language here.
In order to successfully allege retaliation for being "about to report," a plaintiff must show, with clear and convincing evidence, that the employer had objective notice of the threat to make a complaint to the State. Kaufman & Payton, P.C. v. Nikkila, 200 Mich.App. 250, 257-8, 503 N.W.2d 728 (1993); Koller v. Pontiac Osteopathic Hosp., 2002 WL 1040339 (Mich.App.2002), leave to appeal denied, 661 N.W.2d 232 (Table) (Mich. 2003). In Nikkila, the court found that an employer's subjective fear of retaliation was not sufficient to trigger the statute's "about to report" clause. 200 Mich.App. 250, 503 N.W.2d 728. Thus, even an employer is concerned that a call to an internal compliance hotline may eventually lead to a complaint against the State, this alone cannot satisfy the notice requirement. It is sufficient if a plaintiff threatens, either orally or in writing, to report her employer to the State.[3]Shallal v. Catholic Soc. Serv. of Wayne County, 455 Mich. 604, 616, 566 N.W.2d 571 (1997); Koller, id.
Here, although plaintiff Smith does allege that she told Gentiva about the Medicare complaint, she does not recall whether it was before or after the State's investigator came in response to the complaint, and cannot specify that this notification occurred before May 11, 2002. (Smith Depo. 45-6.) Therefore, even if Smith's complaint did trigger the "about to report" language, plaintiffs still fail to allege that the protection extends farther back in time than the protection from the notification of the report itself. Thus, given that the May 11, 2002 date is not called into material dispute under either the "report" or the "about to report" language of the statute, summary judgment is granted for defendants on the issue of when retaliation for the report to the State could begin.
Defendants argue that no retaliation took place from May 11th until the plaintiffs resigned, and therefore, ask the court to grant summary judgment on this issue. However, plaintiffs successfully allege retaliation after May 11, 2002.
Plaintiff Baumgardner wrote in her letter of resignation that when she previously complained of receiving too little work, managers usually responded by increasing her workload, but that when she complained about having too little work on May 15, 2002, her workload was not increased. (Br. in Opposition to Defs.' Second Mt. for Summ. J., Ex. C.) Since plaintiff Baumgardner alleges a behavior change toward her (the further reduction of her workload) that occurred after Dejanovich learned of the complaint, she meets her burden of offering evidence of retaliation. Gentiva offers evidence in contradiction through Dejanovich's and Lebel's depositions. Therefore, there is a material issue of fact that precludes summary judgment on the third prong for Baumgardner.
*765 Similarly, plaintiff Smith asserts in her resignation letter dated May 16, 2002 that "since informing Medicare, I have even less work. In fact, I only have seven visits scheduled for this week." (Br. in Opposition to Defs.' Second Mt. for Summ. J., Ex. C.) Defendant disputes that this reduction was unexpected in the Dejanovich's declaration and Lebel's deposition. However, one additional legal issue must be considered before summary judgment on the prong can be decided in the matter of plaintiff Smith: whether her resignation can qualify as a constructive discharge.
Causation requires retaliation for the complaint; if a plaintiff knows she is due to be let go, she is not protected if she then makes a complaint to the State. 455 Mich. 604 at 615, 566 N.W.2d 571. Here, plaintiff Smith accepted another offer of employment before defendants learned of her call to the State. If plaintiff Smith knew she would resign before May 11th, then this Court cannot find that her resignation was caused by Gentiva's retaliation for her complaint to the State.
Plaintiff Smith applied for a position with a new employer on April 17th, 2002, and began work for that employer five days after her resignation from Gentiva. (Br. in Support of Defs.' Mt. for Summ. J., Ex. K.; Id. Ex. L; Br. in Opposition to Defs.' Second Mt. for Summ. J., Ex. C.). Her April 17th application with her new employer indicated she sought full time work. (Br. in Support of Defs.' Mt. for Summ. J., Ex. K.) This evidence suggests that Smith's resignation was not prompted by retaliation beginning May 11, 2002.
