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227 F.Supp.2d 1220 (2002)
UNITED STATES of America, Plaintiff,
v.
$22,991.00, MORE OR LESS, IN UNITED STATES CURRENCY and
One American Arms .22 Magnum Revolver, Serial No. 214835, and Ammunition.
No. CIV.A. 00-1097-L.
United States District Court, S.D. Alabama, Southern Division.
July 17, 2002.
*1221 *1222 Ronald Wise, U.S. Attorney's Office, Mobile, AL, for plaintiff.
Bruce Maddox, Montgomery, AL, for claimant.
ArLease Prevo, Montgomery, AL, pro se.
Derrick Wise, Montgomery, AL, pro se.
MEMORANDUM OPINION AND ORDER
LEE, United States Magistrate Judge.
This is a civil action in rem for the forfeiture of $22,991.00 in United States currency pursuant to 21 U.S.C. § 881(a)(6), and of a revolver (and ammunition) pursuant to 21 U.S.C. § 881(a)(11). On May 30, 2002, a bench trial was held before the undersigned Magistrate Judge for the purpose of eliciting evidence with respect to the plaintiff United States' allegations in this action. Prior to the commencement of trial, the parties executed their written consent to the exercise of jurisdiction in this action by a United States Magistrate Judge, in accordance with 28 U.S.C. § 636(c) and Fed.R.Civ.P. 73, and the matter was referred to the undersigned. (See Court File). As set forth below, the undersigned has determined to enter judgment in favor of the United States, and, accordingly, the defendant currency, revolver and ammunition shall be forfeited to the permanent custody and control of the United States.[1]
FINDINGS OF FACT[2]
I. The Events of August 13, 2000
1. The Claimant in this case is Ms. Arlease Prevo, who at all relevant times *1223 has resided at 2174 George Mull Street, Montgomery, Alabama.
2. On August 13, 2000, at approximately 8:45 a.m., Ms. Prevo drove her own vehicle from her home in Montgomery to the Loxley Work Release Center ("Center") in Loxley, Alabama. The Center is a correctional institution. Ms. Prevo arrived at the Center premises for the purpose of picking up inmate Derrick Wise on the basis of an "eight-hour pass" to leave the Center premises granted to Mr. Wise.
3. At that time, Mr. Wise was incarcerated at the Center in connection with a ten-year sentence he was serving on drug-related charges. In particular, Mr. Wise had pled guilty to, and had been convicted of, dealing crack cocaine on four separate occasions out of Ms. Prevo's residence. Mr. Wise, referred to by Ms. Prevo as her "common law husband," had lived with Ms. Prevo at her residence from an unspecified date in 1995 until April 1999, when he was incarcerated for the above-referenced drug-related offenses. The testimony at trial also established that Mr. Wise has an extensive criminal history, other than with respect to these particular drug offenses, and in prior years had been incarcerated on other unspecified charges.
4. Captain Gary Hetzel of the Alabama Department of Corrections ("ADOC"), an Assistant Warden at the Center, testified that Mr. Wise began his incarceration in the custody of the ADOC on or about April 23, 1999, and was transferred to the Center on or about April 28, 2000.
5. At all relevant times, at the entrance to the Center, a sign was posted clearly notifying all visitors that vehicles entering the premises were subject to search; that firearms, alcoholic beverages and illegal or narcotic substances were strictly prohibited; and that anyone transporting or possessing such items was subject to criminal prosecution. (Gov.Exh. 3A).
6. Around the time of Ms. Prevo's arrival at the Center on August 13, 2000, routine searches of visiting automobiles for contraband and other items were being conducted under the supervision of Captain Hetzel. Such searches included the use of certified drug detection dogs under the supervision of qualified staff at the Center.
7. Upon having entered the Center's visitor parking area, Ms. Prevo was approached in her automobile by Sergeant Kerry Mitchum of the Loxley, Alabama, Police Department. Ms. Prevo was asked whether she had any weapons or drugs in *1224 her vehicle. Ms. Prevo responded by stating that said she wanted to leave, but was not allowed to do so by Sergeant Mitchum. Ms. Prevo complied with Sergeant Mitchum's directive to turn off the ignition and to exit the vehicle. Ms. Prevo then told Sergeant Mitchum that she had a gun in her purse.
8. At this point, Officer James Turberville of the Chickasaw, Alabama Police Department, who was assisting at the Center that day, had arrived at the area where Ms. Prevo's automobile was parked. Ms. Prevo handed to Officer Turberville a loaded .22 "American Arms" magnum revolver that had been in her purse on the front seat of her automobile. Ms. Prevo did not have a permit to carry a gun, and denies ownership of the defendant revolver and ammunition. Ms. Prevo testified that the revolver belonged to a "friend" of another friend of hers named Wardell Washington, whom, as discussed infra, the evidence at trial shows was engaged in at least one drug transaction at Ms. Prevo's residence in October 2000.
9. At this time, a more extensive search of Ms. Prevo's automobile was conducted, which included Officer Turberville's certified drug detection dog being walked around the automobile. Officer Turberville is a certified handler of drug detection dogs. Officer Turberville's dog "alerted on" the trunk area of Ms. Prevo's automobile. The key to the trunk was retrieved from the automobile's ignition.
10. Officer Turberville then placed his dog in the trunk of Ms. Prevo's automobile. The dog immediately alerted on a brown wooden box with a padlock on it. The key to the box was retrieved from Ms. Prevo. The box was opened, and was found to contain two bundles of United States currency, namely one-hundred dollar bills, banded with paper wrappers.
11. Having discovered the bundled cash in the wooden box, other areas of the trunk were searched, yielding two additional items of note a blue "beach" bag which already was open, and a leather purse. The bag contained: (a) two additional bundles of one-hundred dollar bills, similarly banded with paper wrappers; (b) a home-made crack cocaine pipe, made from a liquor bottle, which had been used and had lipstick on or about the mouth of the bottle; and (c) two small film canisters, one of which contained several off-white colored rocks which were later shown by an analysis performed by the Alabama Department of Forensic Sciences to contain 0.68 grams (or 0.02 ounces) of crack cocaine. (Govt.Ex. 7). The canisters were packed individually in coffee grounds and were covered with aluminum foil. Officer Turberville testified that, in the drug trade, it is common for coffee grounds to be used to mask the smell of crack cocaine. Furthermore, the leather purse was found to contain within it a small green pouch holding a stack of one-hundred dollar bills, which, unlike the other cash discovered at that time, was not bundled with paper wrappers.
12. In total, the aggregate amount of $22,991.00 in cash in United States currency was found in the trunk of Ms. Prevo's automobile in the wooden box, beach bag and leather purse. (Govt. Exhs. 1-A through 1-J, and 25-A through 25-F).
13. The law enforcement officers on the scene gathered all of the cash together and placed it on the ground of the parking lot next to Ms. Prevo's automobile. At that time, Officer Turberville's dog demonstrated a positive alert for the presence of drugs on the cash. Immediately thereafter, Officer James Ferguson and Officer Mitchum escorted their own drug dogs to the area, who also demonstrated, respectively, positive alerts for the presence of *1225 drugs on the cash. Ms. Prevo did not dispute the testimony of the government's witnesses at trial that these three dogs were certified to engage in drug detection and that these three law enforcement officers were certified drug dog handlers.
14. The cash was not counted by law enforcement officials on the scene. After all three of the dogs positively alerted on the cash, the cash was taken inside the Center facility and was counted. A separate laboratory analysis of the presence of drugs on the cash was never conducted. The only analysis that was conducted was, as referred to supra, with regard to the crack cocaine itself.
15. Officer Mitchum testified that Ms. Prevo's purse found on the front seat of her automobile also contained cash, but that cash was not seized. Only the cash found in trunk of Ms. Prevo's automobile, totaling $22,991.00, was seized.
16. Agent David Fagan, of the federal Drug Enforcement Agency ("DEA") task force, interviewed Ms. Prevo on August 13, 2000. Agent Fagan testified that Ms. Prevo told him that she had planned, after returning Mr. Wise to the Center at the end of that day, to travel to Tallahassee, Florida, for the purpose of moving there. When Agent Fagan questioned her about the lack of luggage in the automobile, or other indicia of moving, Ms. Prevo responded that she was just going to stay with a male friend in Tallahassee and that she might be returning to Montgomery.
17. With respect to the defendant loaded revolver in her purse, Ms. Prevo admitted to Agent Fagan that she had possessed the revolver for her own "protection." Ms. Prevo also admitted to Agent Fagan that the crack cocaine found in her automobile was hers, that she was a user of crack cocaine, and that she had purchased the crack cocaine from a woman in Montgomery.
18. With respect to the amount and ownership of the cash found in the trunk of her automobile, Ms. Prevo gave inconsistent accounts to Agent Fagan as to the exact amount of cash she possessed, guessing several times. Ms. Prevo also stated inconsistently to Agent Fagan that, on the one hand, the money belonged to her and that she had been saving it for some time. On the other hand, she stated on at least two occasions that approximately $8,000.00 to $14,000.00 of the money belonged to Mr. Wise, and that the cash constituted proceeds from drug sales.
19. Agent Fagan testified that the $22,991.00 found in the trunk of Ms. Prevo's automobile was, at the time, within the approximate range of $22,000.00 to $25,000.00, the price of one kilo of cocaine in the Mobile, Alabama, area.
20. The defendant currency, revolver, and ammunition were confiscated and subsequently delivered to the United States Marshal's Service pursuant to a seizure warrant issued by this Court. In connection with these events, Ms. Prevo was charged in state court with unlawful possession of a controlled substance, possession of drug paraphernalia, and carrying a pistol without a permit. (Def.Exh. 6-B).
21. On November 16, 2000, Ms. Prevo submitted to the DEA her "Statement of Claimant/Property Seized." (Govt.Exh. 6). This lengthy and detailed statement was signed and dated by Ms. Prevo on that date, and was signed under penalty of perjury before a notary public. The Court notes that the date of this statement is only approximately three months after August 13, 2000. In pertinent part, Ms. Prevo stated as follows:
Upon my arrival at the Loxley Work Release Center, unfortunately, the law officers was [sic] having a prejudice routine search. I was only going to be *1226 there for a matter of minutes; just to pick up my common-law husband, who was going on his [third] 8 hours pass. After being given a choice, I chose not to have my car search[ed]. I quoted to him, "that I would rather leave, than to have my car search[ed]." Then the officer asked me if I had any weapons in the car, slowly, I gracefully handed him the pistol from my purse. They rudely demanded me out of my car, putting hand-cuffs on me. Then they forcefully search[ed] my car inside, finding nothing, then outside. This is when they found the money, ($20,000.00) in the trunk of my car. Having to come back to get ($2,991.00) from my purse, leaving approximately ($129.00) scattered in my purse. I wondered why did they get some money then leave some there? While I was being search[ed] in the facility restroom, I returned outside to my car to find that a small portion of an unlawful controll[ed] substance (.06) grams was found in the front seat of my car. I assumed that I had accidently put it there, being that I was rushing to make that long drive. Nevertheless, I do have a drug addiction problem that I'm seeking help for.
(Id., at 4). Thus, Ms. Prevo admitted that she placed crack cocaine in her automobile, and that at the time she was suffering from a drug addiction. The Court notes that the evidence presented at trial does not reflect any drugs actually being found in the "front seat" of Ms. Prevo's automobile, as she states above, as the drugs and drug paraphernalia were found in the trunk. The Court finds this discrepancy to be immaterial, as it is highly significant that Ms. Prevo incriminated herself by admitting, in a sworn statement to a law enforcement agency, to having placed drugs in her car on August 13, 2000.
II. Additional Evidence of Ms. Prevo's Involvement with Drugs and Drug Transactions, Both Prior to and After August 13, 2000
22. Ms. Prevo testified that she has smoked crack cocaine. While she denied during her trial testimony to having ever had an addiction to drugs, in contrast, her November 16, 2000 sworn statement to the DEA, referred to supra, indicates to the contrary that she has had a drug addiction problem. (Govt.Exh. 6).
23. At trial, the government presented credible and probative testimony of four witnesses that controlled drug transactions were conducted at Ms. Prevo's residence both before and after August 13, 2000. This testimony was provided by Officers Williams Simmons and William Hamil, both narcotics detectives with the Montgomery, Alabama Police Department, as well as by two undercover informants paid by that department, Carl Stovall and Tim Tucker. The detectives testified that Ms. Prevo's residence is known to law enforcement as an address at which drug transactions routinely have been conducted, during the time Ms. Prevo resided there.
24. First, the government's evidence at trial demonstrated that, between February 11, 1998 and May 7, 1998, four separate controlled crack cocaine purchases, overseen by Officer Hamil, occurred at Ms. Prevo's residence. The amount of crack cocaine involved in each purchase varied between $60.00 worth to $100.00 worth. On each occasion, Ms. Prevo's alleged "common law husband," Mr. Wise, sold the crack cocaine to the informant Mr. Stovall, and on the first and last occasion, Ms. Prevo was involved to some degree. With respect to the first occasion, Ms. Prevo greeted Mr. Stovall at the back door of her residence when he arrived in his vehicle, prior to the drug transaction occurring. With respect to the fourth and final occasion, *1227 Ms. Prevo handed the crack cocaine to Mr. Stovall. At trial, Mr. Stovall identified Ms. Prevo in open court as being this person, on both occasions. Mr. Wise was indicted for his participation in these four controlled drug buys. Mr. Wise pled guilty and was incarcerated, as referred to, supra. Ms. Prevo's and Mr. Wise's participation together in the drug trade is further supported by language contained in a letter she wrote to him approximately one month after he was incarcerated, on May 3, 1999: "It's 7:30 a.m. the morning of your Birthday. I'm getting ready to handle your business now. I did just that." (Govt.Exh. 19).
25. Second, on October 28, 2000, approximately one month after the defendant items were seized from Ms. Prevo's automobile on August 13, 2000, Officer Simmons oversaw another controlled crack cocaine purchase at Ms. Prevo's residence, conducted by the informant Mr. Tucker. On this occasion, when Mr. Tucker arrived at Ms. Prevo's residence in his vehicle, Ms. Prevo came to the back door of the residence and stated to him, "What you want, forty?" Mr. Tucker did not exit his vehicle, and nodded his head in the affirmative. A few moments later, Ms. Prevo's friend, Wardell Washington, emerged from the residence and approached Mr. Tucker in his vehicle. Mr. Tucker gave the man $40.00 in cash, that had been given to him by the detectives, and Mr. Washington handed Mr. Tucker $40.00 worth of crack cocaine. (Govt.Exh. 23). At trial, Mr. Tucker identified Ms. Prevo in open court as being the person who first greeted him in regard to this transaction.
26. The Court finds the above to constitute credible and probative evidence that Ms. Prevo was a participant in the transacting of crack cocaine for money, on the premises of her own residence, both before and after the events at issue on August 13, 2000.
III. Absence of Legitimate Origin of Currency
27. The $22,991.00 in cash found in Ms. Prevo's automobile on August 13, 2000, is an unusually large sum of cash, and an amount not commonly kept in one's own vehicle. At trial, the government tendered evidence to demonstrate the absence of a legitimate origin of the currency confiscated from her automobile and to refute Ms. Prevo's claim that she had accumulated this sum of money over a period of years.
28. At trial, the government introduced records generated by the Social Security Administration ("SSA") (Govt.Exh. 20), which reflect the following earnings for Ms. Prevo reported to the SSA, broken down by calendar year: 1980: $2323.00; 1981: $1252.00; 1982: $497.00; 1987: $1962.00; 1990: $3334.00; 1991: $5586.00; 1992: $3987.00; 1993: $8538.00. As is reflected, there is no income accounted for during several years between 1980 and 1993.
29. Moreover, at trial, Mary Ann Osborne of the Internal Revenue Service ("IRS") testified for the government that, from tax years 1990 through 2000, Ms. Prevo self-reported income only for the years 1993 and 1994, reflecting $8,790.00 and $3,571.00, respectively, in adjusted gross income. Ms. Osborne also testified that the IRS audited Ms. Prevo's tax returns for these years and made additional tax assessments totaling $4,157.82, due to the fact Ms. Prevo had claimed a dependant whom she was not legally entitled to claim. Ms. Osborne further testified that, while the IRS has asked for these assessments to be paid, Ms. Prevo still failed to pay them.
30. At trial, Ms. Prevo testified during the government's case-in-chief that her average *1228 monthly expenses have been comprised of an electric bill of $120.00; a water and garbage bill of $28.00; a gas bill of $116.00; a telephone bill of $400.00; and a food bill of $300.00. The Court totals these amounts to comprise approximately $11,500.00 per year, which would appear to far exceed Ms. Prevo's approximate annual income. Ms. Prevo also testified that, between 1995 through 2000, she put a new roof on her house at the cost of $600.00; incurred automobile repairs totaling $600.00; and purchased at least one automobile for the sum of $1900.00. She also testified that, because she had no medical insurance, she paid $2,500.00 toward a $8,714 medical expense she incurred for surgery performed in June 2000.
31. Testimony also was elicited by the government from Ms. Prevo about her numerous outstanding debts, which further undermines Ms. Prevo's claim that the defendant currency was accumulated over a period of years. (Govt. Exhs. 10 through 14, 16, 17). For example, the government's evidence showed that, prior to the seizure of the currency, Ms. Prevo had a difficult time paying her bills and incurred several collection notices. (Govt.Exh.13). Again, Ms. Prevo failed to pay a debt to the IRS that has been due since 1994. Ms. Prevo testified that she did "the best I can to pay my bills," but that she also testified that she "wasn't too anxious on paying a bill right then" and that she "always let them get behind or sometimes cut off before [she] would pay them." It is not credible that Ms. Prevo would possess such a large amount of money ($22,991.00) during this time period, yet not use it to pay any of these comparatively small debts.
32. Ms. Prevo asserted at trial that the defendant currency was the result of savings from her free-lance seamstress business, operated out of her home. In support of this contention, she entered into evidence drawings of flyers promoting her fashion business and other similar items, and documents reflective of income derived from her business in the form of receipts given to customers. (Def.Exh. 3-D).
33. With respect to the flyers promoting her fashion business, such were made in the early to mid 1980s, and are too far removed in time from the events of August 2000 to be considered credible evidence to show a connection between the fruits of her business and cash she possessed approximately fifteen to twenty years later.
34. In any event, assuming Ms. Prevo maintained an ongoing seamstress business from the early 1980s through the period of time leading up to August 2000, the credible evidence of record reflects that she did not generate enough legitimate income during this time to amount to the $22,991.00 at issue. At trial, Ms. Prevo introduced copies of "receipts" of work she performed for customers during the years 1998, 1999 and 2000. (Id.). Ms. Prevo testified that her records of receipts for other years burned in a fire in a storage area adjacent to her residence, but did not offer evidence through other means to reflect income in prior years. The Court has totaled the sums of the receipts for these three years, which appear to amount to only approximately $5843.00, or approximately $1500.00 per year.
35. In an attempt to link the defendant currency specifically to a legitimate source, Ms. Prevo alleged at trial that, in 1996, she withdrew funds from her bank accounts, then kept that sum at her house before placing it in the trunk of her car for "safe-keeping" on an unspecified date prior to August 13, 2000. (Trial Trans., at 66). Ms. Prevo maintained during her testimony that this cash directly represents the proceeds legitimately derived from her *1229 seamstress business, and actually constituted more than the $22,991.00 at issue. In this regard, Ms. Prevo entered into evidence bank statements and related documents regarding one trust account and one savings account, representing to the Court that these documents would prove that she withdrew more than $22,991.00 in 1996. (Def.Exh. 4-B).
36. With respect to the trust account, Ms. Prevo introduced a bank statement reflecting a balance on June 30, 1996 of $9,067.63, and numerous withdrawal slips reflecting funds subsequently withdrawn from that account from that date through the end of 1996 totaling $6,020.00. This account was a savings account held in trust, in the name of, Leticia Nicole Hill, of which Ms. Prevo was listed as trustee. Ms. Prevo testified rather nonchalantly that these were really her monies which she placed into a trust in the name of her ten-year old niece for the purpose of avoiding the repayment of federal education loans. With respect to the savings account, Ms. Prevo introduced a bank statement reflecting a balance on December 31, 1995 of $2,021.21. (Id.). There is no indication that this particular amount was ever withdrawn from the bank. Such evidence, relating at most to the withdrawal of some funds during 1996, hardly provides credible evidence of a legitimate source for the defendant currency found approximately four years later. Contrary to her testimony, the documentary evidence tendered by Ms. Prevo herself reflects that the amount she actually withdrew from the bank in 1996 was well short of the $22,991.00 at issue.
37. In sum, Ms. Prevo's average monthly expenses and other expenditures referred to, supra, easily would have exhausted the money she asserts she withdrew from the bank, referred to supra, or otherwise generated in income.
38. The Court finds the above to constitute credible and probative evidence that there is not a legitimate or innocent source of the currency at issue, prior to its seizure on August 13, 2000.
IV. Ms. Prevo's Testimony Was Without Credibility
39. Throughout trial, Ms. Prevo's testimony was inconsistent, evasive and without credibility. Some examples, other than what is referred to elsewhere in this Memorandum Opinion and Order, are as follows.
40. First, based upon all the prior pleadings, the exhibits and the prior representations to the Court, the amount of money seized and at issue in this case has always been alleged by Ms. Prevo to be $22,991.00, which is consistent with the amount the government's witnesses allege was seized from Ms. Prevo's automobile trunk on August 13, 2000. For example, in Ms. Prevo's "Statement of Claimant Property Seized" (Govt.Exh. 6), submitted by her to the DEA in November 2000, only approximately three months after the seizure, Ms. Prevo repeatedly refers to the amount of money that was in her vehicle as $22,991.00. In fact, Ms. Prevo begins her statement with the words, "I, Arlease Prevo declare that the $22,991.00 that was seized from my vehicle on August 13, 2000; was earned legally and accumulated over a number of years, from hard honest work. I will provide you with the time and labor that I devoted for most of my life to accumulate this saving of $22,991.00." (Id., at 1).
41. However, at trial, Ms. Prevo testified, and alleged for the first time, that she actually had $35,000.00 in currency in her vehicle when the officers seized the money apparently implying that the officers stole or lost approximately $12,000. The Court finds that Ms. Prevo's testimony at *1230 trial that there actually was $35,000.00 in her automobile to be an outright fabrication, in light of her numerous prior representations.
42. Second, Ms. Prevo testified several times at trial that she had no idea how the crack cocaine that was found in her vehicle got there. However, again, Ms. Prevo's own pre-trial statements severely contradict her trial testimony. As referred to supra, Ms. Prevo admitted in her November 16, 2000 sworn statement to the DEA that she "assumed" that she "accidently put it there, being that I was rushing to make that long drive." (Govt. Exh. 6, at 4). When confronted with this inconsistency on cross-examination during trial, the Court observed Ms. Prevo's attempt to reconcile the contradictory statements wholly incredible. In this regard, Ms. Prevo testified: "This says: `Accidently put it there.' But back then I was I wasn't sure of what was going on. I wasn't sure. I don't know. I don't think I put it there. I know I didn't put it there now. But back then I wasn't sure." (Trial Trans., at 84). Agent Fagan testified that on the day of the seizure, Ms. Prevo admitted to him that the crack cocaine found in the automobile was hers.
43. Third, Ms. Prevo testified at trial that she had never been addicted to any kind of drug, in direct contradiction to a statement she made to the DEA in her "Statement of Claimant Property Seized," referred to, supra, that, "I do have a drug addiction problem that I'm seeking help for." (Govt.Exh. 6).
44. Fourth, during her testimony at trial, Ms. Prevo denied she was at her residence when any drug sales were made, and denied knowledge of any drug-related arrests on or about the premises of her residence. For example, Ms. Prevo was asked: "And during the last five years have there been at least three drug arrests" at her address "that you know about?" Ms. Prevo responded, "I'm not sure." (Trial Trans., at 8). However, Ms. Prevo later admitted she was at her residence on one occasion when Mr. Wise sold crack cocaine to an informant for the Montgomery Police Department. Ms. Prevo also testified that, "[e]ven though these things happened at my house, most of the times I am not there." (Trial Trans., at 63).
45. The Court finds Ms. Prevo's inability or unwillingness to testify consistently and truthfully throughout the trial in this action further belies her assertion that the defendant currency was derived from a legitimate source. Moreover, the fact of Ms. Prevo's untruthfulness about the source of the cash provides additional evidentiary support for the government's assertion that the defendant currency is in fact drug proceeds.
CONCLUSIONS OF LAW
The instant complaint was filed on December 19, 2000. (Doc. 1). Thus, the standards set forth in Civil Asset Forfeiture Reform Act of 2000 ("CAFRA") (Pub. L.106-185; 18 U.S.C. § 981, et seq.) apply to this action, as section 21 of CAFRA provides that it is intended to govern civil forfeiture proceedings commenced on or after August 23, 2000. See, e.g., U.S. v. Real Property in Section 9, Town 29 North, Range 1 West Township of Charlton, Otsego County, Michigan, 241 F.3d 796, 798 (6th Cir.2001). The provisions of CAFRA "materially altered the various burdens of proof in civil forfeiture actions filed in federal courts." U.S. v. One Parcel of Property Located at 2526 Faxon Avenue, Memphis, Tennessee, 145 F.Supp.2d 942, 949 (W.D.Tenn.2001). Now, under CAFRA, "the burden of proof is on the Government to establish, by a preponderance of the evidence, that the *1231 property is subject to forfeiture...." 18 U.S.C. § 983(c)(1).
Because the government's theory of forfeiture in this action "is that the property was used to commit or facilitate the commission of a criminal offense, or was involved in the commission of a criminal offense...," under CAFRA, the government now is required to establish by a preponderance of the evidence "that there was a substantial connection between the property and the offense." 18 U.S.C. § 983(c)(3). In attempting to meet its burden in this regard, the government is entitled to use evidence "gathered after the filing of a complaint for forfeiture." 18 U.S.C. § 983(c)(2).[3]
With regard to the element of "substantial connection" which must be proved by the government, although a showing of mere "probable cause" no longer is sufficient, there continues to be no requirement that the government tender direct evidence of a connection between the subject property and a specific drug transaction. 18 U.S.C. § 983. See, e.g., U.S. v. $4,255,000.00, 762 F.2d 895, 904 (11th Cir. 1985), cert. denied, 474 U.S. 1056, 106 S.Ct. 795, 88 L.Ed.2d 772 (1986)(prior to enactment of CAFRA; declining to impose a requirement that evidence be presented of a "particular narcotics transaction"). Thus, the presentation of circumstantial evidence by the government continues to be a permissible form of proof in a civil forfeiture action. See, e.g., U.S. v. $345,510.00 in U.S. Currency, 2002 WL 22040, *3 (D.Minn. Jan.2, 2002)(post-CAFRA case: "the Government has produced an aggregate of circumstantial evidence sufficient to establish by a preponderance of the evidence that the Defendant currency was connected with narcotics activity.").
I. The Defendant Currency
As an initial matter, the Court concludes that Ms. Prevo has standing to contest the forfeiture of the defendant currency, because she asserts that she legally owns and possesses the currency. See, e.g., U.S. v. Carrell, 252 F.3d 1193, 1201 (11th Cir.2001)("[t]o have standing to contest a § 881(a)(6) forfeiture, a claimant must have an ownership or possessory interest in the property seized.")(internal quotation marks and citation omitted).
21 U.S.C. § 881(a)(6) provides in pertinent part that the defendant currency is subject to forfeiture if it constitutes "... moneys ... furnished or intended to be furnished by any person in exchange for a controlled substance ... all proceeds traceable to such an exchange, and all *1232 moneys ... used or intended to be used to facilitate [such an exchange]...." The "violation of this subchapter" alleged by the government is the "Controlled Substances Act, as amended." (Doc. 1, at 5). Cocaine, the drug at issue in this regard, is a controlled substance for these purposes. See, e.g., U.S. v. One 1976 Lincoln Continental Mark IV, VIN 6Y89A852019, 584 F.2d 266, 268 (8th Cir.1978). The term "facilitate" means making the illegal activity "easy or less difficult." U.S. v. Approximately 50 Acres of Real Property Located at 42450 Highway 441, North Fort Drum, Okeechobee County, Florida, 920 F.2d 900, 902 (11th Cir.1991) (citation omitted).
Thus, in sum, it is the government's burden with respect to the defendant currency to prove by a preponderance of the evidence that there is a "substantial connection" between the currency and the purchase or sale of cocaine. See, e.g., $345,510.00 in U.S. Currency, 2002 WL 22040, at *2 (interpreting CAFRA: "[t]he Court must ... determine whether these facts are sufficient to establish by a preponderance of the evidence that the Defendant currency is connected with illegal narcotics activity.")(citing 18 U.S.C. § 983(c)(1)).[4]
In the present action, the Court concludes that the government has sustained its burden of proof to warrant the forfeiture of the defendant currency. Seven factors, considered in their aggregate, persuade the Court that a preponderance of the evidence exists to show a "substantial connection" between the defendant currency and the purchase or sale of crack cocaine. As derived from the Court's findings of fact, supra, the Court addresses and weighs the legal significance of each of the pertinent factors, below.
First, the defendant currency, $22,991.00, is an unusually large amount of cash to be transported in the trunk of an automobile. (See Finding of Fact 12, supra). The Court deems this to be highly probative, although not dispositive, circumstantial evidence of a link between this exorbitant amount of cash and illegal drug activity. Courts have recognized that, for purposes of a civil forfeiture action, the possession of a large sum of currency is strong evidence of narcotics trafficking. See, e.g., U.S. v. $121,100.00 in U.S. Currency, 999 F.2d 1503, 1507 (11th Cir.1993)("[a]lthough insufficient by itself to demonstrate a connection to illegal drugs, the quantity of cash seized [may be] highly probative of a connection to some illegal activity."). See also U.S. v. Puche-Garcia, 2000 WL 1288181, *4 (4th Cir.2000)(unpublished opinion)("[t]he carrying of `unusually large amounts of cash' can help to establish the link to drug activity. ...")(quoting U.S. v. Thomas, 913 F.2d 1111, 1115 (4th Cir.1990)); U.S. v. One Lot of U.S. Currency ($36,634.00), 103 F.3d 1048, 1055 (1st Cir.1997)("[c]arrying a large sum of cash is `strong evidence' of [a connection to illegal drug activity] even without the presence of drugs or drug paraphernalia.")(quoting U.S. v. U.S. Currency, $83,310.78, 851 F.2d 1231, 1236 (9th *1233 Cir.1988), cert. denied, 497 U.S. 1005, 110 S.Ct. 3242, 111 L.Ed.2d 752 (1990)); U.S. v. Blackman, 904 F.2d 1250, 1257 (8th Cir.1990) ("large sums of unexplained currency," in connection with other evidence of drug trading, is "circumstantial evidence" of the intent to distribute cocaine); U.S. v. $2,361.00 U.S. Currency, More or Less, 1989 WL 135257, *2 (S.D.N.Y.1989)(a substantial amount of cash present is probative of illegal drug activity, because it is "well-known that drug-traffickers usually deal in cash."); U.S. v. $32,310.00 in U.S. Currency, 1988 WL 169271, *6 (D.N.J. 1988)("[a] large amount of cash unsatisfactorily explained constitutes strong evidence, standing alone, from which we may permissibly infer that the money was furnished in exchange for illegal drugs."); U.S. v. $2,500.00 in U.S. Currency, 689 F.2d 10, 16 (2nd Cir.), cert. denied, 465 U.S. 1099, 104 S.Ct. 1591, 80 L.Ed.2d 123 (1984)(characterizing an amount of cash as low as $2,500.00 as being "substantially greater than is commonly kept ... by law-abiding wage earners.").
Second, the defendant currency was located in close proximity to crack cocaine and cocaine paraphernalia. In fact, some of the cash was found in the same blue beach bag that contained the cocaine and paraphernalia. (See Findings of Fact 10, 11 and 12, supra). Ms. Prevo conceded to Agent Fagan that she had purchased the cocaine, and she represented in her sworn statement to the DEA that she "assumed" she placed the cocaine in her automobile. (See Findings of Fact 17 and 21, supra). The Court deems the proximity of the currency to drugs itself to be highly probative circumstantial evidence of a link between the cash and illegal drug activity.
Indeed, courts have recognized that, for purposes of a civil forfeiture action, the physical location of the subject property to the drugs, at the time those items are detected by law enforcement, is strong circumstantial evidence of narcotics trafficking. See, e.g., U.S. v. $10,700.00 in U.S. Currency, 258 F.3d 215, 224 (3rd Cir.2001)("claimants' possession of drugs or drug paraphernalia at the time of the seizure ... would support the government's theory that the money in claimants' possession is connected to illegal drug trafficking."); U.S. v. Currency: $4,424.00 (U.S.), 1994 WL 568594, *4 (N.D.N.Y.1994)(probative that claimant possessed subject cash "in close proximity to distribution quantities of narcotics."); U.S. v. $149,442.43 in U.S. Currency, 965 F.2d 868, 877 (10th Cir.1992)("[t]he unusually large amount of hidden currency, the presence of drug paraphernalia, including packaging supplies and drug notations reflecting large drug transactions, establishes a sufficient nexus between the defendant property and claimant['s] involvement in drug trafficking."); U.S. v. $80,760.00 in U.S. Currency, 781 F.Supp. 462, 473 (N.D.Tex.), aff'd, 978 F.2d 709 (5th Cir.1992)("a large amount of money, found in combination with other persuasive circumstantial evidence, particularly the presence of drug paraphernalia..." is probative in a civil forfeiture proceeding); U.S. v. $24,000.00 in U.S. Currency, 722 F.Supp. 1386, 1390 (N.D.Miss.), aff'd, 902 F.2d 956 (5th Cir.), cert. denied, 498 U.S. 1024, 111 S.Ct. 671, 112 L.Ed.2d 664 (1991)("[t]he storage of the unexplained $24,000.00 in close proximity to a suitcase of eighteen pounds of marijuana in the cinder block foundation of the claimant's house indicates that the money seized is drug-related.").
Third, each of three certified drug detection dogs demonstrated a positive alert for the presence of drugs on the defendant currency. (See Findings of Fact 9, 13 and 14, supra). Although courts are divided as to the weight to be accorded evidence of this nature, it is commonly recognized that *1234 such evidence is of at least minimal probative value, and should be considered in the totality of the evidence presented in a civil forfeiture action. "[A] positive alert by a police dog on a cache of money can have some probative value ... particularly when it is considered along with other telling circumstances ... [o]rdinary experience suggests that currency used to purchase narcotics is more likely than other currency to have come into contact with drugs." Puche-Garcia, 2000 WL 1288181, at *4. See also U.S. v. $67,220.00 in U.S. Currency, 957 F.2d 280, 285 (6th Cir.1992)("a positive dog reaction is at least strong evidence of a connection to drugs.").
Fourth, the amount of the defendant currency was established to be at or near the approximate street value of one kilo of cocaine in the Montgomery, Alabama. (See Finding of Fact 19, supra). Such is probative evidence that the $22,991.00 in question either was intended to be used to purchase a kilo of cocaine, or already had been received in exchange for a kilo of cocaine. See, e.g., U.S. v. $33,500.00 in U.S. Currency, 1988 WL 169272, *4 (D.N.J.1988)(inference that the currency is drug-related becomes "even stronger" where the amount seized is "approximately equivalent to the street value of one kilogram of cocaine.").
Fifth, several controlled crack cocaine transactions were conducted by law enforcement at Ms. Prevo's residence, both before and after August 13, 2000. Such transactions included the personal participation of Ms. Prevo, as recently as approximately one month after the events of August 13, 2000. (See Findings of Fact 23 through 26, supra). Ms. Prevo conceded to Agent Fagan that a significant portion of the defendant currency represented proceeds from one or more drug transactions conducted by her alleged "common law husband," Mr. Wise. (See Finding of Fact 18, supra).
Ms. Prevo's personal involvement in the drug trade both before and almost immediately after the events of August 13, 2000, and her concession to a law enforcement official at least a large percentage of that the cash actually was derived from the drug trade, obviously is very strong evidence of a "substantial connection" between the currency and drug trafficking. See, e.g., Carrell, 252 F.3d at 1201 ("[e]vidence that claimants are generally engaged in the drug business over a period of time" is probative evidence in civil forfeiture proceeding) (citation omitted). See also $10,700.00 in U.S. Currency, 258 F.3d at 224 ("[a]s a matter of logic, circumstantial evidence implicating claimants in recent drug activities, such as, for example, evidence of claimants' contemporaneous affiliation with known drug traffickers, or claimants' possession of drugs or drug paraphernalia at the time of the seizure, would support the government's theory that the money in claimants' possession is connected to illegal drug trafficking."); Currency: $4,424.00 (U.S.), 1994 WL 568594, at *4 (evidence of claimant's "history of involvement in narcotics distribution" is probative); Thomas, 913 F.2d at 1116-17 (claimant's "history of illegal drug activity" and evidence of "[a]n informant's statement" implicating claimant in such activity is probative); U.S. v. $37,780.00 in U.S. Currency, 920 F.2d 159, 163 (2nd Cir.1990)(probative evidence introduced of claimant's "extensive involvement in drug activities.").
Sixth, the evidence presented by the government at trial established the absence of a legitimate origin of the defendant currency. (See Findings of Fact 27 through 38, supra). Such evidence, considered together with the other evidence presented at trial, suggests a "substantial *1235 connection" between the currency and the drug trade. See, e.g., Carrell, 252 F.3d at 1201 ("[e]vidence that claimants ... have no visible source of substantial income," is probative evidence in civil forfeiture proceeding) (citation omitted). See also U.S. v. U.S. Currency, in the Amount of $150,660.00, 980 F.2d 1200, 1207 (8th Cir. 1992)("the absence of any apparent verifiable, legitimate source for the [subject currency], coupled with all of the other evidence ... strongly suggests that the defendant currency was connected with drug activity."); Thomas, 913 F.2d at 1115 ("[e]vidence that cash expenditures [by claimant] hugely exceeded any verifiable income suggests that the money was derived illegally."); U.S. v. $250,000.00 in U.S. Currency, 808 F.2d 895, 899 (1st Cir. 1987)("[t]he absence of any apparent legitimate sources for the $250,000 suggests that the money is derived from drug transactions.").
Even assuming arguendo that a portion of the defendant currency was derived legitimately from the proceeds of Ms. Prevo's seamstress business, as she maintains, Ms. Prevo's admission to Agent Fagan that at a significant portion of the currency derived from one or more drug transactions involving Mr. Wise supports the forfeiture of the currency. (See Finding of Fact 18, supra). "As a wrongdoer, any amount of the [subject property] traceable to drug activities forfeits the entire property." U.S. v. One Single Family Residence Located at 15603 85th Avenue North, Lake Park, Palm Beach County, Florida, 933 F.2d 976, 981 (11th Cir.1991). "[W]hen a claimant to a forfeiture action has actual knowledge, at any time prior to the initiation of the forfeiture proceeding, that claimant's legitimate funds are commingled with drug proceeds, traceable in accord with the forfeiture statute, the legitimate funds are subject to forfeiture." Id., at 982. See also U.S. v. Certain Funds on Deposit in Account No. XX-X-XXXXX, Located at the Bank of New York, 769 F.Supp. 80, 84 (E.D.N.Y.1991)("[e]ven if a portion of the property sought to be forfeited is used to `facilitate' the alleged offense, then all of the property is forfeitable.").
Seventh, and finally, Ms. Prevo continually provided inconsistent and falsified testimony with respect to several key points raised during the trial, including her own attempts to show a legitimate origin of the defendant currency. (See Findings of Fact 18, and 32 through 45, supra). Ms. Prevo's lack of veracity and credibility provides another circumstance lending additional support for the government's assertion that the defendant currency is "substantially connected" to the drug trade. See, e.g., Puche-Garcia, 2000 WL 1288181, at *4 ("[t]he explanation that [claimant] provided to the deputies was inconsistent and confusing."); $37,780.00 U.S. Currency, 920 F.2d at 163 (claimant's "evasive, confused explanation for carrying such a large sum" of currency may support a finding of forfeiture); U.S. v. $9,135.00 in U.S. Currency, 1998 WL 329270, *3 (E.D.La.1998)("the myriad of inconsistencies evident in claimant's explanation as to the source of the money and the duration of her stay in Houston, a known source city for drugs, underscores the fact that her story is simply not credible.").
On the basis of the above factors, the Court concludes that the government has sustained its burden of proof to warrant the forfeiture of the defendant currency. "The aggregation of facts, each one insufficient standing alone, may suffice to meet the government's burden." $67,220.00 in U.S. Currency, 957 F.2d at 284. In this regard, in civil forfeiture proceedings, "[c]ourts have been cautioned not to dissect *1236 strands of evidence as discrete and disconnected occurrences." Thomas, 913 F.2d at 1115 (quotation marks and citations omitted). In such cases, the Court must judge the evidence "not with clinical detachment but with a common sense view to the realities of normal life," in the "totality of the circumstances." U.S. v. $4,255,000.00, 762 F.2d 895, 903-04 (11th Cir.), cert. denied, 474 U.S. 1056, 106 S.Ct. 795, 88 L.Ed.2d 772 (1986). See also Puche-Garcia, 2000 WL 1288181, at *4 (in evaluating evidence in a civil forfeiture proceeding, the court shall "consider all of these facts in the totality....").
The above factors, considered in their aggregate, persuade the Court that a preponderance of the evidence exists to show a "substantial connection" between the defendant currency and the purchase or sale of crack cocaine. 18 U.S.C. § 983(c)(3). As such, the currency is subject to forfeiture because the currency constitutes "... moneys ... furnished or intended to be furnished by any person in exchange for a controlled substance ... [or] all proceeds traceable to such an exchange, [or] ... moneys ... used or intended to be used to facilitate..." the same. 21 U.S.C. § 881(a)(6).
II. The Defendant Revolver and Ammunition
As an initial matter, Ms. Prevo has standing to contest the forfeiture of the defendant revolver and ammunition. Although Ms. Prevo does not assert legal ownership over the revolver and ammunition, she appears to assert some degree of possessory interest over them. Again, Ms. Prevo testified that the revolver had been given to her by a "friend" of another friend of hers named Wardell Washington. (See Finding of Fact 8, supra). "A claimant need not own the property in order to have standing to contest its forfeiture; a lesser property interest, such as a possessory interest, is sufficient for standing." U.S. v. $38,000.00 in U.S. Currency, 816 F.2d 1538, 1544 (11th Cir.1987).
The Court concludes that the government has met its burden of demonstrating an entitlement to forfeiture of the defendant revolver and ammunition. 21 U.S.C. § 881(a)(11) provides in pertinent part that "[a]ny firearm ... used or intended to be used to facilitate the transportation, sale, receipt, possession, or concealment of [drugs or drug paraphernalia]..." is subject to forfeiture. Thus, in sum, it is the government's burden with respect to the defendant revolver and ammunition to prove by a preponderance of the evidence that there is a "substantial connection" between those items and drug activity. 18 U.S.C. § 983(c). The Court observes that the evidence presented at trial by the government with regard to these items was largely unrebutted by Ms. Prevo.
In the present action, as found supra, when approached by Officer Mitchum on August 13, 2000, Ms. Prevo then told Sergeant Mitchum that she had a gun in her purse. (See Finding of Fact 7, supra). Ms. Prevo eventually handed to Officer Turberville a loaded .22 "American Arms" magnum revolver that had been in her purse on the front seat of her automobile. Ms. Prevo testified that the revolver belonged to a "friend" of another friend of hers, Wardell Washington, whom, as discussed supra, the evidence at trial shows was engaged in at least one drug transaction at Ms. Prevo's residence in October 2000. (See Finding of Fact 25, supra). Ms. Prevo stated to Agent Fagan that she possessed the revolver for her own "protection." (See Finding of Fact 17, supra). Considering that the Ms. Prevo possessed both illegal drugs and a large sum of money which the court has determined to be substantially connected to the drug transaction, *1237 the court finds that the gun was also substantially connected to the furtherance of drug activity.
Accordingly, the Court concludes that the defendant revolver and ammunition, in association with the defendant currency, the crack cocaine, and the crack cocaine paraphernalia, more likely than not was a tool of the drug trade. It is generally recognized that firearms are "tools of the trade of those engaged in illegal drug activities and are highly probative in proving criminal intent." U.S. v. Martinez, 808 F.2d 1050, 1057 (5th Cir.), cert. denied, 481 U.S. 1032, 107 S.Ct. 1962, 95 L.Ed.2d 533 (1987). It has been observed that, "[e]xperience on the trial and appellate benches has taught that substantial dealers in narcotics keep firearms on their premises as tools of the trade almost to the same extent as they keep scales ... glassine bags, cutting equipment and other narcotic equipment." U.S. v. Perez, 648 F.2d 219, 224 (5th Cir.), cert. denied, 454 U.S. 1055, 102 S.Ct. 602, 70 L.Ed.2d 592 (1981) (citations omitted).[5]See also U.S. v. Kearney, 560 F.2d 1358, 1369 (9th Cir.), cert. denied, 434 U.S. 971, 98 S.Ct. 522, 54 L.Ed.2d 460 (1977)("[p]ossession of a firearm demonstrates the likelihood that a defendant took steps to prevent contraband or money from being stolen.").
Therefore, a preponderance of the evidence exists to show a "substantial connection" between the defendant revolver and ammunition and drug activity. 18 U.S.C. § 983(c). As such, these items are subject to forfeiture because they were "used or intended to be used to facilitate the transportation, sale, receipt, possession, or concealment of [drugs or drug paraphernalia]. .." 21 U.S.C. § 881(a)(11).
CONCLUSION
Accordingly, the undersigned determines that judgment be entered in favor of plaintiff United States, and that the defendant currency ($22,991.00), revolver (.22 Magnum, Serial Number 214835) and ammunition, be forfeited to the permanent custody and control of the United States. The United States Marshall's Service is directed to take appropriate and customary action with respect to these items.
NOTES
[1] On May 23, 2001, Chief District Judge Butler, to whom this action initially was assigned, entered a "Default Judgment on Forfeiture" as to the interest of Derrick Wise in the defendant currency, revolver and ammunition. (Doc. 28).
[2] The facts found herein by the Court are derived from the undisputed facts set forth in the parties' pretrial order, filed on April 5, 2002 (Doc. 66), the credible testimony of witnesses presented at trial, and documents and pictures admitted into evidence during trial. Documents and pictures admitted into evidence during trial are referred to specifically as either "Govt. Exh." when tendered by the United States, or "Def. Exh." when tendered by the claimant Ms. Prevo.
In addition, at the outset of Ms. Prevo's testimony during the presentation of the government's case-in-chief, as well as during the testimony Ms. Prevo gave on her own behalf during the presentation of her case, the Court fully explained to her the nature and availability of the privilege against self-incrimination afforded by the Fifth Amendment to the United States Constitution. At trial, Ms. Prevo stated that there were criminal charges pending against her. Nevertheless, with the exception of one line of questioning posed to Ms. Prevo by the government concerning certain aspects of her history of drug use, Ms. Prevo otherwise knowingly and voluntarily waived her privilege against self-incrimination during trial, and gave testimony during the government's case-in-chief and during the presentation of her case. "The very fact of a parallel criminal proceeding, however, d[oes] not alone undercut [a claimant's] privilege against self-incrimination, even though the pendency of the criminal action forced [her] to choose between preserving [her] privilege against self-incrimination and losing the civil suit." United States v. Lot 5, Fox Grove, Alachua County, Florida, 23 F.3d 359, 364 (11th Cir.1994)(quoting United States v. Little Al, 712 F.2d 133, 136 (5th Cir. 1983)).
[3] Among other things, CAFRA has enhanced the government's initial burden of proof from a mere showing of "probable cause" to believe that the subject property was involved in unlawful activity, to proof by a preponderance of the evidence of "a substantial connection between the property and the offense." 18 U.S.C. § 983(c)(1) and (3). However, in essence, the government is obligated to prove the same connection between the subject property and the offense that it was required to prove under the pre-CAFRA law, but it now must do so by a preponderance of admissible, non-hearsay, evidence. See The Civil Forfeiture Reform Act of 2000: Expanded Government Forfeiture Authority and Strict Deadlines Imposed on All Parties, 27 J.Legis. 97, 110 (2001). As stated by one sister court has observed, as a consequence of CAFRA:
[T]he government is not entitled to proceed by civil complaint for forfeiture solely on probable cause, but must establish, by a preponderance of the evidence, that the property is subject to forfeiture. This being true, it cannot proceed on mere hearsay. And a claimant (who has appropriate standing) can now `put the government to its proof', without doing more than denying the government's right to forfeit the property.
One Parcel of Property Located at 2526 Faxon Avenue, Memphis, Tennessee, 145 F.Supp.2d at 950 (footnote omitted).
[4] The Court observes that Ms. Prevo has not alleged the affirmative defense of "innocent owner" pursuant to 18 U.S.C. § 983(d). The defense applies to situations in which, generally speaking, the claimant either did not know of the illegal conduct or knew of the conduct but took steps to prevent the subject property from being used to further the conduct. Id. Indeed, the underlying purpose of the defense would be incompatible with Ms. Prevo's claim to the subject property in this action that the currency at issue constituted proceeds legitimately derived from her seamstress business, and not derivative of any drug-related transactions. Thus, in this Memorandum Opinion and Order, the Court does not address the elements of the innocent owner defense.
[5] In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981), the Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to October 1, 1981.
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69 F.3d 551
U.S.v.Rogers**
NO. 95-8228
United States Court of Appeals,Eleventh Circuit.
Oct 06, 1995
1
Appeal From: M.D.Ga.,No. 93-00033-CR-1-MAC
2
AFFIRMED.