However, there is conflicting evidence on this point. From her deposition, it is clear plaintiff Smith often held a job for another employer while she worked for defendants, which suggests she could have been planning to supplement rather than replace her employment at Gentiva. (G. Smith Dep. 14.) In addition, when asked in her deposition if she was applying for a "full-time position," Smith responded that "I was applying for any position," and says the opening in the location she preferred was not yet specified as part-time or full-time when she indicated that location was her top choice. (Id. 32-3.) Smith said she could not remember when she found out that position would be full-time. (Id.) Although the record of her employment interviews indicate that the position she was interviewed for was in fact full time, the box indicating the reviewer conveyed this information to the job applicant is not checked, unlike the box for nearly every other item. (Br. in Support of Defs.' Mt. for Summ. J., Ex. J.) The letter confirming her acceptance of the offer, dated May 7th, does not specify whether the position is full-time or part-time. (Id., Ex. L.)
In deciding summary judgment motions, I am required to view evidence and any inferences drawn from the evidence in a light most favorable to the nonmoving party. Smith has given evidence that offers support to the inference that she was intending to supplement her Gentiva work rather than replace it entirely. Thus, although there is evidence that strongly supports the opposite inference, this burden requires me to find that there is a material dispute as to whether plaintiff Smith's resignation could have been in response to retaliation by Gentiva.
F. Post-prima facie case analysis
Finally, summary judgment must be denied because defendants meet their burden by offer a legitimate reason for the alleged retaliatory actions, and plaintiffs offer evidence to indicate that the reason given is pretextual.
Defendants offer three reasons for the schedule changes. In response to Baumgardner, Gentiva says she had asked to reduce her hours at the start of 2003. (Br. *766 in Support of Mt. for Summ. J., Ex. A(Lebel Declaration, 41).) In regard to plaintiff Smith, defendants says she had been considered a "new" RN for much of 2003, so she had received an unusually high number of starts and the May reduction in her schedule was to be expected. (Id., Ex. Q (Dejanovich Declaration).) Finally, defendants also argue that Smith was scheduled to be on vacation much of the week of May 12th, so her scheduled visits were low for that reason. (Defs. Mt. for Summ. J., 8 (referencing G. Smith Dep. 49).) Therefore, defendant claims, no scheduling reductions were independently instituted by Gentiva.
Plaintiffs put forth evidence challenging these justifications. Baumgardner's letter of resignation says she asked for more work, not less, several times before resigning. (Br. in Opposition to Defs.' Second Mt. for Summ. J., Ex. C.) As for Smith, she had worked at Gentiva since October of 1994, and could only be considered a "new" employee because she had resigned in December 2001 and was rehired in January 2002. (G. Smith Dep. 12; Defs. Mt. for Summ. J., Ex. Q (Dejanovich declaration ¶¶ 19-21).) Plaintiff Smith says, therefore, that the reduction in her hours cannot be attributed to this status. Moreover, plaintiff Smith says she only had two visits scheduled for the Tuesday in dispute, and that this number was far below the number of visits she had previously been given the day before a vacation. (G. Smith Dep. 48-50.)
III. Conclusion
Therefore, since all parties have met their burden, but because there is conflicting evidence on all points, summary judgment can not be granted for either side on the main case. However, on the issue of whether evidence of retaliation predating May 11, 2002 is relevant to this case, I grant summary judgment in favor of defendants and find such evidence is not relevant.
IT IS SO ORDERED.
NOTES
[1] Without citation to any documents, plaintiffs' brief asserts that both plaintiffs can testify Dejanovich received notice before May 11. (Br. in Opposition to Defs. Second Mt. for Summ. J., 10.) However, plaintiff Smith could offer no date on which she told anyone at Gentiva about the call to Medicare. (G. Smith Dep. 38-39.) Therefore, plaintiff Smith does not offer a competing date and create a question of material fact as to the date defendants learned of the CIS complaint.
Plaintiffs also assert, without citation, that on May 1, 2002 plaintiff Baumgardner informed an employee of Gentiva that plaintiffs had complained to the State. (Br. in Opposition to Defs.' Second Mt. for Summ. J, 11.) However, in her sworn deposition, when asked, "Did you tell anyone else that you had these conversations with Holly and Barbara Banks from Medicare?" Baumgardner responded, "The only person I talked to was Gretchen [Smith] about it." (Br. in Support of Defs.' Mt. for Summ. J., Ex. D, 93.) It is improper for a witness to contradict deposition testimony by an affidavit or declaration for the purpose of avoiding summary judgment. See, e.g., Reid v. Sears, Roebuck and Co., 790 F.2d 453, 460 (6th Cir.1986); Downer v. Detroit Receiving Hosp., 191 Mich.App. 232, 477 N.W.2d 146 (1991). Since the sworn statement of Ms. Baumgardner in her deposition contradicts her unsworn declaration in the plaintiffs' brief, this Court will disregard Baumgardner's attempt to create a dispute regarding the May 11 date.
[2] To dispute the scheduler's account, plaintiff Georgia Smith offers the deposition of fellow Gentiva employee Amy Smith. Amy Smith said she had a conversation with the company's scheduler, Ms. Lebel, in which Ms. Lebel told her that she had been ordered by plaintiffs' supervisor, Bette Dejanovich, to reduce plaintiff Smith's hours. (No statement is made either way in relation to plaintiff Baumgardner). (Defs.' Mt. for Summ. J. Ex. C (Amy Smith Dep. 48).) Defendants challenge this statement as hearsay. F.R. of Evid. 801(d)(2)(D) makes an exception in the hearsay rule for statements by the party's employees concerning a matter within the scope of the employment. Ms. Lebel's statement comes within this exception because she was Gentiva's scheduler, and she made a statement about an order she had received regarding scheduling. Therefore, I may consider this statement in deciding these motions.
[3] A threat to report to an internal corporate compliance body or even such a report cannot trigger the protection of the "about to report" language of the statute, because the Whistleblower's Act does not apply if a plaintiff reports a violation "only to his employer, not to a public body." Dudewicz v. Norris-Schmid, Inc., 443 Mich. 68, 503 N.W.2d 645 (1993), quoted by Chandler v. Dowell Schlumberger Inc., 456 Mich. 395, 572 N.W.2d 210 at 214 (1998).
| {
"pile_set_name": "FreeLaw"
} |
141 F.3d 1181
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.United States of America, Plaintiff-Appellee,v.Hung Quoc LY, Defendant-Appellant.United States of America, Plaintiff-Appellee,v.Chung WONG, Defendant-Appellant.United States of America, Plaintiff-Appellee,v.Chi Pang LEE, Defendant-Appellant.United States of America, Plaintiff-Appellee,v.Cindy Ruirong WAN, Defendant-Appellant.United States of America, Plaintiff-Appellee,v.Chun LOK, Defendant-Appellant.
No. 97-10130, 97-10132, 97-10148, 97-10162, 97-10166.D.C. No. CR-96-00085-LDG.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted Feb. 9, 1998.Decided Mar. 25, 1998.
On Appeal from the United States District Court for the District of Nevada Lloyd D. George, District Judge, Presiding.
Before SCHROEDER, FARRIS, and TASHIMA, Circuit Judges.
1
MEMORANDUM*
2
On conflicting evidence, the jury returned a verdict finding all five codefendants guilty of: (1) conspiracy; (2) interstate travel for purposes of racketeering; (3) money laundering; and (4) aiding and abetting. The court entered judgment on the verdict. Sentencing followed.
3
The defendants appeal their convictions. Hung Ly also appeals the duration of his sentence and the amount of restitution assessed against him.