**
Local Rule 36 case
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957 S.W.2d 246 (1997)
Lesley D. BLADES, Appellant,
v.
COMMONWEALTH of Kentucky, Appellee.
No. 95-SC-979-DG.
Supreme Court of Kentucky.
October 30, 1997.
Rehearing Denied January 22, 1998.
*248 Charles R. Orange, Russellville, for Appellant.
A.B. Chandler, III, Attorney General, Perry T. Ryan, Criminal Appellate, Division Office of Attorney General, Frankfort, George Gleitz, Assistant County Attorney, Bowling Green, for Appellee.
*247 GRAVES, Justice.
This matter is before the Court on discretionary review from the Warren Circuit Court. Appellant, Lesley Blades, was convicted in the Warren District Court of operating a vehicle while under the influence of alcohol, second offense. He was fined $500 and sentenced to seven days in jail. The conviction was affirmed on appeal to the circuit court and the Court of Appeals denied review. Four issues are presented: whether Appellant was entitled to an alcohol intoxication instruction; whether the circuit court should have reversed the conviction due to the Commonwealth's failure to respond to the appeal; whether sufficient evidence was presented to support Appellant's conviction; and whether the trial court erred in failing to bifurcate the guilt phase and penalty phase of the trial.
On November 6, 1993, two Kentucky State Troopers responded to citizens' complaints that a male was staggering in the roadway and that a truck with its emergency flashers operating was parked in the roadway. The troopers observed Appellant walking down U.S. Highway 31 W in Warren County. Upon questioning, Appellant strongly smelled of alcohol and failed to pass several field sobriety tests. He was subsequently placed under arrest for public intoxication. The troopers came upon Appellant's truck approximately one mile down the road. The truck was in the center of the highway and its engine was still running. Appellant admitted he had driven the truck to its location. At the Warren County jail, Appellant submitted to a breathalyzer test which indicated his blood alcohol concentration was .234 percent. Because Appellant had previously been convicted of DUI within five years, he was charged with DUI second offense.
At trial, both troopers testified that Appellant admitted that the truck was his and he had, in fact, been driving. Appellant testified that he had driven the truck to Dueling Grounds race track in Simpson County earlier on the day of the arrest. However, he explained that at the end of the day he asked his stepdaughter to drive because he was intoxicated. His truck developed a problem while on the highway, and he had started walking in order to get assistance. Appellant testified that he did not tell the truth when he told the troopers he had been driving, in order to protect his stepdaughter who was married.
In addition to Appellant's testimony, a defense witness testified that he had helped a woman start a truck in the race track parking lot on the day in question because she was unfamiliar with diesels. The witness stated that Appellant was a passenger in the truck. The stepdaughter, as well, testified that she, and not Appellant, had driven the truck from the race track to Warren County.
At the close of trial, the jury found Appellant guilty of DUI second offense. On appeal, the Warren Circuit Court affirmed the judgment of the district court, by order entered on June 29, 1995. In October 1995, the Court of Appeals denied discretionary review. This Court subsequently granted discretionary review in May 1996. Additional facts are set forth as necessary in the course of this opinion.
Appellant's first allegation of error is the trial court's failure to instruct the jury on alcohol intoxication in a public place. Appellant contends that the fact he was arrested while walking down the highway entitled him to such an instruction. However, it is apparent from the record, and Appellant conceded as much during oral argument, that an instruction was never requested.
"It is fundamental that in a criminal case it is the duty of the court `by the instructions to give to the accused the opportunity for the jury to determine the merits of any lawful defense which he has.'" Sanborn v. Commonwealth, Ky., 754 S.W.2d 534 (1988) (Quoting Curtis v. Commonwealth, 169 Ky. 727, 184 S.W. 1105, 1107 (1916)). However, this Court has consistently held that pursuant *249 to RCr 9.54(2), a party cannot assign error to instructions unless that party "makes a specific objection to the giving or failure to give an instruction before the court instructs the jury, stating specifically the matter to which he objects and the ground or grounds of his objection." Chumbler v. Commonwealth, Ky., 905 S.W.2d 488, 499 (1995); see also Perdue v. Commonwealth, Ky., 916 S.W.2d 148, 160 (1996) and Davis v. Commonwealth, Ky., 795 S.W.2d 942, 952 (1990). The record is void of any indication that Appellant ever requested an alcohol intoxication instruction. Thus, this issue is unpreserved and does not warrant consideration upon review.
Appellant next argues that he was entitled to essentially a reversal by default in the circuit court because the Commonwealth failed to file a brief or response to his appeal. Appellant relies primarily on CR 76.12(8)(c) which provides:
If the appellee's brief has not been filed within the time allowed, the court may: (i) accept the appellant's statement of the facts and issues as correct; (ii) reverse the judgment if appellant's brief reasonably appears to sustain such action; or (iii) regard the appellee's failure as a confession of error and reverse the judgment without considering the merits of the case. (emphasis added)
Rule 76 clearly states that it only applies to practice and procedure in the Court of Appeals and Supreme Court. CR 76.01. Appeals to the circuit court are instead governed by CR 72. Nonetheless, the language of CR 76.12(8)(c), authorizes discretionary, not automatic, relief. We are not aware of any rule requiring an automatic reversal in cases where an appellee fails to file an appellate brief. Appellant's argument is without merit.
Appellant further takes issue with the trial court's failure to grant his motion for a directed verdict. He contends that the Commonwealth produced no evidence to prove that he drove his vehicle, other than his confession to the troopers when he was first arrested.
Appellant relies on the rationale set forth in Pence v. Commonwealth, Ky.App., 825 S.W.2d 282 (1991), in which the Court of Appeals reversed the defendant's conviction on the grounds that there was no evidence to prove that he had been operating, while intoxicated, the vehicle in which he was found. The defendant in Pence was found sitting behind the wheel of his vehicle parked at a truck stop. In response to a question by the police officer, the defendant admitted that he had been operating the vehicle. A breathalyzer test revealed a blood alcohol content of .26 percent. The defendant was subsequently convicted in the circuit court for operating a vehicle while under the influence of alcohol, KRS 189A.010.
On appeal, the Court of Appeals determined that nothing in the evidence presented permitted a reasonable inference as to how long the defendant had been at the truck stop or that it was more likely that the defendant drove to the truck stop while intoxicated than he became intoxicated after arriving. "[T]here is no evidence to indicate whether such misconduct consisted only of drunkenness in public or operating a motor vehicle while drunk." Id. at 283.
Viewing the evidence in the light most favorable to the prosecution, there is still an absence of proof that the appellant operated his vehicle while intoxicated. At best the evidence makes the existence of these elements of the offense slightly more probable than they would be without such evidence, but that is not enough. See Jackson v. Virginia, 443 U.S. 307, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979).
Pence, supra at 284.
The facts in this case differ from Pence in that the time of arrest was more proximate to the time of the offense. The record reveals that no alcohol containers were found in Appellant's vehicle. Further, there were no liquor stores located on the approximately one mile stretch of road that Appellant walked. It is, nonetheless, quite improbable that Appellant could have become intoxicated in the short period of time it took him to leave his truck and travel to the location where he was subsequently arrested. This leads to a reasonable conclusion that Appellant *250 became intoxicated prior to operating his vehicle.
Moreover, we are of the opinion that Pence is flawed because it erroneously requires a greater degree of certainty in DUI cases than is required in other areas of the law. It is well-settled that a jury may make reasonable inferences from the evidence. Commonwealth v. DeHaven, Ky., 929 S.W.2d 187 (1996); Carpenter v. Commonwealth, Ky., 771 S.W.2d 822 (1989); Barker v. Commonwealth, 304 Ky. 13, 199 S.W.2d 713 (1947), Mattingly v. Commonwealth, 240 Ky. 625, 42 S.W.2d 874 (1931). We fail to logically perceive a rational differentiation between the inferences that may be drawn in DUI cases of this nature and other crimes. Clearly, if inferences from circumstantial evidence are sufficient to convict in felony crimes, Commonwealth v. Preece, Ky., 844 S.W.2d 385, 388 (1992), a fortiori circumstantial evidence and reasonable inferences therefrom are sufficient for a jury conviction of a misdemeanor offense, as is present in this case. Thus, we overrule Pence to the extent that it requires a heightened level of evidence in order to be submitted to the jury.
RCr 9.60 provides that a confession not made in open court will not warrant a conviction unless corroborated by other proof that such an offense occurred. The evidence presented in this case consisted of the following: Appellant was observed staggering in the roadway; upon further investigation it was determined that Appellant was intoxicated as demonstrated by his failure to pass the field sobriety tests as well as the breathalyzer results; Appellant's vehicle was found in the center of the roadway with the engine still running; and Appellant admitted to the troopers that he had driven the vehicle to its location. Clearly, there was more than sufficient circumstantial evidence presented to satisfy the corroboration requirement of RCr 9.60 and allow the jury to draw the reasonable inference that Appellant had been operating his vehicle while under the influence of alcohol. Our standard for review of a denial of a motion for directed verdict based on insufficient evidence is that if, under the evidence as a whole, it would be clearly unreasonable for a jury to find the defendant guilty, a directed verdict of acquittal should be granted. Commonwealth v. Benham, Ky., 816 S.W.2d 186 (1991); Commonwealth v. Sawhill, Ky., 660 S.W.2d 3 (1983); Trowel v. Commonwealth, Ky., 550 S.W.2d 530 (1977). There was no error in denying Appellant's motion for directed verdict.
Although proof beyond a reasonable doubt is necessary to convict of a criminal offense, the proof required by RCr 9.60 to corroborate an extrajudicial confession need not be such that, independent of the confession, would establish the corpus delicti or Appellant's guilt beyond a reasonable doubt; and that proof of the corpus delicti, i.e., that the offense of DUI was actually committed, may be established by considering the confession as well as the corroborating evidence. Prichard v. United States, 181 F.2d 326 (6th Cir.1950), affirmed, 339 U.S. 974, 70 S.Ct. 1029, 94 L.Ed. 1380 (1950); see Lacey v. Commonwealth, 251 Ky. 419, 65 S.W.2d 61 (1933); C.E. Torcia, 1 Wharton's Criminal Law, § 28, p. 172 (15th ed. Clark Boardman Callaghan 1993); Cooper, 1 Kentucky Instructions to Juries (Criminal), §§ 1.01B, 2.05 (4th ed. Anderson 1993). Thus, even if the circumstantial evidence in this case standing alone would not suffice to prove guilt beyond a reasonable doubt, it sufficed to corroborate Appellant's confession; and the circumstantial evidence and the confession considered together constituted sufficient proof to take the case to the jury.
Finally, Appellant argues that a new trial is required because the trial court failed to bifurcate the guilt phase from the penalty phase at trial. Appellant concedes that this issue was not raised in the district court, nor on appeal to the circuit court.
Notwithstanding that this issue is unpreserved, it is also unpersuasive. In Dedic v. Commonwealth, Ky., 920 S.W.2d 878 (1996), this Court held that misdemeanor DUI trials must be bifurcated. However, at the time of Appellant's trial in 1994, there was no constitutional or statutory requirement for the bifurcation of misdemeanor DUI trials. Ratliff v. Commonwealth, Ky.App., 719 S.W.2d 445 (1986); Carver v. Commonwealth, Ky., 634 S.W.2d 418 (1982). Appellant is simply seeking *251 to take advantage of a new decision which has no retroactive applicability to his trial.
For the foregoing reasons, the judgment and conviction of the Warren Circuit Court is affirmed.
COOPER, GRAVES, LAMBERT and WINTERSHEIMER, JJ., concur.
STUMBO, J., dissents in a separate opinion in which STEPHENS, C.J., and MARGARET KEANE, Special Justice, join.
JOHNSTONE, J., not sitting.
STUMBO, Justice, dissenting.
Respectfully, I must dissent. The majority has tossed aside precedent more than ten years old and ignored the rules of this Court in affirming this conviction. RCr 9.60 provides as follows: "A confession of a defendant, unless made in open court, will not warrant a conviction unless accompanied by other proof that such an offense was committed." When the evidence is examined, without considering the confession, there is not enough left to fulfill the corroborative evidence requirement. Blades was found in an intoxicated state walking on the roadway. His car was found some distance away, its engine on, parked in the roadway. Blades testified that he had been drinking at Dueling Grounds race track, so he got his stepdaughter to drive him home. The stepdaughter and an independent witness both testified that she did indeed drive the vehicle from the grounds of the track. Both Blades and his stepdaughter testified that the vehicle began to malfunction and that the stepdaughter left to obtain help, catching a ride with a passing car back to Dueling Grounds. No one puts Blades behind the wheel in an intoxicated condition. If the statement Blades gave is disregarded, there is simply no evidence to prove that he committed the offense of driving under the influence. The case law is clear. There must be proof that the crime was committed to corroborate the out-of-court confession. Wilson v. Commonwealth, Ky., 476 S.W.2d 622 (1971); Dolan v. Commonwealth, Ky., 468 S.W.2d 277 (1971). Here, there is no proof of a crime without Blades' statement. The statement made by Blades should not have been admitted into evidence because it was uncorroborated.
It is this scenario that the now-overruled cases of Pence v. Commonwealth, Ky.App., 825 S.W.2d 282 (1991) and Wells v. Commonwealth, Ky.App., 709 S.W.2d 847 (1986), sought to address. The evidence in each of those cases was just as consistent with guilt as with innocence. Thus, the cases were taken from the jury because there was insufficient evidence to support a jury finding of guilt beyond a reasonable doubt. In the instant case, once the proper evidentiary ruling was made, then a directed verdict should have been granted. I would reverse the conviction of Appellant.
STEPHENS, C.J., and MARGARET KEANE, Special Justice, joins this dissenting opinion.
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FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS DEC 29 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
RAHINAH IBRAHIM, an individual, Nos. 14-16161
14-17272
Plaintiff-Appellant,
D.C. No. 3:06-cv-00545-WHA
v. Northern District of California,
San Francisco
U.S. DEPARTMENT OF HOMELAND
SECURITY; TERRORIST SCREENING ORDER
CENTER; FEDERAL BUREAU OF
INVESTIGATION; CHRISTOPHER A.
WRAY, in his official capacity as Director
of the Federal Bureau of Investigation;
KIRSTJEN NIELSEN, in her official
capacity as Secretary of the Department
of Homeland Security; JEFFERSON B.
SESSIONS III, Attorney General, in his
official capacity as Attorney General;
CHARLES H. KABLE IV, Director, in
his official capacity as Director of the
Terrorist Screening Center; CARL
GHATTAS, in his official capacity as
Executive Assistant Director of the FBI's
National Security Branch; NATIONAL
COUNTERTERRORISM CENTER;
RUSSELL "RUSS" TRAVERS, in his
official capacity as Director of the
National Counterterrorism Center;
DEPARTMENT OF STATE; REX W.
TILLERSON, in his official capacity as
Secretary of State; UNITED STATES OF
AMERICA,
Defendants-Appellees.
THOMAS, Chief Judge:
Upon the vote of a majority of nonrecused active judges, it is ordered that
these cases be reheard en banc pursuant to Federal Rule of Appellate Procedure
35(a) and Circuit Rule 35-3. The three-judge panel disposition in these cases shall
not be cited as precedent by or to any court of the Ninth Circuit.
Judges Graber, Murguia, Owens, and Friedland did not participate in the
deliberations or vote in these cases.
2
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08-9044-am
In re Gregory Cooper
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389 Mass. 729 (1983)
452 N.E.2d 208
DISTRICT ATTORNEY FOR THE NORTHERN DISTRICT
vs.
BOARD OF TRUSTEES OF THE LEONARD MORSE HOSPITAL.
Supreme Judicial Court of Massachusetts, Middlesex.
April 7, 1983.
July 18, 1983.
Present: HENNESSEY, C.J., WILKINS, LIACOS, ABRAMS, NOLAN, LYNCH, & O'CONNOR, JJ.
Kenneth J. Mickiewicz for the defendant.
Carol S. Ball, Assistant District Attorney, for the plaintiff.
HENNESSEY, C.J.
The issue raised in this case is whether the board of trustees of Leonard Morse Hospital (hospital) is a governmental body within the meaning of the open meeting law, G.L.c. 39, § 23A. On May 16, 1979, the district attorney for the northern district notified the trustees that his office had received a complaint alleging that the board had been violating G.L.c. 39, §§ 23A-23C. He directed them to comply with the provisions of §§ 23A-23C. When the trustees replied that they were not subject to the statute, the district attorney brought suit in the Superior Court pursuant to G.L.c. 39, G.L.c. 66, § 17, and G.L.c. 231A, § 1. Acting on cross motions for summary judgment, the *730 judge granted summary judgment in favor of the district attorney and entered a judgment declaring that the hospital is a "governmental body" for the purposes of G.L.c. 39, §§ 23A-23C. The defendants brought this appeal, arguing that the board of trustees is not a "governmental body" within the meaning of G.L.c. 39, § 23A, and that even if the board of trustees were a governmental body, the requirements of the open meeting law may not constitutionally be applied to it under the contract clause, art. 1, § 10, of the United States Constitution. We transferred the case to this court on our own motion. A majority of the court agree with the defendants that the board of trustees is not a governmental body within the meaning of the open meeting law. Thus, we reverse the judgment on this ground, and do not address the defendants' constitutional argument.
The judge found the following facts. One Mary Ann Morse died on January 11, 1891, leaving a will which devised the residue of her estate to the inhabitants of Natick, in their corporate capacity, for the purpose of establishing and maintaining a hospital.[1] The hospital was to be under the care, control, and management of a board of trustees consisting of seven persons who were to be inhabitants of *731 Natick. The first seven trustees were to be chosen by the voters at the next annual election, and each trustee would be elected to serve for a different term ranging from one to seven years. Thus, after the first election, the voters of Natick would choose at least one trustee each year at the annual election to serve a term of seven years.
At the annual town meeting in 1893, the inhabitants voted to accept the devise and bequest. At the regular annual election held in 1893, seven trustees were duly elected by the voters of Natick in accordance with the provisions of the will.
By c. 216 of the Special Acts of 1916, the trustees then in office and their successors were made a corporation with the name Leonard Morse Hospital, with all the powers and privileges and subject to all the duties, restrictions, and liabilities then or thereafter in force relating to charitable, religious, and educational corporations. No vote with respect to the adoption or approval of c. 216 was ever taken by the town. Mahoney v. Attorney Gen., 346 Mass. 709, 712 (1964).
The Massachusetts open meeting law requires that "[a]ll meetings of a governmental body shall be open to the public...." G.L.c. 39, § 23B, as amended through St. 1980, c. 220, § 3. General Laws c. 39, § 23A, as amended *732 through St. 1978, c. 372, § 9, defines "[g]overnmental body" as "every board, commission, committee or subcommittee of any district, city, region or town, however elected, appointed or otherwise constituted, and the governing board of a local housing, redevelopment or similar authority." We are aware of no judicial decision in Massachusetts addressing the nature or extent of the meaning of the term "governmental body" as used in G.L.c. 39, § 23A. In several cases §§ 23A-23C have been applied to certain entities without discussion of the meaning of "[g]overnmental body." See Ghiglione v. School Comm. of Southbridge, 376 Mass. 70, 71-73 (1978) (school committee); District Attorney for the Northwestern Dist. v. Selectmen of Sunderland, 11 Mass. App. Ct. 663, 665 (1981) (municipal board of selectmen); Yaro v. Board of Appeals of Newburyport, 10 Mass. App. Ct. 587, 587-588 (1980) (town zoning board of appeals); Nantucket Land Council, Inc. v. Planning Bd. of Nantucket, 5 Mass. App. Ct. 206, 213 (1977) (town planning board); Cole v. Brookline Hous. Auth., 4 Mass. App. Ct. 705, 709 (1976) (municipal housing authority).
A number of factors support the conclusion that the board of trustees is not a governmental body within the meaning of the open meeting law. The hospital is a charitable institution established under the will of Mary Ann Morse. In Mahoney v. Attorney Gen., 346 Mass. 709, 714-715 (1964), we concluded that, under the terms of the will of Mary Ann Morse, the board of trustees of the hospital holds exclusive control over the management of the hospital and that the town of Natick is bound by the terms of the will.[2] It is true that the trustees are elected directly by the voters of the town. Nevertheless, the means by which the members of a particular board are selected is only one factor among many to be considered in evaluating whether a particular *733 entity is a governmental body. Cf. Colonial Tavern, Inc. v. Boston Licensing Bd., 384 Mass. 372, 376 (1981) ("The fact that the Governor appoints the members of the [Boston licensing] board does not warrant a conclusion that the board acts as a State agency" rather than a local agency). Furthermore, in this case the only reason that the trustees are chosen in this manner is because the will of Mary Ann Morse, a private individual, so provided.
Other factors support the conclusion that the board of trustees is not a governmental body. The board of trustees lacks traditional governmental powers such as the power to tax, the power to take property by eminent domain, and the power to regulate coercively individual and group conduct.[3] In addition, it lacks the authority to control any other governmental authority, just as the town government of Natick is without power to control or manage the hospital. See Mahoney v. Attorney Gen., supra. Although legal title to the hospital is in the town and the town has appropriated money and issued bonds to support the hospital, we do not think that either of these considerations is sufficient to support a determination that the board of trustees is a governmental body. Legal title to the hospital is in the town only because the will of Mary Ann Morse so provided. As we have observed previously, control of the hospital remains with the trustees and not with the town. Furthermore, the fact that the hospital has received public monies is not determinative. Cf. Bello v. South Shore Hosp., 384 Mass. 770, 775 (1981).
Based on all these considerations, a majority of the court conclude that the board of trustees is not a governmental *734 body within the meaning of the open meeting law. Accordingly, the judgment is reversed and the case is remanded to the Superior Court for proceedings consistent with this opinion.
So ordered.
NOTES
[1] Article Sixth of the last will and testament of the late Mary Ann Morse provides: "All the rest, residue, and remainder of my estate, real, personal, or mixed, I give, devise and bequeath unto the inhabitants of Natick, in their corporate capacity, for the purpose of erecting, establishing and maintaining a hospital in said town for the reception and treatment of persons who may need medical or surgical attendance during temporary sickness or injury, upon such terms and under such rules and regulations as the trustees of said hospital may from time to time make for the government of the same. Said hospital shall be erected by, and shall be under the care, control and management of, a board of trustees, consisting of seven persons, who shall be inhabitants of said town and be chosen by the legal voters thereof as follows: the whole board shall be chosen at the first election, one to serve seven years, one for six years, one for five years, one for four years, one for three years, one for two years, and one for one year, and thereafter one each year to serve for seven years; and in case a vacancy shall occur in said board from any cause, said vacancy shall be filled by the remaining members of said board, until the next annual election of said town, when said vacancy shall be filled at such election. The hospital shall be called the Leonard Morse Hospital, and a tablet shall be placed in some suitable place therein with this inscription thereon, `This Hospital was established in memory of Leonard Morse by his widow, Mary Ann Morse.'
"The amount of the funds remaining after said hospital shall have been built and established shall be safely invested by said trustees in their own names, and the income thereof shall be used for the maintenance and support of said hospital in such manner as said trustees may deem best.
"It is my wish that a good and substantial hospital be built and established, having due regard to the amount which may be received under this legacy; but I deem it inexpedient to attach any conditions to this gift or to impose any unnecessary restrictions or limitations on the authority of the said trustees, having full confidence that the town in which my husband and myself lived so many years, and for which we both cherished the greatest goodwill and affection, will choose only suitable and proper persons to act as trustees, and that trustees so chosen will at all times act with fidelity, discretion, and judgment, and for the best interest of all concerned in all matters pertaining to said trust."
[2] Compare Walker v. Natick, Superior Court, Middlesex County, Civ. Action No. 80-1867 (1980) (declaring invalid a change in the town charter which shifted management and control over the hospital from the trustees to a town administrator).
[3] We need not decide today whether the term "[g]overnmental body" in G.L.c. 39, § 23A, includes only entities that exercise sovereign functions, such as the ability to tax or the power to take property by eminent domain, or whether it also encompasses entities which engage in purely proprietary functions if they are sufficiently connected with a municipality. See, e.g., State ex rel. Bd. of Pub. Utils. of Springfield, Mo. v. Crow, 592 S.W.2d 285, 288 (Mo. Ct. App. 1979); Raton Pub. Serv. Co. v. Hobbes, 76 N.M. 535, 539-540 (1966).
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108 F.3d 1369
NOTICE: THIS SUMMARY ORDER MAY NOT BE CITED AS PRECEDENTIAL AUTHORITY, BUT MAY BE CALLED TO THE ATTENTION OF THE COURT IN A SUBSEQUENT STAGE OF THIS CASE, IN A RELATED CASE, OR IN ANY CASE FOR PURPOSES OF COLLATERAL ESTOPPEL OR RES JUDICATA. SEE SECOND CIRCUIT RULE 0.23.In re CITY OF NEW YORK, A municipal Corporation, Petitioner.CITY OF NEW YORK, A municipal corporation, and JosephHeavey, Officer, Petitioner,v.James PEARSON and Catherine Pearson, Respondents.
No. 97-3016.
United States Court of Appeals, Second Circuit.
March 24, 1997.
Appearing for Petitioner: Elizabeth I. Freedman, Assistant Corporation Counsel, City of New York, New York, New York.
Appearing for Respondent: Robert L. Herbst, Herbst & Greenwald, New York, New York.
Present Honorable FEINBERG, CARDAMONE and WINTER, Circuit Judges.
SUMMARY ORDER
1
Petition for a writ of mandamus to the United States District Court for the Southern District of New York (Martin, Judge).
2
This cause came on to be heard on the transcript of record from the United States District Court for the Southern District of New York, and a motion for a stay pending decision was argued.
3
ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the case is remanded to the District Court.
4
The City of New York petitions for a writ of mandamus directing Judge Martin to vacate three orders, entered on January 22, 1997, February 3, 1997, and March 10, 1997, which directed the City to produce defendant police officer Joseph Heavey's social security number to the plaintiffs in Pearson v. Heavey, 96 Civ. 3863(JSM). The City also moves for a stay of the orders pending our decision.
5
We remand to the district court for Judge Martin to state his reasons for directing the City to produce Heavey's social security number. Judge Martin has discretion to allow supplementation of the record as he deems appropriate and may consider protective measures designed to address concerns raised by petitioner. The mandate shall issue forthwith and shall state that the parties shall inform the clerk of this court when the district court issues its decision on remand. Jurisdiction will then be automatically restored to this court. See United States v. Jacobson, 15 F.3d 19, 21-22 (2d Cir.1994). After jurisdiction is restored, the clerk shall set an expedited briefing schedule, and the matter will then be heard by this panel on the briefs.
6
The matter is remanded and the orders to produce the officer's social security number are stayed until further order of this court.
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United States Court of Appeals
For the First Circuit
No. 11-1479
UNITED STATES OF AMERICA,
Appellee,
v.
MATTHEW CLARK,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. George Z. Singal, U.S. District Judge]
Before
Lynch, Chief Judge,
Boudin and Selya, Circuit Judges.
James H. Budreau for appellant.
Margaret D. McGaughey, Assistant United States Attorney
(Appellate Chief), with whom Thomas E. Delahanty II, United States
Attorney, was on brief, for appellee.
July 16, 2012
SELYA, Circuit Judge. Defendant-appellant Matthew Clark
was convicted on two counts of possessing child pornography. He
now challenges the propriety of the search that uncovered his
pornography collection and ultimately led to his conviction. He
also challenges the 210-month sentence imposed by the court below.
Concluding, as we do, that the defendant's arguments are without
merit, we affirm.
I. BACKGROUND
The facts relevant to this appeal are essentially
undisputed. On January 19, 2008, officers from Maine's Animal
Welfare Program (AWP) and the local sheriff's department executed
a search of a home in Somerville, Maine, inhabited by Fern Clark
and her adult son, Matthew. The officers conducted this search
pursuant to a warrant issued by a state magistrate the previous day
(the first warrant), which authorized a search for evidence of
animal cruelty and the unlicensed operation of a breeding kennel.
During their search, the officers entered the defendant's
bedroom. Near a computer work station, they saw a handwritten list
of web sites with titles suggestive of child pornography together
with nude photographs appearing to depict underage males.
The officers immediately halted their search and
approached the local magistrate for a supplementary search warrant
-2-
(the second warrant).1 The second warrant authorized a search of
the Clark household for child pornography. While executing this
warrant, officers seized evidence that subsequently formed the
basis for a federal indictment against the defendant for two counts
of possessing child pornography.2 See 18 U.S.C. § 2252A(a)(5)(B).
Prior to trial, the defendant moved to suppress evidence
seized during the second search. Pertinently, he argued that the
first warrant was defective (and, therefore, that the original
search was illegal) because the affidavit submitted in support of
the warrant application did not make out probable cause to believe
that evidence of either animal cruelty or an unlicensed kennel
operation would be found. Building on this foundation, he argued
that the second search would not have come to pass but for the
evidence of child pornography uncovered during the initial
(illegal) search. He concluded, therefore, that the items seized
during the second search were the fruit of the poisonous tree, see
1
During this hiatus, some officers remained at the scene to
ensure that the premises would not be disturbed.
2
Fern Clark was not prosecuted federally. However, relying
in part on evidence seized during the first search, local
authorities brought charges of animal cruelty against her in a
Maine state court. See Me. Rev. Stat. tit. 17, § 1031(1)(E). She
was convicted of those charges, and her conviction was affirmed on
appeal. See State v. Clark, No. 09-375 (Me. May 18, 2010) (per
curiam).
-3-
Wong Sun v. United States, 371 U.S. 471, 484-85 (1963), and should
have been excluded when offered by the government at trial.3
The district court refused to suppress the evidence. It
held that the first warrant was supported by probable cause and, in
all events, the searching officers had relied upon it in good
faith, see United States v. Leon, 468 U.S. 897, 918-25 (1984).
Because the court found no constitutional flaw in the first search,
there was no basis for suppressing the items seized during the
second search.
After a bench trial, the district court found the
defendant guilty on both of the possession counts.4 At the
disposition hearing, the district court, over objection, relied on
the defendant's two prior convictions for indecent acts involving
children as a basis for an offense-level enhancement related to "a
pattern of activity involving the sexual abuse or exploitation of
a minor." USSG §2G2.2(b)(5). With this enhancement in place, the
court sentenced the defendant to a 210-month incarcerative term
(the bottom of the guideline sentencing range). This timely appeal
ensued.
3
In the court below, the defendant advanced additional
arguments in support of suppression. Without exception, those
arguments have been abandoned on appeal.
4
The defendant has not challenged the splitting of the
indictment into two counts, and we do not comment further on that
circumstance.
-4-
II. ANALYSIS
On appeal, the defendant challenges both the denial of
his motion to suppress and the application of the "pattern of
abuse" enhancement. We bifurcate our discussion accordingly.
A. The Motion to Suppress.
When reviewing a denial of a motion to suppress, we assay
a district court's legal conclusions, including its conclusion
regarding the existence of probable cause, de novo. United States
v. Kearney, 672 F.3d 81, 88 (1st Cir. 2012); United States v.
Schaefer, 87 F.3d 562, 565 & n.2 (1st Cir. 1996). We must,
however, credit the district court's findings of fact unless they
are clearly erroneous. United States v. Hughes, 640 F.3d 428, 434
(1st Cir. 2011). Thus, we will uphold a denial of a suppression
motion as long as "any reasonable view of the evidence supports the
decision." United States v. Woodbury, 511 F.3d 93, 96-97 (1st Cir.
2007) (internal quotation marks omitted).
In the case at hand, the defendant's suppression argument
hinges entirely on the supposed invalidity of the first warrant
(which, in his view, was issued in the absence of probable cause).
Mindful that inquiries into the existence vel non of probable cause
are normally factbound, see Acosta v. Ames Dep't Stores, Inc., 386
F.3d 5, 8 (1st Cir. 2004), we carefully examine the contents of the
affidavit that accompanied the application for the first warrant.
The test is whether the sworn allegations are sufficient "to
-5-
warrant a man of reasonable caution in the belief that an offense
has been or is being committed and that evidence bearing on that
offense will be found in the place to be searched." Safford
Unified Sch. Dist. No. 1 v. Redding, 129 S. Ct. 2633, 2639 (2009)
(citation and internal quotation marks omitted); see U.S. Const.
amend. IV (stating that no search "[w]arrants shall issue, but upon
probable cause, supported by Oath or affirmation").
Christine Fraser, an AWP veterinarian, swore out the
affidavit supporting the application for the first warrant. She
explained that on January 16, 2008 (three days before the searches
in question took place), police in Salem, New Hampshire, had
discovered 22 dogs locked inside a car. The dogs were in poor
condition (indeed, three of them were dead) and were covered in
fleas and feces. The car's owner, Amy Moolic, told the police that
she had rescued the dogs from a "puppy mill" in Somerville, Maine,
where the conditions were "filthy." After the Salem police
obtained paperwork (not specifically identified) indicating that
the dogs had come from the home of Fern Clark, they informed AWP
officials about what they had learned.
This was not the first time that Fern Clark had appeared
on the AWP's radar screen. Fraser's affidavit noted that animals
had been seized from Fern Clark's home kennel in the 1990s
(although she was ultimately acquitted of animal cruelty). Between
2005 and 2007, the AWP received three separate complaints about
-6-
sick animals and squalid conditions at the Clark residence. In
response to each of these complaints, Fraser sought to inspect the
premises; each time, she was turned away. On one of these
occasions, the Clarks barred Fraser from entering their home but
permitted a relatively inexperienced local animal control officer
to inspect the premises. He concluded that the conditions inside
the home were "borderline but ok."
By statute, Maine requires that all breeding kennels be
licensed. See Me. Rev. Stat. tit. 7, § 3931-A(1). A breeding
kennel is defined alternatively as either any location that has at
least five adult female animals capable of breeding and where at
least some of the offspring are sold or any location where more
than 16 dogs or cats raised on the premises are sold in any given
calendar year. Id. § 3907(8-A). The Fraser affidavit related that
Fern Clark's license to operate a breeding kennel had expired in
2005 and had not been renewed. Nevertheless, Fern Clark had
admitted to Fraser that, even after her license for a breeding
kennel had expired, she had approximately 50 dogs on her property.
Moreover, the AWP had continued to receive complaints from
customers who claimed to have purchased puppies and kittens from
her.
Based on these averments, we have little difficulty in
concluding that probable cause existed to search the Clark home for
evidence of animal cruelty and the unlicensed operation of a
-7-
breeding kennel. Probable cause exists whenever the circumstances
alleged in a supporting affidavit, viewed as a whole and from an
objective vantage, suggest a "fair probability" that evidence of a
crime will be found in the place to be searched. Illinois v.
Gates, 462 U.S. 213, 238 (1983); see United States v. Sanchez, 612
F.3d 1, 5 (1st Cir. 2010). Probable cause does not require either
certainty or an unusually high degree of assurance. See United
States v. Winchenbach, 197 F.3d 548, 555-56 (1st Cir. 1999). All
that is needed is a "reasonable likelihood" that incriminating
evidence will turn up during a proposed search. Valente v.
Wallace, 332 F.3d 30, 32 (1st Cir. 2003). The Fraser affidavit
easily satisfies this standard.
The centerpiece of Fraser's affidavit is Moolic's
statement that many of the bedraggled dogs found in her car had
been rescued from a "puppy mill" in Somerville, Maine, where the
conditions were "filthy." Salem police, following up on Moolic's
statement, obtained paperwork that linked these dogs to Fern Clark
— a woman who previously had operated a licensed breeding kennel in
Somerville, Maine. In addition, the affiant reported that, even
after Fern Clark's license had expired, she harbored a large number
of dogs on her premises and continued to be the subject of
complaints from putative purchasers. These facts formed the basis
for a reasonable belief that Fern Clark, at or near the time of the
-8-
application for the first warrant, was illegally kenneling animals
in inhumane conditions.
The fact that Fraser's affidavit relies in part on
matters not within her firsthand knowledge does not destroy its
force. An affidavit supporting a warrant application may rely upon
information provided by a third-party source as long as the affiant
gives the issuing magistrate a sufficient basis for crediting that
source. See United States v. McFarlane, 491 F.3d 53, 57 (1st Cir.
2007). In evaluating whether a particular affidavit crosses this
threshold, we may consider, among other things, whether the
affidavit establishes the source's veracity, whether the source's
statement derives from firsthand knowledge, and whether all or any
portion of the source's statement is corroborated. United States
v. Tiem Trinh, 665 F.3d 1, 10 (1st Cir. 2011). We also may
consider "whether a law enforcement affiant assessed, from his
professional standpoint, experience, and expertise, the probable
significance of the informant's provided information." Id. None
of these factors is singularly dispositive, and a stronger showing
on one may offset a weaker showing on another. United States v.
Zayas-Diaz, 95 F.3d 105, 111 (1st Cir. 1996).
Here, all of the aforementioned factors militate in favor
of a finding that Moolic's statement was worthy of credence.
First, the record does not indicate any reason to question Moolic's
veracity; for aught that appears, she was a neutral party who had
-9-
nothing to gain by pointing the finger at an unnamed kennel in a
neighboring state. The fact that the Salem police credited
Moolic's statement following a face-to-face encounter with her
bolsters her overall credibility. See United States v. Croto, 570
F.3d 11, 14 (1st Cir. 2009) (noting that sources who meet with
police are inherently more credible). What is more, lying to the
police could have had serious repercussions for her. See N.H. Rev.
Stat. Ann. § 641:4 (criminalizing the making of a false statement
to law enforcement officials that implicates another in a crime).
Second, Moolic — who claimed to have rescued the dogs herself — had
firsthand knowledge of the conditions at the "puppy mill." And the
Salem police were able to obtain paperwork that tied the dogs to
Fern Clark, whose operation was located where Moolic had placed the
"puppy mill." Similarly, Moolic's statement jibed both with other
complaints that Fraser had heard over the years and with her own
concerns. These data points partially corroborated Moolic's
statement and, thus, reinforced it. See United States v. Sclamo,
578 F.2d 888, 890 (1st Cir. 1978); see also United States v. One
1986 Ford Pickup, 56 F.3d 1181, 1188 (9th Cir. 1995) (per curiam)
(stating that "'[i]nterlocking' information from multiple
informants may enhance the credibility of each").
The defendant labors to discount the force of Moolic's
allegations on the ground that the Fraser affidavit does not state
when Moolic rescued the dogs from Fern Clark's home. The rescue,
-10-
he says, could have occurred years earlier, and the poor condition
of the dogs could thus have been entirely Moolic's fault. This
pettifoggery defies logic. After all, "[s]earch warrants and
affidavits should be considered in a common sense manner, and
hypertechnical readings should be avoided." United States v.
Syphers, 426 F.3d 461, 465 (1st Cir. 2005) (internal quotation
marks omitted). While Fraser does not mention the exact date when
Moolic rescued the dogs, the common sense inference is irresistible
that Moolic was discussing recent events when she spoke with the
Salem police. See Zayas-Diaz, 95 F.3d at 115-16 (stating that an
affiant's failure to provide precise temporal references is not
fatal when the relevant time frame can be inferred).
The defendant also argues that the "paperwork" allegedly
linking Moolic's dogs to Fern Clark was entitled to no weight
because Fraser's affidavit did not specifically identify the
components that collectively comprised the "paperwork." We do not
agree. In the search-warrant context, it is not necessary for an
affiant, in describing supporting evidence, to be precise to the
point of pedantry. See Gates, 462 U.S. at 235 (explaining that
"elaborate specificity" has no role in the probable cause context).
The affidavit makes clear that the Salem police unearthed
documentation that they thought reliably indicated Fern Clark's
connection to the dogs. The fact that the police saw fit to pass
along this documentation to the AWP is itself indicative of their
-11-
belief in its trustworthiness. Cf. Estrada v. Rhode Island, 594
F.3d 56, 65 (1st Cir. 2010) (explaining that police may draw upon
their experience and expertise in evaluating probable cause). No
more was exigible.
Relatedly, the defendant beseeches us to disregard the
past complaints against Fern Clark because those complaints were
never corroborated. Indeed, in one instance Fern Clark was
acquitted, and in another instance a home inspection (albeit by a
relatively inexperienced inspector) found "borderline" compliance.
But this argument goes only to the weight to be given to the past
complaints in the calculus of probable cause. Independent sources
that provide the same information are "mutually corroborating."
Wood v. Clemons, 89 F.3d 922, 930-31 (1st Cir. 1996). In this
case, several sources over the years identified Fern Clark as an
abuser of animals. These past complaints (even if not especially
probative in and of themselves) and Moolic's allegations reinforce
each other.
We need not tarry over the defendant's plaint that the
Fraser affidavit was tainted because Fraser had an axe to grind
over the Clarks' past refusals to allow her to inspect their home.
It is settled beyond peradventure that "[a] police officer's
subjective motive, even if improper, cannot sour an objectively
reasonable search." Spencer v. Roche, 659 F.3d 142, 149 (1st Cir.
2011). Here, the facts contained in the Fraser affidavit, viewed
-12-
in their totality and from a vantage point of objective
reasonableness, establish probable cause.
It is a rare case in which every jot and tittle in an
affidavit filed in support of an application for a search warrant
will argue persuasively for a finding of probable cause. More
often, there will be some facts and circumstances that paint the
picture not in black and white, but in varying shades of gray. The
task of the issuing magistrate is to make certain that she focuses
on the forest — not on the individual trees. See United States v.
Carson, 582 F.3d 827, 832 (7th Cir. 2009). The ultimate question
is not whether there is some doubt but, rather, whether the
totality of the facts and circumstances described in the affidavit,
viewed objectively, gives rise to a fair probability that a crime
has been committed and that the search, if allowed, will reveal
evidence of it. See, e.g., United States v. Morales-Aldahondo, 524
F.3d 115, 119 (1st Cir. 2008); United States v. Barnard, 299 F.3d
90, 93 (1st Cir. 2002).
Silhouetted against this backdrop, the outcome is clear.
"A magistrate's determination of probable cause should be paid
great deference by reviewing courts." Gates, 462 U.S. at 236
(internal quotation marks omitted). Given the trappings of
credibility that surround Moolic's statement and the other facts
limned in Fraser's affidavit, we cannot fault the magistrate's
decision to issue the first warrant. The Supreme Judicial Court of
-13-
Maine, reviewing Fern Clark's conviction in the animal cruelty case
brought by state authorities, determined that the Fraser affidavit
demonstrated probable cause to believe that a search of the Clark
household would turn up incriminating evidence. State v. Clark,
No. 09-375 (Me. May 18, 2010) (per curiam). We agree.
That ends this aspect of the matter. Because the first
warrant was supported by probable cause and the defendant has made
no independent challenge to the issuance of the second warrant, the
district court did not err in denying the defendant's motion to
suppress.
B. The Sentencing Enhancement.
The defendant's remaining claim of error relates to the
district court's decision to apply a five-level guideline
enhancement for "a pattern of activity involving the sexual abuse
or exploitation of a minor." USSG §2G2.2(b)(5). In this regard,
the court relied on the defendant's two predicate convictions (in
1979 and 1984, respectively) for indecent acts involving minors.
The defendant asserts that those predicate convictions were too
remote in time to demonstrate a "pattern" of abuse under section
2G2.2(b)(5). This is a challenge to the district court's
application of the sentencing guidelines, which engenders de novo
review. See United States v. Walker, 665 F.3d 212, 232 (1st Cir.
2011).
-14-
In this instance, the defendant's challenge is foreclosed
by circuit precedent. In United States v. Woodward, we held that
"previous sexual assaults, although occurring long ago, could be
considered" when applying a section 2G2.2 "pattern of abuse"
enhancement.5 277 F.3d 87, 90-92 (1st Cir. 2002) (internal
quotation marks omitted). We are firmly bound by this prior panel
holding. See United States v. Pires, 642 F.3d 1, 9 (1st Cir. 2011)
(holding that, with only narrow exceptions, "newly constituted
panels in a federal appellate court are bound by prior panel
decisions closely on point"); United States v. Wogan, 938 F.2d
1446, 1449 (1st Cir. 1991) (similar). Consequently, we reject the
defendant's sentencing challenge.
III. CONCLUSION
We need go no further. For the reasons elucidated above,
we uphold the defendant's conviction and sentence.
Affirmed.
5
Our holding in Woodward accords with the views of our sister
circuits. See United States v. Bacon, 646 F.3d 218, 220-21 (5th
Cir. 2011) (per curiam) (collecting cases from several circuits).
By the same token, it comports with the views of the Sentencing
Commission. See USSG §2G2.2, comment. (n.1) (explaining that "any
combination of two or more separate instances of the sexual abuse
or sexual exploitation of a minor" constitutes a pattern of abuse
(emphasis supplied)).
-15-
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181 F.2d 42
UNITED STATESv.ANDRADE.
No. 12119.
United States Court of Appeals, Ninth Circuit.
March 23, 1950.
1
Frank J. Hennessy, U. S. Atty., Joseph Karesh and Robert F. Peckham, Assts., San Francisco, Cal., for appellant.
2
Fred A. Watkins, San Francisco, Cal., for appellee.
3
Before STEPHENS and BONE, Circuit Judges, and BLACK, District Judge.
4
BLACK, District Judge.
5
The United States has appealed to this court from an order of the district court denying forfeiture to the government of one 1947 Cadillac sedanette automobile and directing instead that such vehicle should be turned over to the intervener, Jack Andrade, the appellee herein.
6
The government seized and sought forfeiture of said Cadillac automobile because of illegal transportation and sale of narcotics in same on several occasions.
7
The intervener is the vendor of said automobile under a conditional sales contract to one Everett Brown, vendee.
8
The district court held that said intervener as vendor at all times "acted in good faith and in complete innocence" of the unlawful use of said vehicle.
9
The evidence below established without any contradiction that on four separate occasions in February and March, 1948 one Kado Barrow illegally transported and sold heroin in such Cadillac, Brown not being in the car on any of such four trips. These transactions were in violation of the Harrison Narcotic Act, 26 U.S.C.A. §§ 2553 and 2557, and the Jones-Miller Act, 21 U.S.C.A. § 174.
10
The undisputed evidence is as follows: that the automobile here involved was regularly parked in front of or in the immediate vicinity of 1430 O'Farrell Street, San Francisco, California; that said Everett Brown, the vendee and registered owner, and said Kado Barrow resided at such address; that on each of such occasions in February and March above-mentioned said Kado Barrow was observed to leave 1430 O'Farrell Street and enter the said automobile and drive same to a prearranged place, where on each occasion while in the automobile he made a sale of heroin which he brought to such place of sale in said vehicle.
11
The further uncontradicted evidence was that arrangement for each of such illicit sales was made by an informer placing a telephone call from the office of the Bureau of Narcotics to the telephone listed to the name of Everett Brown at such address of 1430 O'Farrell Street; that during one of such illicit sales a Ruby Slater was in the car with Kado Barrow; that the last such sale in said car was on March 23, 1948 and that the following day Kado Barrow was arrested in another vehicle in possession of narcotics; that on the same day Everett Brown and said Ruby Slater were arrested at 1430 O'Farrell Street; that at the time of her arrest she was found in possession of a quantity of narcotics and Everett Brown then had the keys to such Cadillac automobile.
12
All three of them in due course were convicted of narcotic violations, Kado Barrow being sentenced to ten years imprisonment, Ruby Slater to one year and one day, and Everett Brown to fifteen years imprisonment, all of said convictions being for other narcotic offenses than those occurring in the Cadillac.
13
Everett Brown, who was the registered owner of said Cadillac, purchased same from the appellee for $5,356 in October, 1947, paying $2,327 down and about $800 more before the seizure.
14
The intervener asked return of the vehicle under the terms of the conditional sales contract by reason of the unpaid balance in excess of $2,000.
15
Neither Barrow, Brown or Ruby Slater testified in the hearing below, each being engaged in serving the imprisonment sentence imposed. The intervener offered no evidence except in support of his claim of good faith in the sale and lack of knowledge of the unlawful use. When Everett Brown purchased the automobile in 1947 the vendor was informed that he was twenty-seven years of age and employed as a foreman on the waterfront. At such time Brown gave as references the manager of a bank and a certain individual who had been his bondsman in connection with numerous arrests and who knew that Brown had already been convicted of a previous narcotic offense. However, no inquiry was made by the vendor of such references because Brown's own statement of his financial ability and particularly the substantial cash payment were satisfactory to the vendor.
16
The trial court having the advantage of seeing the intervener personally found that the seller was "at all times * * * in good faith and in complete innocence" and that there were "no circumstances sufficient to arouse the suspicions of a reasonable and prudent person." The appellant assigned no error as to this finding and same is binding on this appeal.
17
But it is agreed by both appellant and appellee that if Kado Barrow had permission from Everett Brown to use such automobile that his unlawful use of same for transportation or sale of narcotics would justify forfeiture although the vendor had no inkling of same and even whether or not Brown had any knowledge of such narcotic violations. Appellant and appellee further are in agreement that Sections 781, 782 and 784 of Title 49 U.S.C.A. and Section 1615 of Title 19 U.S.C.A., by reference thereto in Section 784 of Title 49, govern the forfeiture proceedings here involved.
18
The applicable portions of these sections follow:
19
"Section 781 * * *
20
"(a) It shall be unlawful (1) to transport * * * any contraband article in, * * any * * * vehicle * * *; or (3) to use any * * * vehicle * * * to facilitate the transportation, * * * sale, * * * of any contraband article.
21
"(b) * * * the term `contraband article' means —
22
"(1) Any narcotic drug * * * possessed with intent to sell or offer for sale in violation of any laws or regulations of the United States * * *."