I. BACKGROUND
4
The alleged conspiracy took place at three casinos in Las Vegas, the Desert Inn, the MGM, and the Hilton. The defendants were charged with conspiring with a dealer at each casino to execute a "false shuffle" at a mini-baccarat table. Once the false shuffle was completed, the defendants were able to predict the outcome of approximately 7-10 upcoming hands and bet accordingly. The government contends that the defendants used this process to cheat the casinos out of a total of approximately $768,000.00.
5
The jury was presented with testimony and casino security videos on each of the three alleged false shuffles. Generally, the videos showed a repeated course of conduct at each casino. Approximately two defendants would sit at a table while one recorded cards. When the shoe ran out, the defendant dealer would fail to shuffle a large number of cards, thereby creating what is referred to as a "slug." Other defendants would then occupy all of the seats at the table for the next deal. They would bet sporadically and for small sums until the slug of unshuffled cards appeared. At this point, the size of the bets would increase dramatically as all the gamblers played the winning side. When the slug ran out, the defendants would leave and cash out their chips.
6
The defendants were alleged to have played the following roles: (1) Chun Lok-gambler at all three casinos; (2) Hung Ly-dealer at the Hilton; (3) Cindy Wan-dealer at the MGM; (4) Chung Wong-gambler at the Desert Inn only; and (5) Chi Lee-gambler at the MGM.
II. DISCUSSION
A. MONEY LAUNDERING INSTRUCTIONS
7
We examine first the instructions to the jury. Ly and Wong contend that the use of a general instruction on "knowledge" rendered the specific instruction on money laundering erroneous. The Ninth Circuit model instruction provides:
8
An act is done knowingly if the defendant is aware of the act and does not act through ignorance, mistake, or accident. The Government is not required to prove that a defendant knew that his acts or omissions were unlawful ....
9
Ninth Cir.Crim. Jury Instr. 5.06 (1995).
10
While the general rule on knowledge applies to the act of laundering proceeds, the government must prove that a defendant knew that the proceeds at issue were obtained unlawfully. United States v. Stein, 37 F.3d 1407, 1410 (9th Cir.1994). Ly and Wong contend that the general instruction on knowledge negated one of the elements of money laundering and that Stein requires reversal.
11
The instructions given do not present the same danger of confusion as did the instructions in Stein. Here, the judge twice recited that a money laundering conviction requires that the defendants knew the chips were proceeds of an unlawful, or criminal, activity. In its instruction on the elements of money laundering under 18 U.S.C. § 1956, the district court told the jury that "[i]n order for a defendant to be guilty ... the government must prove ... [that] the defendant knew the property represented the proceeds of unlawful cheating from a Nevada gaming establishment or some form of unlawful activity." Similarly, in instructing on the charges under 18 U.S.C. § 1957, the court stated that the government was required to prove that "the defendant then knew that the cashing of gaming chips in exchange for currency at casinos involved the proceeds of a criminal offense."
12
These instructions differ from those in Stein, because the district court specifically charged the jury with finding knowledge of "unlawful activity" or "a criminal offense" as a predicate for the money laundering transaction. Moreover, the judge directed the jury to consider the defendants' knowledge of the prior offense at the time of the laundering transaction. This does not conflict with the Ninth Circuit's general instruction on knowledge, i.e., that the defendant need not know that the act he is committing is unlawful. When the specific instruction is read in conjunction with the general instruction, it is clear that there was no reasonable possibility that the jury was confused.
B. EXPERT TESTIMONY OF WILLIAM ZENDER
13
Initially, all five codefendants challenge the district court's decision to allow the expert testimony of William Zender. Zender, a former dealer and manager of casino games, testified as to the rules of mini-baccarat and the defendants' actions on the security videos. Ly asserts that Zender's testimony was improperly admitted without being subjected to analysis under Daubert v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). Wan contends that Zender was not qualified as an expert even without Daubert analysis. All defendants challenge the scope of the testimony permitted.