23
"Section 782. Seizure and forfeiture
24
"Any * * * vehicle * * * which has been or is being used in violation of any provision of section 781 * * * shall be seized and forfeited: Provided, * * * That no * * * vehicle * * shall be forfeited under the provisions of this chapter by reason of any act or omission established by the owner thereof to have been committed or omitted by any person other than such owner while such * * * vehicle * * * was unlawfully in the possession of a person who acquired possession thereof in violation of the criminal laws of the United States, or of any State." (Italics ours.)
25
"Section 784. * * *
26
"All provisions of law relating to the seizure, summary and judicial forfeiture, and condemnation of * * * vehicles for violation of the custom laws; * * * the remission or mitigation of such forfeitures; * * * shall apply to seizures and forfeitures * * * under the provisions of this chapter insofar as applicable * * *."
27
"Section 1615. Burden of proof in forfeiture proceedings
28
"In all suits or actions brought for the forfeiture of any * * * vehicle * * seized under the provisions of any law relating to the collection of duties on imports * * * where the property is claimed by any person, the burden of proof shall lie upon such claimant; * * * Provided, That probable cause shall be first shown for the institution of such suit or action, to be judged of by the court, * * *"
29
The undisputed evidence as to such repeated unlawful use of the vehicle involved for the transportation and sale of heroin certainly constituted the showing of probable cause for the institution of the suit or action to forfeit the Cadillac. And from the record it does not appear that the trial judge had any doubt that such probable cause had been shown nor does it appear that anyone at such trial questioned whatsoever the adequacy of such showing.
30
The appellee, while not contending that the good faith alone of the vendor as found by the trial court authorizes return of the Cadillac to him, does contend that the additional findings of the trial court that Kado Barrow was in the illegal possession of the automobile on each of the four occasions that he transported and sold such narcotics as well as the further finding of the trial court that Everett Brown, the vendee, did not at any time expressly or impliedly authorize Barrow to have possession of such Cadillac not only justified but required the return of the automobile to the claimant.
31
As to Barrow's possession the trial court did find: "that said Everett Brown did not at any time expressly or impliedly authorize Cato Barrow to have possession of said 1947 Cadillac sedanette automobile; that said Cato Barrow was in illegal possession of said 1947 Cadillac sedanette automobile on March 24, 1948, at the time the Federal agents, Bureau of Narcotics, Treasury Department of the United States, seized said car, nor at any other time."
32
The appellant, however, insists that a reading of the transcript discloses that there was no evidence at all to "establish" that Barrow's possession of the Cadillac was illegal or to "establish" that Brown did not consent to such possession.
33
With that contention of appellant we must agree.
34
The uncontradicted evidence submitted unquestionably would have permitted the trial court to have found affirmatively that Kado Barrow was in possession of such automobile with the permission of Everett Brown, the registered owner thereof.
35
The argument of appellee is that the trial judge in the absence of affirmative evidence that Kado Barrow had the consent of Everett Brown to use the automobile was right in finding Barrow was illegally in possession of the car. If the statute instead were worded so as to have placed the "burden of proof" on the government there would, of course, be more merit in the position of appellee. However, as specifically stated in Section 782 of Title 49 above-mentioned the owner shall "establish" that the vehicle "was unlawfully in the possession of a person who acquired possession thereof in violation of the criminal laws of the United States, or of any State." Moreover, in Section 1615 of Title 19, supra, made by Section 1784 of Title 49 applicable to this proceeding, it is provided that "the burden of proof shall lie upon such claimant". Thus, the government did not have to "establish" that Barrow's possession of the vehicle was legal. On the contrary, any illegality had to be "established" by the claimant. General Motors Acceptance Corp. v. U. S., 6 Cir., 63 F.2d 209; U. S. v. One Dodge Coupe, D.C., 43 F.Supp. 60; U. S. v. One 1937 Hudson Terraplane Coupe, D.C., 21 F. Supp. 600. The claimant actually failed to present any evidence at all to establish such.
36
The libel proceeding here involved is primarily a proceeding in rem against the automobile as authorized by the statute. The appellee entered the proceeding as an intervener subject to the statutory obligations of a claimant. It has been frequently decided that a legal owner or vendor claimant is not entitled to relief from the forfeiture by reason of good faith or innocence. See United States v. One Ford Coupe, 272 U.S. 321, 47 S.Ct. 154, 71 L.Ed. 279, 47 A.L. R. 1025; U. S. v. One 1940 Packard Coupe, D.C., 36 F.Supp. 788.
37
We have not overlooked U. S. v. One Reo Speed Wagon, D.C., 5 F.2d 372; Platt v. U. S., 10 Cir., 163 F.2d 165; and U. S. v. One 1938 Chevrolet, D.C., 78 F.Supp. 676 cited by appellee. But none of these three cases supports any contention that the government rather than claimant had to affirmatively "establish" that the use was with the consent of the owner or that the government had the "burden of proof". On the contrary, in two of such cases it was held by the court that the claimant had by the evidence affirmatively established that the possession of the vehicle by the narcotic violator was unknown to the owner and was without the consent of any other person who had authority or ability to consent. In the other case the evidence affirmatively showed that the owner had no knowledge of intended unlawful use and moreover that her daughter at no time had the morphine in the automobile but was merely on her way from the drugstore toward her mother's automobile when she was arrested.
38
There is a suggestion on the part of appellee that the trial court's decision might be sustained on the theory that such was a "remission or mitigation of such forfeiture". However, it has been repeatedly held under the statutes applicable that the district court is without jurisdiction to release a seized automobile by way of mitigation or remission or to remit the forfeiture to the extent of the innnocent lienor's or owner's interest. U. S. v. One 1941 Plymouth Tudor Sedan, 10 Cir., 153 F.2d 19; U. S. v. One 1946 Plymouth Sedan, D.C., 73 F.Supp. 88; U. S. v. One 1941 Chrysler Brougham Sedan, D.C., 74 F.Supp. 970; and U. S. v. Heckinger, 2 Cir., 163 F.2d 472, in which last case it is said that the ruling in 73 F.Supp. 88, supra, "was correct."
39
Under the decisions and the statutes claimant's remedy would appear to have been administrative by application to the Secretary of the Treasury as provided for in Title 19 U.S.C.A. § 1618.
40
This court fully recognizes that findings of fact of the trial court are not to be set aside unless clearly erroneous. Federal Rules of Civil Procedure, rule 52(a), 28 U.S.C.A. But in this case we must find that there was no evidence at all to "establish" or support the finding that Barrow took illegal possession of the automobile from Brown without his consent. The statute placed the burden of so establishing by competent evidence upon the claimant Andrade.
41
Reversed and remanded to the trial court to enter appropriate order and decree of forfeiture in favor of the government as prayed for.
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480 F.2d 916
U. S.v.Stavitsky
73-1803
UNITED STATES COURT OF APPEALS Second Circuit
June 28, 1973
1
S.D.N.Y.
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248 Md. 148 (1967)
235 A.2d 556
HARLEYSVILLE MUTUAL CASUALTY COMPANY
v.
HARRIS & BROOKS, INC.
[No. 681, September Term, 1966.]
Court of Appeals of Maryland.
Decided December 5, 1967.
The cause was argued before HAMMOND, C.J., and BARNES, McWILLIAMS, FINAN and SINGLEY, JJ.
William A. Ehrmantraut, with whom were Donahue, Ehrmantraut, Mitchell & Gleason, on the brief, for appellant.
Barry Zaslav, with whom were Leonard S. Blondes and Stanley R. Jacobs on the brief, for appellee.
SINGLEY, J., delivered the opinion of the Court.
Harris & Brooks, Inc. (Harris), the plaintiff below and appellee here, is a corporation engaged in the business of excavating, clearing and grading land. In September, 1961, Harris entered into a contract to "clear, burn and smooth up" a wooded tract of some 15 acres at Aspen Hill Road and Georgia Avenue in Montgomery County.
Gillis, an employee of Harris, testified that on Saturday, September 2, he operated a caterpillar loader at the site where he "cleared the trees and put them in appropriate piles and burned them." There were somewhere between 3 and 5 piles, 10 to 12 feet in height, located at a distance of between 300 and 400 feet from the nearest buildings. Fuel oil was poured on the piles, *150 which were set afire between 6:00 and 6:30 A.M. on Saturday, September 2.
There was further testimony that while there was no wind when the fires were set, a breeze came up at about 9:30 A.M. on September 2 and "stayed up a little breezy the rest of the day;" that on Sunday, September 3, a summer storm came up, the wind blew quite hard, and the fires were extinguished on the advice of the fire marshal. Climatological data introduced into evidence by stipulation, showed that light and variable winds had been recorded on the days in question at Washington National Airport, some 15 miles distant from the site.
Owners of houses nearby testified that rubber tires had been added to the piles; that the fires produced a heavy black smoke; and that smoke and soot from the fires damaged their properties and contents of their houses on September 2 and 3. There was evidence that the first damage was sustained during the evening and night of September 2, well in advance of the summer storm of September 3. Eight claims, totalling some $16,000, were asserted by neighboring property owners against Harris for smoke and soot damage. These were ultimately the subject of a suit against Harris in Montgomery County, which resulted in the entry of a judgment in favor of the property owners of $2,595.00 for damages sustained by them.
On October 11, 1960, Harris had entered into a contract of insurance with Harleysville Mutual Casualty Company (Harleysville), the appellant. The policy, which was written for a term of one year and was in effect on September 2 and 3, 1961, provided in "Coverage C" that the insurer would
"pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident."
Harris, which had defended the damage suit, satisfied the judgment and entered suit against Harleysville for the amount paid the property owners together with counsel fees incurred in defending the suit. Harleysville denied liability under the insurance contract, contending that the damage suffered by the neighboring property owners had not been caused by accident. This *151 appeal was taken from the judgment of the lower court entered against Harleysville and in favor of Harris for $3,100.00 (of which $2,500.00 represented payments made in satisfaction of the judgment and $600.00 counsel fees) plus costs.
The only question raised by this appeal is whether the events which gave rise to the entry of judgment against Harris in the earlier case brought by the property owners amounted to damage "caused by accident." The lower court answered this question in the affirmative. With this conclusion we do not agree.
The Shorter Oxford English Dictionary (2d Ed. 1939) defines accident as "Anything that happens. an event; especially an unforeseen contingency * * *." Webster's Twentieth Century Dictionary (1950) expands this definition: "a happening; an event that takes place without one's foresight or expectation; an event which proceeds from an unknown cause, or is an unusual effect of a known cause, and therefore not expected * * *."
We have previously held that in interpreting insurance contracts words are to be given their customary and normal meanings. Smith v. Maryland Casualty Co., 246 Md. 485, 491, 229 A.2d 120 (1967); Pennsylvania Threshermen & Farmers Mut. Cas. Ins. Co. v. Travelers Ins. Co., 233 Md. 205, 196 A.2d 76 (1963); U.S.F. & G. v. National Paving Co., 228 Md. 40, 178 A.2d 872 (1962); Haynes v. American Casualty Co., 228 Md. 394, 179 A.2d 900 (1962).
The rationale employed by the court below was essentially this: There was no intent to damage. Harris had conducted similar operations in the past without damage. There were no unusual circumstances present. The damage was unexpected and unforeseeable and therefore accidental.
This court has previously held that an accidental result need not, in every case, be the consequence of the use of accidental means.[1]Haynes v. American Casualty Co., supra. In other words, the fact that an injury is caused by an intentional act does not preclude it from being caused by accident if in that act, *152 something unforeseen, unusual and unexpected occurs which produces the result.
In the Haynes case, where the insurance policy provision was substantially similar to that in the instant case, the contractor pointed out a property line to his employees and left the site. When he returned, he found that they had encroached on adjacent property and had cut down 48 trees. The insurer denied liability on the theory that the damage was the result of a voluntary and intentional act and therefore could not have been "caused by accident" which would have brought it within the terms of the policy. The insured, on the other hand, contended that while an intentional or voluntary act caused the damage, the result could not have been foreseen, and was therefore damage "caused by accident" and covered by the policy. This was the view adopted by the court.
It is our opinion that Haynes is clearly distinguishable from the case at bar. The contractor who points out a property line and leaves the site cannot be charged with a duty to foresee that his employees will cross the line and trespass on the property of another.
Appellee also relies on the cases of Cross v. Zurich General Accident & Liability Ins. Co., 184 F.2d 609 (7th Cir.1950) and O'Rourke v. New Amsterdam Casualty Co., 68 N.M. 409, 362 P.2d 790 (1961). It is our opinion that these cases, too, may be easily distinguished from the present case. The Cross case involved the cleaning of the exterior of a building by the insured. When the normal acid solution would not clean effectively, the insured added hydrofluoric acid to the solution. Although the windows were carefully washed with water before and after the application of the solution, the hydrofluoric acid still caused damage to the glass windows. The court found that there was indeed an "accident" within the meaning of the insurance policy, which was similar to that in the case at bar. The facts of the Cross case, however, show that in addition to the obvious lack of intent to cause the damage, there were also definite steps taken by the insured to prevent the damage and there was testimony to the effect that the precautions of washing the windows with water should have been sufficient. In the instant case, there is no evidence of any precautionary measures having *153 been taken by Harris which should have prevented the clearly foreseeable result from taking place.
The O'Rourke case was a suit by a roofing company seeking to recover from its liability insurer for rain damage to the interior of a house. On the morning when the work was started, although the weather was clear and dry, the roofer called the Weather Bureau and was told "there was no rain in sight." At the end of the day, he again called the Weather Bureau, and received "the same forecast, no rain in sight." That night it rained. The court held that the damage caused by the rain was an "accident" within the terms of the policy. The situation is distinguishable from that of the instant case, since by his precautionary actions, the roofer had removed the possible damage from the realm of his foresight or reasonable expectation. In the O'Rourke case, the court found it necessary to distinguish a case involving a situation quite similar to that of the case at bar. There the court said, 362 P.2d at 794,
"American Cas. Co. of Reading, Pa. v. Minnesota F.B.S. Co., 8 Cir. Minn., 1959, 270 F.2d 686, was a case where insured's fertilizer plant used explosives to blast its solidified material, thereby resulting in loud noises and vibrations and allowing the release of ammonia fumes, powder and dust, noise and vibrations, resulting from the explosions carried on over a period of more than six years, to the damage of surrounding property and discomfort to persons residing nearby. The court held, under the facts, that the resulting damage was not caused by `accident' within the terms of the liability policy.
"The reasoning of these cases is that a finding that substantial damage of the type incurred was a normal and probable consequence of such blasting and clearing as the contractor undertook; that under the law it is sufficient to sustain a conclusion that the damage was not caused by accident within the meaning of the policy. Or, put another way, these cases involved conscious acts, as a result of which it could reasonably be foreseen that the damage which actually occurred would result."
*154 In the present case, Harris took no precautionary measures. It is our view that a contractor who piles trees and underbrush in 10 to 12 foot piles, adds fuel oil and rubber tires, and permits the fires to burn for 36 hours before they are extinguished should be charged with the responsibility of foreseeing that a pall of smoke and soot will result, which may damage adjacent properties. The resulting damage was not "an event that takes place without one's foresight or expectation" (Webster, supra) and was not the "injury to property * * * caused by accident" covered by the policy.
Judgment reversed, costs to be paid by the appellee.
NOTES
[1] The attempted distinction between accidental results and accidental means is the "Serbonian Bog" referred to by Mr. Justice Cardozo in Landress v. Phoenix Mutual Life Insurance Co., 291 U.S. 491, 499 (1934) (dissenting opinion).
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519 N.E.2d 1266 (1988)
Jerry HODGE and Beth Hodge, Appellants (Plaintiffs below),
v.
TOWN OF KINGMAN, Appellee (Defendant below).
No. 23A01-8709-CV-00228.
Court of Appeals of Indiana, First District.
March 7, 1988.
*1267 Robert O. Williams, Covington, for appellants.
Elizabeth A. Brown, Judge & Knight, Ltd., Park Ridge, for appellee.
ROBERTSON, Justice.
Jerry and Beth Hodge appeal the grant of the Town of Kingman's motion to dismiss the Hodges' action against the Town for its negligence in the construction, maintenance or operation of its sewage system and for the creation of a nuisance.
We reverse.
The Hodges averred that they were the owners of real estate with a dwelling house in the Town of Kingman; that the Town established, maintained and operated sewers, sewage disposal systems and systems to collect and dispose of waste substances; that on June 6, 1986 the sewer system constructed, maintained and operated by the Town failed to function properly, spilling raw sewage in the Hodges' dwelling; and, that the Town negligently constructed, maintained or operated the sewage system which was and is a nuisance. No evidence was presented in support of or in opposition to the motion to dismiss. The trial court found the Town was immune from liability pursuant to IND. CODE 34-4-16.5-3(6) because the construction, maintenance and operation of a sewage system constituted a discretionary function.
Our consideration of the issue presented in this appeal is shaped by the case's procedural posture before the trial court. The Town moved for a dismissal pursuant to Ind. Rules of Procedure, Trial Rule 12(B)(6). In a typical 12(B)(6) situation, a complaint is not subject to dismissal unless it appears to a certainty that the plaintiff would not be entitled to relief under any set of facts. State v. Rankin (1973), 260 Ind. 228, 294 N.E.2d 604, 606. When no evidence is heard and affidavits are not submitted, a 12(B)(6) motion should be granted only where it is clear from the face of the complaint that under no circumstances could relief be granted. Id. The 12(B)(6) motion does not, in theory, deny the existence of a claim. Instead, it asserts that the pleadings are insufficient to establish one. Indiana Suburban Sewers, Inc. v. Hanson (1975), 166 Ind. App. 165, 334 N.E.2d 720, 723, trans. denied.
I.C. 34-4-16.5-3 delimits the Town's immunity from suit for losses occasioned by the town government or its employees. I.C. 34-4-16.5-3(6) provides that
a governmental entity or employee acting within the scope of his employment is not liable if a loss results from ... the performance of a discretionary function; ...
Our courts have interpreted this section to mean that a governmental body is immune from liability only if its agent is exercising *1268 his governmental discretion in the performance of a purely public duty. See Board of Commissioners of Delaware County v. Briggs (1975), 167 Ind. App. 96, 337 N.E.2d 852, 862, trans. denied; Campbell v. State (1972), 259 Ind. 55, 284 N.E.2d 733; Maroon v. State, Department of Mental Health (1980), Ind. App., 411 N.E.2d 404, 415, trans. denied. Thus, in order to maintain a valid cause of action against a municipal corporation, a plaintiff must show either that the employee's actions were undertaken in the performance of a ministerial rather than discretionary function or that the employee owed the plaintiff a private duty, whether or not the employee was engaged in an act committed to the discretion of his office. Maroon, id.; Briggs, supra.
In determining whether a loss resulted from the performance of a discretionary as opposed to ministerial function under I.C. 34-4-16.5-3(6), our courts have repeatedly looked to the common law to identify and define a discretionary function. See e.g. Rodman v. City of Wabash (1986), Ind. App., 497 N.E.2d 234, 239 citing Maroon, supra; Maroon v. State, supra at 416 citing Adams v. Schneider (1919), 71 Ind. App. 249, 124 N.E. 718, 720 and Galey v. Board of Comm'rs. of the County of Montgomery (1910), 174 Ind. 181, 91 N.E. 593, 594; State Dept. of Mental Health v. Allen (1981), Ind. App., 427 N.E.2d 2, 4 citing Galey, supra and Adams v. Schneider, supra; City of Tell City v. Noble (1986), Ind. App., 489 N.E.2d 958, trans. denied, citing Brinkmeyer v. City of Evansville (1897), 29 Ind. 187. We believe it readily apparent, however, from a review of these decisions that the determination of whether a particular case involves discretionary or ministerial functions turns largely upon the allegations of the complaint and the facts actually proved. As our supreme court noted, with the restriction of the blanket immunity once available to a governmental defendant, the question of whether the defense is applicable at all may well turn upon the facts of a given case and the specific position, responsibilities and duties of the particular defendants. Miller v. Griesel (1974), 261 Ind. 604, 308 N.E.2d 701. This proposition is perhaps most vividly illustrated by the appellate court's decision in the oft-cited case of Adams v. Schneider (1919), 71 Ind. App. 249, 124 N.E. 718.
In Adams v. Schneider, the plaintiff-appellant sustained injury when a tier of seats collapsed at a school-sponsored field day exhibition conducted at a baseball park. The appellant averred in her complaint against the school board members, superintendent, and school board clerk, individually, that the management, maintenance and supervision of the premises and seats were in the exclusive power and control of the appellees and that the appellees negligently invited and permitted a large crowd including the appellant to occupy the seats while they were in a weak and unsafe condition. The trial court dismissed the action as to the clerk and directed a verdict for the board members and superintendent.
The evidence presented at trial established that at a meeting of the school board the clerk was given the authority to make arrangements for the field day exercises including the construction of the seats, and to manage the park on field day. On appeal, the court noted that the powers conferred upon the board by statute were broad enough in scope to permit the board, in its discretion, to make arrangements for the conduct of field day activities. The court held that the members of the school board, in determining that there should be field day exercises and in determining the manner in which such exercises should be conducted were acting within their discretion and therefore would not be held liable for injuries resulting from those determinations. However, the court held the school board members jointly liable with the clerk because the duties performed by the clerk in making preparations for the field day exercises and the general management of it were ministerial acts, whether or not they were performed by the board members, their agent or an independent contractor.
The appellate court utilized principles of agency to hold school officials responsible for the misfeasance of their employee. The proposition which emerges *1269 from the authorities recited in Adams v. Schneider is that a principal will be responsible for negligence to the same extent as the agent where the agent has actually entered upon the performance of his duties but fails or neglects to use reasonable care or diligence in the performance, whether the wrong be an act of omission or commission. Duties in the performance of the act, including the direction of the work, once it has been determined that the work should be done, are ministerial.
The principles enunciated in Adams v. Schneider are consistent with other authorities which have held that, in the actual work of construction and in the maintenance of sewers and drains, governments act ministerially and their negligence in these particulars may therefore be the basis of an action. See Murphy v. City of Indianapolis (1902), 158 Ind. 238, 240, 63 N.E. 469; City of Logansport v. Cotner et al. (1933), 205 Ind. 13, 17, 20, 185 N.E. 634; Aschoff v. City of Evansville (1904), 34 Ind. App. 25, 31, 72 N.E. 279. Accord, City of Fort Wayne v. Coombs et al. (1886), 107 Ind. 75, 7 N.E. 743; City of Evansville v. Decker (1882), 84 Ind. 325, 327 (municipal corporation not responsible for error in exercise of merely legislative power such as failure to undertake to provide sewers and drains, unless made necessary by its own act, but where municipal corporation undertakes to construct sewers and drains, work becomes ministerial and corporation must exercise ordinary care and skill in devising plan and performing work; corporation also bound to exercise ordinary care in maintaining sewers constructed or adopted by it); Cummins v. City of Seymour (1881), 79 Ind. 491; City of South Bend v. Paxon (1879), 67 Ind. 228; City of Indianapolis v. Huffler (1868), 30 Ind. 235 (liability of city on exactly same foundation as that of natural person; skill and care incumbent upon city relates as well to the capacity of the sewer as to the mere inconvenience in its construction as well to its plan as to execution.)[1]
Thus, the critical question in this appeal becomes whether, from the Hodges' complaint, the trial court properly determined that the Hodges would be unable to prove any set of facts entitling them to relief. Based upon the authorities cited above, if the Hodges were able to demonstrate, for example, that town officials failed to exercise ordinary care in the actual work of constructing the sewer, or allowed it to remain in disrepair when to do so would constitute negligence, the complaint would have adequately charged negligence in the performance of a purely ministerial function, entitling them to relief. Accordingly, we conclude that the Hodges adequately pleaded the operative facts involved in the litigation. Since facts could exist under these allegations which would render the town liable, the trial court erroneously sustained the motion to dismiss under 12(B)(6) when it was based solely upon the face of the complaint.
In this respect we believe the decision rendered by the fourth district of this court in Rodman v. City of Wabash (1986), Ind. App., 497 N.E.2d 234 is readily distinguishable. There, in determining whether a motion for summary judgment was providently granted, this court held that the City of Wabash's decision to utilize existing combined sewers was the performance of a discretionary function. The court expressly noted that the record revealed no evidence of direct or indirect acts of misfeasance or nonfeasance on the part of the city. 497 N.E.2d at 259. We reiterate that by a motion for summary judgment a defendant seeks to assert nonclaim upon a consideration of the undisputed facts. Indiana Suburban Sewers, 334 N.E.2d at 723. It is entirely possible that based upon affidavits, depositions, etc. the instant case could be resolved by summary judgment even though the Hodges' complaint was sufficient to withstand a T.R. 12(B)(6) motion.
The Town also argues the construction and maintenance of a sewage system is an *1270 exercise of the Town's police power and that any damages resulting from negligence in the exercise of the police power are not recoverable since private property rights may be curtailed and even sacrificed when the police power is validly exercised to preserve and promote the public welfare.
The Town assumes that relief can be granted a private citizen against a government only if the individual can show that the government committed, not merely a tort, but a "taking of property" compensable under the Indiana or federal constitution. While at one time in this state a government might have been afforded greater protection from suit, see e.g. Cummins v. City of Seymour (1881), 79 Ind. 491, 500, with the abolition of the common law doctrine of sovereign immunity, see Campbell v. State (1972), 259 Ind. 55, 284 N.E.2d 733; Klepinger v. Board of Comm'r. (1968), 143 Ind. App. 155, 239 N.E.2d 160, trans. denied; and Brinkman v. City of Indianapolis (1967), 141 Ind. App. 662, 231 N.E.2d 169, trans. denied, the liability of a municipality for damages attributable to the torts of its agents is now co-extensive with that of natural persons, except in those enumerated situations set out in the Indiana Tort Claims Act, I.C. 34-4-16.5-1 et seq., for which the legislature has chosen to retain immunity. See Miller v. Griesel (1974), 201 Ind. 604, 308 N.E.2d 701, 705, and Seymour National Bank v. State (1981), Ind., 422 N.E.2d 1223. Having determined that the Hodges may be able to demonstrate that the town is not immune from liability in tort under I.C. 34-4-16.5-3, we conclude that the trial court's grant of the motion to dismiss must be overruled and the matter set for trial.
Judgment reversed.
NEAL and BUCHANAN, JJ., concur.
NOTES
[1] We would add that at common law a municipal corporation was liable in a civil action for erecting and maintaining a nuisance the same as a natural person. Fairwood Bluffs Conservancy District v. Imel (1970), 146 Ind. App. 352, 255 N.E.2d 674, 684.
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 11a0550n.06
No. 10-5141
FILED
UNITED STATES COURT OF APPEALS
Aug 08, 2011
FOR THE SIXTH CIRCUIT
LEONARD GREEN, Clerk
MICHAEL R. HOLBROOK, )
)
Plaintiff–Appellant, )
)
v. ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR THE
BOYD COUNTY, KENTUCKY; JOE ) EASTERN DISTRICT OF KENTUCKY
BURCHETT INDIVIDUALLY AND IN )
HIS OFFICIAL CAPACITY AS BOYD )
COUNTY JAILER; JOHN AND JANE )
DOES, NOS. 1, 2, AND 3 )
INDIVIDUALLY AND IN THEIR )
OFFICIAL CAPACITY AS OFFICERS )
AND EMPLOYEES OF THE BOYD )
COUNTY DETENTION CENTER. )
)
Defendants–Appellees. )
)
Before: MOORE and GIBBONS, Circuit Judges; BORMAN, District Judge.*
JULIA SMITH GIBBONS, Circuit Judge. In this 42 U.S.C. § 1983 action for deliberate
indifference to serious medical needs, plaintiff-appellant Michael R. Holbrook appeals the district
court’s grant of summary judgment to defendants-appellees Boyd County, Kentucky, Joe Burchett
individually and in his official capacity as Boyd County Jailer, and unnamed officers and employees
of the Boyd County Detention Center in their individual and official capacities. The district court
found that Holbrook failed to exhaust his administrative remedies, as required by the Prison
*
The Honorable Paul D. Borman, United States District Judge for the Eastern District of
Michigan, sitting by designation.
No. 10-5141
Michael Holbook v. Boyd County, Kentucky
Litigaton Reform Act of 1995 (“PLRA”), 42 U.S.C. § 1997e(a). On appeal, Holbrook argues that
there exists a genuine question of fact as to whether he attempted to comply with the PLRA and
whether defendants made him aware of the Boyd County Detention Center’s grievance procedures.
For the reasons that follow, we reverse the district court and remand the case for further
consideration.
I.
While in custody at the Boyd County Detention Center, Holbrook was diagnosed with
methicillin resistant staphylococcus aureus (“MRSA”). Holbrook argues that this infection stems
from the prison officials’ deliberate indifference to his medical needs.
At the conclusion of discovery, the case turned on whether Holbrook had exhausted his
administrative remedies, as required by the PLRA. In relevant part, defendants noted in their motion
for summary judgment, “Holbrook did not file a grievance and thus failed to utilize a grievance
procedure provided to him.” Because Holbrook failed to file a grievance, when a grievance
procedure existed, the defendants argued that he did not exhaust his administrative remedies and that
the lawsuit should be dismissed.1 Defendants supported their contentions with the affidavit of
Burchett, submitted with their reply brief in the district court. Burchett attested that the grievance
procedure for the detention center is open to all inmates and that Holbrook did not file a grievance
concerning the subject matter of this case.
1
The defendants offered other arguments too, including an argument for qualified immunity,
but the district court never addressed these other arguments because it could dispose of the case
under the PLRA.
2
No. 10-5141
Michael Holbook v. Boyd County, Kentucky
In response, Holbrook made two primary claims: (1) he was never given any type of
instruction from the jail on grievance procedures, and (2) he knew that grievances, when written,
were often thrown away. Holbrook also argued that he wrote a grievance for this case to which he
never received a reply.2 Holbrook submitted an affidavit with his response in which he stated that
he had received no information or instructions regarding grievance procedures and that he completed
a written medical grievance concerning his condition and lack of medical care and handed it to
Deputy Lovell Marshall. He also averred that complaints were often thrown away at the detention
center.
In reply, the defendants submitted a copy of a grievance Holbrook had previously filed while
incarcerated in the Boyd County Detention Center in an effort to illustrate that Holbrook did indeed
know about the grievance procedure. The defendants also argued that Holbrook had not mentioned
submitting a grievance in his deposition. In his deposition, Holbrook mentioned only complaining
orally to Barry Adkins.
The district court agreed with the defendants. Finding that the PLRA applied, the district
court noted both that “the PLRA makes no exception for ignorance” and that Holbrook had
previously filed a grievance. Thus Holbrook’s claim that he “does not understand or is not familiar
with the grievance procedure stretches the bounds of credibility.” The district court also found that
it was undisputed that Holbrook did not avail himself of his available administrative remedies. The
2
Holbrook also briefly argued that the PLRA did not apply because he had been moved to a
new institution and the state had not proved that there was a mechanism by which he could “grieve
in the second institution conditions that existed in the first.” Because Holbrook does not argue this
point on appeal, we do not address it.
3
No. 10-5141
Michael Holbook v. Boyd County, Kentucky
district court appeared unaware of Holbrook’s affidavit stating that he did submit a grievance.
Because there was no genuine issue of fact whether Holbrook filed a grievance, the district court
granted summary judgment to the defendants. The district court then also denied Holbrook’s motion
to alter or amend under Federal Rule of Civil Procedure 59(e).
II.
This court reviews de novo a district court’s grant of summary judgment. Hartsel v. Keys,
87 F.3d 795, 799 (6th Cir. 1996). Summary judgment is appropriate when the moving party “shows
that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). “When evaluating the appeal, the court must view the
evidence in the light most favorable to the non-moving party.” Hartsel, 87 F.3d at 799 (citing
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
Holbrook correctly insists that there is a genuine question of fact whether he complied with
the PLRA. Holbrook’s affidavit explicitly states that he filed a grievance, even though Burchett’s
affidavit suggests that he did not. Moreover, nothing in Holbrook’s deposition is directly contrary
to the affidavit. While Holbrook was asked in his deposition whether he had complained about his
medical treatment, at no point was he asked whether he had filed a grievance. Because there is a
genuine issue of fact as to whether Holbrook complied with the PLRA, it was error for the district
court to grant summary judgment.
In remanding Holbrook’s case to the district court, we do not find that he has necessarily
satisfied the PLRA. The district court will need to assess whether Holbrook did in fact submit a
4
No. 10-5141
Michael Holbrook v. Boyd County, Kentucky
grievance and, if he did, whether the submission of the grievance without further action by Holbrook
is sufficient to constitute exhaustion.
III.
For the foregoing reasons, we reverse the district court and remand for further consideration.
5
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131 F.Supp.2d 1374 (2001)
UNITED STATES, Plaintiff,
v.
SPANISH FOODS, INC., et al., Defendants
and
Fausto Diaz-Oliver, et al., Third-Party Plaintiffs,
v.
Claudio L. Martinez, Third-Party Defendant
Slip Op. 01-14. Court No. 98-03-00620.
United States Court of International Trade.
February 2, 2001.
*1375 Stuart E. Schiffer, Acting Assistant Attorney General; David M. Cohen, Director; Commercial Litigation Branch, Civil Division, United States Department of Justice, (James W. Poirier), Washington, DC, for plaintiff.
Carroll & Associates, P.A., (Linda L. Carroll), Miami, FL, for Lilliam S. Martinez.
Fotopulos & Spridgeon, (Thomas E. Fotopulos), Tampa, FL, for Fausto Diaz-Oliver.
Collier Shannon Scott, PLLC, (Paul C. Rosenthal, John B. Brew and John M. Herrmann), Washington, DC, for Remedios Diaz-Oliver.
Holland & Knight LLP, (Gregory Baldwin), Miami, FL, for George Mencio, Jr.
ORDER
TSOUCALAS, Senior Judge.
Defendants Spanish Foods, Inc., Lilliam S. Martinez, Francisco Hernandez-Perez, Fausto Diaz-Oliver, Remedios Diaz-Oliver and Vincente Hernandez-Perez ("Defendants"), being sued by the United States for civil penalties and lost duties for 158 violations of 19 U.S.C. § 1592 on March 27, 1998, had moved for summary judgment claiming that the Government commenced this action after the expiration of the five-year statute of limitations provided for in 19 U.S.C. § 1621, and the Government had filed a cross-motion for summary judgment striking defendants' statute of limitations defense contending that this action was commenced in a timely manner. See United States v. Spanish Foods, Inc., 24 CIT ___, 118 F.Supp.2d 1293 (2000). Both motions have been denied, see id., and the trial on the issue was held on January 17 and 18, 2001.
I. Undisputed Facts
Spanish Foods is the United States subsidiary of a Spanish food producer. See Def.s' Pre-Trial Mem. ("Def.s' Mem.") at 2. In or around 1990, Spanish Foods entered an agreement with Juan Antonio Sirvent Selfa, S.A. ("JASS") to become the exclusive United States importer of food products exported from Spain by JASS. See id. Consequently, JASS' former United States importer, General Commodities International, Inc. ("GCI"), hired the law firm of Holland & Knight ("H & K") to proceed with a suit against JASS for breach of contract. See id.
In the course of the litigation, George Mencio ("Mencio"), a partner at H & K, subpoenaed and received documents from Spanish Foods that indicated the presence of a "double invoicing" system between Spanish Foods and JASS. See id. Mencio contacted Don Zell ("Zell"), an employee of *1376 H & K, and a meeting was arranged between Mencio, Zell and Benigno Gonzalez ("Gonzalez"), an officer of GCI. See id. at 2-3. During the meeting, Gonzalez pointed out some documents and a cover letter referring to these documents and translated them from Spanish into English for Zell. See id.; Tr. at 52-53. The documents and the letter suggested that Spanish Foods and its president, Lilliam Martinez ("Martinez"), were submitting false invoices to Customs. Pl.'s Pre-Trial Br. ("Pl.'s Br.") at 4; Def.s' Mem. at 3. Mencio and Gonzalez asked Zell to contact Customs Service ("Customs") in order to arrange a meeting between Mencio, Gonzalez and a Customs officer.
Zell called Customs officer Carelli ("Carelli") on March 24, 1993. During this brief phone conversation, Zell asked Carelli whether Carelli would be willing to meet an unnamed client of H & K. See Pl.'s Br. at 6-7; Def.s' Mem. at 3-4. Carelli agreed to the meeting and, subsequently, Mencio called Carelli setting the meeting on March 29, 1993, at the premises of H & K. See id.
The meeting on March 29, 1993, was attended by Mencio, Gonzalez, Carelli and Robin Avers, Carelli's supervisor ("Avers"). See Pl.'s Br. at 4; Def.s' Mem. at 3-4. At the meeting, Gonzalez provided Carelli and Avers with the double invoicing documents and the cover letter. See id.
II. Standard of Review
The Government asserts that the statute of limitations contained in 19 U.S.C. § 1621 (1994) must be narrowly construed by this Court in favor of the Government. In support of this proposition, the Government relies on Badaracco v. Commissioner of Internal Revenue, 464 U.S. 386, 398, 104 S.Ct. 756, 78 L.Ed.2d 549 (1984). The Government misreads Badaracco and its progeny.
Badaracco addressed the application of section 6501(a) of the Internal Revenue Code of 1954. The statute established a general 3-year period of limitations "after the return was filed" for the assessment of federal income taxes. Id. at 388, 104 S.Ct. 756. However, section 6501(c)(1) provided that if there was "a false or fraudulent return with the intent to evade tax," the tax then could be assessed "at any time." Id. In Badaracco, petitioners conceded that they had filed fraudulent income tax returns that were later amended in a non-fraudulent way and additional taxes were paid. See id. The IRS, however, proceeded to collect penalty funds for the fraud committed. See id. at 389, 104 S.Ct. 756. The Court in Badaracco held that where a taxpayer files a false or fraudulent return, but later files a non-fraudulent amendment, a tax may be assessed at any time because the plain and unambiguous language of section 6501(c)(1) permits the IRS to assess "at any time" the tax for the year in which the taxpayer has filed "a false or fraudulent return," despite any subsequent disclosure the taxpayer makes. Id. at 399-401, 104 S.Ct. 756. Hence, Badaracco is not an applicable precedent to the case at bar because, unlike § 6501(c)(1), no part of 19 U.S.C. § 1621 provides for bringing an action "at any time." Additionally, the rationale of Badaracco relies on cases factually and legally irrelevant to the case at bar.[1] In sum, the rule of statutory construction articulated by the *1377 Badaracco Court the principle that statutes of limitations, sought to be applied to bar rights of the government must be strictly construed in favor of the government applies only in the absence of clear congressional intent to bind the government to the time frame articulated by the statute. See Pacific Coast Steel Co. v. McLaughlin, 61 F.2d 73 (9th Cir.1932).
The statute at issue provides that "[n]o suit or action to recover ... any pecuniary penalty or forfeiture of property accruing under the customs laws shall be instituted unless such suit or action is commenced within five years...." 19 U.S.C. § 1621 (emphasis supplied). Considering that the right to an action for a penalty or forfeiture under the Customs Law belongs exclusively to Customs, the statutory language unambiguously reveals clear congressional intent to bind the government to the five-year limitation period. Therefore, the rule of strict construction [of the statute] in favor of the government delineated in Badaracco is inapplicable to the case at bar.
III. Contentions of the Parties
Section 1621 of Title 19 provides that the statute of limitations begins to run at "the time when the alleged offense was discovered ...." 19 U.S.C. § 1621 (emphasis supplied).
The Government reads 19 U.S.C. § 1621 jointly with 19 U.S.C. § 1592 (1994), the statute providing that a fraudulent violation must be comprised of two elements: (1) "the entry of ... merchandise into the United States by means of a material false statement;" and (2) "knowledge that the statement was false." Pl.'s Br. at 8-9. The Government, therefore, concludes that the statute of limitations did not begin to run until Customs discovered the presence of both elements in the violation. See id. at 9-10. The Government, however, offers no explanation to what it considers to be a "discovery." The Government only asserts the following: (1) the presence of a "mere suspicion" does not amount to discovery, see id. at 11-15; (2) principles of "constructive discovery" or "constructive notice" are inconsistent with the plain reading of 19 U.S.C. § 1621, see id. at 11-14; and (3) an offense cannot be deemed to be discovered until Customs "actually discovers" the offense. See Tr. at 18. The Government connotes that the discovery occurs when Customs has enough incriminating evidence to do any of the following: (1) open a Customs investigation case; or (2) obtain a search warrant; or (3) file a complaint in court. See generally, Tr. (Pl.'s questioning of witnesses Avers and Carelli).
Therefore, the Government maintains that discovery occurred on April 6, 1993, when "Customs officially determined that there was sufficient evidence to suspect that ... entries had been made fraudulently to warrant opening of a formal investigation." Pl.'s Br. at 10-11. Alternatively, the Government suggests that, if principles of constructive notice are applicable, discovery occurred on March 29, 1993. See id. at 15; Tr. at 37-38.
Defendants assert that discovery occurred and the statute of limitations began to run at the moment when Customs was given enough substantive information by a reliable source to be able to discover all other evidence through the means available to Customs, including computerized searches. See Tr. at 22-23, 28-30; see also Def.s' Mem. at 5, citing to United States v. Spanish Foods, Inc. ("Spanish Foods"), 24 CIT ___, 118 F.Supp.2d 1293 (2000). Defendants maintain that under the "discovery rule" articulated in Spanish Foods, the statute of limitations began to run upon the March 24, 1993, phone call from Zell to Carelli because during the conversation Customs was given enough substantive information. See Tr. at 27.
IV. Analysis
A. Constructive Notice
The Government asserts that "constructive notice," that is, notice of a possibility of a wrongful act, is inconsistent with the plain meaning of 19 U.S.C. § 1621. See Pl.'s Br. at 11.
*1378 Constructive notice is defined as "information or knowledge of a fact [that] ... could have [been] discovered ... by proper diligence [if the party was in] ... such situation [that] ... cast upon [the party] the duty of inquiring...." BLACK'S LAW DICTIONARY (6th ed.) at 1062. Nothing in this definition conflicts with the requirement of section 1621 of Title 19 that the statute of limitations is to begin to run at "the time when the alleged offense was discovered." 19 U.S.C. § 1621. Conversely, possession of a proper type of evidence casts the duty of inquiring. See, e.g., United States v. Nussbaum, 24 CIT ___, 94 F.Supp.2d 1343 (2000). Therefore, the Government's contention (that is, the contention that the statute of limitations began to run on April 6, 1993, when Customs was "actually" rather than "constructively" on notice because "Customs officially determined that there was sufficient evidence to suspect that ... entries had been made fraudulently to warrant opening of a formal investigation," Pl.'s Br. at 10-11) lacks merit.[2]
B. Discovery Rule
Citing to Spanish Foods, Defendants, in turn, maintain that under the "discovery rule," the statute of limitations began to run on March 24, 1993, the day of the phone call from Zell to Carelli. See Tr. at 27. Defendants assert that on March 24, 1993, Customs received enough reliable substantive information to be able to discover all other evidence through the means available to Customs, including computerized searches. See id. at 32-33, 502.
The court in Spanish Foods noted the following:
Courts have construed the first clause of § 1621 to embrace the discovery rule in fraud cases, which tolls the limitations period until the time the fraud is discovered. Thus, under the discovery rule the statute of limitations is tolled until the date when the plaintiff first learns of the fraud or is sufficiently on notice as to the possibility of fraud to discover its existence with the exercise of due diligence.
24 CIT at ___, 118 F.Supp.2d at 1297 (internal citations and quotations omitted, emphasis supplied).
Spanish Foods did not, however, specify what constitutes being "sufficiently on notice" for the purpose of the discovery of fraud. The state of being sufficiently on notice for the purpose of the discovery of fraud has been defined by case law to mean the state at which a party comes to obtain knowledge of the fraud or such information on the basis of which the fraud could be detected with reasonable diligence.[3]See, e.g., Urland v. Merrell-Dow *1379 Pharmaceuticals, Inc., 822 F.2d 1268 (3rd Cir.1987), Rosner v. Codata Corp., 917 F.Supp. 1009 (S.D.N.Y.1996), Augusta Bank & Trust v. Broomfield, 231 Kan. 52, 643 P.2d 100 (1982), Salem Sand & Gravel Co. v. Salem, 260 Or. 630, 492 P.2d 271 (1971). "Reasonable diligence," in turn, means "[a] fair, proper and due degree of care and activity, measured with reference to the particular circumstances; such diligence, care, or attention as might be expected from a man of ordinary prudence and activity."[4] BLACK'S LAW DICTIONARY (6th ed.) at 457.
As the Government correctly points out, "reasonable diligence" does not imply the duty to investigate mere suspicions. See Pl.'s Br. at 12-13. Suspicion is defined as "[t]he apprehension of something without proof or upon slight evidence ...." BLACK'S LAW DICTIONARY (6th ed.) at 1447 (emphasis supplied). Therefore, the issue is when Customs came in possession of information or knowledge of facts that: (1) amounted to more than a mere suspicion; and (2) could have led a man of ordinary prudence to learn of the fraud or the possibility of fraud under the particular circumstances.
For the reasons stated below, this Court finds that Customs received information or knowledge of such facts at the meeting that took place on March 29, 1993.
C. Defendants' Evidence With Regard to the March 24, 1993, Phone Call
The evidence presented by Defendants in support of their position falls into two categories: (1) evidence of reliability of the information Customs has received on March 24, 1993, as a result of the phone call between Zell and Carelli; and (2) evidence of sufficiency of this information. The Court addresses each set of evidence in turn.
1. The Information Conveyed to Customs on March 24, 1993, Did Not Amount To Anything But a Mere Suspicion
Defendants allege that Customs considered the content of the phone call reliable because of the following: (1) Zell introduced himself to Carelli as an ex-federal law enforcement officer; (2) Zell stated that he was employed by H & K, a reputable law firm, and the information was to be produced by a client of H & K; (3) Carelli, a Customs agent with a busy schedule, agreed to take time to attend the meeting at H & K and, therefore, to spend one hour on the road; (4) Avers, who had a very substantial set of responsibilities and, consequently, a very busy schedule, see Tr. at 194-98, agreed to accompany Carelli and spent the total of approximately three and a half hours riding to and attending the meeting; and (5) Avers notified her supervisor of her plans to attend the meeting. See Tr. 28-30. Defendants conclude that the aforesaid actions indicated that: (1) Customs had to and actually did allocate the phone call from Zell extreme importance; and (2) such extreme importance demonstrates that the information allegedly conveyed during the phone call fell out of realm of suspicion and into the realm of reliable evidence which cast upon Customs the duty of inquiry. See id.
This Court is not convinced. First, Zell testified that he did not remember specifying to Carelli the exact places of his prior employ in his capacity as a law enforcement officer. See Tr. at 63. There was no evidence presented showing that either Carelli or Avers conducted any check of Zell's credibility and/or background. Customs could doubt or even ignore Zell's statement that he was an ex-federal law enforcement officer and, therefore, consider the information given by Zell as trustworthy or as questionable as if it were coming from any "tipster."[5]
*1380 Next, both Carelli and Avers testified that although the fact that the phone call was coming from and the documents were to be supplied by a reputable law firm like H & K was a factor that prompted them to attend the meeting, see Tr. at 157, 202-03, 215-16, they both testified that they did not know what information they were to receive at the meeting. See id. Indeed, an invitation from a reputable law firm does not necessarily guarantee that the information the firm offers is reputable. A law firm operating on behalf of its client may be propelled to act by less than righteous motives frequent in litigious process. The value of the information, therefore, may be inadvertently misrepresented or unduly enhanced. Carelli and Avers would have been indeed justified in doubting the reliability of the information even if they did not doubt the reliability of the source. Accord Tr. at 216. Considering that both Carelli and Avers testified that they were going to the meeting "in the blind," see Tr. at 157, 207, this Court has no reason to find that either Carelli or Avers allocated extreme importance to the information received on March 24, 1993.
Finally, while Carelli and Avers did acknowledge that attending a meeting at a location other than Customs was a rare practice, they both stated that such practice nonetheless took place, in spite of busy schedules of both officers.[6]See Tr. at 143-44, 212-13. Different people have different approaches and modes in which they execute their duties. Defendants offered no evidence showing that the three and a half hours field trip was entirely incompatible with Carelli or Avers' working pattern. Accordingly, this Court finds it hard to fathom why the field trip or Avers' act of notifying her supervisor about her anticipated absence, see Tr. at 209-10, 236, is categorized by Defendants as an extraordinary conduct.
In sum, the actions of Zell, Carelli and Avers that Defendants claim to be evidence supporting the reliability of the information conveyed during the March 24, 1993, phone call verifies only the fact that Customs officers hoped that the field trip would not be in vain. While the aforesaid actions indicate the presence of suspicion on the part of Customs, none of these actions indicates that Customs was propelled to attend the March 29, 1993, meeting by receipt of what could be qualified as reliable information. See BLACK'S LAW DICTIONARY (6th ed.) at 1447.
2. It Is Unlikely That the Information Conveyed to Customs on March 24, 1993, Was Sufficient
Defendants allege that the content of the March 24, 1993, phone call provided Customs with sufficient evidence because: (1) Zell furnished Carelli with the names of Spanish Foods and Martinez, see Tr. at 29, 485, 494-95;[7] and (2) the names of Spanish *1381 Foods or Martinez gave Customs enough information to detect fraudulent transactions through the use of Customs' ACS and TECS computer queries. See id. at 502.
A TECS computer query allows a researcher to determine whether the importer is subject to Customs' ongoing investigations.[8]See Tr. at 106, 227. Upon a proper submission, an ACS computer query could lead a researcher to the entry documents filed by the importer, prices declared, the identity of the product lines imported and the names of exporters. See Tr. at 108-10, 112, 228. An ACS query, however, does not provide the information whether fraud was committed or if a double invoicing system was used in particular. See id. at 134-35, 236-37. Had Carelli submitted the name of Spanish Foods for an ACS query, he would have received over 350 entries without any information on which ones of those entries, if any, were fraudulent. See id. at 118-19.