14
The applicability of Daubert is reviewed de novo. McKendall v. Crown Control Corp., 122 F.3d 803, 805 (9th Cir.1997). A district court's evidentiary rulings and admission of expert testimony are reviewed for abuse of discretion. United States v. Morales, 108 F.3d 1031, 1035 (9th Cir.1997). The district court abuses its discretion when it bases its decision on an erroneous view of the law or a clearly erroneous assessment of the facts. Id .
15
When ruling on the admission of expert testimony, the district court has broad discretion in determining the witness' expert qualifications. McKendall, 122 F.3d at 806. The court must next decide whether the subject of the testimony properly concerns "scientific, technical, or other specialized knowledge" under Rule 702. Id. (citations omitted). Finally, the court determines whether the testimony will help the jury, i.e., whether it is reliable and relevant. Id.
16
Under Daubert, there are several factors used to determine whether "scientific" evidence will help a jury. These include (1) whether the theory or technique can be tested; (2) whether a theory has been subjected to peer review; (3) whether there is a high known or potential rate of error; and (4) whether a theory has acceptance in the scientific community. Daubert, 509 U.S. at 593-94.
17
Ly argues that a district court must apply the four specialized Daubert factors to all expert testimony. In the alternative, Ly maintains that Zender's testimony should have been deemed scientific for purposes of Daubert.
18
Early Ninth Circuit authority gave inconsistent statements on whether the Daubert factors apply to all expert testimony. Compare United States v. Cordoba, 104 F.3d 225, 227 (9th Cir.1997) (Daubert applies only to "scientific" testimony) with Thomas v. Newton Int'l Enterprises, 42 F.3d 1266, 1270 n. 3 (9th Cir.1994). Our more recent cases hold that Daubert applies to scientific testimony only. See United States v. Bighead, 128 F.3d 1329, 1330 (9th Cir.1997); McKendall, 122 F.3d at 806; Cordoba, 104 F.3d at 227.
19
The most recently enumerated holdings are sound and clarify that the Daubert factors only apply to testimony deemed "scientific." The district court did not err in determining that Zender's testimony was not scientific. Zender was relying on observations and experience, rather than mathematical probabilities as Ly asserts. Of course, the district court could not admit the testimony without considering reliability. Daubert requires this of all testimony. McKendall, 122 F.3d at 806 n. 1.
20
Zender had the qualifications and specialized knowledge of an expert. The record establishes that he had years of experience managing and dealing table games at various casinos, investigating cheating for the Nevada Gaming Commission, and teaching dealers at schools. Other than a possible unfamiliarity with MGM policy manuals, no defendant has suggested any shortcoming in Zender's methods and observations. We find none. The testimony was relevant to help the jury understand both mini-baccarat and the possible ramifications of otherwise innocuous looking behavior. Cf. United States v. Alonso, 48 F.3d 1536, 1541 (9th Cir.1995)(discussing the general principle that police officers may provide explanatory expert testimony). The district court did not abuse its discretion in allowing Zender to testify as an expert.
21
Rule 704 prohibits expert opinion on a criminal defendant's mental state when the mental state constitutes an element of the crime charged. FRE 704(b); United States v. Kinsey, 843 F.2d 383, 388 (9th Cir.1988). Opinion testimony may be given even if it "encompasses an ultimate issue to be resolved by the trier of fact unless the testimony concerns the defendant's mental state or condition." Id. We interpret FRE 704 to allow expert testimony that supports "an inference or conclusion that the defendant did or did not have the requisite mens rea, so long as the expert does not draw the ultimate inference or conclusion for the jury and the ultimate inference or conclusion does not necessarily follow from the testimony." Morales, 108 F.3d at 1038. Moreover, a witness may not give a direct opinion on a defendant's guilt or innocence. Kinsey, 843 F.2d at 388.
22
The defendants argue that Zender testified as to their intent to cheat under the conspiracy charge. The testimony most uniformly challenged came in response to questioning about the Desert Inn. The colloquy went as follows:
23
Q. After reviewing the tape and doing your i nvestigation...did you reach an opinion about the shuffle that was performed at...the Desert Inn?
24
A. Yes, I did.
25
Q. And what was your opinion?
26
A. Based on the shuffle that I viewed on the tape, based on the player's activities at the table, such as appearance or recording cards, the bet variations, the general play, I came to the conclusion that this is not consistent with a trained group of people taking advantage of a weak or sloppy dealer but was consistent with a group of people that were--that seemed to be fairly well trained working in connection with the dealer who was false shuffling in order to cheat casino...
27
The defendants also challenge Zender's opinions that recording cards were taken from gaming tables "to make sure that those aren't taken and they don't fall into management or casino's hands;" that a false shuffle was one which involved the "intentional manipulation of the cards;" and that the deals were not the result of sloppy handling.
28
Even if these opinions improperly invaded the province of jury, their admission was harmless. Zender could properly testify to the rules of the games, the action on the video, and styles of experienced dealers and gamblers. We further allow expert testimony from law enforcement officials to explain innocent looking conduct. Alonso, 48 F.3d at 1542-43; Kinsey, 843 at 387. This is justified on grounds that it will help the jury understand how otherwise innocent looking conduct "might in fact be consistent with or even indicative of criminal conduct" Alonso, 48 F.3d at 1542. While admission of such testimony should not be allowed routinely, it is not inherently prejudicial. Id.
29
Zender's testimony fits within these permissible categories. Although the government and district court relied heavily on Zender's testimony, neither expressly mentioned the portions which potentially negated the permissible innocent inferences. United States v. Lim, 984 F.2d 331, 335 (9th Cir.1993)(discussing profile testimony).
30
C. EXCLUSION OF EVIDENCE OF LEE'S GAMBLING ACTIVITY
31
Lee contends that the district court erred in excluding evidence that he often travelled to Las Vegas and lost substantial sums of money from 1994, through 1996. According to Lee, he intended to argue that it was illogical that a man who lost substantial sums on a regular basis would join a conspiracy to cheat.
32
Prior to trial, the district court granted the government's motion in limine to exclude evidence of Lee's prior gambling activity. From the bench, the court found that the evidence from years past was not relevant, especially under a FRE 403 balancing test. The district court determined that it would only allow evidence of gambling activity during the period of the alleged conspiracy.
33
The district court has wide discretion to exclude evidence under FRE 403. United States v. Layton, 767 F.2d 549, 554 (9th Cir.1985). In the context of a due process claim that the evidentiary ruling precluded the defendant's theory of defense, a court should consider "the probative value of the evidence on the central issue." Walters v. McCormick, 122 F.3d 1172, 1177 (9th Cir.1997). The defendant's interest will be weighed against the government's in conducting efficient trials under the rules of evidence. Perry v. Rushen, 713 F.2d 1447, 1450 (9th Cir.1983).
34
There was no abuse of discretion. Lee was able to present testimony that he sustained heavy losses and made numerous trips to Las Vegas. Further, counsel was permitted to argue this point in opening and closing. Additional evidence of losses was, at best, of marginal value to show that Lee did not intend to cheat. Had it been allowed, other extraneous matters would have become relevant, such as an alleged misuse of casino credit. The district court exercised sound discretion in determining that admission of such matters would have constituted a waste and possibly confused the jury.
D. EXCLUSION OF DEFENSE EXPERT
35
Lee contends that the district court erred in excluding his expert Michael Goodman. Lee called Goodman to testify as to the betting patterns of Asian gamblers. The district court excluded the testimony on grounds that Goodman did not qualify as an expert, that the testimony was irrelevant, and that the testimony would not be helpful to the jury.