Defendants are implying that Carelli could determine that the type of fraud was double invoicing. See Tr. at 128-29. Because there are numerous violations of Customs Law and Carelli would have no means to know what to search for, this Court cannot embrace Defendants' broad proposition.
Carelli's research would have been narrower and, therefore, could possibly have been conducted had Carelli known that: (1) the violation in issue was double invoicing; and (2) either the name of the product line fraudulently exported or the name of the exporter selling the product in issue to Spanish Foods.
Defendants acknowledge that during the March 24, 1993, phone call, Zell did not identify the name of the product line in issue or the exporter to Carelli. See Pl.'s Br. at 7. Defendants, however, claim that: (1) Zell mentioned to Carelli that the violation in issue was double invoicing;[9] and (2) Carelli, therefore, could identify the fraudulent transactions even without knowing the line of the product or the name of the exporter, merely by comparing the prices submitted by Spanish Foods on every product of each entry to those submitted by other companies on the products analogous to those imported by Spanish Foods.[10]See Tr. at 228-30. In view of the fact that there were over 350 ACS entries by Spanish Foods, this Court is hesitant to hold that this monumental task is "such a measure of prudence ... as is properly to be expected from, and ordinarily exercised by, a reasonable and prudent man under the particular circumstances...." BLACK's LAW DICTIONARY (6th ed.) at 457; accord Pl.'s Post-Trial Br. at 13-18 (pointing out that there is no evidence that such massive investigation was ever done, or is feasible, or could be successful); compare R. Diaz-Oliver's Br. at 24 (alleging that the reasonableness of the *1382 task is irrelevant to the issue of the discovery of fraud).
Moreover, the Court finds it unlikely that during the March 24, 1993, phone call Zell did indicate to Carelli that the violation in issue was double invoicing. The pertinent evidence is as follows: (1) Zell's time sheet shows a March 24, 1993, entry reading that Zell "confer[ed] with U[nited] S[tates] Customs special agent Frank Carelli regarding assistance by Customs," see Def.s' Mem., Ex. 5 at 2-3; and (2) Zell's time sheet shows a March 29, 1993, entry reading that Zell attended a "meet[ing] with U[nited] S[tates] Customs special agents and attend[ed] debriefing of client regarding double invoicing scheme by JASS...."[11]See id. at 3 (emphasis supplied).
While different people have different approaches and modes in which they execute their duties, each person tends to execute similar duties in a similar fashion. Compare Martinez' Post-Trial Br. at 8 (failing to observe this fact and attempting to justify the inconsistency by stating that the entries are intended to be brief descriptions rather than diary type entries). It is undisputed that the subject of the meeting that took place on March 29, 1993, was the double invoicing. It is equally undisputed that the meeting was a debriefing of Gonzalez, an H & K client, and that Gonzalez conveyed the name of JASS and the information about the double invoicing to Carelli and Avers. Zell's March 29, 1993, entry properly reflects all of these identities and events. See Def.'s Mem., Ex. 5 at 3. Conversely, Zell's March 24, 1993, entry, while diligently identifying Carelli, omits any reference to a "double invoicing" scheme in the fashion of Zell's March 29, 1993, entry. In fact, in his March 24, 1993, entry Zell referred to "assistance by Customs." Id.
This leads the Court to conclude that on March 24, 1993, Zell, more likely than not, merely alerted Carelli to the general fact of a possible violation. Assuming so, the information given by Zell provided Carelli with insufficient knowledge to conduct an ACS search and determine the presence of fraud in the entries declared by Spanish Foods.[12]
*1383 V. CONCLUSION
This Court concludes that Customs did not learn of the fraud or was not sufficiently on notice as to the possibility of fraud to discover its existence with the exercise of due diligence on March 24, 1993, the day of Zell's phone call to Carelli. Customs, however, was put sufficiently on notice as to the possibility of fraud on March 29, 1993, when Gonzalez provided Carelli and Avers with the double invoicing documents and the cover letter.
Therefore, the action in issue, commenced prior to the expiration of the five-year limitation period posed by 19 U.S.C. § 1621, was commenced in a timely fashion. Based on the foregoing, it is hereby
ORDERED that parties proceed with the litigation on merits.
NOTES
[1] Specifically, the Court in Badaracco relied on: (1) Lucas v. Pilliod Lumber Co., 281 U.S. 245, 249, 50 S.Ct. 297, 74 L.Ed. 829 (1930), which held that the five-year period of limitations prescribed by section 277 of the Revenue Act of 1924 did not begin to run either at the time of the filing of a "tentative return," or at the time of the filing of a return not verified by the proper corporate officers because the Revenue Act of 1918 requires returns of corporations be sworn to as specified; and (2) E.I. DuPont De Nemours & Co. v. Davis, 264 U.S. 456, 462, 44 S.Ct. 364, 68 L.Ed. 788 (1924), case holding that an action by the Director General of Railroads to recover for a liability on behalf of the United States is subject to no time limitation if the only provision prescribing a period of limitation refers to "carriers" and the Director, representing the United States, cannot be qualified as a "carrier."
[2] Moreover, such reading eliminates the entire purpose of and logic behind the statute of limitations.
At common law there was no fixed time for the bringing of an action. Personal actions were merely confined to the joint lifetimes of the parties. The Statute of Limitations was enacted to afford protection to defendants against defending stale claims after a reasonable period of time had elapsed during which a person of ordinary diligence would bring an action. The statutes embody an important policy of giving repose to human affairs. The primary consideration underlying such legislation is undoubtedly one of fairness to the defendant.
Flanagan v. Mount Eden Gen. Hosp., 24 N.Y.2d 427, 429, 301 N.Y.S.2d 23, 248 N.E.2d 871 (1969) (internal citations and quotations omitted).
If the Government is allowed to wait and sit on its rights, the Government would not need a single day of the five-year limitation period offered by 19 U.S.C. § 1621.
[3] Defendants try to offer a test used by the Sixth, Eighth and Ninth Circuits, see Post-Trial Br. of Remedios Diaz-Oliver ("R. Diaz-Oliver's Br.") at 18-20 (citing to United States v. $515,060.42 in United States Currency, 152 F.3d 491 (6th Cir.1998); United States v. Premises Known As 318 So. Third Street, 988 F.2d 822 (8th Cir.1993); United States v. James Daniel Good Property, 971 F.2d 1376 (9th Cir.1992)), accord Fausto Diaz-Oliver's Post-Trial Mem. ("F. Diaz-Oliver Mem.") at 19-21, according to which the discovery occurs when the government possesses "the means to discover" the alleged wrong. There is nothing in the test used by the Sixth, Eighth and Ninth Circuits that invalidates, mitigates, or contradicts the traditional requirement that the fraud should be detectable with reasonable diligence.
[4] The definition of "due diligence" is "[s]uch a measure of prudence ... as is properly to be expected from, and ordinarily exercised by, a reasonable and prudent man under the particular circumstances ...."; compare "extraordinary diligence" and "great diligence." BLACK'S LAW DICTIONARY (6th ed.) at 457.
[5] Defendants assert that Zell had to sound credible to Carelli because of the following: (1) Zell was recently hired by H & K; (2) Zell wanted to seize the opportunity to show H & K that Zell "could do something;" and (3) Zell made an extra effort to get Carelli's attention. See Tr. at 28. While it is not the position of this Court to ascertain or question either Zell's usefulness to H & K in other assignments or Zell's level of zeal in his execution of those assignments, the Court does not share Defendants' confidence that Zell's earnest desire to instill credibility necessarily translated into Carelli's belief that the caller was credible. Indeed, Zell testified that Carelli "indicated that he would want to come out and see for himself the documents," Tr. at. 66 (emphasis supplied), a statement certainly not indicating solid reliance on the part of Carelli.
[6] Avers testified that she occasionally accompanied Carelli on field trips. See Tr. at. 143-44.
[7] One of the Defendants, Fausto Diaz-Oliver ("F.Diaz-Oliver"), asserts that the notes that Carelli took during the March 29, 1993, meeting were actually taken by Carelli during the phone call on March 24, 1993. See F. Diaz-Oliver Mem. at 17-18. F. Diaz-Oliver points out that the name of Lilliam Martinez was misspelled by Carelli as "Lillian," using a traditional spelling. F. Diaz-Oliver deduces that the misspelling indicates that the notes were taken by Carelli prior to Carelli's opportunity to examine the documents that had on their face the name of Lilliam Martinez and were presented by Gonzalez during the March 29, 1993, meeting. F. Diaz-Oliver concludes that this fact verifies that on March 24, 1993, Carelli was furnished with all the information reflected in Carelli's notes, including the name of Spanish Foods, Martinez, and the term "double invoicing."
This Court is not convinced. Zell testified that during his meeting with Mencio and Gonzalez he took down the name of Martinez. See Tr. at 54, 68. In addition, Defendants assert that Carelli did not examine the documents presented by Gonzalez until after the meeting. See R. Diaz-Oliver's Br. at 25. Had Zell actually given the name of Martinez to Carelli, he would have every reason to spell the unusual name. Conversely, there would have been no reason to provide Carelli with the correct spelling of Martinez' first name if Carelli were handed the documents at the time he was taking his notes.
Therefore, if the misspelling verifies anything, it verifies that more likely than not Carelli was not given the name of Martinez during the March 24, 1993, phone call.
[8] Spanish Foods had no TECS record on March 24, 1993.
[9] Zell testified that he conveyed to Carelli that he, Zell, has "read" documents (meaning had the documents translated to him) that "looked to be duplicate invoices for different amounts of money, with a cover letter explaining how to use those documents, that one [of those duplicates] could be used to submit to Customs." Tr. at 65.
[10] Defendants point out that Carelli eventually did this type of comparison. See Tr. at 529. Defendants, however, fail to observe that the comparison actually executed by Carelli was made upon the information pointing out the wrongful transactions in order to prove the fraud rather than to detect it.
[11] In addition, there are the following facts:
(1) Zell's testimony reveals that Zell is not absolutely sure whether he used the precise term "double invoicing," see Tr. at 66; and (2) Carelli, in turn, testified that he did not remember Zell using the term "double invoicing," see Tr. at 104.
Defendants assert that Zell's testimony is particularly trustworthy as testimony against interest because Zell's testimony is likely to deprive Gonzalez, a client of Zell's employer, H & K, from moiety if it is established that it was Zell and not Gonzalez who was the source of the information that could lead the Government to recover penalty. See R. Diaz-Oliver's Br. at 5. The logic of this argument is not entirely clear to the Court. While a possible desire of Zell to claim the moiety personally or the emotional forces behind the relationship between Zell, his employer and the employer's client are not the subject to be taken by the Court, it is apparent that neither Zell nor Gonzalez are to receive any moiety if the Government is to be defeated in this case. Additionally, if the Government is to be defeated, Gonzalez will lose the opportunity to see Spanish Foods (the ex-business partner of GCI, Gonzalez' employer, who switched from GCI to JASS) brought to justice and properly punished. This Court has no knowledge whether the ability to claim the moiety is more important to Gonzalez than seeing the Government prevail. Therefore, it is speculative to suggest that Zell is willing to accommodate the financial but not emotional motives of Gonzalez.
[12] One of the defendants, Remedios R. Diaz-Oliver ("R.Diaz-Oliver"), points out that because the name of Spanish Foods was not present in Zell's March 29, 1993, entry while it is undisputed that Spanish Foods was discussed during the March 29, 1993, meeting, the fact of presence or omission of a term or a name is not representative of the subjects discussed. See R. Diaz-Oliver's Br. at 6-7. R. Diaz-Oliver fails to observe that these similar omissions are consistent actions, unlike Zell's inconsistent entries about the "double invoicing."
In addition, R. Diaz-Oliver notes that "Carelli himself concedes that in March 24, 1993[,] telephone call, Mr. Zell stated that the issue involved double invoicing." Id. at 8 (citing to Tr. at 377). Carelli, however, did not concede exactly that. Carelli merely conceded recalling that he stated in his deposition that he "assumed [the prospect information] was about double invoicing." Tr. at 377 (emphasis supplied). This assumption hardly lends support to Defendants' claim that Customs received either sufficient or reliable evidence that amounted to anything more than a mere suspicion.
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918 F.2d 173Unpublished Disposition
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.Rose MECKLEY, Plaintiff-Appellant,v.BROADDUS HOSPITAL, Chairman of the Board, Broaddus Hospital,Chief Hospital Administrator, Broaddus Hospital, Karl Myers,Doctor, Denise Liston, Director of Nursing, Doris Lambert,Nurse, Brenda Pomraning, Nurse, West Virginia Department ofCorrections, Ron Gregory, Commissioner, Mike House,Superintendent, Frank Phares, Deputy Superintendent, JohnMarkley, Employment Officer, and Barbara Adams, Rite Auvil,Stephanie Bartholome, Ron Baisi, James Bobella, JamesBolyard, Bob Brown, June Carter, Junior Cross, TerryDuckworth, T.K. Foley, Laura Gallo, Nelson Haller, EdMiller, James Reed, Bonnie Richards, Doc Robinson, BobbyRobinson, Ethel Saunders, Doug Stevens, Louis Stevens, MarcWalters, George Watkins, Lisa Weaver, Correctional Officers,Defendants-Appellees,andGary Shaw, Harold Marteney, Defendants.
No. 90-6121.
United States Court of Appeals, Fourth Circuit.
Submitted Oct. 29, 1990.Decided Nov. 19, 1990.
Appeal from the United States District Court for the Northern District of West Virginia, at Elkins. Robert Earl Maxwell, Chief District Judge. (CA-90-55-E)
Rose Meckley, appellant pro se.
James Alexander Swart, Office of the Attorney General of West Virginia, Charleston, W.V., John Andrew Smith, Kay, Casto, Chaney, Love & Wise, Charleston, W.V., for appellees.
N.D.W.Va.
DISMISSED.
Before WIDENER, PHILLIPS and WILKINSON, Circuit Judges.
PER CURIAM:
1
Rose Meckley appeals the district court's order requiring that she submit several copies of an in forma pauperis petition and affidavit.* We dismiss the appeal for lack of jurisdiction.
2
Under 28 U.S.C. Sec. 1291 this Court has jurisdiction over appeals from final orders. A final order is one which disposes of all issues in dispute as to all parties. It "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233 (1945).
3
As the order appealed from is not a final order, it is not appealable under 28 U.S.C. Sec. 1291. The district court has not directed entry of final judgment as to particular claims or parties under Fed.R.Civ.P. 54(b), nor is the order appealable under the provisions of 28 U.S.C. Sec. 1292. Finally, the order is not appealable as a collateral order under Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949).
4
Finding no basis for appellate jurisdiction, we dismiss the appeal as interlocutory. 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.
5
DISMISSED.
*
We do not have jurisdiction to consider Meckley's contention in her informal brief that she is also appealing the district court's dismissal of two defendants since she has not filed a notice of appeal regarding this issue
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AFFIRM; and Opinion Filed April 5, 2013.
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-12-00090-CR
No. 05-12-00091-CR
ROD LEONARD GREER, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 199th Judicial District Court
Collin County, Texas
Trial Court Cause Nos. 199-81410-10 and 416-82349-10
OPINION
Before Justices Moseley, O'Neill, and Lewis
Opinion by Justice Lewis
Appellant Rod Leonard Greer was charged by indictment with two counts of possession
of cocaine with intent to deliver in an amount more than one gram but less than four grams.
Greer pleaded guilty to both indictments, and his punishment was assessed at eight years’
confinement in each case. The trial court probated the sentences and imposed conditions of
community supervision. In three appellate issues, Greer contends: (1) his January 2010 arrest
was dependent upon an unreasonable detention; (2) his May 2010 arrest was made under a
warrant tainted by the illegal January detention; and (3) the May 2010 search of his vehicle was
made pursuant to an invalid inventory search. We affirm the trial court’s judgments in both
cases. 1
Background
Greer’s issues on appeal grow out of two discrete interactions with the McKinney police:
one in January of 2010 and one in May of 2010.
The January 2010 Detention and Arrest
In early 2010, Sergeant Woodruff worked in the narcotics division of the McKinney
Police Department. Woodruff received a tip from a resident of a high-drug-activity
neighborhood in McKinney. The unidentified person told Woodruff that a man named Rod
Greer drove a white Ford pickup truck and was selling drugs on Gerrish Street. The informant
pointed to a particular house on Gerrish that was purportedly the drug house.
On January 19, Woodruff was stopped at the intersection of Gerrish and Maples when he
saw a white Ford pickup turn on to Gerrish without signaling 100 feet before the turn. Woodruff
made a u-turn to stop the truck, which was driven by Greer. Before Woodruff turned his
overhead lights on, Greer pulled into the driveway of a vacant house. The house had a sign in
the front yard indicating it was for sale or rent. Woodruff pulled in behind Greer. Greer got out
of the truck, locked it, and walked toward Woodruff; they met approximately half-way to the
officer’s car.
The parties agree that Woodruff detained Greer for approximately forty to forty-five
minutes following the traffic stop. Woodruff took Greer’s driver’s license and talked to Greer
about why he stopped at the vacant house. Greer said he was looking for a house for his mother.
After five or six minutes, Woodruff told Greer he had information Greer was dealing drugs in
1
Trial court case number 199-81410-10 addressed the events surrounding Greer’s January 2010 arrest. That case is the subject of our
appellate case number 05-12-00090-CR. The events surrounding Greer’s May 2010 arrest were addressed in trial court case number 416-82349-
10, which is our appellate case number 05-12-00091-CR.
–2–
that neighborhood. Woodruff checked and determined Greer had no warrants outstanding.
Woodruff asked for Greer’s consent to search him: Greer consented, but the search turned up
nothing. Woodruff then asked for consent to search Greer’s truck: Greer said no.
Approximately ten minutes in to the detention, Woodruff requested a K-9 officer. After about
twenty-five minutes, the officer arrived with the dog. Within five minutes of arriving at the
scene of the stop, the dog performed an “outside sniff” and alerted. Woodruff searched the truck
and found drugs in the console.
Woodruff arrested Greer, but Woodruff dropped the charges when Greer agreed to
become an informant for Woodruff. When Greer failed to keep that agreement, Woodruff issued
an arrest warrant for him.
The May 2010 Arrest
Officer John Lane had a photograph of Greer and had been told by Woodruff about the
arrest warrant. Lane was on patrol on May 15 and saw Greer driving his white pickup. Lane
pulled Greer over, and Greer got out of his truck and walked toward Lane. Lane handcuffed
Greer and put him in the police car.
Lane then began an inventory search of the truck. When Lane opened the unlocked door
he smelled fresh (unburned) marijuana. He requested a K-9 officer, whose dog alerted on a
locked briefcase in the truck. Lane seized the brief case and delivered it to Woodruff at the
police station. At the station Woodruff told Greer he was going to get a search warrant for the
case; Greer told Woodruff the case “only” contained marijuana. Following that admission, the
officers opened the case and found marijuana and cocaine inside.
The Motion to Suppress
Greer filed, and the trial court heard, his motion to suppress. He alleged the January
detention did not comply with the requirement that the scope of a detention “must be ‘strictly
–3–
tied to and justified by’ the circumstances which rendered its initiation permissible.” Terry v.
Ohio, 392 U.S. 1, 19 (1968). Other issues were argued at the hearing, but the trial court asked
for further briefing on the question of whether the detention was reasonable given (a) the only
suspicion Woodruff had was from the anonymous informant, and (b) Greer was detained twenty-
five minutes while they waited for the dog. At a second hearing, after the parties submitted
briefs, the trial court overruled the motion to suppress. Greer subsequently pleaded guilty. His
punishment was assessed at eight years’ confinement, probated.
Standard of Review
When reviewing a trial judge’s ruling on a motion to suppress, we view all of the
evidence in the light most favorable to the trial judge’s ruling. Gonzales v. State, 369 S.W.3d
851, 854 (Tex. Crim. App. 2012). We afford the trial judge’s determination of historical facts
almost total deference, and we afford the prevailing party “the strongest legitimate view of the
evidence and all reasonable inferences that may be drawn from that evidence.” Id. (quoting State
v. Woodard, 341 S.W.3d 404, 410 (Tex. Crim. App. 2011)). Likewise, when a trial judge’s
ruling on mixed questions of law and fact depend upon an evaluation of credibility or demeanor,
we afford the ruling almost total deference. Gonzales, 369 S.W.3d at 854. However, when
mixed questions of law and fact do not depend on evaluation of credibility and demeanor, or
when the questions are purely legal, we review the trial judge’s rulings de novo. Id.
The question of whether a specific search or seizure is “reasonable” under the Fourth
Amendment is subject to de novo review. Kothe v. State, 152 S.W.3d 54, 62 (Tex. Crim. App.
2004). We measure Fourth Amendment reasonableness in objective terms, examining the
totality of the circumstances. Id. at 63.
–4–
The May 2010 Detention
Greer challenges the reasonableness of the May 2010 detention in both cases on appeal.
Specifically, he challenges the trial court’s ruling that he was lawfully detained after the
conclusion of the initial investigation of the traffic stop. Greer contends Woodruff lacked the
reasonable suspicion required for the extended detention in this case.
The Fourth Amendment requires that a warrantless detention of a suspect be justified by a
reasonable suspicion. Terry, 392 U.S. at 21–22; State v. Elias, 339 S.W.3d 667, 674 (Tex. Crim.
App. 2011). An investigative detention contemplated by Terry allows the police to question a
suspicious person respecting his identity, his reason for being in the area or location, and to make
similar reasonable inquiries of a truly investigatory nature. Amores v. State, 816 S.W.2d 407,
412 (Tex. Crim. App. 1991). An officer may demand identification, a valid driver’s license, and
proof of insurance from the driver, and he may check for outstanding warrants. Davis v. State,
947 S.W.2d 240, 250 n.6 (Tex. Crim. App. 1997). The settled rule is that the investigative
detention must be temporary and can last no longer than is necessary to effectuate the purpose of
the stop. Id. at 245. However, once a police officer makes a good faith stop for a traffic offense,
he may also investigate any other offense that he reasonably suspects has been committed.
Rubeck v. State, 61 S.W.3d 741, 745 (Tex. App.—Fort Worth 2001, no pet.). The State bears the
burden of establishing the reasonableness of the detention. Ford v. State, 158 S.W.3d 488, 492
(Tex. Crim. App. 2005).
In this case, Wofford testified he detained Greer after the initial traffic stop was resolved
based primarily on the informant’s tip, including the facts that Greer was driving the vehicle the
informant had reported and was in the area the informant had identified. Moreover, the area was
known as one where drug activity occurred. Wofford testified he found the fact that Greer left
–5–
his vehicle and locked it to be suspicious, and the fact that he pulled into a driveway that was not
his own to be suspicious as well.
When an informant brings unsolicited information to the police in a face-to-face
encounter, the information should be given serious attention and weight by the officer, even if
the informant did not identify himself or herself. Bilyeu v. State, 136 S.W.3d 691, 694–95 (Tex.
App.—Texarkana 2004, no pet.); State v. Garcia, 25 S.W.3d 908, 913 (Tex. App.—Houston
[14th Dist.] 2000, no pet.); see also Walker v. State, 05-09-00139-CR, 2010 WL 522792, at *4
(Tex. App.—Dallas Feb. 16, 2010, pet. ref’d). The general rule is that “a stop based on facts
supplied by a citizen-eyewitness, which are adequately corroborated by the arresting officer,
do[es] not run afoul of the Fourth Amendment.” Brother v. State, 166 S.W.3d 255, 259 (Tex.
Crim. App. 2005). The officer does not have to observe the conduct personally to corroborate it;
instead, the police officer “in light of the circumstances, confirms enough facts to reasonably
conclude that the information given to him is reliable and a temporary detention is thus
justified.” Id. at 259 n.5 (citing Alabama v. White, 496 U.S. 325, 330–31 (1990)). An
informant’s veracity, reliability, and the basis of his knowledge are all “highly relevant” in
determining the value of his report. Illinois v. Gates, 462 U.S. 213, 230 (1983). In this case,
Greer was driving the vehicle described by the informant and was stopped just two houses away
from the house identified as the location of drug activity by the informant. We conclude
Wofford had confirmation of enough facts to conclude the information given to him was reliable.
Thus, the temporary detention was justified after resolution of the traffic stop. 2
And as to the length of the detention caused by the time for the drug dog to arrive, we do
not conclude a time of approximately twenty-five minutes was unreasonable in this case. The
2
We do not rely on the fact that Greer walked away from his truck and toward Wofford in our analysis of whether Wofford had reasonable
suspicion. See, e.g., Davis v. State, 947 S.W.2d 240, 248 (Tex. Crim. App. 1997) (Mansfield, J. concurring) (concluding fact appellant exited his
car and approached officer’s vehicle was “[f]ar from being suspicious,” and instead showed “an intent to demonstrate he was neither dangerous
nor drunk and his desire ‘to make points with the police by coming to them instead of making them come to him.’”).
–6–
record does not indicate Wofford used the waiting period to Greer’s detriment in an unfair or
unreasonable fashion. And twenty-five minutes is certainly not unreasonable as a matter of law.
See, e.g., Madden v. State, 242 S.W.3d 504, 517 (Tex. Crim. App. 2007) (facts of case provided
sufficient reasonable suspicion to detain appellant for twenty-five minutes it took for drug dog to
arrive).
Based on our review of the totality of the circumstances, we conclude Woodruff
possessed reasonable suspicion to detain Greer for an investigation of his involvement in drug
possession or trafficking. Accordingly, the trial court did not err in denying Greer’s motion to
suppress on this issue. We overrule Greer’s first issue.
The May 2010 Arrest
In his appeal of the charge growing out of the May 2010 arrest, Greer contends that arrest
was invalid because it was the result of the illegal search of his vehicle in January of that same
year. Because we have concluded that Greer was not illegally detained or searched in the first
arrest, we need not address this second issue.
Inventory Search
Finally, in a third issue, Greer challenges the inventory search of his vehicle following
the May 2010 arrest. Greer contends the State offered insufficient evidence of what the city’s
inventory-search policy was and that it was followed; he argues the inventory search was merely
a ruse for searching his vehicle. Greer also argues he had a privacy interest in the locked
briefcase found during the inventory search.
The purpose of an inventory is to protect the owner’s property while it remains in police
custody, to protect the police against claims or disputes over lost or stolen property, and to
protect the police from potential dangers. Kelley v. State, 677 S.W.2d 34, 37 (Tex. Crim. App.
1984). An inventory search is reasonable under the Fourth Amendment so long as it is done as
–7–
part of standard police procedures and not done in bad faith or for the sole purpose of
investigation. Trujillo v. State, 952 S.W.2d 879, 882 (Tex. App.—Dallas 1997, no pet.). Lane
testified it was the McKinney Police Department’s policy to tow the vehicle and to inventory its
vehicle’s contents beforehand. The record establishes that the vehicle was located in the
driveway of a home that did not belong to Greer; thus, it was reasonable for the police
department to have the car towed from that private property. See Mayberry v. State, 830 S.W.2d
176, 180–81 (Tex. App.—Dallas 1992, pet. ref’d). And Lane testified that he did in fact create
an inventory; this was not just a ruse to search the vehicle. We conclude there was sufficient
evidence of the policies underlying the inventory search. See, e.g., Trujillo, 952 S.W.2d at 882.
(evidence sufficient when officer testified it was standard procedure to inventory contents of
vehicle when the vehicle is turned over to wrecker).
As to the locked briefcase and Greer’s privacy interest therein, the record indicates Lane
handled that aspect of the search with an abundance of caution. When he smelled marijuana
after opening the door of the vehicle, he stopped his own search and called the K-9 unit. When
the dog alerted on the locked briefcase, Lane took it to headquarters and turned it over to
Woodruff. Woodruff testified he intended to get a search warrant to open the case, but Greer
admitted that it contained contraband. At that point, Greer no longer had any privacy interest in
the case, and Woodruff had no need of a warrant. See Rodriguez v. State, 106 S.W.3d 224, 229
(Tex. App.—Houston [1st Dist.] 2003, pet. ref’d) (“There is no legitimate expectation or interest
in ‘privately’ possessing an illegal narcotic.”). The trial court did not err in overruling this
portion of the motion to suppress. We overrule Greer’s third issue.
–8–
Conclusion
We have decided each of Greer’s issues against him. We affirm the judgments of the
trial court.
/David Lewis/
DAVID LEWIS
JUSTICE
Do Not Publish
TEX. R. APP. P. 47
120090F.U05
–9–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
ROD LEONARD GREER, Appellant On Appeal from the 199th Judicial District
Court, Collin County, Texas
No. 05-12-00090-CR V. Trial Court Cause No. 199-81410-10.
Opinion delivered by Justice Lewis.
THE STATE OF TEXAS, Appellee Justices Moseley and O'Neill participating.
Based on the Court’s opinion of this date, the judgment of the trial court is AFFIRMED.
Judgment entered this 5th day of April, 2013.
/David Lewis/
DAVID LEWIS
JUSTICE
–10–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
ROD LEONARD GREER, Appellant On Appeal from the 199th Judicial District
Court, Collin County, Texas
No. 05-12-00091-CR V. Trial Court Cause No. 416-82349-10.
Opinion delivered by Justice Lewis.
THE STATE OF TEXAS, Appellee Justices Moseley and O'Neill participating.
Based on the Court’s opinion of this date, the judgment of the trial court is AFFIRMED.
Judgment entered this 5th day of April, 2013.
/David Lewis/
DAVID LEWIS
JUSTICE
–11–
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695 So.2d 873 (1997)
Richard MONTOYA, Appellant,
v.
The STATE of Florida, Appellee.
No. 97-1138.
District Court of Appeal of Florida, Third District.
June 18, 1997.
Bennett H. Brummer, Public Defender and Marti Rothenberg, Assistant Public Defender, for appellant.
Robert A. Butterworth, Attorney General and Keith S. Kromash, Assistant Attorney General, for appellee.
Before NESBITT, GREEN and SORONDO, JJ.
PER CURIAM.
Appellant appeals his conviction and sentence for direct criminal contempt of court. We reverse where the judgment *874 merely provides that appellant was held in contempt for "disrespecting the court" and does not contain a recital of those facts upon which the contempt is based pursuant to Rule 3.830, Fla. R.Crim. P.[1] A contempt judgment which does not contain a recital of those facts upon which it is based is invalid and requires reversal. See Morris v. State, 667 So.2d 982, 987 (Fla. 4th DCA), rev. dismissed, 673 So.2d 29 (Fla.1996); Cook v. State, 636 So.2d 895, 896 (Fla. 3d DCA 1994); Johnson v. State, 584 So.2d 95, 96 (Fla. 1st DCA 1991).
Accordingly, we remand for the trial court to enter its judgment pursuant to Rule 3.830. In light of this, we do not reach the merits of the contempt charge at this time.
Reversed and remanded with instructions.
NOTES
[1] Rule 3.830 provides that:
A criminal contempt may be punished summarily if the court saw or heard the conduct constituting the contempt committed in the actual presence of the court. The judgment of guilt of contempt shall include a recital of those facts on which the adjudication of guilt is based. (emphasis added).
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221 F.3d 989 (7th Cir. 2000)
UNITED STATES OF AMERICA, Plaintiff-Appellee,v.ADAM JADERANY, a/k/a AHMAD JADERANIPOOR, a/k/a A.J. JADERANY, a/k/a AHMAD JADERANY, Defendant-Appellant.
No. 99-2059
In the United States Court of Appeals For the Seventh Circuit
Argued November 8, 1999Decided July 21, 2000
Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. No. 97 CR 6--William C. Lee, Chief Judge.[Copyrighted Material Omitted]
Before POSNER, Chief Judge, and RIPPLE and DIANE P. WOOD, Circuit Judges.
RIPPLE, Circuit Judge.
1
Adam Jaderany, a used car salesperson in Fort Wayne, Indiana, was indicted for his participation in a scheme to defraud used car buyers. The scheme involved purchasing used cars at auction, rolling back their odometers, altering their titles, and then reselling them. At trial, the Government provided testimony that Mr. Jaderany was involved personally in altering both the odometers and the titles of used cars, and the jury convicted him on six counts of transporting stolen goods and securities across state lines. After his motion for acquittal was denied, Mr. Jaderany asked the district court to grant him a downward departure in sentencing based on his family circumstances and his community involvement as a successful businessman. The district court denied the request for the departure.
2
On appeal, Mr. Jaderany submits that the evidence was insufficient to support his conviction and that the district court made a mistake of law when it refused to grant him a downward departure. We hold that there was sufficient evidence to support a conviction and that the district court properly analyzed the question of whether it should grant a downward departure. We therefore affirm the judgment of the district court.
3
* BACKGROUND
4
Because this is an appeal from a conviction, we must construe the facts in the light most favorable to the Government. See Jackson v. Virginia, 443 U.S. 307, 319 (1979); United States v. Asher, 178 F.3d 486, 488 n.6 (7th Cir. 1999); United States v. Wingate, 128 F.3d 1157, 1158 (7th Cir. 1997). The Government prosecuted Adam Jaderany for his involvement in a scheme to purchase used cars at auction, roll back the odometers, and then re-sell them. He was convicted under 18 U.S.C. sec. 2314 (transporting forged securities) and 2 (aiding and abetting). We summarize briefly the relevant facts.
5
The scheme to defraud used car buyers originated with several auto dealers in Illinois. The dealers obtained vehicles at auto auctions. After a car was purchased at auction, its odometer was rolled back in order to increase the resale value of the car. The title was then altered to reflect the new lower mileage.
6
When Illinois stopped processing titles submitted by several of the dealers, they turned to Mr. Jaderany, who obtained false Indiana titles for them. The false titles had the names of people chosen randomly out of the phone book. Mr. Jaderany provided forged power of attorney documents to his employees, allowing them to obtain title in the names of the unaware, randomly selected people. According to witnesses, Mr. Jaderany was involved personally in both tampering with odometers and altering titles. There was also evidence that documents relating to the vehicles were transported across state lines.
7
Mr. Jaderany was indicted on 21 counts relating to the alleged fraud. The jury convicted him on six of those counts, relating to the fraudulent resale of six vehicles. Mr. Jaderany moved for acquittal, arguing that the evidence was insufficient to support the conviction. The district court denied that motion.
8
The district court also refused to grant Mr. Jaderany's request for a downward departure based on his family ties and community status. Mr. Jaderany provided extensive evidence that he had important responsibilities to his wife and children and that he was a well-regarded businessman in the community. The district court found that his evidence did not indicate unusual circumstances that would take him outside the "heartland" of family and employment circumstances cases and that, therefore, a departure was unwarranted.
II
DISCUSSION
A. The Sufficiency of the Evidence
1.
9
A defendant seeking to overturn a conviction based on the insufficiency of the evidence faces a "heavy burden." United States v. Granados, 142 F.3d 1016, 1019 (7th Cir. 1998); United States v. Agostino, 132 F.3d 1183, 1192 (7th Cir. 1997). We must view all of the facts in the record in the light most favorable to the Government. See Jackson, 443 U.S. at 319; United States v. Curry, 187 F.3d 762, 769 (7th Cir. 1999). Drawing all reasonable inferences favorable to the Government, we must determine whether it has proved the elements of the crime beyond a reasonable doubt. See United States v. Hill, 187 F.3d 698, 700 (7th Cir. 1999); United States v. Masten, 170 F.3d 790, 794 (7th Cir. 1999). Reversal is appropriate only if there is truly no evidence from which the jury reasonably could have convicted the defendant. See Masten, 170 F.3d at 794; Granados, 142 F.3d at 1019.
10
Mr. Jaderany was convicted of violating 18 U.S.C. sec. 2314, which governs the transportation of stolen goods and securities across state lines. The district court instructed the jury that to convict Mr. Jaderany, the Government was required to prove four elements of the crime: (1) that the defendant transported securities in interstate commerce, or caused them to be transported; (2) that the securities were forged or altered at the time the defendant transported them; (3) that the defendant knew the securities were forged or altered at the time the defendant transported them; and (4) that the defendant acted with unlawful or fraudulent intent. This instruction was a proper statement of the law. See United States v. Yusufu, 63 F.3d 505, 509-10 (7th Cir. 1995); accord United States v. Drew, 722 F.2d 551, 553 & n.1 (9th Cir. 1983) (using a slightly different formulation of the same elements); United States v. Johnson, 718 F.2d 1317, 1323 (5th Cir. 1983) (en banc) (same); United States v. Brown, 605 F.2d 389, 393 (8th Cir. 1979) (same).1
2.
11
Mr. Jaderany's argument is based primarily on a perceived analogy between his case and the case of James Rekrut in United States v. Martin, 815 F.2d 818 (1st Cir. 1987). In Martin, co-defendant Rekrut showed that the evidence was insufficient to convict him. See id. at 824-27. In that case, Rekrut was a salesman for a car dealer who was found to be perpetrating a fraud on consumers. Rekrut argued that there was no evidence showing that he should have known that he was part of a fraudulent scheme. The Government entered no expert testimony demonstrating that actions taken by Rekrut were inconsistent with normal business practices in the used car industry. See id. at 826. The First Circuit held that Rekrut's conviction could not stand, because the Government had not foreclosed the possibility that a person in Rekrut's position would think he was working for a legitimate business. See id. at 826-27. Mr. Jaderany argues that, as in that case, the Government has not provided evidence of what constituted normal business procedures in the sale of used cars, to compare with Mr. Jaderany's conduct. He also argues that the Government had the obligation to provide such testimony in order to prove that Mr. Jaderany acted with knowledge or intent. Finally, he notes that he was acquitted on most of the counts which, he argues, supports an argument of insufficient evidence.
12
The Government responds that the evidence missing in Martin--evidence showing that the defendant was "aware of the fraudulent nature" of the documents--is present here. Martin, 815 F.2d at 825. Several witnesses testified at Mr. Jaderany's trial that he had personal knowledge of fraud. Charles Bellavia, an automobile purchasing agent, testified that he personally saw Mr. Jaderany alter a vehicle title and that he was with Mr. Jaderany when they both witnessed a vehicle's odometer being rolled back. Colleen Dunn, an insurance agent and former car salesperson, testified that she spoke to Mr. Jaderany personally and that he obtained new and fraudulent titles for her in exchange for a fee. She also testified that Mr. Jaderany said he would choose names out of the phone book to use on titles. Joseph Sosani, who was convicted for his involvement in the odometer rollbacks, testified that, on one occasion, Mr. Jaderany was present when a title was altered to reflect lower mileage. Robin Lee Younger, the bookkeeper for an automotive repair shop, testified that Mr. Jaderany offered money to have the odometers rolled back on automobiles even though a mechanic told him it was illegal. Frank Loftus, a former employee of Mr. Jaderany's, testified that he saw Mr. Jaderany forge titles.
13
The Government submits that all of this evidence is sufficient to show that Mr. Jaderany knew the essential purpose of the scheme and intended to further it. Distinguishing Martin, the Government points out that in that case Rekrut was a low- ranking employee in the scheme handling documents that appeared valid on their face. Here, it argues, Mr. Jaderany was shown to have personally involved himself in altering titles and thus demonstrated a knowledge that Rekrut lacked. Furthermore, it contends, expert testimony is unnecessary to show that Mr. Jaderany's practices were not accepted in the industry. The Government also notes that, although Mr. Jaderany was acquitted on many of the counts, such acquittals do not require acquittal on the six counts of which he was convicted. See United States v. Powell, 469 U.S. 57 (1984).
3.
14
Our task here is to consider only whether the Government provided sufficient evidence to permit a reasonable jury to find that Mr. Jaderany acted with knowledge and intent. We believe that the Government has met that burden. Several witnesses provided testimony about Mr. Jaderany's personal involvement in altering titles and rolling back odometers. This testimony, once found credible by the jury, was sufficient to show that Mr. Jaderany acted with the requisite knowledge and intent. We shall not question the jury's decision on this credibility issue. See United States v. McGee, 189 F.3d 626, 630 (7th Cir. 1999) ("As we have made clear, it is not our role, when reviewing the sufficiency of the evidence, to second-guess a jury's credibility determinations."); United States v. McCaffrey, 181 F.3d 854, 856 (7th Cir. 1999) ("We will not substitute our own credibility assessment for that of the factfinder . . . ."). Mr. Jaderany's analogy to Martin is unavailing because, unlike in that case, the Government has provided evidence from which a reasonable jury could infer that he personally knew the fraudulent nature of his actions.
15
Our assessment is not undermined by the jury's decision to convict Mr. Jaderany on some counts but not on others. We conduct our sufficiency of the evidence review "independent of the jury's determination that evidence on another count was insufficient." Powell, 469 U.S. at 67; United States v. Iriarte-Ortega, 113 F.3d 1022, 1024 n.2 (9th Cir. 1997) (quoting Powell); United States v. Reed, 875 F.2d 107, 111 (7th Cir. 1989) (same). The counts charged violations of different statutory sections and related to different vehicles, and the jury reasonably could have found that the evidence supported convictions relating to some vehicles but not others.
B. The Downward Departure
16
Having found that the jury verdict was based on sufficient evidence, we turn to Mr. Jaderany's claim that the district court abused its discretion by not granting him a downward departure based on his family circumstances and employment. We may reverse a district court's decision to refuse a departure when it makes a mistake of law. See United States v. Corry, 206 F.3d 748, 750 (7th Cir. 2000); United States v. Thomas, 181 F.3d 870, 873 (7th Cir. 1999). However, if the district court had a correct legal understanding of the guideline yet still chose not to depart, we lack jurisdiction to review its decision. See United States v. Williams, 202 F.3d 959, 964 (7th Cir. 2000); United States v. Hegge, 196 F.3d 772, 774 (7th Cir. 1999). Mr. Jaderany argues that the district court made a mistake of law when it determined that his specific circumstances did not place him outside the boundary of the guideline's heartland.2 We must determine whether the district court's decision that Mr. Jaderany fell within the heartland of Guidelines cases was a mistake of law or, in contrast, was an exercise of discretion of the type we may not review.
1.
17
The Supreme Court explained the appropriate standard for appellate review of the district court's decisions about sentencing departures in Koon v. United States, 518 U.S. 81 (1996). In doing so, it adopted the methodology of the Court of Appeals for the First Circuit in United States v. Rivera, 994 F.2d 942 (1st Cir. 1993), an opinion written by then-Chief Judge Breyer. Koon, 518 U.S. at 95. In Koon, the Supreme Court explained that each sentencing guideline applies to a "heartland" of cases, which are the "'set of typical cases embodying the conduct that each guideline describes.'" Id. at 93 (quoting 1995 U.S.S.G. ch. 1, pt. A, intro. comment. 4(b)). The district court should depart from the Guidelines only if some unusual feature of the case takes it out of the heartland the conduct at issue differs significantly from the norm even though the guideline linguistically applies. See id. at 93-95. There are three kinds of potentially unusual factors forbidden factors, encouraged factors, and discouraged factors. See id. at 95- 96. Forbidden factors, such as race or national origin, see id. at 93, may never be used. See id. at 95-96. An encouraged factor, such as victim provocation, see id. at 94, may be used when the applicable guideline has not already taken the circumstance at issue into account. See id. at 96. A discouraged factor, or an encouraged factor already accounted for by the applicable guideline, should be used as a basis for departure only "if the factor is present to an exceptional degree or in some other way makes the case different from the ordinary case where the factor is present." Id.
18
In Koon, the Supreme Court also held that appellate courts should review departure decisions only for an abuse of discretion because, on most issues that might arise in this context, district courts are better suited than appellate courts to decide what kinds of cases fall outside the heartland. See id. at 98-99. Nevertheless, an appellate court must reverse if the district court made a mistake of law. Such a mistake of law constitutes an abuse of discretion. See id. at 100. A district court makes a mistake of law when it relies on a factor that may not be considered in any case, see id., or determines that the court has no authority to depart when in fact it does. See United States v. Farouil, 124 F.3d 838, 845 (7th Cir. 1997). A district court also makes a mistake of law when it misconstrues the language of a guideline and consequently mischaracterizes the boundaries of the heartland created by the guideline. The Court of Appeals for the First Circuit described this situation most graphically in Rivera, the case relied upon so heavily by the Supreme Court in Koon. Then-Chief Judge Breyer wrote:
19
Plenary review is . . . appropriate where the appellate court, in deciding whether the allegedly special circumstances are of a "kind" that permits departure, will have to perform the "quintessentially legal function" . . . of interpreting a set of words, those of an individual guideline, in light of their intention or purpose, in order to identify the nature of the guideline's "heartland" (to see if the allegedly special circumstance falls within it).
20
Rivera, 994 F.2d at 951 (citation omitted). See also United States v. Talk, 158 F.3d 1064, 1072 (10th Cir. 1998) (citing Rivera). We also recognized this situation in United States v. Canoy, 38 F.3d 893 (7th Cir. 1994). After deciding that extraordinary family circumstances could be a basis for departure, we turned to our sister courts of appeals for guidance on how to construe the guideline:
21
Because until today, we have interpreted section 5H1.6 to prohibit all departures based on family considerations, we have not had occasion to consider what separates the usual and ordinary family circumstance from the truly exceptional and extraordinary. The other circuits have developed a significant body of law on this question, however.
22
Id. at 907 (emphasis added). In characterizing the boundary between the ordinary and the exceptional as the subject of a "body of law," we recognized that the inquiry into the boundary of a heartland has a legal dimension that it is our responsibility to address. Since Koon, the Fourth and Sixth Circuits have also recognized that discerning the boundary of the heartland involves the development of a case law, the task of the appellate court.3 This limited but important reliance on appellate decisions helps ensure consistency among the district courts with regard to particular sentencing guidelines. Consistency is, of course, an important purpose of the Guidelines. See 28 U.S.C. sec. 991(b)(1)(B); United States v. Unthank, 109 F.3d 1205, 1211 (7th Cir. 1997).
23
Although appellate case law construing a guideline can shape the contours of its heartland and thereby inform the content of the guideline, Koon makes clear that the district courts have responsibility for assessing whether the circumstances of a particular case fall outside the heartland of a guideline. In performing this task, a district court must not only assess the boundary of the heartland but must also determine on which side of that boundary the facts of a particular case fall. While appellate case law construing the guideline will set certain legal limitations on the district court's construction of the guideline, the second step is clearly a factual issue. In this function, the district courts are, the Supreme Court has reminded us in Koon, in a better position to compare the facts of one case with those of the many others it has adjudicated. See Koon, 581 U.S. at 98. As Koon recognized, the district court has "special competence" on the question of a particular case's "ordinariness" or "unusualness." Id. at 99 (quoting Rivera, 994 F.2d at 951).
2.
24
Section 5H1.6 of the Sentencing Guidelines states that "[f]amily ties and responsibilities and community ties are not ordinarily relevant in determining whether a sentence should be outside the applicable guideline range." U.S.S.G. sec.5H1.6. Further, sec.5H1.5 states that "[e]mployment record is not ordinarily relevant in determining whether a sentence should be outside the applicable guideline range." U.S.S.G. sec.5H1.5. Since Koon we have had several occasions to review a district court's decision as to whether to depart based on family circumstances or employment. See United States v. Wright, 218 F.3d 812 (7th Cir.2000); United States v. Stefonek, 179 F.3d 1030 (7th Cir. 1999); United States v. Guy, 174 F.3d 859 (7th Cir. 1999); United States v. Owens, 145 F.3d 923 (7th Cir. 1998); United States v. Carter, 122 F.3d 469 (7th Cir. 1997).
25
In our decisions interpreting sec.5H1.6, we have interpreted the guideline language "not ordinarily relevant" to require a sentencing court to recognize that, when an individual is incarcerated, it is expected that his family life will suffer. See Wright, 218 F.3d at 815; Carter, 122 F.3d at 473; Canoy, 38 F.3d at 907. The Guidelines recognizes that many persons convicted of a criminal offense have family responsibilities, including responsibilities to their children; such responsibilities, standing alone, cannot be considered extraordinary. See Stefonek, 179 F.3d at 1038; Carter, 122 F.3d at 475; Canoy, 38 F.3d at 907. We have recognized that a defendant's ability to rely on a supportive spouse or other relatives to look after his children makes his case for a downward departure less compelling. See Carter, 122 F.3d at 474. Under sec.5H1.6, when the defendant is a single parent, the district court, in the exercise of its discretion, must determine whether the particular circumstances warrant a departure. Compare Canoy, 38 F.3d at 908 (cataloging decisions from other circuits where downward departures for single parents were affirmed) with Carter, 122 F.3d at 474 (noting decisions from other circuits where departures were rejected for single parents).
26
We also have noted that sec.5H1.5 recognizes that, for most defendants, holding a steady job is not extraordinary, but in fact expected. See Carter, 122 F.3d at 475. We have cautioned that the Guidelines do not permit district courts to grant "'middle class' sentencing discounts," because "[c]riminals who have the education and training that enables people to make a decent living without resorting to crime are more rather than less culpable than their desperately poor and deprived brethren in crime." Stefonek, 179 F.3d at 1038. The fact that a defendant's employment was "strikingly meritorious" does not require district courts to grant downward departures on this basis. See Carter, 122 F.3d at 475.
3.
27
In light of our precedents delineating the boundary of the heartland for family circumstances and employment, we lack jurisdiction to review the district court's decision not to grant a downward departure. The district court correctly recognized that it had the authority to depart based on family and employment circumstances. Although the district court thought that the sentence mandated by the Guidelines was too harsh, and that Mr. Jaderany's family circumstances were deeply sympathetic, it nonetheless concluded that, because Mr. Jaderany's situation was similar to previous situations in which downward departures were denied, a downward departure was unwarranted in this case.
28
The district court employed the proper methodology. First, the district court took note of the boundary of the heartland, and in doing so was mindful of other cases that have delineated the parameters of the heartland. Then, it considered the particular facts of Mr. Jaderany's case, and decided that they fell within the heartland as defined by those earlier cases. The factors considered by the district court were Mr. Jaderany's strong family ties, the high regard in which he was held by his community, and his successful business. It then concluded that those factors on their own did not make Mr. Jaderany's case unusual.
29
We are convinced that the district court correctly understood that it had the authority to depart and correctly perceived the boundaries of the heartland as defined by our earlier cases. Because the district court had a correct understanding of the legal standards for departure, we lack jurisdiction to second-guess the district court's decision not to depart. See Guy, 174 F.3d at 861; Carter, 122 F.3d at 475.
Conclusion
30
For the foregoing reasons, the judgment of the district court is affirmed.
AFFIRMED
Notes:
1
The counts of which Mr. Jaderany was found guilty (Counts 16-21) also charged him as an aider and abettor. See 18 U.S.C. sec. 2. In order to convict Mr. Jaderany as an aider and abettor, the Government had to prove three things: (1) that he knew of the illegal activity; (2) that he desired to help that activity succeed; and (3) that he took some action to help the scheme succeed. See United States v. Irwin, 149 F.3d 565, 569-70 (7th Cir. 1998); United States v. Woods, 148 F.3d 843, 849-50 (7th Cir. 1998). We have held that "[a]n aider and abettor may be punished with the same severity as a principal." United States v. Coleman, 179 F.3d 1056, 1061 (7th Cir. 1999) (quoting United States v. Corral-Ibarra, 25 F.3d 430, 436 (7th Cir. 1994)). Mr. Jaderany's brief on appeal casts his argument only in terms of the substantive offense under 18 U.S.C. sec. 2314. Yet, it should be noted, his specific contention- -that he acted without knowledge and intent--is relevant to the aiding and abetting charge as well.
2
Mr. Jaderany entered evidence of his important role in supporting his wife and children, and of his role as a leader in his community.
3
See United States v. DeBeir, 186 F.3d 561, 573 (4th Cir. 1999) (comparing facts to those "found exceptional in existing case law"); United States v. Ford, 184 F.3d 566, 585 (6th Cir. 1999) (describing as an issue of law a district court's conclusion that transactions in gambling proceeds were not per se outside a heartland's boundary).
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923 F.Supp. 304 (1996)
Jesus Rafael RODRIGUEZ RODRIGUEZ, Plaintiff,
v.
IBERIA LINEAS AEREAS de ESPANA, Defendant.
Civil No. 94-2181.
United States District Court, D. Puerto Rico.
April 22, 1996.
*305 *306 Alberto Acevedo-Colon, Ramos, Muniz & Ramos-Camara, Condado, PR, for plaintiff.
James D. Noel, Ledesma, Palou & Miranda, Hato Rey, PR, for defendant.
OPINION AND ORDER
LAFFITTE, District Judge.
Plaintiff brought an overtime[1] claim seeking compensation for work performed during overtime, mealtime, and the weekly day of rest under Puerto Rico's (1) Act No. 379 of May 15, 1948, as amended, P.R.Laws Ann. tit. 29, §§ 273-274, 282-283 (1985 & 1991 Supp.) (hereinafter "Working and Hours Days Act" or "the Acts") and (2) Act No. 289 of April 9, 1946, as amended, P.R.Laws Ann. tit. 29, §§ 295, 298 (1985) (hereinafter "Seventh Day Act" or "the Acts").
On November 8, 1995, the Court began a three day bench trial to determine whether Plaintiff qualified as an "administrator" and/or an "executive" and, therefore, was exempt from the protective provisions of the Acts. After listening carefully to the evidence and analyzing the parties' respective memorandums of law, the Court finds that Plaintiff meets the requirements of the shorttests for both an "administrator" and an "executive" of Iberia Lineas Aereas de Espafia at the Luis Muñoz Marín International Airport between January 1, 1984 and June 24, 1991. (Dkt. Nos. 23, 24, 25, 27). Consequently, Plaintiff can not seek compensation for work performed during overtime, meals, and the weekly day of rest, and his complaint is hereby dismissed.
FINDINGS OF FACT
From January 1, 1984 until June 24, 1991, Plaintiff, Jesus Rafael Rodriguez Rodriguez ("Rodriguez"), worked for Defendant, Iberia Lineas Aereas de España ("Iberia"), at the Luis Muñoz Marín International Airport in San Juan, Puerto Rico. During this seven year period, Plaintiff labored under two distinct titles. The overwhelming majority of the time Plaintiff worked as the "Traffic Manager" ("Jefe de Servicio de Tráfico"), also known as the "Head of the Shift for Traffic Services" ("Jefe Turno Servicio Tráfico"). Frequently, however, when the Station Manager, otherwise known as the Airport Manager, was absent from the airport, Plaintiff would perform many of the Station Manager's duties as the Acting Station Manager. Iberia compensated Plaintiff with a monthly salary that began at $3,601 per month in January 1984 ($831.00 per week) and ended with a salary of $4,738 per month in June 1991 ($1,093.38 per week).[2]
There were at least six individuals working for Iberia in Puerto Rico that held powerful positions above Plaintiff. The General Manager held the highest position in Puerto Rico and oversaw the work of five executives who ran their respective departments: the sales manager, the administrator, the maintenance manager, the operations manager, and the station manager. These five individuals and the General Manager were known as the "Mandos" or the Commanders.[3] In the hierarchy of Iberia, Plaintiff stood directly below the station manager who oversaw the catering *307 department and the passengers department. During most of Plaintiff's seven year tour of duty as the Traffic Manager, he shared the position with a second individual. While this individual worked the night shift, Plaintiff worked most often during the day.
Five witnesses at the hearing testified about Plaintiff's functions at the airport. Three individuals who worked for Iberia while Plaintiff was Traffic Manager testified on behalf of Iberia: (1) Francisco Duarte Gomez ("Duarte") who was Iberia's Station Manager and Plaintiff's supervisor from July 1986 until December 1989;[4] (2) Vicente Alos Cerra ("Alos") who was a passenger supervisor for Iberia in 1985 and thereafter an employee of the handling companies working under Plaintiff's supervision;[5] and (3) Sandra Rosa Medina ("Medina") who was an administration agent in charge of Iberia's accounting in Puerto Rico from 1984 to 1991.[6] Two witnesses, Plaintiff himself and a former Executive Secretary to the Station Manager, Maria de Los Angeles Pagues Cahue ("Pagues"), testified for Plaintiff.
Although all five did not agree on every aspect of Plaintiff's position, from the evidence presented it is evident that Plaintiff performed several essential functions for Iberia. Perhaps Plaintiff's most important function was his supervision of Iberia's airport employees from 1984 until 1985. After 1985, when Iberia hired independent contractors to perform a variety of functions at the airport, Plaintiff oversaw the operations of these handling companies and their employees.
As supervisor, Plaintiff was responsible for three noteworthy tasks. First, Plaintiff had input into the hourly schedule of the employees at the airport. For example, when airplanes arrived late, Plaintiff would extend their work shifts to accommodate the passengers.[7] Second, Plaintiff directed the work of the employees and independent contractors working for Iberia at the airport. When employees made mistakes, Plaintiff would correct them and report their errors to his superiors.[8] When Plaintiff worked side by side with employees at the Iberia counters, he would remind them of their duties and direct their efforts to accommodate the passengers.[9]
Third, and most importantly, Plaintiff had influence over the hiring and firing of employees. Although Plaintiff did not have the power to hire or to fire an employee at his discretion, the evidence indicates that Plaintiff did have the power to make an influential recommendation about the status of an employee's position with the company.[10] In fact, Duarte testified that as Station Manager he followed Plaintiff's advice regarding the number of new employees needed and the work status of an employee ninety percent (90%) of the time. Given the Station Manager's frequent absence from the airport and the fact that Plaintiff had daily contact with Iberia's employees and independent contractors, Duarte's choice to follow Plaintiff's advice makes perfect sense.
For example, during Plaintiff's tenure as Traffic Manager, an employee of a handling company working for Iberia allegedly misbehaved. Although Plaintiff was not present, the handling company's supervisors reported the incident to Plaintiff. In turn, Plaintiff apparently reported the incident to his superiors with a recommendation that the company reprimand the employee. Although Plaintiff denies any involvement in the firing of this employee, his comments indicate that he had the responsibility of preventing the *308 employee from creating a future disruption at the airport.[11] Plaintiff states: "the situation was so serious that regarding whether I could or couldn't [reprimand her] ... I would have borne the responsibility anyway of ... forbidding her to enter [Iberia's offices]."[12] Undoubtedly, Plaintiff's responsibilities included making reports of any similar incidents and making a recommendation as to the penalty for an employee's wrongful behavior.
In addition to supervising and coordinating the airport workers, Plaintiff acted as an assistant to the Station Manager and as Acting Station Manager when the Station Manager was absent from the Luis Muñoz Marín International Airport. As the Station Manager's assistant, Plaintiff had the authority to pass down orders from the Station Manager to the lower-level employees. When Plaintiff talked to these employees, he instructed them with the full power and authority of Iberia behind him.[13] Furthermore, Plaintiff signed many invoices as Traffic Manager. Sometimes Plaintiff would be the only individual to sign the invoice and, at other times, the Station Manager would sign the invoice after Plaintiff. The invoices listed the expenditures that various companies charged to Iberia for a variety of goods and services. Before signing the invoice, Plaintiff would carefully examine the expenditures and correct any errors.[14] By signing the invoice, Plaintiff indicated that, as Traffic Manager, he approved of the expenditures.
Frequently, the Station Manager was absent from the airport for both business and personal reasons during Plaintiff's work shift. Because Plaintiff was the most senior Traffic Manager, he would assume all the duties and the responsibilities of the Station Manager.[15] This included: (1) correcting and approving of the invoices that billed Iberia for goods and services by signing his name "by authorization" of the Station Manager;[16] (2) approving the distribution of meals by the catering company;[17] (3) authorizing overtime for employees;[18] and (4) authorizing days off and vacation leave.[19] Plaintiff performed these functions as Acting Station Manager at least fifty (50) days every year.[20]
As both Traffic Manager and Acting Station Manager, Plaintiff represented Iberia in company meetings and criminal cases. In meetings with the Puerto Rico Ports Authority, which has jurisdiction over the Luis Muñoz Marín International Airport, and other companies, Plaintiff would be present. Although it is unclear whether Plaintiff's role at these meetings was to listen attentively to instructions, make recommendations, or answer questions, the record shows that he would attend meetings at the airport and Iberia's offices in Miramar, Puerto Rico.[21] Furthermore, Iberia's Mandos often called upon Plaintiff to represent the company in criminal cases.[22]
In Plaintiff's position as Traffic Manager, Plaintiff performed both manual labor and office work. According to Plaintiff himself, he spent the overwhelming majority of his time doing office work. In an eight hour work day, Plaintiff would spend anywhere from the entire day to five hours of the day working at the office or on non-manual *309 tasks.[23] The office work included: (1) informing companies, the Puerto Rico Ports Authority, and airport offices of the flight schedules;[24] (2) dictating reports on employee absences and dictating letters requesting supplies;[25] (3) approving overtime; (4) approving invoices from the catering services company, the airport aviation services company, the airport stores, various business supply companies, airport limousine services, land transportation services, and magazine companies; (4) authorizing vacation leave, overtime, and compensatory days;[26] (5) authorizing the payment of hotel bills for Iberia employees;[27] (6) ordering the purchase of new materials;[28] (7) ordering the disbursement of petty cash;[29] (8) authorizing compensation for lost luggage;[30] (9) correcting telephone bills and charging employees for their personal use of the telephone;[31] (10) attending Iberia meetings; (11) representing Iberia in criminal cases; and (12) supervising and coordinating the activities of the Iberia employees and independent contractors at the airport. Plaintiff carried out the bulk of these activities at the Traffic Manager's desk and he shared a secretary with the Station Manager.[32]
In spite of the fact that Plaintiff's occupation centered around office work, Plaintiff did spend some time performing manual labor on a daily basis. During the day, Plaintiff worked at the customs area, the immigration area, the transit room, the ramp, and the Iberia counters doing the work that other lower-level Iberia employees and independent contractors performed.[33] Each day, according to Plaintiff, he would check in thirty (30) passengers.[34] Moreover, he would check in passenger luggage, help the passengers on wheelchairs, clean the offices, bring mail to Iberia's headquarters in Miramar, and transport sick passengers to the hospital.[35]
Plaintiff's position had a significant impact on Iberia's public image and business success. He was one of Iberia's most important managers of goods and services which had a direct effect upon Iberia's most important clientele, the passengers. All three of Iberia's witnesses, Duarte, Alos, and Medina, as well as Plaintiff himself, testified about the importance of his work.[36] As Traffic Manager and Acting Station Manager at the airport, Plaintiff had to make decisions frequently about the boarding status of a passenger. Plaintiff, for example, had the authority to admit or to deny passengers the right to board an airplane, upgrade passengers from "coach" to "first class," and approve of "denied boarding" compensation.[37] Plaintiff maintained such a distinguished and helpful relationship with the public that he was rewarded two times with the "Best Airline Traffic Airport Employee" of the year award by the Puerto Rico Association of Travel Agents.[38]
Plaintiff's responsibilities and title placed him in a separate and distinct class of Iberia employees. On the highest level were the *310 Mandos who worked in powerful positions directly above Plaintiff. On the lowest level were those employees working directly below Plaintiff: (1) Iberia's employees at the counter section, the customs area, the immigration area, the ramp, and the transit room; and (2) the independent contractors who replaced most of them in 1985. Between these two levels, there was a middle tier where Plaintiff, the other Traffic Managers, the Traffic Coordinators (who coordinated the Station Manager's orders and were in charge of the meals department), and the Operations Department Coordinators worked.
Iberia treated the workers in this middle tier, like Plaintiff, differently from the remaining airport employees. The middle level employees, unlike the lower level employees, had a different hourly schedule and holiday schedule.[39] They did not receive overtime compensation but, instead, received more compensation or more days off for the additional hours that they worked.[40] None of these employees, including Plaintiff, recorded their working hours by punching time cards. Rather, they reported their hourly schedule by filling out attendance sheets.[41] Furthermore, Plaintiff along with the other Traffic Managers had to wear a double breasted jacket that distinguished them from both higher executives and lower level employees.[42]
In summary, Plaintiff was the second most important Iberia employee at the Luis Muñoz Marín International Airport from January 1, 1984 until June 24, 1991. He was the most senior Traffic Manager and the individual most likely to assume the duties of the Station Manager when the Station Manager was absent from the airport. His most significant functions included: (1) supervising the lower level Iberia employees and the independent contractors; (2) approving business expenditures, overtime, and vacation leave while assisting and substituting the Station Manager; (3) attending company meetings and representing Iberia in criminal cases; and (4) performing office work which directly affected Iberia's business operations. He performed these tasks with the highest distinction and with such an unusual dedication that Iberia relied on his expertise and experience at the airport for many years.
LEGAL DISCUSSION
A. The Meaning of "Administrator" and "Executive"
Iberia asserts that Plaintiff was an "administrator" and/or an "executive" of the company from January 1, 1984 until June 24, 1991 and, therefore, exempt from the protective provisions of Puerto Rico's Working and Hours Days Act and the Seventh Day Act. The Acts require, inter alia, employers to pay overtime wages for all hours worked in excess of an eight hour work day, the hours worked during the weekly day of rest, and the hours worked during mealtime. The Acts, however, do not protect executives, administrators, and professionals as those terms are defined by the Puerto Rico Minimum Wage Board. P.R. Laws Ann. tit. 29, §§ 288, 299 (1985).[43]
The Puerto Rico Minimum Wage Board recently amended the definition of "administrator" and "executive" for the fourth time in Regulation Number 13 (Fourth Revision) (1990). For each definition *311 there are two tests: (1) the "long test" for those employees earning less than $295.00 per week exclusive of board, lodging, or other facilities which has five requirements for "administrators" and six requirements for "executives; and (2) the "short test" for those employees earning at least $295.00 per week exclusive of board, lodging and other facilities which has only two requirements for both "administrators" and "executives." Because Plaintiff was compensated at least $831.00 per week exclusive of board, lodging and other facilities, Iberia must only satisfy the shortened requirements under the definition of "administrator" or "executive" to defeat Plaintiff's claims.
Under the short test for "administrators," Iberia has the burden of establishing that: (1) Plaintiff performed office or non-manual work directly related to (a) management policies, (b) Iberia's general business operations, or (c) Iberia's customers; and (2) Plaintiff customarily and regularly exercised discretion and independent judgment. Article III, Regulation 13, P.R. Minimum Wage Board (Fourth Revision), approved June 26, 1990.
The first prong of the test focuses on the employee's non-manual tasks. Such tasks as supervising other workers, attending to the needs of clients, collecting and receiving payments for services, coordinating with other businesses, maintaining and purchasing supplies, and using a petty cash fund are examples of office work related to management policies, business operations, and customers. Lehman v. Ehret, Inc., 103 D.P.R. 264, 103 English Translations 364, 370-71 (1975). According to the interpretations of the Federal Regulations governing the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et. seq. which are almost identical to the Minimum Wage Board regulations and considered persuasive authority by Puerto Rico courts, this part of the test is designed to exempt "white-collar" employees who expend a significant amount of time performing office work. 29 C.F.R. § 541.203 (1995); White v. All America Cable & Radio, 656 F.Supp. 1168, 1170 (D.P.R.1987); López Vega v. F. Vega Otero, Inc., 103 D.P.R. 175, 103 English Translations 243, 246-47 (1974). Employees who perform manual work may still come within the exemption for administrative employees. 29 C.F.R. § 541.203 (1995).
Furthermore, the office work must be "directly related" to management policies, general business operations, or the employer's customers. In other words, the work must be substantially important to the administrative operations of the business. The employee does not have to help formulate management policies or help operate the entire business. Rather, the employee may carry out and execute policies which have a substantial impact upon a segment of the business. A finding that the employee performed office work of substantial importance to the business is not contingent on the number of other employees carrying out these same tasks. So long as the employee's tasks fits within these parameters the employee satisfies this part of the test. 29 C.F.R. § 541.205 (1995); Reich v. Haemonetics Corp., 907 F.Supp. 512, 516-17 (D.Mass. 1995).
The second prong of the "administrator" short test focuses on whether the employee customarily and regularly exercised discretion and independent judgment in the performance of his or her tasks. In general, an employee that has the authority "to make an independent choice, free from immediate direction and supervision and with respect to matters of significance" fits within the test. 29 C.F.R. § 541.207 (1995); Reich, 907 F.Supp. at 518. The employee must not be merely applying his knowledge and skill to prescribed procedures but rather exercising independent thought in selecting a choice between several permitted options. 29 C.F.R. § 541.207 (1995). Moreover, routine, clerical decisions, although requiring some discretion, are not the kinds of tasks that the regulation has in mind. Instead, the decisions must either involve choosing which policies to follow within the employee's sphere of responsibility or affect the employer's financial condition in a substantial manner. Id. Furthermore, the employee does not have to make the final decision in order to be considered exercising independent judgment. An employee who makes influential recommendations that are reviewed by superiors is still exercising significant discretion and independent *312 judgment. Id. Finally, although an employee may receive detailed instructions regarding the daily work that must be performed, the employee's functions, the nature of the employee's occupation, and the "diverse fluidity of daily situations" may indicate more than an occasional use of discretion. López Vega, 103 English Translations at 252.
Under the short test for "executives," Iberia has the burden of establishing that: (1) Plaintiff's primary duty consisted of managing Iberia's enterprise or a customarily recognized department or subdivision of Iberia; and (2) Plaintiff customarily and regularly directed the work of two or more employees of the enterprise, department, or subdivision. Article IV, Regulation 13, P.R. Minimum Wage Board (Fourth Revision), approved June 26, 1990.
The first prong of this test centers on the management functions of the employee. Examples of these management tasks include overseeing the work of lower level employees, assigning pre-ordered tasks to other employees, setting and adjusting other employees' compensation, receiving minimal supervision from superiors, appraising other employees, handling the employee complaints, disciplining employees when necessary, dividing the work among employees, and/or controlling the type and the use of previously ordered materials. Castro Sosa v. Puerto Rico Water Sources Authority, 107 D.P.R. 711, 107 English Translations 787, 789-90 (1978); 29 C.F.R. § 541.102 (1995). "The supervision of other employees is clearly a management duty." Donovan v. Burger King Corp., 672 F.2d 221, 226 (1st Cir.1982). Even though an employee may be enforcing the detailed policies of upper level management, "ensuring that company policies are carried out constitutes the `very essence of supervisory work.'" Id.
Significantly, although the language "primary duty" implies that the employee must perform these management functions over fifty percent of his working time, this is not necessarily true. Management may be an employee's principal duty even though that employee spends a majority of the time performing manual tasks. Donovan, 672 F.2d at 226; 29 C.F.R. § 541.103 (1995). Moreover, as long as the employee is "in charge" of the particular business department, the employee does not need to make significant influential decisions affecting the outcome of the business. Id. at 227; Dole v. Papa Gino's of America, Inc., 712 F.Supp. 1038, 1043 (D.Mass.1989). An assistant manager, for example, that supervises other employees and performs management functions while working over fifty percent of the time on manual tasks without the power to make significant decisions still has the primary duty of managing the business.
The second prong of the "executive" short test is more straight forward. An employee customarily and regularly directs the work of two or more employees by supervising at least two full-time employees or "any number of part-time employees, as long as the total number of hours supervised exceeds eighty." Dole, 712 F.Supp. at 1044.
B. Conclusions of Law
Iberia has satisfied its burden of proving that Plaintiff is both an "administrator" and an "executive" under Puerto Rico's Working and Hours Days Act and the Seventh Day Act. The documentary evidence as well as the testimony of Iberia's witnesses and Plaintiff himself clearly establishes that: (1) Plaintiff performed office work directly related to management policies and Iberia's general business operations; (2) Plaintiff customarily and regularly exercised discretion and independent judgment; (3) Plaintiff's primary duty consisted of managing Iberia's Traffic Department; and (4) Plaintiff customarily and regularly directed the work of at least two Iberia employees working at the Luis Muñoz Marín International Airport.
Iberia's evidence established both prongs of the "administrator" short test. First, undoubtedly, Plaintiff labored most of his day at the airport completing non-manual tasks. In the findings of fact of this opinion, the Court listed twelve different office activities that consumed most of Plaintiff's time *313 and energy.[44] Many of these activities, including supervising other employees, attending to the passengers' needs, approving of Iberia's expenditures at the airport, ordering the purchase of new materials, and using Iberia's petty cash fund, have been considered by the Puerto Rico Supreme Court as primary examples of non-manual tasks. See Lehman v. Ehret, Inc., 103 P.R.R. 264, 103 English Translations 364, 370-71 (1975). Plaintiff's assumption that his daily performance of manual tasks at the airport customs area, immigration area, transit room, ramp and counters precludes this finding is plainly incorrect. His performance of some manual tasks with his hands does not alter the fact that Plaintiff was essentially a "white-collar" employee.
Plaintiff's non-manual tasks were substantially important to the success of Iberia's administrative operations. Without Plaintiff's supervision of the lower level employees working at the airport, Iberia's operations would not have flowed very smoothly. Plaintiff was able to supervise the employees, coordinate their activities, inform airport offices of the flight schedules, and approve of the expenditure of large amounts of money for supplies and employee hotel stays. His role had a substantial impact on Iberia's image at the airport, on how passengers reacted to Iberia's services, and on Iberia's financial success.
Second, Iberia demonstrated that Plaintiff customarily and regularly exercised his discretion and independent judgment while carrying out these non-manual tasks. Plaintiff was free from immediate supervision to make decisions with respect to matters of significance. His reports on employee absences, his approval of overtime, his frequent approval of expenditures for goods and services without supervision, his orders requesting new materials, his representation of Iberia in criminal cases, and, most importantly, his supervision of Iberia employees and independent contractors required the use of independent judgment and all involved matters of significance.
Plaintiff exercised discretion when he altered the hourly schedule of the airport workers. He exercised discretion when corrected employee mistakes and directed their work at the airport. When there was a problem at the airport, all the employees turned to Plaintiff, their immediate supervisor, for direction. Significantly, Plaintiff had the discretion to make influential recommendations on the operations of the airport and the working status of an employee.
Plaintiff argues that most of his office work consisted of performing clerical tasks and carrying out his superiors' orders that required absolutely no independent judgment. He suggests that his daily work involved the application of his knowledge and skill to predetermined procedures rather than the use of discretion in selecting an option among several permitted choices. The evidence, however, does not substantiate Plaintiff's argument. Plaintiff's interpretation of discretionary authority is very narrow.[45] The nature of Plaintiff's job as Traffic Manager and Acting Station Manager and the likelihood of facing unanticipated daily problems at the airport required Plaintiff to exercise discretion. A primary example of an unexpected situation that required independent judgment was Plaintiff's authority to upgrade passengers from "coach" status to "first-class" depending on the identity of the passenger and his authority to approve of "denied boarding" compensation.
Having found that Plaintiff performed office work directly related to Iberia's general business operations and that Plaintiff regularly exercised discretion and independent judgment, the Court finds that Plaintiff qualifies as an "administrator" within the Minimum Wage Board's definition. Plaintiff, therefore, is exempt from the protective provisions *314 of the Working and Hours Days Act and the Seventh Day Act.
Although unnecessary, Iberia also produced overwhelming evidence demonstrating that Plaintiff qualifies as an "executive" of Iberia as well.[46] There is absolutely no question that Plaintiff's primary duty as Traffic Manager and Acting Station Manager was managing Iberia's passengers department, a recognized subdivision of Iberia. Plaintiff oversaw the work of lower level employees and independent contractors, directed and appraised their work, fielded employee complaints, reprimanded employees when required, and controlled the amount and the type of goods and services that Iberia paid for. Although Plaintiff argues that he was merely enforcing the policies of upper level management, this is a supervisory function and a defining characteristic of management. In addition, the fact that Plaintiff performed manual tasks as he supervised the employees does not minimize his managerial role. Since Plaintiff admits that he exercised his supervisory duties over at least seven people during the employees' respective work shifts, there is also no question that Iberia proved the second prong of the "executive" short test.[47] Consequently, Plaintiff qualified, without a doubt, as an "executive" of Iberia within the meaning of the Minimum Wage Board's definition.
In an attempt to prove that he was neither an "administrator" nor an "executive," Plaintiff makes a series of unfounded assumptions regarding the functions of an "administrator" and an "executive." Plaintiff assumes that an employer must have written policies outlining the special powers of all its administrators and executives.[48] Plaintiff also assumes that all administrators and executives have the power of attorney.[49] Additionally, Plaintiff assumes that only the Mandos of Iberia can be administrators and executives.[50] Finally, Plaintiff assumes that an individual in charge of passengers can never be an administrator or an executive.[51] Plaintiff never substantiates these assumptions with any supporting authority or logical reasoning. These conclusory assertions, without more, are not enough to punch even a small hole into the finely weaved arguments and evidentiary evidence of Iberia.
CONCLUSION
From January 1, 1984 until June 24, 1991, Plaintiff was the Traffic Manager and Acting Station Manager for Iberia. Plaintiff filed the instant complaint alleging that, during this seven year period, Iberia failed to comply with Puerto Rico's Working and Hours Days Act (Act No. 379, as amended) and the Seventh Day Act (Act No. 289, as amended) by not paying him for overtime, work performed on the weekly day of rest, and work completed during mealtime. After scrutinizing carefully the evidence presented by both sides in a three day bench trial, the Court finds that Plaintiff meets the requirements of the short-test for an "administrator" and an "executive" under both Acts and, therefore, is exempt from the Act's overtime provisions. Plaintiff's complaint is hereby dismissed with prejudice. Judgment shall be entered accordingly.
IT IS SO ORDERED.
NOTES
[1] Under Act No. 379 and Act No. 289, overtime includes the hours worked in excess of an eight hour work day, hours worked in excess of forty during any week, hours worked when the business must remained closed by law, hours worked during the weekly day of rest, and hours worked during the mealtime period. See P.R.Laws Ann. tit. 29, § 273 (1985).
[2] See PreTrial Order, Dkt. No. 13, Statement of Uncontested Material Facts, Part III, 1-2.
[3] Both parties discuss repetitively whether Plaintiff was one of the Mandos. The Court, however, shall not expend its time determining whether Plaintiff was a Mando. The nature of Plaintiff's position and the functions he performed during the seven year period in question are more important than the title that Iberia conferred upon him. See Medina Vega v. Unión Obreros Cervecería Corona, 86 P.R.R. 609, 614-17 (1962); see also 29 C.F.R. § 541.201(b) (1995) (explaining that job titles are insufficient yardsticks to measure an employee's status and functions); Reich v. Newspapers of New England, Inc., 44 F.3d 1060, 1075 (1st Cir.1995) (exemption depends on the employee's functions and not the job title).
[4] Tr. of Hearing, Dkt. No. 24, 10-11 (hereinafter "Tr.").
[5] Id. at 77-78.
[6] Id. at 101-102.
[7] Rodriguez Dep., Dkt. No. 18, Joint Ex. I at 26; Tr. at 62.
[8] Alos Test., Tr. at 93; Medina Test., Tr. at 115; Rodriguez Test., Tr. at 206-207; Rodriguez Dep., Dkt. No. 18, Joint Ex. I at 18, 28.
[9] Medina Test., Tr. at 115.
[10] Pl.'s Memo., Dkt. No. 25, at 43. Plaintiff admits that he made recommendations that Iberia fire and hire certain people. He argues, however, that these recommendations are insignificant because any Iberia employee could make similar suggestions to their superiors.
[11] Duarte Test., Tr. at 71; Rodriguez Test., Tr. at 212-214, 244.
[12] Rodriguez Test., Tr. at 244.
[13] Rodriguez Dep., Dkt. No. 18, Joint Ex. I at 18; Duarte Test., Tr. at 12, 28.
[14] Rodriguez Test., Tr. at 279, 318-319; Def.'s Exs. Z, AA, BB, CC, DD, EE, GG, HH, II, JJ, KK, LL, MM, NN, OO.
[15] Rodriguez Test., Tr. at 165; Def.'s Ex. B; Duarte Test., Tr. at 15, 28; Medina Test., Tr. at 107.
[16] Rodriguez Test., Tr. at 263-264.
[17] Alos Test., Tr. at 81.
[18] Alos Test., Tr. at 81-83; Rodriguez Test., Tr. at 207-208; Duarte Test., Tr. at 62-64, 83.
[19] Rodriguez Test., Tr. at 236; Def.'s Exs. K, L, M, N, O, P, Q.
[20] Rodriguez Test., Tr. at 221; Medina Test., Tr. at 109.
[21] Duarte Test., Tr. at 13; Medina Test., Tr. at 107.
[22] Rodriguez Test., Tr. at 175.
[23] Rodriguez Dep., Dkt. No. 18, Joint. Ex. I at 48.
[24] Duarte Test., Tr. at 24; Medina Test., Tr. at 103-105.
[25] Id.
[26] Rodriguez Test., Tr. at 274-331; Def.'s Ex. X WW.
[27] Rodriguez Test., Tr. at 309-310; Def.'s Ex. QQ, T.
[28] Rodriguez Test., Tr. at 324; Def.'s Ex. SS.
[29] Rodriguez Test., Tr. at 325; Def.'s Ex. TT.
[30] Rodriguez Test., Tr. at 330; Def.'s Ex. VV.
[31] Rodriguez Test., Tr. at 331; Def.'s Ex. WW.
[32] Duarte Test., Tr. at 21-22.
[33] Rodriguez Test., Tr. at 142-143.
[34] Id. at 218.
[35] Rodriguez Dep., Dkt. No. 18, Joint Ex. I at 34-35; Rodriguez Test., Tr. at 223-224.
[36] Duarte Test., Tr. at 14; Alos Test., Tr. at 87; Medina Test., Tr. at 113; Rodriguez Test., Tr. at 199-201.
[37] Duarte Test., Tr. at 12, 15, 55-56, 65-66, 74; Rodriguez Test., Tr. at 255-56.
[38] Rodriguez Test., Tr. at 199-201; Pl.'s Exs. 2, 4. Plaintiff argues that only non-administrators and non-executives can receive this award. There is no evidentiary support, however, for this conclusory assertion.
[39] Rodriguez Test., Tr. at 209-10.
[40] Id.
[41] Id. at 191-193, 209-11, 254, 290-91.
[42] Duarte Test., Tr. at 49-51; Rodriguez Test., Tr. at 187, 353; Pagues Test., Tr. at 384.
[43] Plaintiff is not seeking compensation under the Fair Labor Standards Act of 1938, 29 U.S.C. § 201 et. seq. and, therefore, the federal statute's two-year statute of limitations and three-year statute of limitations for willful violations is inapplicable. See Reich v. Newspapers of New England, Inc., 44 F.3d 1060, 1079-80 (1st Cir.1995). Under Puerto Rico law, Plaintiff filed a timely complaint on September 2, 1994 within three years after terminating his employment relationship with Iberia on December 31, 1993. See Act No. 96 of June 26, 1956, as amended, P.R.Laws Ann. tit. 29, § 246d(a) (1985); Nazario v. Joyería Gordons, Inc., 99 P.R.R. 575, 576 (1971). Furthermore, Plaintiff is seeking appropriately compensation within the ten year period immediately preceding the termination of his employment relationship with Iberia: from January 1, 1984 until June 24, 1991. See Act No. 96 of June 26, 1956, as amended, P.R.Laws Ann. tit. 29, § 246d(c) (1985).
[44] See Findings of Fact, supra at 308.
[45] For example, Plaintiff argues that the General Manager of Iberia in Puerto Rico, the highest official in the company, exercised very little discretion and independent judgment in his job. Rodriguez Dep., Dkt. No. 18, Joint Ex. I at 95. Clearly, the General Manager of Iberia had ample discretion to resolve disputes, coordinate the operation of Iberia airlines in Puerto Rico, and perform a myriad of functions to ensure the success of the airline.
[46] In his post-hearing memorandum, Plaintiff argues that Iberia abandoned its defense that he was an "executive." See Pl.'s Memo., Dkt. No. 23, at 52-53. The Court finds, however, that the opposite is true. Iberia argued forcefully in its post-hearing memorandum that Plaintiff qualified as an "executive." Def's Memo., Dkt. No. 25, at 53-56.
[47] Pl.'s Memo, Dkt. No. 23, at 31, 51.
[48] Id. at 8, 9, 10, 26, 28, 45-47.
[49] Id. at 12, 21, 28, 35-36.
[50] Id. at 14, 19, 45.
[51] Id. at 17.
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IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-281-CV
PROVIDENCE LLOYD'S INSURANCE COMPANY,
APPELLANT
vs.
JEANETTE HOBBS SMITH, INDIVIDUALLY AND AS
REPRESENTATIVE OF THE ESTATE OF
SILAS HOWARD SMITH, DECEASED,
APPELLEE
FROM THE DISTRICT COURT OF BELL COUNTY, 169TH JUDICIAL DISTRICT
NO. 121,072-C, HONORABLE STANTON B. PEMBERTON, JUDGE PRESIDING
This appeal involves the late filing of a claim by Jeanette Hobbs Smith for workers'
compensation death benefits. Following a jury trial, the district court rendered judgment against
the carrier, Providence Lloyd's Insurance Company. We will affirm the judgment of the trial
court.
BACKGROUND
On January 11, 1986, Silas Howard Smith, while attending a seminar in the course
of his employment, fell to the ground, striking and injuring his knee. Later that day he was taken
to the hospital emergency room, where, to relieve Mr. Smith's pain, the attending physician
prescribed Tylenol containing codeine, even though both Mr. and Mrs. Smith informed the doctor
that he could not take codeine. The next day Mr. Smith began vomiting and grew weaker; his
personal physician admitted him into the hospital where he died two weeks later. The jury found
that the work-related injury and subsequent medical care caused Mr. Smith's death and this
finding is not disputed on appeal.
Providence Lloyd's instead attacks the legal and factual sufficiency of the evidence
to support the jury's finding that Mrs. Smith had good cause for delay in filing a claim with the
Industrial Accident Board (IAB). Evidence at trial suggested that Mrs. Smith had relied on
assurances by officers of S.P.J.S.T., the fraternal life insurance company and benevolent society
which employed her husband, that they were taking care of the filing of the workers'
compensation claim. The jury apparently believed that Mrs. Smith acted reasonably in her
reliance on these statements, and the district court entered judgment for Mrs. Smith.
DISCUSSION
I. LEGAL SUFFICIENCY
In its first point of error, Providence Lloyd's attacks the legal sufficiency of the
evidence to support the finding that Mrs. Smith had good cause for delay. When reviewing legal
sufficiency points of error, we must consider only the evidence and inferences tending to support
the finding, and disregard all evidence and inferences to the contrary. Alm v. Aluminum Co. of
America, 717 S.W.2d 588, 593 (Tex. 1986).
It is well settled in Texas that an employer's representation that the claim is being
handled can excuse an employee's failure to timely file a workers' compensation claim. See Lee
v. Houston Fire and Casualty Ins. Co., 530 S.W.2d 294, 296 (Tex. 1975), and Texas Employer's
Insurance Association v. Herron, 569 S.W.2d 549, 554 (Tex. Civ. App. 1978, writ ref'd n.r.e.).
However, the sole test for permissible delay in filing a workers' compensation claim remains
whether the claimant acted as a reasonably prudent person would have under the circumstances.
Texas Casualty Ins. Co. v. Beasley, 391 S.W.2d 33 (Tex. 1965). Generally, a one-time
representation by the employer that the claim will be taken care of is not sufficient to make
inaction on the part of the claimant reasonable. See Consolidated Casualty Ins. Co. v. Perkins,
279 S.W.2d 299 (Tex. 1955), and Texas Employer's Ins. Ass'n v. Coronado, 519 S.W.2d 517
(Tex. Civ. App. 1975, writ ref'd n.r.e.). But cf. Standard Fire Ins. Co. v. Morgan, 745 S.W.2d
310, 311 (Tex. 1987).
The relevant question in this case is whether a reasonably prudent person in Mrs.
Smith's position would have remained inactive in reliance on the representations by the officers
of S.P.J.S.T. Coronado, 519 S.W.2d at 519. Mrs. Smith testified that she was assured
repeatedly by Bernie Gebala, the vice-president of S.P.J.S.T., that "everything would be taken
care of." Mrs. Smith further testified that she believed that when Gebala said "everything" this
included the workers' compensation claim, and since this is a legal sufficiency point of error we
must accept Mrs. Smith's reasonable interpretation of their conversations. See Morgan, 745
S.W.2d at 311 (the jury found that the claimant's inaction was reasonable based solely on the
claimant's own testimony that her employer promised that "everything would be taken care of").
The fact that Gebala was a close personal friend of the Smiths enhances the reasonableness of her
reliance on his reassurances. See Lee, 530 S.W.2d at 296.
Additionally, several months after her husband's death, Mrs. Smith visited the
offices of S.P.J.S.T. to check on some of her husband's affairs, including the workers'
compensation claim. She spoke with Leonard Mikeska, the S.P.J.S.T. officer in charge of
workers' compensation, and according to Mrs. Smith, he stated specifically that he had filed the
claim. This evidence is sufficient to overcome the distinction made in some cases between
promised future action by an employer and a bald factual statement that the claim has already been
filed. These cases suggest that a promise of future action alone should not completely reassure
the reasonably prudent person. Compare Bray v. Texas Employer's Insurance Ass'n, 483 S.W.2d
907 (Tex. Civ. App. 1972, writ ref'd n.r.e.) (mere promise of future action insufficient) with
Morgan, 745 S.W.2d 310 (promise of future action was sufficient under the circumstances).
There is, therefore, more than a scintilla of evidence suggesting that a reasonably prudent person
would have relied on the statements made by the officers of S.P.J.S.T.
Providence Lloyd's further attacks the legal sufficiency of the verdict by alleging
that any initial good cause that Mrs. Smith might have enjoyed evaporated either when she
received notice and claim forms from the IAB, or when she contacted her attorney, Ben Harvie,
about the potential workers' compensation claim. Even if the receipt of notice and claim forms
should have alerted Mrs. Smith to the need to file, her conversation with Mikeska, in which he
said that the claim had already been filed, came after receipt of the forms. This statement by
Mikeska, along with Gebala's frequent if broadly phrased assurances, supports the jury's apparent
conclusion that Mrs. Smith reasonably believed that she had no affirmative duty to file.
Providence Lloyd's next argues that any good cause for delay could not exist after
September 1986 when Mrs. Smith first discussed the workers' compensation claim with her
attorney, Ben Harvie. In a meeting held to discuss a medical malpractice claim arising out of Mr.
Smith's death, the topic of workers' compensation arose when Harvie advised Mrs. Smith that she
might also have such a claim. Mrs. Smith, however, told Harvie that S.P.J.S.T. was handling
the claim for her, and Harvie apparently did not force the issue because he believed Mrs. Smith's
statement and because the claim was not adversarial in nature at that time.
Providence Lloyd's also contends that at the very latest, once Mrs. Smith employed
Harvie to represent her in the matter of the workers' compensation claim, any good cause for
delay that she previously enjoyed ended at that time. They argue that the two and one-half months
that Harvie took to file the claim was an unreasonable period of time, and the letter by which
Harvie notified the IAB of the claim was insufficient for that purpose. We disagree.
Mrs. Smith's suspicions were first aroused when she inadvertently received a copy
of the employer's report to the IAB filed by S.P.J.S.T. This report contained factual statements
about how Mr. Smith hurt his knee which Mrs. Smith did not agree with and she therefore
employed Harvie to investigate the matter on September 3, 1987. Harvie personally contacted
the IAB and, on November 19, 1987, he followed up the call with a letter to the Board asking for
copies of the documentation already in the file. That letter, read in the light most favorable to the
jury's finding, suggests that Ben Harvie still believed that the claim had already been filed. The
IAB responded with a letter dated February 8, 1988, in which they notified Harvie that the
employer had controverted the case. The IAB also enclosed forms for filing a claim, which Mrs.
Smith and Harvie filled out and returned by February 12, 1987, four days later.
The record contains some evidence, therefore, that the post-attorney involvement
delay was reasonable for purposes of investigating, preparing, and filing the claim. Texas
Employer's Ins. Ass'n v. Brantley, 402 S.W.2d 140 (Tex. 1966). The question of whether
Harvie's original letter of inquiry to the IAB was sufficient to constitute notice is irrelevant given
Mrs. Smith's and Harvie's belief that a claim had already been filed. Harvie's letter, in fact,
speaks of the claim as having been filed and only requests forms for indicating that Harvie would
be representing Mrs. Smith in any further action on the matter.
We conclude, therefore, that the record contains sufficient evidence to support the
jury's finding that Mrs. Smith had good cause for delay in filing the workers' compensation claim
resulting from the death of her husband. Accordingly, we overrule Providence Lloyds' legal
sufficiency point of error.
II. FACTUAL SUFFICIENCY
In its second point of error, Providence Lloyd's attacks the factual sufficiency of
the evidence to support the jury's finding that Mrs. Smith had good cause for delay. In ruling on
this point, we must consider all of the evidence and set aside the judgment only if it is so contrary
to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709
S.W.2d 175, 176 (Tex. 1986).
The evidence introduced by the defendants at trial is, at best, weak. At no time
during his testimony did Gebala deny having had frequent contact with Mrs. Smith after her
husband's death, nor did he deny reassuring her in broad terms. Furthermore, the testimony of
both Mrs. Smith and Bernie Gebala demonstrates the depth of the friendship that had existed
between them. Gebala wrote the eulogy for Mr. Smith's funeral, and in a letter to Mrs. Smith
he called himself a lifelong friend. Nor does the testimony of Mikeska refute Mrs. Smith's
testimony that he told her that a claim had been filed.
Much is made by Providence Lloyd's of a letter written by Mrs. Smith and
addressed to Gebala. In the letter she claims that she felt betrayed by Gebala because of
statements he made in answer to a request by her attorney regarding the medical malpractice
claim. Providence Lloyd's suggests that if she did feel betrayed by these statements she could not
have continued to reasonably rely on Gebala's assurances, which did continue even after she wrote
the letter. However, Mrs. Smith's sense of betrayal by Gebala in this matter does not necessarily
suggest that she should have discontinued her trust in Mikeska's previous statement that the claim
had in fact been filed, nor does it mean that she necessarily could not trust Gebala, a self-professed lifelong friend, on any other matter. Moreover, the frequent phone conversations
continued between Mrs. Smith and Gebala, and Gebala wrote a letter to Mrs. Smith in which he
again reassured her that he was treating her as fairly as he could.
Competent evidence of probative force exists in the record to support the conclusion
that Mrs. Smith reasonably believed the representations by officers of S.P.J.S.T. that they were
taking care of her claim. The appellant has produced no evidence which casts any real doubt on
this contention. Accordingly, we overrule Providence Lloyd's factual sufficiency point of error,
and affirm the judgment of the trial court.
Jimmy Carroll, Chief Justice
[Before Chief Justice Carroll, Justices Aboussie and B. A. Smith]
Affirmed
Filed: April 8, 1992
[Publish]
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978 F.2d 1261
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.Charles GARWOOD, Plaintiff/Appellant,v.UNITED STATES of America, Defendant/Appellee.
No. 91-3735.
United States Court of Appeals, Seventh Circuit.
Submitted Oct. 14, 1992.*Decided Oct. 23, 1992.
Before FLAUM, MANION and KANNE, Circuit Judges.
ORDER
The IRS put a lien on Charles Garwood's property because he failed to pay a tax deficiency assessed against him. Instead of challenging in tax court the finding of a deficiency, I.R.C. § 6213(a), Garwood challenged the imposition of the liens by bringing a suit to quiet title in federal district court. The Judge, sitting as the finder of fact, granted the government's motion to dismiss at the close of Garwood's case-in-chief. The court held that Garwood's suit was not truly a suit to quiet title but rather a suit attacking the assessment of the deficiency. Finding no legal basis for the suit the court granted the government's motion to dismiss and denied Garwood's subsequent motion to reconsider its ruling. Garwood appealed.
Garwood's only basis for suing was his frivolous claim that he did not have to pay taxes so there should not have been a deficiency nor a lien. United States v. Sloan, 939 F.2d 499, 501 (7th Cir.1991) The court correctly characterized the suit as one attacking the assessment of deficiency. And having so characterized the suit, the court correctly dismissed the case for failure to state a claim on which relief could be granted. 28 U.S.C. § 2410 waives governmental immunity in suits to quiet title, and when a taxpayer attacks procedural lapses by the government in placing a lien on his property for tax deficiencies. Robinson v. United States, 920 F.2d 1157, 1161 (3d Cir.1990). But if the suit to quiet title is just a suit attacking the assessment of a deficiency the government is immune from suit. Falik v. United States, 343 F.2d 38, 40 (2d Cir.1965) (Friendly, J.).
1
The government asks us to impose sanctions against Garwood for filing a frivolous appeal. Fed.R.App.P. 38. The government raised this request in its brief, but Garwood passed up the opportunity to respond in his reply brief so he has forsaken further need for notice. Colosi v. Electri-Flex Co., 965 F.2d 500, 505 (7th Cir.1992). Rule 38 allows sanctions when the case is frivolous and appropriate for sanctions; this case meets both requirements so we will impose sanctions on Garwood. Granado v. CIR, 792 F.2d 91, 94 (7th Cir.1986); Coleman v. CIR, 791 F.2d 68, 73 (7th Cir.1986). The government has asked for $1500 in sanctions instead of costs and attorneys' fees, which we have found appropriate in past cases. Id. Garwood shall have 15 days within which to respond to the government's proposal of $1500 in sanctions.
2
AFFIRMED, with SANCTIONS.
*
After preliminary examination of the briefs, the court notified the parties that it had tentatively concluded that oral argument would not be helpful to the court in this case. The notice provided that any party might file a "Statement as to Need of Oral Argument." See Fed.R.App.P. 34(a); Cir.R. 34(f). No such statement having been filed, the appeal has been submitted on the briefs
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
November 24, 2008
No. 08-40189 Charles R. Fulbruge III
Clerk
DELFINO PARRA, JR.
Plaintiff - Appellant
v.
MARKEL INTERNATIONAL INSURANCE COMPANY LIMITED, formerly
known as Terra Nova Insurance Company Ltd.
Defendant - Appellee
Appeal from the United States District Court
for the Southern District of Texas, Laredo
5:06-CV-59
Before DAVIS, STEWART, and DENNIS, Circuit Judges.
PER CURIAM:*
The Appellant, Delfino Parra, Jr. (“Parra”), challenges the district court’s
order granting summary judgment to Appellee, Markel International Insurance
Company Limited (“Markel”), on grounds that Markel’s policy provided no
coverage to its insured, Interamerican Textile Incorporated (“Interamerican”),
to cover the judgment Parra obtained against Interamerican.
*
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. 08-40189
Parra worked intermittently for Interamerican on an as needed basis.
While engaged in this work in Interamerican’s warehouse, he suffered serious
injury. Interamerican exercised its option to operate outside the workers’
compensation program in Texas and therefore carried no workers’ compensation
insurance. Interamerican did maintain a commercial general liability policy
with surplus lines insurer, Markel. Because Interamerican was a non-subscriber
to the Texas workers’ compensation program, it had no tort immunity and
therefore Parra sued Interamerican for damages under Texas tort law.
Interamerican did not notify Markel of the suit and Parra obtained a judgment
against Interamerican for a sum in excess of $1 million. Parra then sought to
recover this judgment from Markel as a third party beneficiary under
Interamerican’s commercial general liability policy with Markel.