36
The district court did not abuse its discretion. The record reflects that Goodman's qualifications rested largely, if not solely, on having observed ten-to-fifteen Asian gamblers playing Pai Gao Poker in California. Further, Goodman's testimony on these experiences would have opened the door to government evidence from Goodman's own articles that the Asian gamblers he observed would often cheat. Such race-based evidence was properly excluded.
E. SUFFICIENCY OF THE EVIDENCE
37
In reviewing challenges to the sufficiency of the evidence, we determine "whether after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." United States v. Bautista-Avila, 6 F.3d 1360, 1362 (9th Cir.1993).
38
Wong argues that the money laundering convictions under § 1956(a)(1) must be reversed as a matter of law. Wong contends that the chips won during the games were not "monetary instruments" and, as such, the cashing of the chips could not constitute laundering. Wong bases his argument on Nevada law which establishes that gambling chips are mere evidence of debt owed by the casino and cannot be used for purposes other than gambling.
39
Wong misreads the statute. There is no requirement that a financial transaction involve a "monetary instrument" to fall within § 1956(a)(1)(A). Instead, this portion of the statute requires a financial transaction involving the "proceeds" of illegal activity. 28 U.S.C. § 1956(a)(1). We define "proceeds" broadly to include such things as a fraudulently obtained line of credit. United States v. Estacio, 64 F.3d 477, 480 (9th Cir.1995). Similarly, chips gained from an unlawful cheat are proceeds as evidence of debt owed by the casino to the holder. United States v. Manarite, 44 F.3d 1407, 1416-17 (9th Cir.1995).
40
Nor can it be said, as Lok asserts, that the defendants did not complete the cheat until the cashing of the chips. We recognize that cashing the chips helped the defendants realize monetary benefit from the cheats. Id. at 1416. This obvious fact does not lead to Lok's suggestion that the chips were of no value until cashed. Instead, it is evidence that the cashing helped "promote" the unlawful activity. 18 U.S.C. § 1956(a)(1)(A); Manarite, 44 F.3d at 1416. We reject Lok's additional contentions that the evidence did not show a violation of Nevada law or that he knew that the cheat was illegal.
41
The record supports the convictions for a single conspiracy and violations of the Travel Act. The evidence was sufficient to establish international travel to Las Vegas to conduct three complex and virtually identical cheats over a brief period of time. In addition, the commonality of the participants and the magnitude of the overall scheme could satisfy a trier of fact of a conspiracy to commit Travel Act or money laundering violations. United States v. Bibbero, 749 F.2d 581, 587 (9th Cir.1984)(discussing the law of multiple conspiracies); United States v. Tavelman, 650 F.2d 1133, 1140 (9th Cir.1981)(discussing the Travel Act). The district court did not err in refusing to grant a new trial or acquittal on the grounds of insufficient evidence.
X. SENTENCING ISSUES: HUNG LY
42
Ly claims that the district court erred by (1) holding him responsible for the conduct at all three casinos; (2) enhancing his sentence two levels for the use of a special skill; and (3) assessing restitution against him in the full amount of the loss at all three casinos.
A. AMOUNT OF LOSS ATTRIBUTABLE TO LY
43
Ly only dealt cards at the Hilton. The district court computed Ly's sentence based on the amount of loss at all three casinos. Ly failed to object at sentencing. We review for plain error. United States v. Valencia, 15 F.3d 149, 151 (9th Cir.1994).
44
Section 1B1.3(a)(1)(B) requires the sentencing court to take into account "all reasonably foreseeable acts...in furtherance of the jointly undertaken activity." U.S.S.G. § 1B1.3(a)(1)(B). The amount of loss attributable to Ly is not necessarily established by merely looking to the amount of loss in the conspiracy as a whole. United States v. Castaneda, 9 F.3d 761, 769-70 (9th Cir.1993). Instead, the sentencing court can properly look to the amount of loss which Ly reasonably foresaw or which fell within the scope of his particular agreement. Id.