Markel filed a motion for summary judgment contending that it provided
no coverage for the judgment Parra obtained against its insured based on the
following exclusion:
Exclusions
e. Employer’s liability
“Bodily injury” to:
(1) an “employee” of the insured arising out of and in the course of:
(a) Employment by the insured; or
(b) Performing duties related to the conduct of the insured’s business...
Definitions
(5) “Employee” includes a “leased worker.” “Employee” does not include a
“temporary worker”
(9) “Leased worker” means a person leased to you by a labor leasing firm under an
agreement between you and the labor leasing firm, to perform duties related to the
conduct of your business. “Leased worker” does not include a “temporary worker.”
(17) “Temporary worker” means a person who is furnished to you to substitute for a
permanent “employee” on leave or to meet seasonal or short-term workload
conditions.
Markel contended that Parra was an employee of the insured at the time
of his injury and coverage was excluded. Parra argued that he was a “temporary
2
No. 08-40189
worker” and that the district court erred in concluding that liability for his
injury was excluded under the “employee” exclusion. As indicated from the
policy language quoted above, temporary worker is a defined term: “temporary
worker means a person who is furnished to you to substitute for a permanent
employee on leave or to meet seasonal or short-term workload conditions.” The
district court concluded that although Parra was a worker used to meet short-
term workload conditions, the summary judgment evidence established that he
was not “furnished” to Interamerican. The district court concluded that for this
reason, he did not meet the policy definition of “temporary worker”.
The record reveals that Interamerican sometimes called Parra when it
needed temporary workers and at other times Parra would contact
Interamerican through its warehouse supervisor, Guerrero. On occasion
Guerrero would contact Parra when temporary help was needed. Parra argued
that he was “furnished” to Interamerican by Guerrero. The district court
concluded that the clause “person who is furnished to you” required a showing
that a third person rather than an agent or employee of the employer referred
the temporary worker to the employer for employment. We agree. As the
Eighth Circuit in Northland Casualty Co. v. Meeks, 540 F.3d 869, 875 (8th Cir.
2008), stated, “we find that the policy’s use of the term ‘furnished to’ is
unambiguous and clearly requires the involvement of a third party in furnishing
a worker either to ‘substitute for a permanent ‘employee’ on leave’ or ‘to meet
seasonal or short-term workload conditions.’” Id. at 875. We agree with this
analysis and also agree with the Meeks court that attaching any other meaning
to the term would render the provision meaningless.
We therefore agree with the district court that the policy provided no
coverage for the judgment obtained by Parra.
Parra asserted additional claims for violation of various provisions of the
Texas Insurance Code which would preclude Markel from asserting coverage
3
No. 08-40189
defenses in the policy. However, to have standing to assert rights under the
Texas Insurance Code and claim the benefits of violations of that Code by an
unauthorized insurer requires that a plaintiff qualify as a third-party beneficiary
of the insurance policy.
We agree with the district court that Parra, who is a potential judgment
creditor of Markel since he holds a judgment against its insured, is nevertheless
not a third-party beneficiary. See Palma v. Verex Assur., Inc., 79 F.3d 1453,
1457 (5th Cir. 1996).
Parra also asserts a claim under the Texas Insurance Code § 541.151 for
unfair or deceptive practices by insurers. However, as we held in Warfield v.
Fidelity and Deposit Co., 904 F.2d 322, 327 (5th Cir. 1990), Texas law does not
permit a person to recover under this section unless there is a direct and close
relationship between wrongdoer and claimant. In other words, the plaintiff
must establish either privity with the insurer or some sort of reliance on actions
of the insurer. Parra failed to demonstrate either privity or reliance.
For the reasons stated above and the reasons stated in the district court’s
thorough December 11, 2007 opinion, we affirm the district court’s judgment.
AFFIRMED.
4
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430 F.2d 129
UNITED STATES of America, Plaintiff-Appellee,v.Robert Scott HILL and Thomas Leroy Leonard, Defendants-Appellants.
No. 27804.
United States Court of Appeals, Fifth Circuit.
August 17, 1970.
Rehearing Denied September 22, 1970.
Ray Sandstrom, Sandstrom & Hodge, Fort Lauderdale, Fla., for appellants.
Robert W. Rust, U. S. Atty., Neal R. Sonnett, Michael J. Osman, Asst. U. S. Attys., Miami, Fla., for appellee.
Before JOHN R. BROWN, Chief Judge, and GEWIN and THORNBERRY, Circuit Judges.
GEWIN, Circuit Judge:
1
Appellants were convicted, following a non-jury trial, of smuggling 81 cases of liquor into the United States in violation of 18 U.S.C. § 545. On appeal they contend: (1) The district court erred in failing to suppress the liquor which they allege to have been seized following an unconstitutional search. (2) The court erred in admitting a conversation between the agents and appellants after appellants were effectively in custody but before they had been advised of their rights. (3) Requesting the appellants to produce a customs receipt violated their privilege against self-incrimination. We affirm the convictions.
2
In May of 1968 a United States customs agent received a report that the vessel "Black Cloud"1 had been observed in Bimini taking on a cargo of liquor. Subsequently, the vessel was observed by several customs agents in or about the Coral Ridge Marina in Pampano Beach, Florida. On at least two occasions a truck was seen leaving the moored vessel. On 31 July 1968, customs agents received a report that the "Black Cloud" had left the marina prior to 9:30 that morning. About 3:15 a. m. on 1 August 1968, some eighteen hours later, a group of agents saw the vessel re-enter the Intracoastal Waterway through the Hillsboro Inlet. It tied up at a seawall away from its usual moorings at the edge of the marina. A white Chevrolet panel truck backed up to the vessel and the agents observed boxes being unloaded from the boat and loaded into the truck. When the truck was loaded the "Black Cloud" returned to its normal docking place and the truck departed.
3
A group of customs agents in four vehicles followed the white panel truck as it left the marina and turned south on North Federal Highway (U.S. 1). About two miles from the marina the agents caused it to stop by using a siren. Approaching the truck from the front, some of the agents could see into the cargo area of the van where numerous boxes were stacked.2 The agents placed appellants, the only occupants of the vehicle,3 under arrest for smuggling. A thorough examination of the contents of the van revealed some 81 cases of various liquors, none of which bore the appropriate tax stamps.
4
Appellants moved the district court to suppress as evidence the seized liquor, on the ground that it was the fruit of an unconstitutional search. The search in question was conducted without a warrant and without the consent of appellant Hill, the owner of the truck. Following a hearing, the district court concluded that there was not sufficient probable cause for the search, but that it was nonetheless a valid "border search". It consequently denied the motion to suppress.
5
Under 19 U.S.C. § 482, customs agents are authorized to search any vehicle or person they reasonably suspect to be carrying merchandise illegally introduced into the United States.4 These "border searches", though subject to the constitutional standard of reasonableness, have been uniformly upheld by the courts absent the normal requirements of a search warrant or the existence of probable cause.5 The reasonable suspicion of a customs agent is sufficient to authorize a "border search".
6
In the present case appellants contend that the search of the truck cannot qualify as a "border search" inasmuch as there is no evidence that the "Black Cloud" crossed an international boundary on the dates in question. They point out that the agents first viewed the vessel as it entered the Intracoastal Waterway, and that no one had actually seen it cross the international boundary lying three miles out at sea. Appellants argue that a showing of a border crossing is an indispensable, primary element of a "border search". We cannot agree. The extraordinary deference accorded this unique category of searches is based on a recognition of the difficulty in volved in effectively policing our national boundaries.6 The facts of the present case dramatically illustrate the burden we would be placing on the officers charged with this responsibility, were we to accept appellant's position.
7
In United States v. Glaziou,7 the Second Circuit upheld the search of two French seamen as they were leaving the pier where their vessel was docked. In considering the seamen's argument that they were not subject to a "border search" since the customs officers had no grounds to believe that they were entering, or had recently entered, this country, the court stated:
8
The class of persons who may be subjected to a border search is not limited to those suspected persons who are searched for contraband upon first entering the United States. Also included in the class are persons who work in a border area when leaving the area;8 persons engaged in suspicious activity near border areas;9 and, in some situations, persons and vehicles after they have cleared an initial customs checkpoint and have entered the United States.10 Therefore, we hold that when an individual has direct contact with a border area,11 or an individual's movements are reasonably related to the border area,12 that individual is a member of the class of persons that a customs officer may, if his suspicions are aroused, stop and search while the individual is still within the border area.13
9
We believe that Glaziou states the proper rule. The facts of the present case demonstrate that appellants were within the class of individuals subject to a "border search", that the customs agents had a reasonable suspicion that they were in possession of unlawfully imported merchandise, and that the search was conducted within a border area. Consequently, the district court properly denied the motion to suppress the use of the seized liquor as evidence.
10
Immediately after the customs agents stopped the truck but before they had administered Miranda rites to the appellants, one of the agents asked appellant Hill what he had in the truck. Hill replied, "You know what it is. It's liquor." Appellants were also asked if they had a customs receipt, to which there was no reply. Appellants contend that the court erred in finding that these exchanges were not the sort of custodial interrogation envisioned by Miranda v. Arizona,14 and admitting them into evidence. However, even if the court committed error in this regard, it was, beyond a reasonable doubt, harmless error.15 These statements could have some bearing on the case in two ways: as providing a basis for suspicion which would authorize a "border search", or as they might relate to the issue of guilt. The district court stated:
11
I think, however, that even if these statements are not properly admitted, that there is sufficient evidence before the Court under which the Government agents would be justified in having a suspicion that merchandise in violation of Customs laws was in the truck.
12
We agree that the statements were not necessary to the validity of the search. Accepting the validity of the search, and remembering that this was a non-jury trial, it may not be seriously maintained that the statements affected the district court's finding of guilt.
13
Finally, appellants contend that the inquiry regarding the customs receipt, or the requirement that they obtain a customs receipt, in some way violated their privilege against self-incrimination. This argument is plainly meritless. We are unable to perceive the analogy to Marchetti v. United States,16 Grosso v. United States,17 and Haynes v. United States,18 suggested by appellants.
14
The judgment is affirmed.
Notes:
1
The "Black Cloud" is a vessel of some 36 feet in length with a 12 foot beam. It was equipped for fishing and registered in the name of appellant Hill
2
The cases were marked "Bahamas" and indicated that they contained 40-ounce bottles
3
Hill was driving the truck and Leonard was in the passenger's seat
4
19 U.S.C. § 482, provides:
Any of the officers or persons authorized to board or search vessels may stop, search, and examine, as well without as within their respective districts, any vehicle, beast, or person, on which or whom he or they shall suspect there is merchandise which is subject to duty, or shall have been introduced into the United States in any manner contrary to law, whether by the person in possession or charge, or by, in, or upon such vehicle or beast, or otherwise, and to search any trunk or envelope, wherever found, in which he may have a reasonable cause to suspect there is merchandise which was imported contrary to law; and if any such officer or other person so authorized shall find any merchandise on or about any such vehicle, beast, or person, or in any such trunk or envelope, which he shall have reasonable cause to believe is subject to duty, or to have been unlawfully introduced into the United States, whether by the person in possession or charge, or by, in, or upon such vehicle, beast, or otherwise, he shall seize and secure the same for trial.
5
United States v. Tsoi Kwan Sang, 416 F.2d 306 (5th Cir. 1969); Walker v. United States, 404 F.2d 900 (5th Cir. 1968); Thomas v. United States, 372 F.2d 252 (5th Cir. 1967); Valadez v. United States, 358 F.2d 721 (5th Cir. 1966); Marsh v. United States, 344 F.2d 317, 324 (5th Cir. 1965); Mansfield v. United States, 308 F.2d 221 (5th Cir. 1962). See Comment, Border Searches and the Fourth Amendment, 77 Yale L.J. 1007 (1968)
6
Thomas v. United States, 372 F.2d 252, 254 (5th Cir. 1967)
7
402 F.2d 8 (2d Cir. 1968), cert. denied, 393 U.S. 1121, 89 S.Ct. 999, 22 L.Ed.2d 126 (1969)
8
See United States v. McGlone, 394 F.2d 75 (4th Cir. 1968); cf. United States v. Yee Ngee How, 105 F.Supp. 517 (N.D. Cal.1952).
9
Cf. Lannom v. United States, 381 F.2d 858 (9th Cir. 1967), cert. denied, 389 U.S. 1041, 88 S.Ct. 784, 19 L.Ed.2d 833 (1968); Rodriguez-Gonzalez v. United States, 378 F.2d 256 (9th Cir. 1967).
10
E. g. King v. United States, 348 F.2d 814 (9th Cir.), cert. denied, 382 U.S. 926, 86 S.Ct. 314, 15 L.Ed.2d 339 (1965); Ramirez v. United States, 263 F.2d 385 (5th Cir. 1959); Murgia v. United States, 285 F.2d 14 (9th Cir. 1960), cert. denied, 366 U.S. 977, 81 S.Ct. 1946, 6 L.Ed.2d 1265 (1961).
11
See United States v. McGlone, 394 F.2d 75 (4th Cir. 1968); Mansfield v. United States, 308 F.2d 221 (5th Cir. 1962).
12
Cf. e. g., Lannom v. United States, 381 F.2d 858 (9th Cir. 1967), cert. denied, 389 U.S. 1041, 88 S.Ct. 784, 19 L.Ed.2d 833 (1968).
13
402 F.2d at 13-14 (citations in the quoted text appear as footnotes 8-12 of the present opinion)
14
384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed. 2d 694 (1966)
15
Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967). InChapman the Court stated:
We conclude that there may be some constitutional errors which in the setting of a particular case are so unimportant and insignificant that they may, consistent with the Federal Constitution, be deemed harmless, not requiring the automatic reversal of the conviction. 386 U.S. at 23, 87 S.Ct. at 827.
28 U.S.C. § 2111 provides:
On the hearing of any appeal or writ of certiorari in any case, the court shall give judgment after an examination of the record without regard to errors or defects which do not affect the substantial rights of the parties.
Fed.Rule Crim.Proc. 52(a) provides:
Any error, defect, irregularity or variance which does not affect substantial rights shall be disregarded.
16
390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889 (1968)
17
390 U.S. 62, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968)
18
390 U.S. 85, 88 S.Ct. 722, 19 L.Ed.2d 923 (1968)
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422 F.2d 402
UNITED STATES of America, Appellee,v.Clingman O'DELL and Elisabeth C. O'Dell, Appellants.
No. 13776.
United States Court of Appeals, Fourth Circuit.
Argued February 3, 1970.
Decided March 11, 1970.
Appeal from the United States District Court for the Western District of North Carolina, at Charlotte.
Charles D. Gray, III, Gastonia, N. C. (Joseph B. Alala, Jr., Gastonia, N. C., on the brief), for appellants.
Joseph R. Cruciani, Asst. U. S. Atty. (Keith S. Snyder, U. S. Atty., on the brief), for appellee.
Before HAYNSWORTH, Chief Judge, and SOBELOFF and BOREMAN, Circuit Judges.
PER CURIAM:
1
Upon consideration of the briefs, the record, and the oral argument of counsel, we find no reversible error. The convictions upon charges of tax fraud are affirmed.
2
Affirmed.
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Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit
1-28-2002
USA v. Fritz
Precedential or Non-Precedential:
Docket 0-4120
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2002
Recommended Citation
"USA v. Fritz" (2002). 2002 Decisions. Paper 46.
http://digitalcommons.law.villanova.edu/thirdcircuit_2002/46
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-4120
UNITED STATES OF AMERICA
v.
ROBERT L. FRITZ,
Appellant
Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Criminal Action No. 99-cr-00042)
District Judge: Honorable Malcolm Muir
Argued November 26, 2001
Before: ROTH, FUENTES and WEIS, Circuit Judges
(Memorandum Opinion filed: January 28, 2002)
Stephen F. Becker, Esquire (Argued)
Shapiro & Becker
114 Market Street
Lewisburg, PA 17837
Attorney for Appellant
David M. Barasch
United States Attorney
Middle District of Pennsylvania
John J. McCann, (Argued)
Assistant United States Attorney
Herman T. Schneebeli Federal Building
240 West Third Street, Suite 316
Williamsport, PA 17701- 6465
Attorneys for Appellee
MEMORANDUM OPINION
ROTH, Circuit Judge:
Defendant Robert L. Fritz appeals from a judgment of sentence in the
United
States District Court for the Middle District of Pennsylvania. After
entering a plea of not
guilty on three criminal counts, Fritz was found guilty of two counts,
including
conspiracy to distribute and possess with intent to distribute heroin,
cocaine, or cocaine
base (crack), see 21 U.S.C. 846, and distribution of cocaine base
(crack) resulting in the
death of an individual. See 21 U.S.C. 841 (a)(1). Fritz was found not
guilty of a third
count of distribution of heroin resulting in the death of an individual.
See 21 U.S.C.
841 (a)(1). On November 14, 2000, Fritz was sentenced to thirty years
imprisonment and
supervised release of ten years.
On appeal, Fritz first contends that his conviction should be
reversed because of
prejudice suffered due to the District Court's joinder and subsequent
refusal to sever the
conspiracy count and the two distribution counts. See Fed. R. Crim. P.
8(a) & 14. We
agree with the District Court's rejection of these contentions. The
evidence admissible
for the conspiracy count was also admissible for the distribution counts.
In circumstances
such as these, where three offenses share the same "transactional nexus,"
the indictment
counts are properly joined. United States v. Eufrasio, 935 F. 2d 553, 570
n.20 (3d. Cir.),
cert. denied, 502 U.S. 925 (1991). We find that the District Court did not
abuse its
discretion in its decision not to sever the charges of the indictment. The
evidence was
admissible against Fritz in the conspiracy count and the two distribution
counts, and there
is not substantial evidence to warrant a finding of prejudice.
Fritz also alleges that the conviction on the conspiracy to
distribute charge should
be reversed. Fritz claims a variance between the indictment of a single
conspiracy and
the proof offered at trial, which, according to Fritz, was indicative of
multiple
conspiracies. Fritz also claims that the District Court erred in denying
his motion for
judgment of acquittal based on insufficiency of the evidence, and that the
jury's verdict
on this count was against the weight of evidence. These allegations fail.
Although
evidence in support of a single conspiracy, as opposed to multiple
conspiracies, is not
overwhelming, our review of the record in a light most favorable to the
government does
reveal sufficient evidence for a reasonable jury to find the existence of
a single
conspiracy. The District Court properly deferred to the jury's verdict in
denying the
motion for judgment of acquittal. Furthermore, the jury's verdict was not
against the
weight of the evidence.
Fritz makes similar variance and evidentiary arguments with respect
to the charge
of distribution of cocaine base (crack) resulting in the death of an
individual and,
additionally, alleges an impermissible broadening of the indictment
through the District
Court's jury charge. For the same reasons that Fritz's arguments fail
with respect to the
conspiracy charge, they also fail with respect to the distribution charge.
There was
sufficient evidence for a jury to properly find Fritz guilty of the
distribution charge, the
verdict was not against the weight of the evidence, and the District
Court's jury charge
was consistent with the indictment.
Fritz next contends that the District Court improperly denied his
request to instruct
the jury that evidence of multiple buyer-seller relationships, standing
alone, is insufficient
to support a conspiracy conviction. Fritz also claims that the trial
court erred in refusing
to give the requested jury instruction since the buyer-seller instruction
was a part of his
defense. After reviewing the jury charge, we find Fritz's claims without
merit. There
was sufficient evidence to establish that Fritz's acts involved multiple
drug transactions as
opposed to single isolated sales associated with a buyer-seller
relationship. We agree
with the District Court that the evidence did not support a buyer-seller
charge to the jury.
Finally, Fritz makes several arguments regarding his sentence.
First Fritz contends
that the District Court erred in calculating the amount of crack cocaine
attributable to
Fritz. Second, Fritz claims that the court erred in applying a three-
level upward
sentencing adjustment pursuant to U.S.S.G. 3B1.1(b) for acting in a
supervisory
capacity. Third, Fritz claims that the District Court's two level upward
sentencing
adjustment pursuant to U.S.S.G. 3B1.4 for using a minor in the
commission of a crime
was improper. Fritz's fourth claim is that the District Court should not
have increased his
maximum sentence from twenty to thirty years due to a prior conviction,
when that
conviction was not proven beyond a reasonable doubt to the jury. Finally,
Fritz alleges
that the District Court erred by utilizing a preponderance of the evidence
standard in
evaluating the factors of type and quantity of drugs, where those factors
should have been
submitted to the jury and proven under a reasonable doubt standard.
When reviewing sentencing decisions, this Court exercises plenary
review over
legal questions about the meaning of the sentencing guidelines, but
applies the clearly
erroneous standard to factual determinations underlying their factual
application. United
States v. Price, 13 F.3d 711, 732 (3d Cir. 1994), cert. denied, 514 U.S.
1023 (1995). Fritz
has not demonstrated clear error on the part of the District Court in the
application of the
sentencing guidelines. We find that the District Court properly applied
the guidelines
with respect to the calculation of amounts of crack cocaine and with
respect to both
upward sentencing adjustments. With regard to the increase in Fritz's
sentence from
twenty to thirty years, Fritz was given proper notice of the use of his
prior conviction in
consideration of his sentence pursuant to 21 U.S.C. 851(a), and was
properly sentenced
to thirty years' imprisonment pursuant to 21 U.S.C. 841 (a). Finally,
we find that the
District Court properly sentenced Fritz based on a preponderance of the
evidence
standard.
For the foregoing reasons, the judgment of the District Court will be
affirmed.
TO THE CLERK:
Please file the foregoing Memorandum Opinion.
By the Court,
/s/Jane R. Roth
Circuit Judge
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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________
No. 94-10028
__________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
ALLEN LANDERMAN,
DAVID DEWAYNE HANKS,
a/k/a Ed Banks and
RANDALL BOYD ZEIGLER,
a/k/a/ Bo Zeigler,
Defendants-Appellants.
* * * * * * * * * * * * *
__________________
No. 94-10403
__________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
RODNEY LEE HOLLOMAN,
a/k/a/ Rod Weatherly and
WALTER HUMBERT CUSHMAN,
Defendants-Appellants.
______________________________________________
Appeals from the United States District Court for the
Northern District of Texas
______________________________________________
March 31, 1997
Before BENAVIDES, STEWART, and DENNIS, Circuit Judges.
BENAVIDES, Circuit Judge:
This direct criminal appeal involves, among other things, a
challenge to the district court's refusal to allow a prosecution
witness to be cross examined regarding his alleged bias. Finding
that the limitation of cross examination resulted in a violation of
the Confrontation Clause and that such error was not harmless, we
vacate and remand.
I. BACKGROUND
The evidence at trial demonstrated that from 1989 to 1992
several companies were established to market oil and gas drilling
projects. The projects were marketed through the use of written
prospectuses sent by mail to potential investors and through the
companies' sales brokers telephoning potential investors. The
prospectuses contained inflated cost estimates for drilling the
wells; misrepresentations regarding the qualifications of various
persons involved in the projects; and false representations that
certain individuals performed work for the companies. During the
telephone solicitations, the brokers would make false
representations and promises about the investment. Additionally,
names of employees and affiliated companies were given as
references to potential investors. These references are known as
"in-house" references.
There are five appellants on this consolidated appeal: Walter
Humbert Cushman III (Cushman), who essentially owned and operated
the companies, but represented that he was only a consultant;
Rodney Lee Holloman (Holloman), who initially was involved in
establishing the companies but thereafter worked primarily at the
drill sites; Allen Landerman (Landerman), who was an attorney
2
representing the companies; David Dewayne Hanks (Hanks), who
appraised a drilling rig and for a brief time was a sales manager;
and Randall Boyd Zeigler (Zeigler), the personnel manager who
interviewed and hired sales brokers for the companies.
A. GREAT SOUTHWEST ENERGY
In the latter part of 1989, Sam Hooper, who had been involved
in the oil and gas business, met with Cushman, Holloman, and Rob
Overstreet (Overstreet),1 to discuss the development of two oil and
gas wells, the Strickland and Parkman wells. Thereafter, Great
Southwest Energy was incorporated, and the articles of
incorporation listed Hooper as the initial director and
incorporator. Neither Cushman's nor Holloman's name was listed in
the articles of incorporation or in the company's mailings to
potential investors. Cushman and Holloman represented that they
were outside consultants for Great Southwest Energy.
Great Southwest Energy marketed the Parkman and Strickland
wells. This project, known as the Twin Elephant, was offered to
investors in a prospectus. Cushman, Holloman, and Hooper agreed to
divide the profits among themselves. Richard Hewitt, an attorney,
prepared the Twin Elephant prospectus, which disclosed the
participation of Cushman and Holloman and their criminal records.
Pursuant to Cushman's instructions, Daphne Bostick, a secretary,
removed pages from the prospectus indicating that the company was
the subject of an investigation by the State Securities Board.
Hooper resigned on December 31, 1989, because the investors'
1
Overstreet was tried with the instant appellants and
acquitted by the jury.
3
money was not being spent as represented in the prospectus.
Despite his resignation, Great Southwest Energy continued to list
Hooper as president on company mailings until April of 1990. After
Hooper's name was removed, Overstreet was listed as president of
Great Southwest Energy.
Meanwhile, Grant Ottesen (Ottesen) owned and operated Oil
Consortium of Texas, Inc.2 Because Ottesen's business was
experiencing financial difficulties, he merged it with Great
Southwest Energy in late 1989. Names of prospective investors were
obtained primarily from "lead" lists. Using these lists, the
brokers for Great Southwest Energy made telephone contact with
prospective investors. For a short period of time, Ottesen
recruited sales brokers for Cushman. Ottesen left the newly merged
company in April of 1990 but returned in September of 1990.
Ottesen testified that the following misrepresentations were
made to investors: Hooper was president of the company during the
Twin Elephant program; projects were already producing oil; almost
all units had been sold; and the return on the investment was
nearly immediate. Ottesen heard Cushman admit that he knew the
Twin Elephant would not have any production and that he did not
intend to spend any more money than had already been spent.
Ottesen also testified that in-house references were given to
investors, false drilling reports were given to salesmen, drilling
2
Ottesen was indicted along with the appellants. Ottesen
pleaded guilty to two counts of fraud and testified against the
appellants.
4
costs were inflated,3 investor funds were used to pay salaries and
expenses of the office, and that completion funds4 were called
early and used for purposes other than drilling. Ottesen also
testified that Zeigler, Hanks, Holloman, Cushman, and Don Cronn
(also known as Tom Green) were all part of conversations in which
this conduct was discussed.
Tom Grace began working as a sales broker for Great Southwest
Energy in December 1989. Grace advised the investors that the
wells were going to be horizontally drilled. In fact, the wells
were never horizontally drilled. According to Holloman, they
attempted to horizontally drill the Strickland well but could not
reach the bottom of the hole because the well had been sitting
dormant for seven or eight years. Grace testified that he resigned
in May 1990 because the company did not procure a management
license for the oil and gas brokerage and also because he learned
"about the backgrounds of Mr. Cushman and Holloman."
Jo Beth Smith (Smith) performed accounting work for Great
Southwest Energy in the early part of 1990. Holloman had Smith
cash $5,000-$6,000 checks for expenses or "to go on a trip."
Neither Cushman nor Holloman received salaries or paychecks. The
evidence revealed that, instead of receiving salaries or being on
the company payroll, the company paid the expenses of Cushman and
3
Bruce Damron, a petroleum engineer, testified that he had
estimated the cost of drilling the Strickland well at $640,000.
Yet the prospectus provided that the cost would be $1,258,100.
4
Ottesen explained that the brokers should not call for
completion funds until after it has been determined that a well is
commercially viable.
5
Holloman.
Lisa Holdge (Holdge) began working as a receptionist for Great
Southwest Energy in February 1990. Cushman subsequently asked her
to become secretary-treasurer of the company, and she agreed. The
position was in name only. Cushman instructed Holdge to create
false invoices for oil field services. After the Securities Board
investigated the company, Cushman directed Holdge to place
rescission letters in all the investor files. The recision letter
explained to the investors that they could obtain a return of the
money they invested. Cushman, however, told her to send the
recision letter to certain selected investors, and she complied.
Holdge resigned after discovering that her name had been listed as
a reference in one prospectus.
B. HARTFORD OIL AND GAS
In June 1990, Hartford Oil and Gas (Hartford)5 was
incorporated to market the Silver Fox and Slover Beever wells.
After that time, the name Hartford was used in place of Great
Southwest Energy. Glen Chambers was later named president of
Hartford. David Card (Card), a codefendant who pleaded guilty to
wire fraud, worked as a sales broker. Hanks was sales manager at
Hartford for a short time, and Ottesen, after returning to the
company, became sales manager in spring of 1991.
Jeff Everett (Everett), Cushman's son-in-law, bought Foxridge
Securities (Foxridge), a company that was a licensed brokerage, for
5
Subsequently, the company was called Hartford Exploration.
Because it is unclear exactly when Hartford changed names, we will
refer to both companies as "Hartford."
6
Cushman.6 At Cushman's request, Card began working at Foxridge.
Cushman and Card actually operated Foxridge. Cushman made Card
president of Foxridge. Hartford used Foxridge as a reference in
the prospectus for the Slover Beever project. Investors would call
Foxridge to obtain information regarding the project, and Card
"told them that [Foxridge was] doing due diligence on [Hartford.]"
Foxridge closed in November of 1990, and upon Foxridge's closing,
Card returned to Hartford.
In June 1990, Card hired Grace to work for Foxridge
Securities. Grace typed the prospectus for the Silver Fox well,
including the criminal backgrounds of Cushman and Holloman in the
prospectus. He observed Cushman remove that information from a
prospectus. Grace worked for Allen Landerman, an attorney, from
December 1990 until August 1991. It was Landerman's opinion that
the joint ventures were not securities. Grace put together the
prospectus for the Slover Beever well, the Grand Slam No. 1, and
the Grand Slam No.2. Cushman did not want the criminal histories
disclosed in the prospectus because it "made sales very difficult."
Ulrike Bell (Bell) worked for Cushman at Hartford as a
bookkeeper from July 1990 to February 1991. She regularly signed
checks in blank for Cushman, and Cushman asked her to make false
invoices. Several of the representations about Bell's
qualifications listed in the prospectus were false.7
6
Everett previously had opened a bank account in the
fictitious name of East Texas Well Service to allow Cushman to cash
the Great Southwest Energy checks. The bank statements were mailed
to Everett's home address.
7
Also, Raymond Wottrich was never hired by Cushman as a
7
Zeigler was the personnel manager and interviewed and hired
sales brokers. He knew that Foxridge's name was being given as a
reference. According to Kevin Rose, who worked for Hartford, sales
brokers at the companies made whatever representations were
necessary to persuade investors, and the information that the
brokers imparted to the investors over the phone had been supplied
by Donn Cronn, Zeigler, Overstreet, Cushman, and Holloman.
Teresa Stauffacher, a receptionist, was instructed to give
Pearsall Oil Field Supply as a reference to investors. The
telephone number for Pearsall was actually a telephone in Zeigler's
office at Hartford, and when that phone rang, Zeigler had
Stauffacher answer it. Cushman admitted to Stauffacher that his
name was not on any documents because it would be a red flag for
the federal authorities. Zeigler admitted to Stauffacher that his
name was not listed on anything because he had "a wife and kids and
was not going down."
C. HORIZONTAL DRILLTEX
Cushman hired Royce Calk (Calk), a certified public
accountant, to do accounting work for Hartford and later made Calk
president of a company called Horizontal Drilltex. It was falsely
represented to investors that Horizontal Drilltex and Hartford were
separate entities and that Horizontal Drilltex had drilled between
20 and 30 wells. Additionally, completion funds, which were only
to be called from an investor after the well was completed, were
called before drilling began.
petroleum engineer as represented in the Silver Fox prospectus.
8
Hanks, Holloman, Overstreet, and Stanley Crutchfield met with
Jim Meyers (Meyers), who sold Horizontal Drilltex a drilling rig
for $109,000. Holloman signed a promissory note for the rig on
behalf of Horizontal Drilltex. Hanks appraised the drilling rig at
$1,250,000. Meyers thought that, after improvements, the rig would
be worth $350,000 to $400,000 on the market. The drilling rig was
used to raise $1,000,000 in investor funds, which was deposited in
Horizontal Drilltex's account.
D. EXCITING TANS
Terry Donahue,8 Cushman, and Marylin Cook set up a tanning
salon called "Exciting Tans" using money from Cushman and money
that investors had sent to Hartford and Great Southwest Energy for
the drilling of the oil and gas wells. This money was treated as
a loan to Exciting Tans. To repay the loan, Exciting Tans would
send money every week to Matuso Holding Company, which was used as
a holding company to funnel money back to Cushman.9
On one occasion, Donahue heard Cushman and Landerman in a
conversation deciding that $23,000 (a $15,000 check and a $8,000
check) from Cushman would be routed through Landerman's client
trust account and then to Exciting Tans. That money was used to
start a second tanning salon. Cushman's investment was also
returned to him by allowing his employees to charge services at
Exciting Tans against any amounts owed to him.
8
Donahue pleaded guilty to wire fraud and money laundering
prior to testifying.
9
Dana Bien worked for Cushman and regularly cashed $2,000
checks for Cushman that were written to Matuso Holding Company.
9
E. EVIDENCE REGARDING INVESTORS
Various investors testified that they would not have invested
in the oil and gas projects had they known that Cushman and
Holloman were the true owners of the company, that Cushman and
Holloman had criminal records, that the investor funds were not
being used for drilling wells, and that Holloman had never drilled
a well.
An auditor for the Government testified that the total amount
of investor funds received from the marketing of the five oil and
gas drilling projects was $5,283,487, that the total amount of
refunds to investors was $61,206, and that the total amount of
royalties paid was $71,385.
F. PROCEDURAL HISTORY
On February 10, 1993, a 24-count indictment was returned
charging Cushman, Holloman, Hanks, Landerman, and Zeigler, along
with seven other defendants with violations of conspiracy, mail
fraud, wire fraud, money laundering and criminal contempt.
Ultimately, on October 6, 1993, a third superseding 32-count
indictment was returned charging Cushman, Holloman, Hanks,
Landerman, Zeigler, and six other defendants with conspiracy, mail
fraud, wire fraud, and money laundering. Additionally, a separate
superseding indictment was returned charging Cushman and Holloman
with criminal contempt.
On November 15, 1993, trial began on the 32-count indictment.
The next day a mistrial was granted. The retrial began on November
22, 1993. The five defendants that are now party to this appeal
were found guilty on all counts submitted to the jury: Cushman,
10
counts 1-4 and 6-32;10 Holloman, counts 1-4 and counts 6-30; Hanks,
1, 25, 26, and 27; Landerman, 1, 31, 32; and Zeigler, 1, 20, 28,
29, and 30. Cushman and Holloman were later tried on a separate
superseding indictment charging five counts of contempt, and both
were found guilty on all five counts.
The district court imposed the following sentences of
imprisonment and fines: Cushman received 290 months and a $40,000
fine; Holloman received 210 months and a $30,000 fine; Hanks
received 52 months and a $10,000 fine; Zeigler received 60 months
and a $10,000 fine; and Landerman received 135 months and a $10,000
fine.
II. ANALYSIS
A. RESTRICTION OF CROSS EXAMINATION REGARDING WITNESS BIAS
All five appellants, Cushman, Holloman, Landerman, Hanks, and
Zeigler, argue that the district court violated their confrontation
rights under the Sixth Amendment by improperly restricting defense
counsel's cross examination that was intended to demonstrate bias
on the part of Grant Ottesen, a prosecution witness. More
specifically, the district court prohibited the appellants from
questioning Ottesen regarding his pending felony charge in state
court and any effect it might have on his motivation to testify in
the instant federal proceeding.11 The Government counters that the
pending charge was not relevant to Ottesen's motive to testify
against the appellants and that the "appellants were otherwise
10
Count 5 was not submitted to the jury.
11
The defense also wanted to admit this evidence to rebut
Ottesen's testimony that he had never used any drug but marijuana.
11
allowed to fully cross examine him."12
Although the scope of cross examination is within the
discretion of the district court, that discretionary authority
comes about only after sufficient cross examination has been
granted to satisfy the Sixth Amendment. United States v. Restivo,
8 F.3d 274, 278 (5th Cir. 1993), cert. denied, __ U.S. __, 115
S.Ct. 54 (1994). "The Confrontation Clause of the Sixth Amendment
is satisfied where defense counsel has been permitted to expose to
the jury the facts from which jurors, as the sole triers of fact
and credibility, could appropriately draw inferences relating to
the reliability of the witness." Id. (citation and internal
quotation marks omitted). To show an abuse of discretion, the
appellants must show that the limitations imposed on cross
examination were clearly prejudicial. Restivo, 8 F.3d at 278.
Prior to testifying at the appellants' trial, Ottesen,
pursuant to a written plea agreement, pleaded guilty to two counts
of fraud in connection with the offenses that are the subject of
this appeal. Ottesen's plea agreement provided that "[u]pon
12
The Government also asserts that the pending state charge
was not a final conviction that could be used to attack Ottesen's
credibility under Rule 609(a) of the Federal Rules of Evidence.
While this assertion certainly is correct, in the instant case, it
is of no moment. The appellants were not attempting to use the
pending criminal charge as a general attack on Ottesen's
credibility. Instead, they were attempting to effect a more
particular attack on Ottesen's credibility by exposing his possible
bias or ulterior motive for testifying. See Davis v. Alaska, 415
U.S. 308, 316, 94 S.Ct. 1105, 1110 (1974) (explaining the
difference between exposing on cross examination a prior criminal
conviction for the purpose of affording the jury a basis to infer
that the witness would be less likely to be truthful and exposing
on cross examination a bias, prejudice, or ulterior motive of the
witness).
12
request of the defendant, [the] United States agrees to bring to
the attention of any other prosecuting authority the nature and
extent of the defendant's cooperation." The plea agreement was
admitted into evidence. At the time he pleaded guilty to the two
federal offenses, Ottesen had a pending delivery of cocaine charge
in state court. The Government filed a motion in limine seeking to
prohibit the appellants from questioning Ottesen regarding the
pending charge, which the district court granted.
During the instant trial, Ottesen testified that he pleaded
guilty to one count of mail fraud and one count of wire fraud and
that he was awaiting sentencing. The plea agreement provided that,
at sentencing, the Government would move to dismiss Ottesen's 15
remaining counts in the indictment. Additionally, the Government
had agreed that, prior to sentencing, it would make known to the
court the nature and extent of Ottesen's cooperation. The
agreement further provided that the Government may seek a
substantial assistance reduction in Ottesen's sentence under § 5K
"should the Defendant, in addition to full cooperation,
substantially assist the United States and law enforcement agencies
in investigating and prosecuting criminal matters." On cross
examination, when asked whether he considered the Government's
dismissal of the remaining counts a benefit, Ottesen replied that
he was "not putting any weight on that." He did acknowledge that
the possibility of obtaining sentence reduction would be a
"benefit."
Defense counsel tendered cross examination questions regarding
the pending state charge, and the district court allowed Ottesen to
13
answer those questions outside the presence of the jury.13 Ottesen
admitted that the state case, which carried a potential life
sentence, was pending when he entered into the plea bargain with
the Government. When asked whether he expected the Government to
make a favorable recommendation to the state prosecutor regarding
his cooperation, Ottesen answered that he did not know and that it
had not been discussed.14
Defense counsel then offered the testimony, arguing that it
showed Ottesen's motive to testify, his bias, and his prejudice.
The court responded as follows: "Well, I haven't heard him say
anything that would cause you to think that that's so. So if
that's the reason it's being offered, I will exclude the testimony.
Even if it had some slight relevance, its improper or undue
13
The Government asserts that the record does not reflect
that any of the appellants joined in requesting the proffered
questions. The record indicates, however, that the district court
instructed the defense attorneys to designate one "attorney to
conduct examination of various witnesses on the subjects of
cooperation with the Government, plea agreements, and related
matters." Moreover, the district court expressed his displeasure
with an attempt by Landerman's attorney to make a proffer regarding
the termination of his cross examination of Ottesen. The following
colloquy exemplifies the court's position and the futility of an
attempt to independently voice an objection to the district court's
ruling:
[Landerman's attorney]: May I make a proffer on [the]
termination of my cross-examination?
THE COURT: We don't have time to do that. There are
more important things, Mr. Rosenberg. I need for you to
comply with my rulings, and then we wouldn't have these
problems.
14
According to Cushman, "Bill Coos, the State Prosecutor,
states the charges were dismissed against Ottesen upon request of
the Federal Prosecutors as a result of Ottesen's testimony against
Cushman."
14
prejudicial effect would outweigh it."
Contrary to the district court's holding, "[t]he partiality of
a witness is subject to exploration at trial, and is always
relevant as discrediting the witness and affecting the weight of
his testimony." Davis, 415 U.S. at 316, 94 S.Ct. at 1110 (internal
quotation marks and citation omitted). We acknowledge that a
district court is afforded broad discretion in determining the
probative value of evidence to determine its admissibility. United
States v. Abel, 469 U.S. 45, 50, 105 S.Ct. 465, 468 (1984).
Further, it is well established that a district court may impose
reasonable limits on defense counsel's questioning into the
potential bias of a government witness to prevent "harassment,
prejudice, confusion of the issues, the witness' safety, or
interrogation that [would be] repetitive or only marginally
relevant." Olden v. Kentucky, 488 U.S. 227, 232, 109 S.Ct. 480,
483 (1988). Of course, as set forth previously, until we determine
that the cross examination satisfied the Sixth Amendment, the
district court's discretion does not come into play. Restivo,
supra.
In the case at bar, after hearing Ottesen's answers to the
proffered questions, the district court stated that Ottesen
apparently did not interpret the clause in the plea agreement to
include the state prosecuting authorities. That determination,
however, should not have been made by the district court. Instead,
the jury, as the trier of fact, should have been allowed to draw
its own inferences regarding Ottesen's credibility and determine
what effect, if any, the pending criminal charge had on Ottesen's
15
motivation to testify. Cf. Olden v. Kentucky, 488 U.S. at 232, 109
S.Ct. at 483 (stating that speculation regarding prejudice caused
by evidence of bias cannot justify exclusion of cross examination).
The Supreme Court has consistently "recognized that the
exposure of a witness' motivation in testifying is a proper and
important function of the constitutionally protected right of
cross-examination." Davis v. Alaska, 415 U.S. 308, 316-17, 94
S.Ct. 1105, 1110 (1974) (citing Greene v. McElroy, 360 U.S. 474,
496, 79 S.Ct. 1400, 1413 (1959)); accord Olden v. Kentucky, 488
U.S. at 231, 109 S.Ct. at 483. Additionally, this Court has made
clear that the right to cross examination "is particularly
important when the witness is critical to the prosecution's case."
United States v. Mizell, 88 F.3d 288, 293 (5th Cir.), cert. denied,
__ U.S. __, 117 S.Ct. 620 (1996). Counsel should be allowed great
latitude in cross examining a witness regarding his motivation or
incentive to falsify testimony, and this is especially so when
cross examining an accomplice or a person cooperating with the
Government. United States v. Hall, 653 F.2d 1002, 1008 (5th Cir.
1981). Indeed, the right of cross examination:
is so important that the defendant is allowed to "search"
for a deal between the government and the witness, even
if there is no hard evidence that such a deal exists.
What tells, of course, is not the actual existence of a
deal but the witness' belief or disbelief that a deal
exists.
Id. (quoting United States v. Onori, 535 F.2d 938, 945 (5th Cir.
1976)).
Here, the jury was informed that Ottesen had pleaded guilty to
two federal offenses and was awaiting sentencing. The district
16
court's ruling nevertheless precluded the jury from learning of the
pending state charge, which, especially in light of the plea
agreement provision to relate Ottesen's cooperation to any other
prosecuting authority, would allow the jury to conclude that "there
was considerable incentive for him to `slant, unconsciously or
otherwise, his testimony in favor of or against a party.'" United
States v. Cooks, 52 F.3d 101, 104 (5th Cir. 1995).
In Cooks, the district court allowed cross examination of the
prosecution witness regarding his status as a paid criminal
informant and his hopes for leniency on certain charges pending in
Texas in exchange for his assistance in the investigation. Id. at
103-04. However, the court disallowed cross examination regarding
the witness's "subsequent Louisiana arrest for purse-snatching or
. . . the stiff penalties [the witness] faced if convicted on
either the Texas or Louisiana charges." Id. at 103. Noting that
the pending Texas and Louisiana charges carried possible 99-year
and 40-year sentences respectively, we recognized the obvious
temptation to slant his testimony in favor of the prosecution.
Cooks, 52 F.3d at 104 & n.13. We thus held that the district court
erred in keeping from the jury these pertinent facts that related
to the witness's motivation to testify.15
15
Citing United States v. Hamilton, 48 F.3d 149 (5th Cir.
1995), the Government argues that the district court did not abuse
its discretion in prohibiting the requested cross examination.
Hamilton is inapposite. Unlike the case at bar, the pending
charges against Hamilton were misdemeanor. Cf. United States v.
Alexius, 76 F.3d 642, 646 (5th Cir. 1996) (distinguishing Hamilton
on basis that it only involved state misdemeanor charges). More
importantly, Hamilton was permitted to elicit evidence regarding
the pending misdemeanor offenses during the cross examination of
another witness.
17
In light of the fact that Ottesen’s testimony was critical to
the prosecution's case16 and the pending charge carried the
potential of a life sentence, we conclude that the district court
erred in prohibiting the appellants from exploring before the jury
the effect that Ottesen's pending criminal charge might have on his
motivation to testify. Like the jury in Cooks, the jury in the
instant case was unaware of the serious pending charge against
Ottesen. And given the plea agreement provision that the
Government, upon Ottesen's request, would advise any other
prosecuting authority about the extent of Ottesen's cooperation in
this case, the denial of cross examination and the defendant's
right to have the jury properly assess Ottesen's motivation is even
more egregious than in Cooks.
Next, we must determine whether this Confrontation Clause
error was harmless. Delaware v. Van Arsdall, 475 U.S. 673, 106
S.Ct. 1431 (1986). "The correct inquiry is whether, assuming that
the damaging potential of the cross-examination were fully
realized, a reviewing court might nonetheless say that the error
was harmless beyond a reasonable doubt." Id. at 673, 106 S.Ct. at
1438. We consider the following factors to determine whether the
error was harmless: "the importance of the witness' testimony in
the prosecution's case, whether the testimony was cumulative, the
16
The Government does not (nor could it credibly) argue that
Ottesen was not a crucial prosecution witness. During closing
argument, the Government expressly referenced Ottesen's testimony
at least 15 times. During defense counsel's argument, Ottesen was
referred to as "the Government's star witness."
18
presence or absence of evidence corroborating or contradicting the
testimony of the witness on material points, the extent of cross-
examination otherwise permitted, and of course, the overall
strength of the prosecution's case." Id. After having extensively
reviewed the record, we will consider the evidence in regard to
each of the five appellants.
1. ZEIGLER
It is abundantly clear that Ottesen's testimony was the most
important in implicating Zeigler in the conspiracy. Ottesen
testified that Zeigler was one of the five persons who were in
charge of raising money and appeasing angry investors. Ottesen
further testified that these five conspirators met several times a
week and that Zeigler was aware that the companies were using in-
house references. Ottesen described discussions he had with
Zeigler regarding Cushman's falsifying drilling reports. No other
witness's testimony comes close to implicating Zeigler to the
extent that Ottesen's testimony does. Moreover, the prosecution's
case against Zeigler was not strong. The vast majority of the
prosecution witnesses neither spoke of nor implicated Zeigler in
comparison to the few who testified against him.17 We are confident
that the error was not harmless beyond a reasonable doubt in regard
to Zeigler's conviction.
2. HANKS
17
As characterized by Zeigler's counsel during closing
argument, "Mr. Ottesen . . . knows the Government's case against
Mr. Zeigler is weak because if you were to take [the prosecutor's]
references to Mr. Ottesen out of his opening, he wouldn't have had
anything to say. He would not have been able to talk about Randall
Zeigler."
19
Ottesen's testimony also implicated Hanks in the conspiracy.
Ottesen testified that he spoke with Hanks regarding the use of in-
house references for the company. He further testified that "we
had Dave Hanks come in as an independent, [when] he was actually
working for the company to appraise this rig and get the rig value
over a million dollars, because that's what we were planning on
raising." Although other witnesses testified regarding the value
of the rig versus the appraisal amount, the other witnesses'
testimony was not nearly as inculpatory.18 We thus conclude that
the error was not harmless.
3. LANDERMAN
Similarly, Ottesen's testimony against Landerman appears
significant, if not necessary, to the jury's verdict. Ottesen
testified that Landerman "basically told [Cushman] how to set up
the corporations to funnel the money through and things of that
nature, and he tried to get the Hartford set up with a joint
venture where we weren't security." He also testified that when
Landerman first started coming to the Bedford office Landerman
"would be standing up on the sales floor and cringe and tell people
that you can't be saying that [to the potential investors]."
18
In the context of arguing that there is sufficient evidence
to sustain Hanks' conviction, the Government argues that "in
addition to evidence of [his] participation in the drilling rig
promotion,"
the following evidence demonstrates Hanks' involvement in the
conspiracy: (1) Hanks was a sales manager at Hartford; he was
used as an independent reference to investors; he lived in the
apartment rented by Cushman and Holloman; he was paid by checks
from Hartford Exploration or Hartford Energy; and he used the name
of Ed Banks while at Hartford. It is clear that the evidence of
the inflated drilling rig appraisal is the most inculpatory
evidence against Hanks.
20
However, "[a]s time passed, [Landerman] got a little bit more
lenient toward misrepresentations" and would just shake his head
and laugh about any misrepresentations he overheard the sales
brokers make. Landerman admitted to Ottesen that the money used to
start Exciting Tans was funneled out of Hartford. Finally, Ottesen
testified that Landerman was aware that they were using in-house
references.
Other witnesses did testify that Landerman structured the
financial transactions that form the basis of the two money
laundering convictions. Of course, in order to constitute money
laundering, the proceeds involved in the transactions must have
been from the mail and wire fraud offenses, and the most damning
testimony regarding Landerman's knowledge of the fraud came through
Ottesen. We therefore cannot conclude that the error was harmless
beyond a reasonable doubt.
4. HOLLOMAN
In regard to Holloman, Ottesen testified that, in Holloman's
presence, Cushman stated that the Twin Elephant would not have any
production and that he did not intend to spend any more money than
had already been spent. Ottesen also asserted that Holloman was
one of the five people "basically in charge of raising the money"
and that this group of five met several times a week from December
1990 to December 1991.19 Ottesen further testified that Holloman
was involved in conversations regarding in-house references being
19
Ottesen later backtracked somewhat, stating that, at the
beginning, Holloman came to the office every day but later Holloman
spent more time at the drilling site.
21
used in the company.
In contrast to Ottesen's testimony, a fair reading of the
entire transcript leaves one with the impression that after the
company was formed, Holloman spent virtually all his time at the
well site attempting to drill for oil and gas. Indeed, even the
Government witnesses testified that Holloman appeared competent
while performing his duties at the well sites. Additionally,
contrary to Ottesen's testimony, Landerman and Zeigler testified
that they did not consider Holloman to be part of the management.
Ottesen's testimony regarding Holloman's knowledge of the use
of in-house references may be viewed as somewhat cumulative of
other witnesses' testimony. Nevertheless, after comparing
Ottesen's testimony with the rest of the Government's evidence, we
are not prepared to find this error harmless.
5. CUSHMAN
Finally, we consider Ottesen's testimony against Cushman.
Although there was sufficient evidence to convict Cushman without
Ottesen's testimony, that is not the appropriate inquiry. As set
forth above, Ottesen testified that Cushman stated he knew the Twin
Elephant would not have any production and that he did not intend
to spend any more money than had already been spent. Ottesen
further testified that Cushman confessed "that the Twin Elephant
wouldn't [amount to] a popcorn cart." Ottesen's testimony was, by
far, the most damaging testimony against Cushman. This is the only
testimony that we have found that directly shows that Cushman
believed the oil and gas projects were simply a sham.
Further, closing arguments reveal the importance of Ottesen's
22
testimony against Cushman. The prosecutor relied heavily on
Ottesen's testimony to set forth the case against Cushman. In
response, Cushman's attorney argued that "the only witness that
they really base all their case on is --what was that guy's name,
the one that talked so fast and -- Ottesen." Although it is a
close question, after a most careful reading of the record of this
multi-week trial, we are not persuaded that the error was harmless
beyond a reasonable doubt.20 Therefore, the convictions of Zeigler,
Hanks, Landerman, Holloman, and Cushman are vacated.
C. RECUSAL
Cushman, Landerman, and Hanks argue that the district judge
erred in refusing to recuse himself. They argue that the district
court's actions and rulings favored the Government.21 A judge
should disqualify himself if a reasonable person, knowing all the
relevant circumstances, would harbor doubts about the judge's
20
It is worth noting that aside from Ottesen's testimony
directly inculpating Cushman in the charged offenses, Ottesen
provided other testimony that in general placed Cushman in a bad
light before the jury: (1) Ottesen and Cushman used marijuana
together on occasion; (2) Cushman purchased the Silver Fox lease in
an attempt to curry favor with the next Securities and Exchange
Commissioner; and (3) Ottesen observed "about $140,000 worth of
cashier's checks made in $10,000 increments and a title to an
Elante, a clear title to the Jaguar and a title to a Camaro" in a
safe in Cushman's home.
21
Landerman and Cushman both filed motions to recuse the
judge in the district court based on the argument that the judge
should have recused himself because he previously presided over a
civil action filed by the SEC against the various companies that
were the subject of this criminal case. Landerman filed an
application for writ of mandamus with this Court, which was denied.
The Government argues that because Hanks did not file such a
motion, he has not preserved this argument for appeal. Because we
find that this claim does not entitle the appellants to any relief,
we do not reach whether Hanks preserved this issue for appeal.
23
impartiality. Matter of Hipp, Inc., 5 F.3d 109, 116 (5th Cir.
1993). We review the district court's denial of a recusal motion
for abuse of discretion. Id.
The appellants rely on appendices that list the district
court's warnings to counsel and the times the court cut off
questioning. According to Cushman's appendix "C," the charts show,
among other things, that the judge interrupted the defendants'
attorneys 83% of the time and interrupted the Government 17% of the
time. They contend that the charts demonstrate that the court
terminated defense counsel's questioning much more quickly than the
Government's questioning. By these actions, they argue, the judge
conveyed to the jury an impression that he favored the Government's
case.
"Judicial rulings alone almost never constitute valid basis
for a bias or partiality motion." Liteky v. United States, 510
U.S. 540, 114 S.Ct. 1147, 1157 (1994). Instead, the judge's
rulings should constitute grounds for appeal, not for recusal. Id.
Opinions formed by the judge that are based on the evidence in the
case or events occurring during the proceedings do not constitute
a basis for recusal "unless they display a deep-seated favoritism
or antagonism that would make fair judgment impossible. Thus,
judicial remarks during the course of a trial that are critical or
disapproving of, or even hostile to, counsel, the parties, or their
cases, ordinarily do not support a bias or partiality challenge."
Id. If the remarks stem from an extrajudicial source, they may
constitute sufficient grounds for recusal. Further, expressions of
impatience, annoyance, dissatisfaction, and even anger, do not
24
establish bias or partiality.
The parties do not allege that Judge McBryde's alleged bias
stemmed from any extrajudicial source. A careful review of the
record indicates that Judge McBryde did allow the Government more
leeway during its questioning and did interrupt defense counsel's
questioning more often than the Government's questioning.
Nevertheless, we are not convinced that the judge's remarks and
actions were such that a reasonable person would harbor doubts
about the judge's partiality. The district court therefore did not
abuse its discretion in denying the motion to recuse.
D. SUFFICIENCY OF THE EVIDENCE
Zeigler, Hanks and Landerman contend that the evidence is
insufficient to support their convictions. When reviewing the
sufficiency of the evidence, this Court views all evidence, whether
circumstantial or direct, in the light most favorable to the
Government with all reasonable inferences to be made in support of
the jury's verdict. United States v. Salazar, 958 F.2d 1285, 1290-
91 (5th Cir.), cert. denied, 506 U.S. 863, 113 S.Ct. 185 (1992).
The evidence is sufficient to support a conviction if a rational
trier of fact could have found the essential elements of the crime
beyond a reasonable doubt. Id. The evidence need not exclude
every reasonable hypothesis of innocence or be completely
inconsistent with every conclusion except guilt, so long as a
reasonable trier of fact could find that the evidence established
guilt beyond a reasonable doubt. United States v. Faulkner, 17
F.3d 745, 768 (5th Cir.), cert. denied, __ U.S. __, 115 S.Ct. 193
(1994).
25
To prove a violation of the mail fraud statute, 18 U.S.C. §
1341, the Government must prove beyond a reasonable doubt that
there was (1) a scheme or artifice to defraud, (2) specific intent
to commit fraud, and (3) use of the mails for the purpose of
executing the scheme to defraud. United States v. Shively, 927
F.2d 804, 813-14 (5th Cir.), cert. denied, 501 U.S. 1209, 111 S.Ct.
2806 (1991). To prove a wire fraud offense under § 1343, there
must be proof of (1) a scheme to defraud and (2) the use of, or
causing the use of, wire communications in furtherance of the
scheme. Id. at 813. After membership in a scheme to defraud is
shown, a knowing participant is liable for any wire communication
that has taken place or subsequently takes place in connection with
the scheme. Id. To prove a money laundering offense under 18
U.S.C. § 1956(a)(1)(A)(i), the Government must demonstrate that the
defendant: (1) conducted or attempted to conduct a financial
transaction; (2) that the defendant knew involved proceeds of
unlawful activity; (3) and did so with the intent to promote
unlawful activity. See United States v. West, 22 F.3d 586, 590-91
(5th Cir.), cert. denied, __ U.S. __, 115 S.Ct. 584 (1994).
Finally, to prove a conspiracy, the Government must show that
two or more persons agreed to commit a crime and that at least one
of them committed an overt act in furtherance of that agreement.
United States v. Tansley, 986 F.2d 880, 885 (5th Cir. 1993).
1. HANKS AND LANDERMAN
Hanks and Landerman contend that the evidence is insufficient
to convict them because the only evidence linking them to any of
the counts of conviction is the funds from the drilling rig deal.
26
They contend that because Horizontal Drilltex, the company involved
in the rig deal, was dismissed from a prior SEC civil action, "res
judicata principles preclude any finding that Horizontal Drilltex,
Inc. funds were the proceeds of specified unlawful activity." We
find no merit in this argument.
The appellants do not dispute that the judgment that dismissed
Horizontal Drilltex from the previous suit provided that no
violations of securities laws were admitted or denied. As such, it
is clear that the issue of whether the proceeds from the rig deal
were from unlawful activity was not litigated. The SEC action did
not terminate with a final judgment on the merits, one of the
requirements necessary for the application of res judicata. See
United States v. Shanbaum, 10 F.3d 305, 310 (5th Cir. 1994).
Hanks and Landerman do not argue that the evidence is
insufficient to sustain their convictions if the evidence regarding
the drilling rig deal is included. In any event, viewing all the
evidence in the light most favorable to the verdict, the evidence
is sufficient to support the convictions of Hanks for conspiracy
and wire fraud and Landerman for conspiracy and money laundering.
2. ZEIGLER
Zeigler contends there was insufficient evidence to support
his convictions for conspiracy, mail fraud, and wire fraud.
Zeigler acknowledges that Ottesen was the principal witness against
him. Zeigler argues that "Ottesen's testimony should not be
considered as support for [his] conviction where it is demonstrably
false and concocted." We understand Zeigler's argument to be that
Ottesen's testimony, if true, would be sufficient to sustain his
27
convictions, but because Ottesen's testimony is false, his
convictions should not be sustained.
As set forth above, we must construe all reasonable inferences
from the evidence in support of the verdict. More to the point,
this Court is precluded from invading the province of the jury by
substituting our credibility determinations for those of the jury
unless the witness's testimony is factually impossible, which would
render it incredible as a matter of law. United States v. Jaras,
86 F.3d 383, 388 (5th Cir. 1996). Zeigler has not shown that
Ottesen's testimony is incredible as a matter of law. Accordingly,
because the jury has the sole responsibility for determining the
weight and credibility of the evidence, it could and apparently did
credit the testimony of Ottesen. United States v. Harrison, 55
F.3d 163, 165 (5th Cir.), cert. denied, __ U.S.__, 116 S.Ct. 324
(1995).
Zeigler also argues that the evidence is insufficient because
no evidence ever directly connected him with the victims of the
four substantive mail and wire fraud counts. Zeigler, who had a
management position in the company, ignores the fact that the
charges levied against him in the indictment alleged that he aided
and abetted the other defendants in regard to the substantive
counts. 18 U.S.C. § 2.22 Reading the record in the light most
22
To uphold a conviction for aiding and abetting under 18
U.S.C. § 2, the Government must prove that the defendant associated
with a criminal venture, purposefully participated in the criminal
activity, and sought by his actions to make the venture successful.
United States v. Polk, 56 F.3d 613, 620 (5th Cir. 1995) (citations
omitted). A defendant associates with the criminal venture if he
shares in the criminal intent of the principal. United States v.
Jaramillo, 42 F.3d 920, 923 (5th Cir.), cert. denied, __ U.S. __,
28
favorable to the verdict, the evidence is sufficient to support
Zeigler's convictions for aiding and abetting his codefendants in
the defrauding of the victims in the substantive mail and wire
fraud convictions.
E. DOUBLE JEOPARDY BASED ON RETRIAL
Cushman, Holloman, Landerman, and Hanks argue that the instant
retrial was barred by the double jeopardy clause. The district
court granted the appellants' motion for a retrial based on an FBI
Agent's conversation with a juror.
The general rule is that when a defendant moves for a mistrial
there is no bar to retrying the defendant. The Supreme Court has
recognized a narrow exception to this rule. In Oregon v. Kennedy,
456 U.S. 667, 102 S.Ct. 2083, 2091 (1982), the Supreme Court held
that only when the governmental conduct was intended to goad the
defendant into moving for a mistrial may the defendant invoke the
bar of double jeopardy after having requested the mistrial. As the
Government argues, the appellants have failed to allege (or point
to anything in the record indicating) that the FBI agents engaged
in the brief conversation with the juror intending to provoke the
appellants into moving for a mistrial. United States v. Botello,
991 F.2d 189, 192-93 (5th Cir. 1993), cert. denied, 510 U.S. 1074,
114 S.Ct. 886 (1994). Therefore, this double jeopardy claim fails.
Id.
F. DOUBLE JEOPARDY BASED ON CRIMINAL CONTEMPT
115 S.Ct. 2014 (1995). A defendant participates in the criminal
activity if he has acted in some affirmative manner designed to aid
the venture. Id.
29
Cushman argues that his double jeopardy rights were violated
when he was tried on the indictment containing the criminal
contempt charges. His argument is without merit.
The elements of the criminal contempt statute, 18 U.S.C. §
401(3) are: (1) a reasonably specific order; (2) violation of the
order; and (3) the willful intent to violate the order. Cooper v.
Texaco, 961 F.2d 71, 72 n.3 (5th Cir. 1992)). As the Government
argues, these elements have no commonality with the elements of the
conspiracy, mail fraud, wire fraud, and money laundering statutes.23
Accordingly, because the same element test set forth in Blockburger
v. United States, 284 U.S. 299, 304, 52 S.Ct. 180, 76 L.Ed. 306
(1932) is not violated, this claim is without merit.
III. CONCLUSION
In light of our disposition of the Sixth Amendment claim, we
do not address the appellants' remaining claims except for
Zeigler's argument that the district court erred in refusing to
sever his case. We have determined that the district court did not
abuse its discretion in denying Zeigler's motion for severance.
See United States v. Williams, 809 F.2d 1072, 1085 (5th Cir.),
cert. denied, 484 u.S. 896, 108 S.Ct. 228 (1987). Accordingly, we
VACATE the convictions of Cushman, Holloman, Landerman, Hanks, and
Zeigler and remand to the district court for further proceedings.
23
The elements of these offenses previously have been set
forth in this opinion.
30
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839 F.2d 656
56 USLW 2510, 1988-1 Trade Cases 67,893
UNITED STATES of America, Plaintiff-Appellant,v.EVANS & ASSOCIATES CONSTRUCTION CO., INC. and Lloyd I.Evans, Defendants- Appellees.
Nos. 87-1331, 87-1332.
United States Court of Appeals,Tenth Circuit.
Feb. 17, 1988.
David Seidman, Atty., Dept. of Justice, Washington, D.C. (Charles F. Rule, Acting Asst. Atty. Gen., Kenneth G. Starling, Deputy Asst. Atty. Gen., John J. Powers, III and Laurence K. Gustafson, Attys., Dept. of Justice, Washington, D.C., Kent A. Gardiner and Alan A. Payson, Attys., Dept. of Justice, Dallas, Tex., with him on the briefs), for plaintiff-appellant.
B.J. Rothbaum, Jr. of Linn & Helms, Oklahoma City, Okl. (Brinda K. White of Linn & Helms, Oklahoma City, Okl., David Kline and Richard Coulson of Kline & Kline, Oklahoma City, Okl., with him on the brief), for defendants-appellees.
Before SEYMOUR, SETH and BALDOCK, Circuit Judges.
SETH, Circuit Judge.
1
This appeal is taken from an order of the United States District Court for the Western District of Oklahoma dismissing in its entirety a three count indictment against appellees as a sanction. The indictment charged appellees with violating Section One of the Sherman Anti-Trust Act, 15 U.S.C. Sec. 1, the mail fraud statute, 18 U.S.C. Sec. 1341, and the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Sec. 1962(c), in connection with the award of an Oklahoma highway construction contract. The United States as appellant contends that the trial court abused its discretion in granting appellees' motion for discovery and erred in dismissing Count One as time barred.
2
Evans and Associates (Evans) was a construction company. Beginning as early as September 1979 and continuing at least through April 1981 it was charged that appellees and other unnamed coconspirators agreed among themselves who would be the lowest bidder for the Noble County project the Oklahoma Department of Transportation was awarding. The contract was awarded in 1979. On April 21, 1986 a grand jury for the Western District of Oklahoma returned the indictment here concerned.
3
Appellees made a number of discovery motions and also moved to dismiss Count One as being barred by the five-year statute of limitations. One of the discovery motions requested that pursuant to Rule 6(e) of the Federal Rules of Criminal Procedure the court make available transcripts of testimony presented to the grand jury. The court granted appellees' motion to dismiss Count One on the limitations issue. In addition, the court made a number of scheduling orders because it appeared that the trial would begin in about thirty-five days. The court granted appellees' Rule 6(e) motion and directed the Government to provide Evans within seven days (October 23, 1986) the grand jury transcripts that were already transcribed and all other testimony no later than ten days before the start of the trial.
4
Rather than turn over the transcribed material on October 23 the Government filed a motion for the court to reconsider the production order. The Government stated that it was willing to disclose the statements of all Government witnesses ten days before trial; that it would furnish all exculpatory material pursuant to Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215, and that it had already provided appellees with transcripts of their own grand jury testimony and those of employees in a position to legally bind them. The court reconsidered but reaffirmed its earlier decisions. During the hearing the Government notified the court that it was going to appeal the dismissal of Count One of the indictment and also that it would not comply with the court's disclosure order. The Government requested that the court impose sanctions in order for it to have an order to appeal. As a sanction the court dismissed the entire indictment and the Government filed this appeal.
5
The Government contends the court abused its discretion when it granted appellees' motion requesting transcripts of testimony given before the grand jury because appellees failed to demonstrate a particularized need for the material.
6
When the court was called upon to determine whether the grand jury transcripts should be released it had substantial discretion to order or to deny release. Douglas Oil Company of California v. Petrol Stops Northwest, 441 U.S. 211, 99 S.Ct. 1667, 60 L.Ed.2d 156. We said in United States v. Warren, 747 F.2d 1339, 1347 (10th Cir.): "There is a 'long-established policy that maintains the secrecy of the grand jury proceedings in the federal courts.' " This is necessarily the starting position. The Supreme Court had stated this policy as it observed in Douglas Oil Company:
7
"In particular, we have noted several distinct interests served by safeguarding the confidentiality of grand jury proceedings. First, if preindictment proceedings were made public, many prospective witnesses would be hesitant to come forward voluntarily, knowing that those against whom they testify would be aware of that testimony. Moreover, witnesses who appeared before the grand jury would be less likely to testify fully and frankly, as they would be open to retribution as well as to inducements. There also would be the risk that those about to be indicted would flee, or would try to influence individual grand jurors to vote against indictment. Finally, by preserving the secrecy of the proceedings, we assure that persons who are accused but exonerated by the grand jury will not be held up to public ridicule."
8
441 U.S. at 218-19, 99 S.Ct. at 1672-73.
9
Nevertheless, there are instances where disclosure of grand jury testimony is warranted. As the Supreme Court noted in Dennis v. United States, 384 U.S. 855, 870, 86 S.Ct. 1840, 1849, 16 L.Ed.2d 973, as to variations to the doctrine:
10
"These developments are entirely consonant with the growing realization that disclosure, rather than suppression, of relevant materials ordinarily promotes the proper administration of criminal justice."
11
The Federal Rules of Criminal Procedure have provided an exception to the general rule of secrecy with the courts acting as guardians of the grand jury transcripts, and not the United States Attorney. Thus, the Federal Rule of Criminal Procedure 6(e)(3)(C)(i) states:
12
"(C) Disclosure otherwise prohibited by this rule of matters occurring before the grand jury may also be made--
13
(i) when so directed by a court preliminarily to or in connection with a judicial proceeding."
14
The trial court must exercise its discretion in determining whether the testimony should be disclosed. United States v. Warren, 747 F.2d 1339, 1347 (10th Cir.); United States v. Cronic, 675 F.2d 1126, 1130 (10th Cir.), rev'd on other grounds, 466 U.S. 648, 104 S.Ct. 2039, 80 L.Ed.2d 657; In re September 1975 Grand Jury Term, 532 F.2d 734, 737 (10th Cir.); United States v. Parker, 469 F.2d 884, 889 (10th Cir.).
15
The party seeking disclosure must demonstrate that disclosure is sought preliminarily to or in connection with a "judicial proceeding," and that there is a particular, not a general, need for the material. The rule is not to be used as a substitute for general discovery. The party seeking disclosure must demonstrate that the need for disclosure outweighs the need for secrecy.
16
In the instant case, appellees gave these specific reasons why they needed the material: the passage of time between the events alleged, some events occurred nearly twenty years ago; the grand jury testimony was the only source of "fresh" testimony available; there would be no interference with an ongoing investigation; the complexity of the charges; the number of potential witnesses; the volume of testimony heard by the grand jury; and finally, because the testimony would be extremely helpful to Evans in preparing its case because the testimony consisted of statements made by witnesses who testified in support of the conspiracy and much of their testimony would be uncorroborated. Assertions were also made by the Government in its motion for a continuance filed September 15, 1986 wherein it also argued the complexity of the case legally and factually, the voluminous evidence attendant to a 13-year course of conduct, and that it anticipated calling fifty witnesses and introducing hundreds of documents.
17
The court after evaluating this information from both parties found that appellees had in fact shown a particularized need for the material. The court acknowledged that while motions like this are generally not granted it felt that the facts of this case fell within the Dennis ruling. The factors the Supreme Court in Dennis had also found persuasive in supporting disclosure were the passage of time between when the events alleged occurred and when the testimony was to be given, and when the trial commenced; that much of the requested testimony which was critical to the Government's case consisted of testimony of key Government witnesses and accomplices and their testimony was largely uncorroborated. The Supreme Court there recognized and stated: "A conspiracy case carries with it the inevitable risk of wrongful attribution of responsibility to one or more of the multiple defendants." 384 U.S. at 873, 86 S.Ct. at 1851. In Dennis it appeared to be unfair to allow the Government to have access to the material while denying access to the defendant; that disclosure rather than suppression would promote the proper administration of justice; and because the grand jury investigation was completed the need for preserving the secrecy of the minutes had diminished.
The court in the case before us noted:
18
"Here it has been a long long time since the events alleged in the indictment occurred. In this case the Defendants have brought civil actions attempting to speed the--either speed up the return of the indictment or to stop the ongoing investigation. The memories of witnesses may have dimmed over the years and this--I think the grand jury, at least its [sic] alleged here and I suppose it's true that many different grand juries have looked at this thing."
19
Record Vol. II at 13. At the rehearing November 6 the court again reiterated that the instant case met the test of Dennis:
20
"And I knew when I made that statement of many times that in civil proceedings this particular Defendant had tried to get the case dismissed or the grand jury investigation stopped because it dragged out so terribly long and the Government--I denied those motions, but the Government still waited a year or two after all of that to return an Indictment."
21
Record Vol. III at 11.
22
The court here required that the material released to Evans be limited to only that which pertained to appellees. The court order did not give appellees access to material dealing with any other investigation. Significantly, the Government did not at either the October 16 or November 6 hearing or in its motion to reconsider filed October 23 mention that there was an ongoing investigation or any particular circumstance which required that the grand jury proceedings be kept secret.
23
On appeal the Government urges that the Jencks Act, 18 U.S.C. Sec. 3500, prohibited the trial court from ordering the disclosure of grand jury material under Rule 6(e) of the Rules of Criminal Procedure. This issue was not raised in the trial court and we will not consider it here.
24
Deference should be shown to the trial court scheduling orders because of the ever present scheduling problems. As the Sixth Circuit noted in United States v. Van Dyke, 605 F.2d 220, 227 (6th Cir.): "A District Court has wide discretion in the scheduling of a trial which should not be disturbed in the absence of manifest abuse...." In the case before us the court in ordering the Government to turn over transcribed material within seven days of the October 16 hearing and the remaining material at least ten days before the start of trial did so because it was also concerned with the need to schedule and with the Speedy Trial Act. The court of this said:
25
"... In other words we must set a trial within 40 days of today absent some of those findings or the clock will have run down and we'll have to dismiss the case.
26
"In other words, we must commence this case by the 25th of November, according to the computations that I have."
27
Record Vol. II at 5. The court considered the order as a "matter of timing." Record Vol. III at 3. Obviously this was a matter for the court and not the United States Attorney. Considering that the Government intended to call at least fifty witnesses, and considering the length of time the Government had been working with the material, by allowing appellees the amount of time it did to review the transcripts, was not excessive. The court explained why it felt the material should be disclosed this far in advance of trial: "If you hand it to them in the trial, you know as well as I do that we are going to have to recess the trial a week." Record Vol. II at 22. It is clear from the record that the court did not abuse its discretion in setting the time table for the production of the grand jury testimony.
28
Just as the timing of discovery resides within the discretion of the court so does selecting the appropriate sanctions for the failure to comply with a discovery ruling. United States v. Carrigan, 804 F.2d 599 (10th Cir.). In Carrigan we relied for the authority of the district court to impose the sanctions on "its inherent power to control and supervise its own proceedings." 804 F.2d at 603. See also United States v. Levine, 700 F.2d 1176 (8th Cir.). In the instant case the Government expressly refused to comply with the order because it was concerned with having a "vehicle to appeal." Record Vol. III at 20. Upon the court's denial of the Government's motion to reconsider the order to disclose the grand jury record the Government responded:
29
"Now, I don't do this lightly, Your Honor, but I'm going to resist that order. What I'm going to do is I'll notify you that the Government is not going to comply with that order and I'm going to ask you to impose sanctions--"
30
Record Vol. III at 18. The Government sought to dictate to the court the sanctions the court should impose. It suggested sanctions which sought to keep the information which it selected to itself before trial. The trial court characterized the suggested sanctions as an "exercise in futility" and we agree.
31
While the court does have discretion in selecting what sanctions are appropriate for a refusal to comply with a scheduling order this discretion is not without limit. While the Government's conduct in seeking to control the time schedule and to itself control the release of material cannot be condoned and despite the Government's request for sanctions the dismissal of the indictment was too drastic. When considering whether a dismissal in these circumstances is appropriate the factors stated in United States v. Fields, 592 F.2d 638, 647 (2d Cir.), should be applied. These are:
32
"The extreme sanction of dismissal of an indictment is justified in order to achieve one or both of two objectives: first, to eliminate prejudice to a defendant in a criminal prosecution; second, to 'help to translate the assurances of the United States Attorneys into consistent performances by their assistants.' " (Footnotes omitted.)
33
The footnotes in the above quotation refer to United States v. Jacobs, 531 F.2d 87 (2d Cir.), and United States v. Estepa, 471 F.2d 1132 (2d Cir.). See also United States v. Jacobs, 547 F.2d 772 (2d Cir.). These conditions or requirements in Fields are reasonable, in our view, for application to the particular circumstances before us. When this is done in the case before us we must hold the sanction of dismissal of the indictment is too extreme. On remand the trial court should consider other sanctions it deems appropriate in the event the prosecution does not carry out the orders of the court.
34
The Government also contends that the court erred in dismissing Count One of the indictment on grounds that the statute of limitations had run. This count, as mentioned, charged appellees with bid rigging in violation of Section One of the Sherman Anti-Trust Act. The indictment charged Evans and unnamed coconspirators with agreeing to submit noncompetitive or rigged bids for the Noble County highway construction project. South Prairie Construction Company was awarded the contract. 18 U.S.C. Sec. 3282 provides a five-year statute of limitations for criminal conspiracies to violate the Sherman Act. Appellees maintain that the statute began to run when the bids were let September 21, 1979. The indictment was returned April 21, 1986. The Government claims the statute did not run while payments were made to South Prairie on the contract by the state. South Prairie received payments until 1981. There appears to have been no division of these payments among the conspirators. The trial court found the count barred by the statute of limitations. The court in making its decision relied on the trial court's decision in United States v. Northern Improvement Company, 632 F.Supp. 1576 (D.N.D.). In that case several contractors were charged with a conspiracy to submit rigged bids. As in the instant case, the coconspirators agreed which company would be the successful bidder. Moreover, the contractors did not share any money once the contract was awarded. The trial court concluded that the last act triggering the running of the five-year statute of limitations was the submission of the rigged bids. The Eighth Circuit, however, reversed the trial court in United States v. Northern Improvement Company, 814 F.2d 540 (8th Cir.), finding that the statute did not begin to run until after the successful contractor accepted the last payment on the contract. It concluded that the Sherman Act violation was "accomplished both by the submission of noncompetitive bids and by the request for and receipt of payments at anti-competitive levels." 814 F.2d at 543 n. 2. (Emphasis in original.) Although appellees here did not receive any money South Prairie did and that was sufficient to delay the start of the statute.
35
The district court's dismissal of Count One must be and is reversed and the imposition of the sanction of dismissal of the entire indictment must also be reversed.
36
REVERSED and REMANDED.
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624 So.2d 1225 (1993)
STATE of Louisiana
v.
James Gale TYLER,
No. 93-K-1512.
Supreme Court of Louisiana.
September 24, 1993.
Denied.
KIMBALL, J., not on panel.
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260 S.W.3d 265 (2007)
Lavell EVANS, Appellant,
v.
STATE of Arkansas, Appellee.
No. CR 07-276.
Supreme Court of Arkansas.
June 28, 2007.
Gary McDonald, for appellant.
No response.
PER CURIAM.
Gary McDonald, counsel for Appellant Lavell Evans, petitions this court to be relieved as counsel. Accompanying his motion is Appellant's affidavit in support of his request to proceed in forma pauperis pursuant to Ark. Sup.Ct. R. 6-6 (2007).
Under Ark. R.App. P. Crim. 16 (2007), McDonald is required to represent Appellant until he has been relieved as counsel by the trial court or by a state appellate court. McDonald requests to be relieved as counsel because continuing to represent Appellant would cause him undue financial hardship or professional peril. Specifically, Mr. McDonald explains that, in order to move forward with the appeal, he must lodge the record with the clerk. Otherwise, he will be reported to the Supreme Court Committee on Professional Responsibility. In order to lodge the record, McDonald must pay $4,000, as the court reporter will not provide him the record free of charge. Additionally, if not relieved as counsel, McDonald would expend time and money preparing the abstract and our briefing requirements.
Ark. R.App. P. Crim. 16(a) governs trial counsel's duties with regard to appeal. It provides:
(a) Trial counsel, whether retained or court-appointed, shall continue to represent a convicted defendant throughout any appeal to the Arkansas Supreme Court or Arkansas Court of Appeals, unless permitted by the trial court or the appellate court to withdraw in the interest of justice or for other sufficient cause. After the notice of appeal of a judgment of conviction has been filed, the appellate court shall have exclusive jurisdiction to relieve counsel and appoint new counsel.
In interpreting this statute, we have held that an attorney who has not been relieved as counsel may not, under any circumstances, abandon an appeal. Holland v. State, 358 Ark. 366, 190 S.W.3d 904 (2004). In Bogachoff v. Arkansas Department of Human Services, 360 Ark. 259, 200 S.W.3d 884 (2005), we held that:
Even if there are insufficient funds to pay for the appeal transcript, an attorney cannot abandon the convicted defendant solely because there is no money for an appeal. An attorney, knowing the convicted defendant desires to appeal, *266 is obliged under Ark. R. App. P.-Crim. 16, regardless of the defendant's financial circumstances, to file the notice of appeal and then file a partial record, consisting of at least the judgment and notice of appeal, in the appellate court with a motion to be relieved containing a statement of the reason for the request to withdraw.
Id. at 260, 200 S.W.3d at 885 (citations omitted). In addition to the requirement to file a notice of appeal, the judgment, and a motion to be relieved, we held in James v. State, 329 Ark. 58, 945 S.W.2d 941 (1997), that an attorney must submit supporting documentation such as an affidavit of indigency.
Here, McDonald has filed a notice of appeal and a partial record, and he has stated specific reasons for his request to withdraw. Appellant has submitted an affidavit of financial means and an affidavit in support of his request to proceed in forma pauperis.
Based on the foregoing conclusions, we find that Appellant is indigent, and we appoint McDonald as counsel for Appellant. Accordingly, we deny McDonald's motion to be relieved as counsel. We direct counsel to file a petition for writ of certiorari to prepare the record.
Motion denied.
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802 F.2d 451Unpublished Disposition
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.Robert Martin BARRITT, Appellant,v.Warden Donald BORDENKIRCHER, WV Penitentiary, Appellee.
No. 86-7033.
United States Court of Appeals, Fourth Circuit.
Submitted July 31, 1986.Decided Oct. 2, 1986.
Robert Martin Barritt, appellant pro se.
Chauncey H. Browning, Attorney General, for appellee.
N.D.W.Va.
DISMISSED.
Before HALL, WILKINSON and WILKINS, Circuit Judges.
PER CURIAM:
1
Robert Martin Barritt, a West Virginia inmate, seeks to appeal the district court's denial of habeas corpus relief. 28 U.S.C. 5 2254. He has also requested this Court to compel production of certain transcripts and documents not filed in the district court and to compel the district court to grant his Fed. R. App. P. 4(a) (5) motion. Additionally, since Barritt noticed this appeal he has filed in the district court another habeas petition which essentially contains further argument in support of one of the claims raised in the petition before us on appeal. The district court has forwarded the new petition for our consideration along with this appeal.
2
After carefully reviewing the state court records, the record made in the district court, and Barritt's arguments on appeal, we find this appeal to be without merit. We find the analysis of Barritt's claims contained in the several reports and recommendations of the magistrate to be proper and conclude that the district court correctly rejected Barritt's objections to those recommendations and denied the relief sought.
3
The supplemental argument contained in Barritt's second habeas petition, relying upon the Supreme Court's decision in Ake v. Oklahoma, --- U.S. ----, 53 U.S.L.W. 4179 (Feb. 26, 1985), does not alter our view that Barritt's claim based on the prosecutor's reference to him as a former psychiatric patient of the victim is without merit. We also find without merit Barritt's challenge to the adequacy of the state court records filed in the district court. As those records were sufficient for disposition of the issues raised in the petition, we deny Barritt's request that we compel production of additional transcripts and documents. We also deny as moot Barritt's motion to compel the district court to grant his Fed. R. App. P. 4(a) (5) motion.
4
A certificate of probable cause to appeal is denied, and the appeal is dismised on the reasoning of the district court. Barritt v. Bordenkircher, C/A No. 83-116-E (N.D.W.Va., Jan. 10, 1986). We dispense with oral argument because the dispositive issues recently have been decided authoritatively.
5
DISMISSED.
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Case: 19-40996 Document: 00515421150 Page: 1 Date Filed: 05/19/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 19-40996 May 19, 2020
Conference Calendar
Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee
v.
ARMANDO MAGALLON-MOLINA, also known as Miguel Magallon-Molina,
Defendant-Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 7:19-CR-1224-1
Before HAYNES, DUNCAN, and ENGELHARDT, Circuit Judges.
PER CURIAM: *
The Federal Public Defender appointed to represent Armando Magallon-
Molina has moved for leave to withdraw and has filed a brief in accordance
with Anders v. California, 386 U.S. 738 (1967), and United States v. Flores, 632
F.3d 229 (5th Cir. 2011). Magallon-Molina has not filed a response. We have
reviewed counsel’s brief and the relevant portions of the record reflected
therein. We concur with counsel’s assessment that the appeal presents no
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 19-40996 Document: 00515421150 Page: 2 Date Filed: 05/19/2020
No. 19-40996
nonfrivolous issue for appellate review. Our review also reveals a clerical error
in the district court’s written statement of reasons, which reflects that the
district court imposed an upward departure under U.S.S.G. § 4A1.3. However,
our review of the record, particularly the transcript of the sentencing hearing,
reveals that the district court clearly imposed a discretionary variance outside
of the guidelines framework in light of various 18 U.S.S.G. § 3553(a) factors.
See United States v. Jacobs, 635 F.3d 778, 782 (5th Cir. 2011) (explaining the
difference between a variance and a departure).
Accordingly, counsel’s motion for leave to withdraw is GRANTED,
counsel is excused from further responsibilities herein, and the APPEAL IS
DISMISSED. See 5TH CIR. R. 42.2. The case is REMANDED for the limited
purpose of correcting the clerical error in the written statement of reasons. See
FED. R. CRIM. P. 36; United States v. Powell, 354 F.3d 362, 371-72 (5th Cir.
2003).
2
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558 F.Supp. 532 (1983)
In re GRAND JURY PROCEEDINGS.
Civ. A. No. 83-M-25-R.
United States District Court, W.D. Virginia, Roanoke Division.
March 1, 1983.
*533 Anthony Troy, Mays, Valentine, Davenport & Moore, Richmond, Va., for respondent.
Samuel G. Wilson, Woods, Rogers, Muse, Walker & Thornton, Roanoke, Va., amicus curiae.
John Perry Alderman, U.S. Atty., Karen Breeding Peters, Thomas J. Bondurant, Jr., Asst. U.S. Attys., Roanoke, Va., for United States.
MEMORANDUM OPINION
TURK, Chief Judge.
The United States Attorney filed a "Motion to Enjoin Violations of Grand Jury Secrecy" on January 18, 1983 against respondent, a law firm, alleging that the latter was systematically "debriefing" witnesses appearing before the Grand Jury during the course of an ongoing tax fraud investigation. The government, citing the paramount need for secrecy in grand jury proceedings, seeks an injunction or, preferably, a local rule to prevent the practices complained of.
The parties filed briefs and affidavits in support of their positions, and orally argued before this court on February 17, 1983. The matter is now ready for disposition.
I.
Respondent contends at the outset that the matter is moot, and indicates that the grand jury investigation at issue is, for the time being, complete. The government concedes this fact, but with the qualification that it may call more witnesses at a later time.
Under these facts, the case is not moot. The government seeks relief not only for any acts currently being undertaken, but also for acts to be performed in the future. A reasonable probability exists that the respondent will continue to "debrief" witnesses in the future should the occasion arise. Accordingly, jurisdiction is vested in this court. United States v. Trans-Missouri Freight Association, 166 U.S. 290, 307-10, 17 S.Ct. 540, 546-47, 41 L.Ed. 1007 (1897). See, generally, P. Bator, P. Mishkin, D. Shapiro & H. Wechsler, Hart & Wechsler's, the Federal Courts and the Federal System, 110-11 (2d ed. 1973 & Supp.1981).
II.
A second threshold question relates to this court's authority to issue the relief sought. The court tends to agree, and respondent does not seriously contest, that 28 U.S.C. § 1651[1] would grant this power were the court inclined to exercise it. See United States v. New York Telephone Co., *534 434 U.S. 159, 171-74, 98 S.Ct. 364, 372-73, 54 L.Ed.2d 376 (1977). A square holding is not required on this point, however, because of the conclusion that the relief sought is not warranted. See part III, infra.
The government also cites Fed.R.Crim.P. 57 in support of this court's power to promulgate a local rule pertaining to this subject matter. As to this, see part IV, infra.
III.
The government argues that the paramount need for secrecy in grand jury proceedings commands that the relief sought be granted. Respondent, on the other hand, contends that Fed.R.Crim.P. 6(e)(2) prohibits it. That rule, while imposing an obligation of secrecy on other parties to the proceeding, does not do so with regard to witnesses, and provides that "[n]o obligation of secrecy may be imposed on any person except in accordance with this rule." The Advisory Committee Note following Rule 6(e) explains this provision as follows:
The rule does not impose any obligation of secrecy on witnesses. The existing practice on this point varies among the districts. The seal of secrecy on witnesses seems an unnecessary hardship and may lead to injustice if a witness is not permitted to make a disclosure to counsel or to an associate.
Respondent relies heavily on In re Grand Jury Summoned October 12, 1970, 321 F.Supp. 238 (N.D.Ohio 1970). In that case, the court restrained government attorneys from in effect imposing a "veil of secrecy" over witnesses by advising them that, "while they were free to discuss their testimony with whomever they pleased, they were to report back to the grand jury in the event they were interrogated regarding the questions presented to them by the grand jury." 321 F.Supp. at 239. The court stated: "The cases show that the secrecy of grand jury proceedings may not be imposed upon witnesses who appear before a grand jury; they may be interviewed after their appearance and repeat what they said before the grand jury or otherwise relate their knowledge on the subject of their inquiry." 321 F.Supp. at 240.
That no obligation of secrecy may be imposed on grand jury witnesses clearly does not control this matter. Respondent contends merely that, because the witnesses are free to speak with whom they choose, "[a] fortiori attorneys are free to interview witnesses following their testimony if they consent." Respondent's Memorandum at 9. The conclusion, however, does not necessarily follow from the premise. As the Fourth Circuit held in In re Swearingen Aviation Corp., 605 F.2d 125 (4th Cir.1979), the rule is intended to benefit witnesses, not targets of grand jury investigations. Accordingly, subjects of grand jury investigations have no standing to challenge the validity of ex parte court orders prohibiting witnesses from disclosing certain information to them. Id. at 126-27.[2]
The government counters that the requirement of grand jury secrecy is great. This is beyond dispute. See, e.g., Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. 211, 99 S.Ct. 1667, 60 L.Ed.2d 156 (1979). See, generally, Pickholz & Pickholz, Grand Jury Secrecy and the Administrative Agency: Balancing Effective Prosecution of White Collar Crime Against Traditional Safeguards, 36 Wash. & Lee L.Rev. 1027 (1979). To be weighed against this policy, however, is the First Amendment rights of respondent to communicate with whom it chooses.[3] Respondent's related rights of *535 free speech and association are inconsistent with the relief sought by the government. See, generally, N.A.A.C.P. v. Button, 371 U.S. 415, 83 S.Ct. 328, 9 L.Ed.2d 405 (1963); Shelton v. Tucker, 364 U.S. 479, 485-87, 81 S.Ct. 247, 250-51, 5 L.Ed.2d 231 (1960).
To accommodate the values and interests found on each side of the argument, a balancing approach is dictated. An injunction, which would be in effect a disfavored "prior restraint," is not warranted at this point, especially since the government has not demonstrated that the efficacy of the grand jury proceeding has been affirmatively harmed. On the other hand, the government has an interest in guarding against the chilling effect that respondent's practices are likely to have upon potential witnesses. Accordingly, the government attorneys may tell witnesses that, although they have a right to discuss their testimony with third parties, they may also refuse to do so. In addition, the government may indicate to witnesses that it would prefer that they not discuss their testimony with third parties (apart from their own attorneys), although they may do so if they choose. Such a course of action would not violate the rule 6(e) proscription against imposing an obligation of secrecy on witnesses; it would merely convey the government's desires.
IV.
The government also seeks the promulgation of a local rule prohibiting contact by attorneys with witnesses.[4] The government maintains that Fed.R.Crim.P. 57(a) grants this power. It provides:
Rules made by district courts for the conduct of criminal proceedings shall not be inconsistent with these rules. Copies of all rules made by a district court shall upon their promulgation be furnished to the Administrative Office of the United States Courts. The clerk shall make appropriate arrangements, subject to the approval of the Director of the Administrative Office of the United States Courts, to the end that all rules made as provided herein be published promptly and that copies of them be available to the public.
This rule appears to be a narrowing of the general grant in 28 U.S.C. § 2071, which provides: "The Supreme Court and all courts established by Act of Congress may from time to time prescribe rules for the conduct of their business. Such rules shall be consistent with Acts of Congress and rules of practice and procedure prescribed by the Supreme Court."
The Second Circuit approved a local rule, pursuant to which a fine was assessed against counsel for delaying court proceedings. In re Sutter, 543 F.2d 1030 (1976). The Third Circuit, however, invalidated a similar rule, holding that "the local rule-making power, while not limited to the trivial, cannot extend to basic disciplinary innovations requiring a uniform approach." Gamble v. Pope & Talbot, Inc., 307 F.2d 729 (3d Cir.) (per curiam), cert. denied sub nom. United States District Court v. Mahoney, 371 U.S. 888, 83 S.Ct. 187, 9 L.Ed.2d 123 (1962).
The grant of authority found in § 2071 allows courts to make "rules of practice," but not "rules of law." Saylor v. Taylor, 77 F. 476, 480 (4th Cir.1896) (construing predecessor statute). The rule sought by the government would be more "substantive" than "procedural" in its effect, and is not authorized by the statute.
Further, the rulemaking power found in § 2071, Rule 57, and other provisions of law, represents a departure from the basic rule that federal courts decide only cases and controversies and not render "advisory opinions." See Weinstein, Reform of Federal Court Rulemaking Procedures, 76 Colum.L.Rev. 905, 914-16 (1976) (hereinafter cited as "Weinstein"). Accordingly, the rulemaking power of the federal courts is appropriately viewed as "a legislative *536 delegation." Weinstein at 929, citing Wayman v. Southard, 23 U.S. (10 Wheat.) 1, 6 L.Ed. 253 (1825). Congress delegated the power in order to avail itself of courts' expertise in the area of litigation; thus, any Congressional review of court-made rules should be limited to broad issues of policy. Weinstein at 929-30. However:
If Congress is to exercise restraint, so, too, must the courts. Where substantial substantive policies are at stake or fundamental jurisdictional issues are raised, the courts should refrain from treating the matter by rules, but should, through the Judicial Conference or groups such as the American Bar Association, seek appropriate legislation.
Id. at 930.
Because the courts' rulemaking power represents a deviation from the traditional separation of powers doctrine, there are serious objections to its use in any case. See Rules of Civil Procedure, Order, 374 U.S. 865, 865-70 (1963) (statement of Black and Douglas, JJ.); Rules of Criminal Procedure, Order, 323 U.S. 821, 821-23 (1944) (memorandum of Frankfurter, J.). These considerations indicate that the Weinstein view is correct. Courts ought not to adopt rules relating to important matters requiring deliberation and factfinding.
This is especially true at the district court level. Local rules are usually promulgated without the aid of an advisory committee, without advance publication, and without affording interested parties an opportunity to be heard. Weinstein at 944-54. This court has no existing mechanism to provide these safeguards, which ordinarily inhere in legislative-type decisionmaking. See Note, Rule 83 and the Local Federal Rules, 67 Colum.L.Rev. 1251 (1967) for a critique of local rulemaking. See also Comment, The Local Rules of Civil Procedure in the Federal District CourtsA Survey, 1966 Duke L.J. 1011.
For these reasons, restraint is mandated in this situation. A rule restricting the rights of all attorneys to contact and interview willing witnesses would require fundamental policy decisions of a kind not amenable to consideration by this court. Congressional action or, at the very least, a uniform rule promulgated by the Supreme Court (which is counseled by an advisory committee) is required.
Accordingly, the motion filed by the government shall be denied in an Order entered this date.
FINAL JUDGMENT AND ORDER
In accordance with the Memorandum Opinion filed this day, it is hereby
ADJUDGED and ORDERED
that the motion filed by the United States is hereby DENIED. This matter is stricken from the docket of this court, but the file is to remain sealed.
NOTES
[1] This section provides:
(a) The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aide of their respective jurisdictions and agreeable to the usages and principles of law.
(b) An alternative writ or rule nisi may be issued by a justice or judge of a court which has jurisdiction.
[2] Respondent relies on language in Swearingen to the effect that the subjects of investigation were entitled to contact witnesses to obtain other information. 605 F.2d at 127. The court, however, was only construing the district court's orders in that case, and did not discuss the propriety of the latter's ruling.
[3] Respondent relies mainly on the witness' rights to communicate with counsel. Ordinarily, one has no standing to assert the rights of others on one's own behalf. The doctrine, however, is riddled with exceptions. See, generally, Note, Standing to Assert Constitutional Jus Terti, 88 Harv.L.Rev. 423 (1974). The court prefers to analyze the instant matter in terms of Respondent's rights to free speech and association.
[4] Several districts have promulgated such rules, including the District of New Hampshire, the Southern District of Iowa, the Eastern District of Louisiana, and the Northern District of Georgia.
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457 N.E.2d 217 (1983)
Randall Lee PRINE, Appellant,
v.
STATE of Indiana, Appellee.
No. 683S210.
Supreme Court of Indiana.
December 30, 1983.
*218 Peter G. Koransky, Spangler, Jennings, Spangler & Daugherty, P.C., Merrillville, for appellant.
Linley E. Pearson, Atty. Gen., Michael Gene Worden, Deputy Atty. Gen., Indianapolis, for appellee.
PIVARNIK, Justice.
Defendant-Appellant Randall Lee Prine was convicted by a jury in the Lake Superior Court of class B felony robbery. He subsequently was sentenced to twelve years imprisonment. Appellant now directly appeals and raises the following two issues for our review:
1. whether there was sufficient evidence from which the trial court properly could deny Appellant's motion for a directed verdict and from which the jury properly could find Appellant guilty as charged; and
2. whether the trial court erred by admitting certain identification evidence during the State's redirect examination of a witness.
*219 I
We first note that Appellant's motion for a directed verdict was made at the close of the State's case. The trial court denied it. Appellant thereupon presented evidence in his defense and never renewed his motion for a directed verdict. Any error in the denial of his motion for a directed verdict therefore was waived. Peckinpaugh v. State, (1983) Ind., 447 N.E.2d 576; Walker v. State, (1983) Ind., 444 N.E.2d 842.