45
The evidence ties Ly to the four players from Hong Kong as well as to the dealer who conducted the false shuffle at the Desert Inn. As with the assignment of error on multiple conspiracies, the similarity of the participants bolsters the finding of foreseeability. The temporal proximity of the three cheats is also indicative of foreseeability. It was not plain error to adopt the presentence report's recommendation that the activity at all three casinos was foreseeable. Valencia, 15 F.3d at 152.
46
B. TWO LEVEL ENHANCEMENT FOR USE OF SPECIAL SKILL
47
The district court enhanced Ly's sentence by two levels under U.S .S.G. 3B1.3. Under the guideline, a two level enhancement is allowed if the defendant "used of a special skill in a manner that significantly facilitated the commission or concealment of the offense." U.S.S.G. § 3B1.3
48
We interpret enhancement to require a "preexisting, legitimate skill not possessed by the general public." Id. (citation omitted). The guideline defines "special skill" as one not possessed by the general public and "usually requiring substantial education, training, or licensing." U.S.S.G. § 3B1.3 comment. (applic. note 2). Examples include pilots, lawyers, doctors, accountants, chemists, and demolition experts. U.S.S.G. § 3B1.3 comment. (applic. note 2).
49
The government argues that the enhancement was proper since dealers "typically" go to casino schools prior to dealing. The government claims that dealers work anywhere from a few months to two years prior to dealing at a casino such as the Hilton. It also notes that Ly would have needed to train to execute a false shuffle.
50
Even if we accept the government's argument, the district court failed to make any special skill findings specific to Ly. It held that the enhancement applied, since Ly used his skill as a dealer, but enhancement requires more than a finding that the skill is one used in the defendant's job. Id. at 507 n. 5 (stating that "[c]ourts should be particularly cautious in imposing special skills adjustments where substantial education, training, or licensing is not involved.")
51
We do not resolve the question of what may satisfy the requirement of "special skill." We are not prepared to make a factual determination and the record is insufficient for us to form a legal conclusion. We therefore reverse the holding of special skill and remand for re-sentencing. This will permit the court to supplement or reject the request for special skills enhancement.
C. AMOUNT OF RESTITUTION
52
The district court adopted a recommendation from the presentence report holding Ly jointly and severally liable for the full $768,120 loss at all three casinos. Ly argues that he should not be responsible for the sums at the MGM and the Desert Inn.
53
We review the "legality of a restitution order de novo." United States v. Dayea, 73 F.3d 229, 230 (9th Cir.1995). Restitution may only be awarded as authorized by the Victim Witness Protection Act, 18 U.S.C. § 3663. Under the statute, a court can properly order restitution in conspiracy cases for losses "resulting from any conduct that was part of the conspiracy and not just from the specific conduct that met the overt act requirement..." United States v. Reed, 80 F.3d 1419, 1423 (9th Cir.1996). The question is whether an individual defendant may be held liable for the full amount of losses or only for an amount attributable to his own conduct in furtherance of the conspiracy.
54
Based on a premise that a defendant is legally liable for all of his coconspirators' actions, numerous courts have upheld imposition of joint and several liability. United States v. Chaney, 964 F.2d 437, 453 (5th Cir.1991); United States v. Harris, 7 F.3d 1537, 1539 (10th Cir.1993); United States v. Ismoila, 100 F.3d 380, 398 (5th Cir.1996). Without detailed comment, we have also allowed imposition of joint and several liability. United States v.. Angelica, 951 F.2d 1007, 1009-10 (9th Cir.1991).
55
Ly was convicted of conspiracy. The underlying conduct supporting the conviction included scams at all three casinos. There is no requirement that the restitution against Ly be limited to the losses directly caused by his own conduct in furtherance of the conspiracy. We find no error.
XI. CONCLUSION
56
We affirm, except for Ly's sentence enhancement for "special skill" and remand that issue for further consideration.
57
Affirmed, but remanded in part.
*
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir. R. 36-3
| {
"pile_set_name": "FreeLaw"
} |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.