The facts adduced at trial show that during the early morning hours of March 26, 1982, Michael Tucker was working as the night manager of the White Hen Pantry located at 169th and Calumet in Hammond. At approximately 2:20 a.m., Tucker observed a man enter the store and wander around. Suspecting the man to be a shoplifter, Tucker watched him closely. The man also was observed by Jeff Newman, a customer in the store. The man eventually carried some items to the cashier's counter but there pulled a gun on Tucker and demanded money. Tucker complied with the demand. When the man left, Tucker tripped the store's alarm and followed the man to see if he could observe the man fleeing. Tucker saw nothing. Newman had left the store to get into his truck but watched the man point what appeared to be a gun at Tucker. Tucker and Newman both identified Appellant as the man who perpetrated the instant robbery.
With regard to sufficiency of the evidence questions, this Court will neither reweigh the evidence nor determine the credibility of witnesses. If there is substantial evidence to support the jury's conclusion that Appellant was guilty beyond a reasonable doubt, the jury's verdict will not be disturbed. Oatts v. State, (1982) Ind., 437 N.E.2d 463, reh. denied; Gatewood v. State, (1982) Ind., 430 N.E.2d 781. Furthermore, it is well settled in Indiana that a robbery conviction can rest upon the uncorroborated testimony of one witness. Martin v. State, (1983) Ind., 453 N.E.2d 1001. Reviewing the evidence in the instant case, we find more than sufficient evidence of probative value to justify the jury's verdict.
II
Appellant next argues that the trial court erred by overruling his objection to testimony by Michael Tucker pertaining to his viewing of certain identification photographs. Appellant specifically argues that said testimony was improper during the State's redirect examination of Tucker because it was beyond the scope of Appellant's prior cross-examination of Tucker. The State submits that the alleged error was waived. We agree.
The specification of error in Appellant's Belated Motion to Correct Errors upon which he now rests the instant claim reads as follows:
"2. That the Court permitted an error of law in the conduct of the trial by allowing the admission of inadmissible evidence."
We previously have held that to preserve an alleged error for appellate review, the error must be stated with specificity in the motion to correct errors. Guardiola v. State, (1978) 268 Ind. 404, 375 N.E.2d 1105. Appellant's specification of error number 2 in his Belated Motion to Correct Errors does not even nominally satisfy the requirement of specificity. Appellant's error argued on appeal accordingly was waived. Nunn v. State, (1983) Ind., 450 N.E.2d 495; Brumfield v. State, (1982) Ind., 442 N.E.2d 973.
Finding no error, we affirm the trial court in all things.
GIVAN, C.J., and HUNTER and PRENTICE, JJ., concur.
DeBRULER, J., concurs in result.
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
PAUL ECCLESTON JACKSON,
Petitioner,
v. Civil Action No. 18-26 (JEB)
ATTORNEY GENERAL OF THE
UNITED STATES,
Respondent.
MEMORANDUM OPINION
This immigration and citizenship controversy hinges on one very simple question: who is
Petitioner Paul Jackson’s biological father? Would that the answer were so easily found. Three
years ago, the Board of Immigration Appeals ordered the Jamaican-born Jackson’s removal from
this county. He petitioned a federal appellate court for judicial review of that order, maintaining
that he could not be deported because he is a U.S. citizen. More specifically, Petitioner alleged
that he acquired citizenship via his putative American father — Herbert Jackson. The appellate
court found that there were genuine issues of material facts as to Paul’s citizenship status, and
the case has made its way here for de novo consideration of that issue.
Following about a year and a half of discovery, he now moves for summary judgment on
his citizenship claim or, in the alternative, for partial summary judgment on several elements of
that claim. In rejoinder, the Government chiefly contends that the identity of Petitioner’s natural
father remains in dispute. Having combed through the record, the Court concludes that Paul has
satisfied all but one part of his claim — that is, biological paternity. For that reason, it will grant
only partial summary judgment and require a trial to finally determine Petitioner’s true lineage.
1
I. Background
To set the stage, the Court begins by laying out the uncontested facts bearing on
Petitioner’s progenitors before turning to those in dispute. It will then offer a few words on this
case’s procedural history.
A. Factual History
Upon multiple facts do the parties agree. In October 1967, Eupheme Finlayson gave
birth to Petitioner in Kingston, Jamaica. See ECF No. 25 (Appendix Volume II) at RESP624–
25. She filled out a “Birth Registration Form” by hand, leaving blank the lines designated for the
names of the child and the father. Id. at RESP624. Later that month, she amended the form and
named the child “Paul Eccleston Matthews.” Id. She did not, however, enter a name for the
child’s father. Id.
After a few months passed, in March 1968, she filed a summons in her country, seeking
child support for the newborn and other relief from a Jamaican man named Fahrin Matthews. Id.
at RESP106. That summons was dismissed for lack of jurisdiction. Id. at RESP102–12. Before
the end of the year, in November 1968, Eupheme came to the U.S. as a legal permanent resident,
leaving her infant son with her relatives in Jamaica. Id. at RESP21–22, 27–28; see ECF No. 26
(Appendix Volume III) (Deposition of Paul Jackson) at 34–37.
Within three years of arriving in this country, in 1971, Eupheme married Herbert
Jackson — an American citizen — in Maryland. See Vol. II at RESP12, 16; ECF No. 24
(Appendix Volume I) at PET1. Two years later, the couple moved to Jamaica. See ECF No. 31-
2 (Resp. Statement of Facts) at 17, ¶ 37; Vol. II at RESP14; Vol. I at PET36. Upon returning to
the island, Eupheme legally changed her son’s surname from “Matthews” to “Jackson.” See
Vol. II at RESP708–13.
2
For a number of years, the Jacksons resided in Jamaica, but they eventually made their
way back to Maryland. See Resp. SMF at 17–18, ¶¶ 39–40. Herbert and Eupheme returned
first, see Vol. I at PET36 (Herbert returned in 1979); Vol II at RESP2 (Eupheme returned in
1980), and in 1981, Paul joined them, entering this country as a legal permanent resident. Id. at
RESP613–17. With the assistance of a relative, he filled out his immigration paperwork and
identified Herbert as his father. Id. Further, an application for a social-security number the
following year stated the same thing. See Vol. I at PET49.
The path now turns more crooked. Because Herbert passed away decades ago, the
foolproof method of determining whether he is Paul’s birth father — i.e., a DNA test — is not
available. See Vol. I at PET239 (Herbert died in 1992); see also id. at PET237–38 (Eupheme
died in 1986). That being so, Petitioner must rely on a variety of circumstantial evidence — all
of which the Government contests — to make his case. For example, he points to the deposition
testimony of a family friend who alleged that Herbert and Eupheme were in a romantic
relationship before she gave birth to Paul. See Vol. III (Deposition of Clive Gifford) at 8, 27–29.
As evidence, this witness testified that, on several occasions, Herbert visited Eupheme in
Jamaica while she was pregnant with Petitioner. Id. at 22–26. During those visits, the two
allegedly were physically affectionate with one another. Id. at 22 (stating that he saw them
“hug” and “kiss”).
The Government, however, maintains that this testimony is wholly unreliable, riddled
with inconsistencies, and directly contradicted by other witness accounts. See Resp. SMF at 11,
¶ 22. Those people aver that Herbert met Eupheme long after Paul had been born. See Resp.
Opp. at 5; Vol. III (Deposition of Leonard Jackson) at 23 (stating his belief that the two met in
the United States — i.e., sometime after November 1968). More telling still, the Government
3
points out that Herbert could not legally travel to Jamaica until 1973 — when he first applied for
a U.S. passport. See Resp. SMF at 11, ¶ 22; Vol. I at PET172–73. As such, Herbert and
Eupheme could not have been together at the time of Paul’s conception. The Government posits,
in short, that the timelines simply do not add up.
B. Procedural History
Since the late 1980s, Petitioner has had multiple encounters with law enforcement that
have landed him in prison and subject to removal. See Vol. II at RESP72–83 (chronicling drug
and illegal-reentry offenses). Indeed, he has been deported to Jamaica several times. Id. at
RESP74 (listing deportations in 1993, 1996, and 2009). As a result of his latest criminal episode
in 2012, an immigration judge once again ordered Paul’s removal from this country following
the completion of his prison sentence. See Jackson v. Att’y Gen., 3d Cir. No. 17-1318, Doc.
3112588204. After serving out his sentence, Paul moved to reopen this removal decision, but an
IJ denied his request. See Jackson v. Att’y Gen., 663 F. App’x 245, 246 (3d Cir. 2016). The
case then wound its way through the administrative-appeals process, culminating with the Board
of Immigration Appeals’ affirming that order in January 2017. See Jackson, Doc. 3112588204.
Undeterred, Paul sought review before the Third Circuit pursuant to 8 U.S.C. § 1252(b).
Id.; see also id. (noting that he was then detained by immigration authorities in Pennsylvania).
That statute permits a would-be deportee to challenge his removal order on the basis that he is a
U.S. citizen and therefore not subject to deportation. See Ricketts v. Att’y Gen., 897 F.3d 491,
492 (3d Cir. 2018) (citing 8 U.S.C. § 1252(b)(5)). Petitioner argued that he could not be
deported because his alleged biological father (Herbert) was an American citizen, which makes
him one, too.
4
The Third Circuit identified a genuine issue of fact underlying his acquired-citizenship
claim. See Jackson, Doc. 3112808615. It therefore transferred the proceeding to a federal
district court in Pennsylvania for a de novo hearing. Id. (invoking 8 U.S.C. § 1252(b)(5)(B)).
That court, in turn, transferred the case here when Paul moved to the District of Columbia. See
Docket Entry Jan. 9, 2018.
With discovery having concluded, Petitioner has filed a Motion for Summary Judgment
on his citizenship claim. In the alternative, he moves for partial summary judgment on several
elements of that claim. Briefing is now complete, and the Court is ready to rule on the Motion.
II. Legal Standard
Upon a party’s motion, Federal Rule of Civil Procedure 56(a) requires the Court to “grant
summary judgment if the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.” A fact is “material” if it can affect
the substantive outcome of the litigation. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986); Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). A dispute is “genuine” if
the evidence is such that a reasonable factfinder could return a verdict for the non-moving party.
See Scott v. Harris, 550 U.S. 372, 380 (2007); Holcomb, 433 F.3d at 895.
When a motion for summary judgment is under consideration, “[t]he evidence of the non-
movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Liberty
Lobby, 477 U.S. at 255 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158–59 (1970)); see
also Mastro v. PEPCO, 447 F.3d 843, 850 (D.C. Cir. 2006) (same). Courts, moreover, must
apply the same evidentiary standard of proof that would apply at trial. See Liberty Lobby, 477
U.S. at 254 (holding that “the judge must view the evidence presented through the prism of the
substantive evidentiary burden.”). They, however, must “eschew making credibility
5
determinations or weighing the evidence.” Czekalski v. Peters, 475 F.3d 360, 363 (D.C. Cir.
2007).
To defeat summary judgment, an opposition must be supported by affidavits,
declarations, or other competent evidence, setting forth specific facts showing that there is a
genuine issue for trial. See Fed. R. Civ. P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 323–24
(1986). The non-movant is required to provide evidence that would permit a reasonable jury to
find in its favor. Laningham v. U.S. Navy, 813 F.2d 1236, 1243–44 (D.C. Cir. 1987). If the
non-movant’s evidence is “merely colorable” or “not significantly probative,” summary
judgment may be granted. Liberty Lobby, 477 U.S. at 249–50.
III. Analysis
The legal principles that govern citizenship claims are well established. Time and again,
the Supreme Court has made clear that there are only “two sources of citizenship”: birth and
naturalization. Miller v. Albright, 523 U.S. 420, 423 (1998) (quoting United States v. Wong
Kim Ark, 169 U.S. 649, 702 (1898)). As to the first category, the Constitution expressly grants
U.S. citizenship to all persons born in this country. See U.S. Const. amend. XIV, § 1. Those
born abroad, on the other hand, “acquire citizenship by birth only as provided by Acts of
Congress.” Miller, 523 U.S. at 424 (citing Wong Kim, 169 U.S. at 703).
Paul maintains that, though he was born on Jamaican soil, he became an American citizen
by virtue of his biological father’s citizenship and subsequent legitimation. In evaluating his
claim, the Court must look to the law in effect at the time of Petitioner’s birth in 1967. See
Sessions v. Morales-Santana, 137 S. Ct. 1678, 1687 n.2 (2017). At such time, Congress
provided for a blanket grant of citizenship to those children born abroad who had at least one
U.S. citizen parent, subject only to that parent’s meeting a physical-presence requirement in this
6
country. See 8 U.S.C. § 1401(a)(7) (1964 ed.). Under that criterion, the citizen parent must have
been present in the U.S. for ten years prior to the child’s birth, and at least five of those years had
to follow the parent’s 14th birthday. Id.
The legislature, moreover, imposed an additional requirement on a “child born out of
wedlock” to a citizen father. See 8 U.S.C. § 1409(a) (1964). Namely, before that child turned 21
years old, his father’s paternity must have been established by legitimation (under the law of
either the father’s or the child’s domicile). Id.; id. § 1101(c)(1) (1964); Tineo v. Att’y Gen., 937
F.3d 200, 204 (3d Cir. 2019).
Putting all this together, to succeed on his citizenship claim, Petitioner must prove that:
(1) Herbert is his biological father; (2) Herbert was a U.S. citizen when Paul was born; (3) before
Paul’s birth, Herbert had been physically present in the U.S. for at least ten years, at least five of
which were after he turned 14; and (4) prior to Paul’s turning 21, Herbert legitimated him as his
son under Jamaican or Maryland law.
Of these elements, the Government has effectively conceded the last three by wholly
failing to challenge the sufficiency of Petitioner’s evidence, which is, in any event, solid on all
three. See ECF No. 31 (Resp. Opp.) at 23–24. In Respondent’s view, it is unnecessary to reach
these elements because the first one — biological paternity — has not been established. Id. The
Court disagrees. Even assuming for a moment that Paul has not shown that Herbert was his birth
father, partial summary judgment on the undisputed components of his claim would still be
appropriate. See Fed. R. Civ. P. 56(a) advisory committee’s note to 2010 amendment
(recognizing that partial summary judgment could be sought “as to a claim . . . or part of a
claim”) (emphasis added); see also Hotel 71 Mezz Lender LLC v. Nat’l Retirement Fund, 778
F.3d 593, 606 (7th Cir. 2015) (“[P]atrial summary judgment can serve a useful brush-clearing
7
function even if it does not obviate the need for a trial . . . .”). For these reasons, the Court finds
that Paul has surmounted the summary-judgment hurdle as to the last three elements. All that
remains to analyze, then, is whether he has satisfied the first element.
A. Requisite Burden
To decide whether Herbert is Petitioner’s natural father, the Court must first address a
threshold issue — viz., exactly how much proof must Paul adduce to shoulder his burden? The
parties vigorously disagree on this, each offering a different approach for the relevant burden and
quantum of proof.
For starters, Petitioner urges this Court to adopt the Ninth Circuit’s three-part burden-
shifting framework. See ECF No. 27-3 (MSJ) at 3–7. Under that approach, the government
bears the initial burden to prove non-citizenship. Mondaca-Vega v. Lynch, 808 F.3d 413, 419
(9th Cir. 2015) (en banc). It can do so, for example, by pointing to a petitioner’s admission that
he was born abroad. See, e.g., Corona-Palomera v. INS, 661 F.2d 814, 818 (9th Cir. 1981). This
creates a rebuttable presumption of non-citizenship. Id.
At that point, the burden shift backs to the petitioner, who must present “substantial
credible evidence” of citizenship to “burst” the non-citizenship presumption. Mondaca-Vega,
808 F.3d at 419. (For those unfamiliar with this standard, “[s]ubstantial evidence is more than a
scintilla and is such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.” Rivera v. Mukasey, 508 F.3d 1271, 1274 (9th Cir. 2007) (quoting Turcios v. INS,
821 F.2d 1396, 1398 (9th Cir. 1987)); see also Rose v. Sessions, 679 F. App’x 557, 559 (9th Cir.
2017) (“Substantial evidence is ‘more than mere scintilla,’ . . . but less than a preponderance.”)
(omission in original) (quoting Saelee v. Charter, 94 F.3d 520, 522 (9th Cir. 1966)).)
8
If a petitioner meets this burden, the government must then counter with “clear and
convincing evidence” of non-citizenship. Mondaca-Vega, 808 F.3d at 419; see also United
States v. Montague, 40 F.3d 1251, 1255 (D.C. Cir. 1994) (noting that “clear-and-convincing
standard” requires factfinder “to reach a firm conviction of truth on the evidence about which he
or she is certain”).
For its part, the Government rejects this scheme altogether. See Resp. Opp. at 12–14. It
maintains that, in proceedings brought under § 1252(b)(5)(B), the onus falls squarely on the
petitioner to prove his citizenship claim by a preponderance of the evidence. Id. at 15. It finds
support for this position in the provision’s text — chiefly, the requirement that district courts are
to make “a decision on [a citizenship] claim as if an action had been brought . . . under [the
Declaratory Judgment Act, 28 U.S.C. § 2201].” See Resp. Opp. at 10 (quoting 8 U.S.C.
§ 1252(b)(5)(B)). Because individuals seeking declaratory judgments of citizenship must meet a
preponderance standard, the argument goes, a petitioner claiming citizenship in a
§ 1252(b)(5)(B) proceeding must meet the same burden. Id. at 10–11, 13. The Government is
not alone in its thinking; a number of appellate courts have set the bar at a preponderance of the
evidence. See, e.g., Espichan v. Att’y Gen., 945 F.3d 794, 801 (3d Cir. 2019); Kamara v. Lynch,
786 F.3d 420, 425 (5th Cir. 2015); Leal Santos v. Mukasey, 516 F.3d 1, 3–4 (1st Cir. 2008).
Fortunately, the Court, at this point, need not decide who has the better of this dispute.
Even if Petitioner has met the substantial-evidence standard, he does not prevail on his Motion
for Summary Judgment. That is because, as will become plain shortly, a factfinder could
reasonably determine that the Government has countered with clear and convincing evidence that
Herbert is not his birth father.
9
B. Merits
According to the Government, the record shows that Paul’s biological father is likely
Fahrin Matthews — not Herbert. See Resp. Opp. at 16–18. To start, it looks to the events
surrounding Petitioner’s birth. Recall that weeks after her son was born, Eupheme amended his
birth certificate, entering “Matthews” as the child’s surname. See Vol. II at RESP624. Shortly
thereafter, Eupheme sued Fahrin for custody and child support. Id. at RESP102–12. Naturally, a
factfinder could conclude that Eupheme would have taken these actions only if she had believed
that Fahrin, not Herbert, was Paul’s birth father.
Additional record evidence shows that, for several decades, Petitioner held the same
belief. He has represented as much to multiple probation officers. See, e.g., Vol. I at PET182
(1988 Presentence Report) (identifying Fahrin as father); Vol. II at RESP65 (1999 PSR) (“The
defendant stated that he is the only child born from a relationship between Farim [sic] Matthews
and Eupheme Jackson (nee: Finlayson).”); id. (referring to Fahrin as his “natural father”); id. at
RESP80 (2012 PSR) (“Paul Eccleston Jackson was born to Farim [sic] Matthews and Eupheme
Finlayson . . . .”). In those same reports, he made clear that he did not believe that Herbert is his
birth father. See, e.g., 1999 PSR at RESP65 (referring to Herbert as his “stepfather” several
times); 2012 PSR at RESP80 (“Ms. Finlayson married Herbert Jackson when defendant was four
or five years old; and it is [Herbert] who the defendant refers to as his father. The defendant
indicated that he was adopted by [Herbert].”).
Consider also the whereabouts of Herbert and Eupheme at the time of Petitioner’s
conception. Eupheme was in Jamaica. See Vol. II at RESP14 (listing Kingston as her residence
from 1965–67); see also id. at RESP4 (indicating that she did not come to America until 1968 —
a year after Paul’s birth). And, says the Government, Herbert did not leave the U.S. until 1973 at
10
the earliest because he did not have a passport. See Vol. I at PET172. So he necessarily could
not have been with Eupheme in Jamaica when Paul was conceived, unless he managed to travel
to the Caribbean without such documentation or such documentation was not required at that
time.
To sum up, even under Petitioner’s preferred evidentiary framework, he comes up short.
That is because a factfinder could reasonably conclude that the Government has adduced clear
and convincing evidence that, contrary to Paul’s take on the facts, Herbert is not his biological
father. Petitioner has thus not met his summary-judgment burden of showing the absence of a
disputed material fact. See Celotex, 477 U.S. at 323.
IV. Conclusion
For these reasons, the Court will grant in part and deny in part Petitioner’s Motion for
Summary Judgment. A separate Order so stating will issue this day.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: April 20, 2020
11
| {
"pile_set_name": "FreeLaw"
} |
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
FREDERICK FOSTER,
Plaintiff-Appellant,
v.
PITNEY BOWES CORPORATION,
Defendant-Appellee,
AND
UNITED STATES POSTAL SERVICE,
Defendant-Appellee,
AND
JOHN DOES 1-10,
Defendants.
______________________
2013-1374, -1444
______________________
Appeal from the United States District Court for the
Eastern District of Pennsylvania in No. 11-CV-7303,
Judge Joel H. Slomsky.
______________________
Decided: December 11, 2013
______________________
2 FOSTER v. PITNEY BOWES CORPORATION
FREDERICK FOSTER, of Philadelphia, Pennsylvania, pro
se.
CHRISTOPHER A. LEWIS, Blank Rome, LLP, of Phila-
delphia, Pennsylvania, for defendant-appellee, Pitney
Bowes Corporation. With him on the brief were
KATHERINE P. BARECCHIA and JONATHAN SCOTT GOLDMAN.
ELIZABETH M. HOSFORD, Senior Trial Counsel, Com-
mercial Litigation Branch, Civil Division, United States
Department of Justice, of Washington, DC, for defendant-
appellee, United States Postal Service. With her on the
brief were STUART F. DELERY, Acting Assistant Attorney
General, JEANNE E. DAVIDSON, Director, and MARTIN F.
HOCKEY, Assistant Director.
______________________
Before RADER, Chief Judge, CLEVENGER, and REYNA,
Circuit Judges.
PER CURIAM.
Pro se Appellant Frederick Foster appeals the follow-
ing orders and opinion of the United States District Court
for the Eastern District of Pennsylvania: (1) a July 23,
2012 opinion dismissing his claims against Appellee
United States Postal Service (“USPS”) under the Postal
Accountability and Enhancement Act (“PAEA”) and the
Federal Tort Claims Act (“FTCA”); (2) an August 13, 2012
order denying his motions for sanctions against USPS; (3)
an October 9, 2012 order denying his motion for reconsid-
eration of the district court’s dismissal of his claims
against USPS; and (4) a February 12, 2013 order granting
Appellee Pitney Bowes Inc.’s (“Pitney Bowes”) motion for
judgment on the pleadings. Foster v. Pitney Bowes Corp.,
No. 11-cv-7303 (E.D. Pa.). We affirm the appealed orders
and opinion in their entirety.
FOSTER v. PITNEY BOWES CORPORATION 3
BACKGROUND
In early May 2007, Mr. Foster submitted a provisional
patent application to the United States Patent and
Trademark Office (“USPTO”) detailing his concept for a
“Virtual Post Office Box/Internet Passport” system
(“VPOBIP”). Under the VPOBIP system as conceived by
Mr. Foster, subscribing individuals and businesses could
obtain a virtual post office box by confirming their identi-
ty at a local post office. Email messages sent by these
subscribers would be marked with a VPOBIP badge
indicating that the sender’s identity had been verified. A
goal of the system was to reduce Internet fraud. Mr.
Foster perfected the application when he filed U.S. Patent
Application No. 12/129,755 on May 30, 2008.
Because Mr. Foster failed to provide a nonpublication
request, the USPTO pursuant to regulation made Mr.
Foster’s application publicly available on December 4,
2008. The USPTO issued a final rejection of Mr. Foster’s
application on June 24, 2010, and, when Mr. Foster did
not appeal this rejection, informed him on February 26,
2011 that his application had been abandoned.
In late May of 2007, after his provisional application
was filed, Mr. Foster initiated discussions with USPS
about the possibility of implementing his VPOBIP con-
cept. Mr. Foster subsequently had conversations with
many USPS representatives, and, at USPS’s suggestion,
representatives of other Government agencies, including
the Postal Regulatory Commission (“PRC”). In September
2009, after Mr. Foster’s patent application had been made
public, a representative from the PRC suggested that Mr.
Foster contact the President of Postal Relations at Pitney
Bowes. Mr. Foster did so, describing via email the
VPOBIP concept and explaining his intention to partner
with USPS. No further conversations between Mr. Foster
and Pitney Bowes or USPS are indicated in the record.
4 FOSTER v. PITNEY BOWES CORPORATION
Pitney Bowes launched the website “Volly.com” in
early 2011. In November 2011, Mr. Foster sued Pitney
Bowes, USPS, and ten John Doe defendants in the United
States District Court for the Eastern District of Pennsyl-
vania, claiming that Volly.com copies ideas contained in
his patent application.
Specifically, Mr. Foster alleged that USPS and Pitney
Bowes violated the provision of the PAEA codified in 39
U.S.C. § 404a(a)(3), stating that:
the Postal Service may not … obtain information
from a person that provides (or seeks to provide)
any product, and then offer any postal service that
uses or is based in whole or in part on such infor-
mation, without the consent of the person provid-
ing that information, unless substantially the
same information is obtained (or obtainable) from
an independent source or is otherwise obtained (or
obtainable).
Mr. Foster also alleged various tortious acts committed by
USPS and Pitney Bowes, including misrepresentation and
fraud, conversion, unjust enrichment, and misappropria-
tion of trade secrets.
On March 9, 2012, USPS moved to dismiss all of Mr.
Foster’s allegations under Federal Rules of Civil Proce-
dure 12(b)(1) and 12(b)(6) for lack of subject matter juris-
diction and failure to state a claim. After Mr. Foster filed
a response and a hearing was held, the district court
granted USPS’s motion to dismiss under Fed. R. Civ.
Proc. 12(b)(1) for lack of subject matter jurisdiction.
Foster v. Pitney Bowes Inc., No. 11-7303, 2012 WL
2997810, at *1 (E.D. Pa. July 23, 2012) (“Foster I”). With
respect to the PAEA claim, the district court concluded
that the PRC has exclusive jurisdiction over such claims,
with appellate jurisdiction vesting in the United States
Court of Appeals for the District of Columbia. Id. at *5.
With respect to the tort claims, the district court conclud-
FOSTER v. PITNEY BOWES CORPORATION 5
ed that the FTCA prohibits claims of misrepresentation
and conversion against the Government and requires a
petitioner to exhaust administrative remedies for claims
of unjust enrichment and misappropriation of trade
secrets. Id.
Following the district court’s grant of USPS’s motion
to dismiss, Mr. Foster moved for reconsideration pursuant
to Fed. R. Civ. P. 59. He also moved for sanctions against
USPS. The district court denied both of these motions.
On August 31, 2012, Pitney Bowes moved before the
district court for judgment on the pleadings pursuant to
Fed. R. Civ. P. 12(c). On February 12, 2013, the district
court granted Pitney Bowes’s motion. With respect to the
PAEA claim, the district court found that 39 U.S.C. §
404a(a)(3) does not apply to Pitney Bowes, a private
corporation. Foster v. Pitney Bowes Corp., No. 11-7303,
2013 WL 487196, at *4 (E.D. Pa. Feb. 8, 2013) (“Foster
II”). The district court also found that no tort had been
committed against Mr. Foster because any information
that may have been appropriated by Pitney Bowes in
creating Volly.com was in the public domain at the time
he spoke with Pitney Bowes representatives. Id. at *4--
10. In light of its grant of judgment on the pleadings to
Pitney Bowes, the district court granted Pitney Bowes’s
non-infringement counterclaim and dismissed its invalidi-
ty counterclaim as moot on April 12, 2013.
Mr. Foster timely appeals the orders and opinions of
the district court. 1
1 Mr. Foster has filed a Motion for Leave to Sup-
plement his Informal Brief, dated October 30, 2013. As
the time for briefing had passed at the time of filing, we
deny the motion as untimely. Fed. Cir. R. 31 (e).
6 FOSTER v. PITNEY BOWES CORPORATION
DISCUSSION
Mr. Foster appeals three district court orders involv-
ing USPS and one order involving Pitney Bowes. We
address each of these in turn.
I
Mr. Foster first challenges the district court’s grant of
USPS’s motion to dismiss under Fed. R. Civ. P. 12(b)(1)
for lack of subject matter jurisdiction. We review the
district court’s decision in this regard de novo. Semicon-
ductor Energy Laboratory Co. v. Nagata, 706 F.3d 1365,
1368 (Fed. Cir. 2012).
The district court determined, first, that it had no
subject matter jurisdiction to hear Mr. Foster’s PAEA
claim because 39 U.S.C. § 3662 requires an individual
suing under 39 U.S.C. § 404a to satisfy certain procedural
requirements that were not met here. Foster I at *3–5.
Section 3662 provides that:
Any interested person . . . who believes the Postal
Service is not operating in conformance with the
requirements of the provisions of sections 101(d),
401(2), 403(c), 404a, or 601 . . . may lodge a com-
plaint with the Postal Regulatory Commission in
such form and manner as the Commission may
prescribe.
Section 3663 of title 39 further provides that a person
adversely affected by a ruling of the PRC may appeal the
ruling in the United States Court of Appeals for the
District of Columbia. The district court construed sec-
tions 3662 and 3663 as vesting exclusive jurisdiction for
claims arising under 39 U.S.C. § 404a in the PRC, with
appellate jurisdiction in the United States Court of Ap-
peals for the District of Columbia.
Mr. Foster claims that the district court erred in
reaching this conclusion because 39 U.S.C. § 409 states
FOSTER v. PITNEY BOWES CORPORATION 7
that “[e]xcept as otherwise provided in this title, the
United States district courts shall have original but not
exclusive jurisdiction over all actions brought by or
against the Postal Service.” He also points out that the
language of section 3662 is permissive rather than man-
datory. See 39 U.S.C. § 3662 (“Any interested person …
may lodge a complaint …”) (emphasis added). Mr. Foster
made the same arguments before the district court, and
that court found them to be unpersuasive. We also con-
sider these arguments to be unavailing.
As the district court pointed out, the legislative histo-
ry of § 3662 suggests that “Congress intended a plaintiff
to exhaust the PRC process before challenging an adverse
ruling in the United States Court of Appeals for the
District of Columbia.” Foster I at *5. The Postal Reform
Act of 1970, under which the initial version of § 3662 was
enacted, established the Postal Rate Commission to hear
all claims involving postal rates and services. See 39
U.S.C. § 3662 (repealed 2006). The district court noted
that courts have regularly held that early versions of
§ 3662 conferred exclusive jurisdiction to the Postal Rate
Commission to hear these claims, despite its permissive
language. Foster I at *4 (citing LeMay v. U.S. Postal
Serv., 450 F.3d 797, 800 (8th Cir. 2006); Bovard v. U.S.
Post Office, No. 94-6360, 47 F.3d 1178, 1995 WL 74678, at
*1 (10th Cir. Feb. 24, 1995); Azzolina v. U.S. Postal Serv.,
602 F. Supp. 859, 864 (D.N.J. 1985); Tedesco v. U.S.
Postal Serv., 553 F. Supp. 1387, 1389 (W.D. Pa. 1983)).
In 2006, the PAEA expanded the reach of § 3662 to
include claims arising under specific sections of the
PAEA, including § 404a. 39 U.S.C. § 3662 (2006). There
is nothing in the statutory text or legislative history to
suggest that the PAEA eliminated the exclusive jurisdic-
tion conferred to the Postal Rate Commission (renamed
the Postal Regulatory Commission, or PRC, by the PAEA)
over claims enumerated in § 3662. To the contrary, the
PAEA added specific, additional types of claims to the
8 FOSTER v. PITNEY BOWES CORPORATION
jurisdictional provision of § 3662, including claims arising
under § 404a.
The fact that § 409 of the PAEA generally grants ju-
risdiction over actions brought against USPS does not
change this conclusion. Indeed, § 409 specifically states
that its grant of jurisdiction to the district courts does not
apply to exceptions “otherwise provided in this title.” 39
U.S.C. § 409(a). Section 3662, with its grant of jurisdic-
tion to the PRC over claims arising under § 404a, provides
such an exception. Thus, the district court correctly
determined that it lacked subject matter jurisdiction to
consider claims arising under § 404a. See Anselma Cross-
ing, L.P. v. U.S. Postal Serv., 637 F.3d 238, 246 (3d Cir.
2011) (holding that a later-enacted and specific statutory
provision bars district court jurisdiction for contract
claims against USPS despite § 409’s general grant of
jurisdiction).
In granting USPS’s motion to dismiss, the district
court next determined that it had no subject matter
jurisdiction over Mr. Foster’s tort claims. Foster I at *5.
Section 409(c) of the PAEA provides that any tort claim
against USPS is subject to the provisions of the FTCA
found in title 28 chapter 171. See Dolan v. U.S. Postal
Serv., 546 U.S. 481, 484 (2006) (holding that 39 U.S.C. §
409(c) requires tort claims brought against USPS to
comply with the FTCA). The FTCA explicitly prohibits
claims of misrepresentation against the Government. 28
U.S.C. § 2680(h). Further, the FTCA requires, as a juris-
dictional prerequisite to adjudication in a federal court,
all claims to first be brought before the appropriate agen-
cy—here, the USPS’s Tort Claims Examiner. See 28
U.S.C. § 2675(a). It is undisputed that Mr. Foster did not
bring his claims to the USPS before initiating this suit.
FOSTER v. PITNEY BOWES CORPORATION 9
Thus, the district court correctly dismissed these claims
for lack of subject matter jurisdiction. 2
II
Mr. Foster also challenges the district court’s denial of
his motion for reconsideration and its denial of sanctions
against USPS. We review these determinations for abuse
of discretion. Q-Pharma, Inc. v. Andrew Jergens Co., 360
F.3d 1295, 1299 (Fed. Cir. 2004) (holding that the stand-
ard of review for the denial of Rule 11 sanctions is gov-
erned by the law of the regional circuit); Gary v. The
Braddock Cemetery, 517 F.3d 195, 201 (3d Cir. 2008)
(holding under Third Circuit law that denial of Rule 11
sanctions is reviewed for abuse of discretion); Delaware
Floral Group v. Shaw Rose Net LLC, 597 F.3d 1374, 1378
(Fed. Cir. 2010) (holding that the standard of review for
the denial of a motion for reconsideration is governed by
the law of the regional circuit); Long v. Atlantic City
Police Dep’t, 670 F.3d 436, 447–48 (3d Cir. 2012) (holding
under Third Circuit law that the denial of a motion for
reconsideration is reviewed for abuse of discretion).
With respect to the motion for reconsideration, the
district court found that Mr. Foster had failed to carry his
burden under Fed. R. Civ. P. 59 of showing that (1) an
intervening change in controlling law; (2) new evidence
not previously available; or (3) a clear error of law or
2 The district court, applying Third Circuit law,
found that conversion is a form of misrepresentation that
is explicitly excluded as a cause of action under the FTCA.
Foster I at *5. We need not decide here whether conver-
sion is a permissible cause of action under the FTCA
because Mr. Foster did not perfect his administrative
remedy for his conversion claim pursuant to 28 U.S.C. §
2675(a).
10 FOSTER v. PITNEY BOWES CORPORATION
manifest injustice required reconsideration. We see no
abuse of discretion in the district court’s determination. 3
Nor did the district court abuse its discretion in deny-
ing Mr. Foster’s motion for sanctions against USPS. Mr.
Foster’s argument that sanctions are appropriate because
the United States Department of Justice (“DOJ”) was
precluded by statute from representing USPS in the
3 Mr. Foster has filed a Motion for Judicial Notice of
New Evidence Pursuant to Fed. R. Evid. 201(c) and
Intervening Change of Controlling Law/Correction of
Error Pursuant to Fed. R. Civ. P. 59(e), dated July 29,
2013. In an Order dated October 3, 2013 this court de-
ferred Mr. Foster’s motion for consideration by the merits
panel. As USPS points out in its briefing, a Rule 59
motion is appropriate only before the trial court, and we
therefore deny the motion. However, we consider the
evidence that Mr. Foster has presented in support of this
motion as potentially supportive of Mr. Foster’s claim that
the district court abused its discretion in denying his Rule
59 motion. This evidence consists of a PRC proposed
rulemaking and a USPS Inspector General’s (“IG”) report.
Neither of these documents supports Mr. Foster’s con-
tentions that there has been an intervening change of
controlling law or that there is new (and relevant) evi-
dence that was not previously available under Fed. R. Civ.
P. 59. Contrary to Mr. Foster’s claim, the PRC proposed
rulemaking does not support the proposition that the PRC
did not, at the time of suit, have jurisdiction over claims
arising under 39 U.S.C. §404a. Nor is the IG report,
which refers to “Virtual Post Office Boxes” and thus
according to Mr. Foster proves that USPS stole his idea,
relevant to the district court’s decision. The district court
dismissed Mr. Foster’s suit for lack of subject matter
jurisdiction and did not reach the issue of whether USPS
misappropriated information from Mr. Foster.
FOSTER v. PITNEY BOWES CORPORATION 11
district court is without merit. Although 39 U.S.C. §
409(g)(1) does prohibit the DOJ from representing USPS
in certain limited situations, none of these situations
apply here. The general rule, provided in 39 U.S.C. §
409(g)(2), states that the DOJ “shall . . . furnish the
Postal Service such legal representation as it may re-
quire.” Mr. Foster therefore presents no tenable basis for
sanctions against USPS.
III
Finally, Mr. Foster challenges the district court’s
grant of judgment on the pleadings to Pitney Bowes under
Fed. R. Civ. P. 12(c). We review a grant of judgment on
the pleadings de novo. 4 N.Z. Lamb Co. v. United States,
40 F.3d 377, 380 (Fed. Cir. 1994).
4 Pitney Bowes argues that we do not have jurisdic-
tion to review the district court’s February 12, 2013 order
granting judgment on the pleadings to Pitney Bowes
because Mr. Foster did not specifically name that order in
his notice of appeal, naming instead the district court’s
April 12, 2013 order handling Pitney Bowes’s counter-
claims. Appellee Br. 2. It is clear from Mr. Foster’s notice
of appeal, however, that he intended to appeal the district
court’s grant of judgment on the pleadings, since he
specifically stated in that document that he was appealing
“the Judgment and Order … granting a motion for Judg-
ment on the Pleadings[.]” Notice of Appeal, No. 11-7303
(E.D. Penn. Apr. 24, 2013). Because Mr. Foster is a pro se
litigant, we have the discretion to be more lenient in
interpreting his filings. See McZeal v. Sprint Nextel
Corp., 501 F.3d 1354, 1356 (Fed. Cir. 2007) (“Where, as
here, a party appeared pro se before the trial court, the
reviewing court may grant the pro se litigant leeway on
procedural matters, such as pleading requirements.”). We
12 FOSTER v. PITNEY BOWES CORPORATION
In reaching its determination, the district court first
found that Pitney Bowes could not be sued under the
PAEA because it is a private corporation. Foster II at *4.
We must also conclude that Pitney Bowes cannot be sued
under 39 U.S.C. § 404a. As the district court pointed out,
the prohibitions listed in § 404a apply on their face to
USPS and not to private entities. See 39 U.S.C. § 404a
(“[T]he Postal Service may not …”) (emphasis added).
Mr. Foster argues, notwithstanding the plain lan-
guage of 39 U.S.C. § 404a, that Pitney Bowes is a “state
actor” for purposes of this litigation. Appellant Br. 1. He
cites to the Third Circuit’s three-part test for determining
whether a private entity is a state actor for litigation
purposes. This test asks:
(1) “whether the private entity has exercised pow-
ers that are traditionally the exclusive prerogative
of the state”; (2) “whether the private party has
acted with the help of or in concert with state offi-
cials”; and (3) whether “the [s]tate has so far in-
sinuated itself into a position of interdependence
with the acting party that it must be recognized
as a joint participant in the challenged activity.”
Kach v. Hose, 589 F.3d 626, 646 (3d Cir. 2009) (internal
citations omitted).
We note, as did the district court, that this three-part
test is relevant in the context of 42 U.S.C. § 1983 litiga-
tion and that Mr. Foster raised no § 1983 claim in his
Complaint. However, assuming arguendo that the three-
part test is relevant here, we conclude that Pitney Bowes
does not meet the requirements of this test.
will therefore consider his challenge to the district court’s
grant of judgment on the pleadings.
FOSTER v. PITNEY BOWES CORPORATION 13
First, Pitney Bowes, in launching its website
Volly.com, did not exercise a power that is traditionally
the exclusive prerogative of the state. Volly.com is appar-
ently a web-based service that allows users to manage
their bills (including mail-based bills) and accounts from a
single website. Although Volly.com involves mail, it does
not exercise any power traditionally exercised by USPS.
Second, there is no evidence, other than Mr. Foster’s
unsupported allegation, that Pitney Bowes acted with the
help of or in concert with USPS to develop Volly.com.
Similarly, there is no evidence that USPS has “so far
insinuated itself into a position of interdependence” with
Pitney Bowes “that it must be recognized as a joint partic-
ipant” in the creation of Volly.com. Kach, 589 F.3d at 646.
Thus, Pitney Bowes cannot be considered a state actor for
purposes of this litigation, and Mr. Foster’s PAEA claim
against Pitney Bowes must fail.
The district court also granted judgment on the plead-
ings to Pitney Bowes on Mr. Foster’s tort claims. 5 The
court determined that all of Mr. Foster’s tort claims
against Pitney Bowes failed because his VPOBIP concept
5 Pitney Bowes argues that Mr. Foster waived any
challenge to the district court’s findings in this regard
because he did not address the issue in his opening brief.
However, we interpret Mr. Foster’s statement on page 9 of
his opening brief that “the trial court failed to realize
Plaintiff’s patent application is not relevant in this case as
it . . . did not contain the confidential information that is
relevant” as an appropriate challenge, since the district
court relied on the existence of allegedly confidential
information in the patent application in dispensing with
Mr. Foster’s tort claims. Appellant Br. 9; Foster II at *4–
9. As mentioned above, we have discretion to be lenient
in interpreting the filings of a pro se litigant. See McZeal,
501 F.3d at 1356.
14 FOSTER v. PITNEY BOWES CORPORATION
was publicly available in the published U.S. Patent Appli-
cation No. 12/129,755 before he had any conversations
with Pitney Bowes. Foster II at *4–9. We also conclude
that the publication of U.S. Patent Application No.
12/129,755 on December 4, 2008 precludes any tort recov-
ery by Mr. Foster.
With respect to the trade secret claim, the district
court outlined the requirements for a prima facie showing
of misappropriation of trade secrets. A plaintiff must
show: “(1) the existence of a trade secret; (2) communica-
tion of a trade secret pursuant to a confidential relation-
ship; (3) use of the trade secret, in violation of that
confidence; and (4) harm to the plaintiff.” Foster II at *5
(quoting Moore v. Kulicke & Soffa Indus., 318 F.3d 561,
566 (3d Cir. 2003)).
The district court found that Mr. Foster could not
make this prima facie showing because Pennsylvania law
defines a trade secret as a secret for which “reasonable
efforts to maintain secrecy” have been made. Id. (quoting
12 PA. CONS. STAT. § 5302). The court correctly pointed
out that Mr. Foster had had the option of filing a non-
publication request with his provisional patent applica-
tion but chose not to do so, and that the ideas in his
published patent application therefore were not subject to
reasonable efforts to maintain confidentiality. Id. at 5–7.
Mr. Foster argues before this court that Pitney Bowes
misappropriated additional trade secrets that were not
included in his provisional patent application. Appellant
Br. 9. Mr. Foster does not specify what these trade se-
crets are. But even if he is correct in this regard, we note
that there is no evidence that Mr. Foster entered into any
confidentiality agreement, informal or otherwise, with
Pitney Bowes when he initiated contact with the company
in 2009. Thus, these trade secrets were not the subject of
“reasonable efforts to maintain secrecy,” as Pennsylvania
law requires.
FOSTER v. PITNEY BOWES CORPORATION 15
As for Mr. Foster’s misrepresentation claim, Pennsyl-
vania law requires a false and material representation
made with the intent of inducing reliance. Overall v.
Univ. of Pa., 412 F.3d 492, 498 (3d Cir. 2005). A plaintiff
must also show that justifiable reliance on the misrepre-
sentation actually took place. Id. Here, the district court
found that there was no justifiable reliance on any alleged
misrepresentations by Pitney Bowes because Mr. Foster
knew or should have known that the information he
provided to Pitney Bowes was publicly available. Foster
II at *8. We also rule that the publication of Mr. Foster’s
patent application prior to his communications with
Pitney Bowes negates any reliance on any alleged repre-
sentations of confidentiality. To the extent Mr. Foster
alleges that he shared additional ideas with Pitney Bowes
and that Pitney Bowes falsely communicated that it
would keep these ideas confidential, there is no evidence
in the record to support such an allegation.
Similarly, the district court found that even assuming
that the tort of conversion applies to ideas, no liability for
conversion was possible when Mr. Foster had relin-
quished control over his VPOBIP concept by permitting it
to be published. Id. We also conclude that Mr. Foster has
no tenable conversion claim against Pitney Bowes. Any
argument that Pitney Bowes stole additional ideas that
were not included in Mr. Foster’s patent application
cannot be accepted absent evidence that this in fact
occurred.
Finally, the district court concluded that Mr. Foster’s
claim for unjust enrichment must fail as a matter of law
because there was no bestowal of benefit on Pitney Bowes.
Id. at *9. The company was free, without Mr. Foster’s
assistance, to look up Mr. Foster’s published patent
application. We cannot disagree with the district court.
Again, to the extent that Mr. Foster wishes us to consider
the argument that Pitney Bowes was unjustly enriched by
16 FOSTER v. PITNEY BOWES CORPORATION
additional ideas not included in his patent application,
Mr. Foster presents no evidence to support this argument.
IV
For the reasons provided above, we affirm the ap-
pealed orders and opinions of the United States District
Court for the Eastern District of Pennsylvania.
AFFIRMED
COSTS
Each side shall bear its own costs.
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} |
261 N.W.2d 346 (1977)
CARL H. PETERSON COMPANY, Respondent,
v.
ZERO ESTATES, et al., Respondents,
First National Bank of Lakeville, Appellant.
HEDBERG & SONS CO., Respondent,
v.
Emil J. BRAUN, et al., Defendants,
First National Bank of Lakeville, Appellant.
Richard L. LUNDAHL, Respondent,
v.
Emil J. BRAUN, et al., Defendants,
First National Bank of Lakeville, Appellant,
W. J. Sutherland & Associates, Inc., intervenor, Respondent,
Road Machinery & Supplies of Minneapolis, Respondent.
No. 47294.
Supreme Court of Minnesota.
December 16, 1977.
Rehearing Denied January 10, 1978.
*347 Ahl, Halberg & Nord, R. Glenn Nord, and William E. Macklin, Lakeville, for appellant.
Peterson & Holtze and Theodore N. Treat, Jr., Minneapolis, for Carl Peterson Co.
Richard M. Greeman, Minneapolis, for Zero Estates, et al.
O. A. Brecke and J. Robert Nygren, Minneapolis, for Hedberg & Sons Co.
Brenner & Harroun and Bernard M. Harroun, Minnetonka, for Richard L. Lundahl.
Robert E. Johnson, Minneapolis, for W. J. Sutherland & Associates.
John J. Waters, Minneapolis, for Road Machinery Supplies.
Heard before SHERAN, C. J., and PETERSON and YETKA, JJ., and considered and decided by the court en banc.
PETERSON, Justice.
The First National Bank of Lakeville (hereafter "bank") appeals from judgment in a mechanics lien foreclosure action in which the bank, as the mortgagee of property in Scott County, unsuccessfully claimed priority for its mortgage, although second in time to the mechanics liens on the same property, on grounds of equitable subrogation or, alternatively as to certain of the lienholders, on various grounds of notice and waiver.
The factual situation upon which the bank's claims are asserted is not in dispute. It made a loan to Emil and Emma Braun in 1970 for $25,000, which was secured by a mortgage on 152 acres of land owned by the Brauns. The Brauns contemplated the construction of a 300- by 176-foot horse barn on the property, but how the loaned funds were used is not clear from the record. This mortgage was filed on October 14, 1970.
The first materials for the horse barn were delivered in June 1972. Construction continued after that date, with labor and materials supplied by respondent mechanics lienholders. It is undisputed that there was an actual and visible improvement on the land some time during 1972.
The issue centers on a second loan and mortgage made between the bank and the Brauns on March 6, 1973, and filed of record March 12, 1973. This loan, in the amount of $180,000, was to finance the continued construction of the horse barn. It was filed subsequent to the beginning of the improvement and the initial furnishing of labor and materials for construction.
The bank's second loan was guaranteed, up to 85 percent, by the Small Business Administration (SBA). SBA, in an attempt to establish priority of the 1973 mortgage, directed that part of the proceeds of the second loan be used to pay the balance of the 1970 loan ($20,133.18) and delinquent taxes ($1,463.17). The building was also to be insured. Additionally, on March 30, 1973, Braun paid one of the mechanics lienholders, Hedberg & Sons Co. (hereafter Hedberg), $4,400 for labor and materials furnished to that date, receiving a lien waiver from Hedberg.
Three actions to foreclose the several mechanics liens on the property were commenced in June and July 1974. On February 12, 1975, the barn collapsed. The insurance on the barn had lapsed. The district court consolidated the three actions and upon trial ruled, pursuant to Minn.St. 514.05, that the mechanics liens had attached in 1972 and were prior to the bank's 1973 mortgage. Judgment was granted to respondent lienholders in the amount of $23,189.56, together with interest, costs, and attorneys fees. The recovery was impressed only upon a 39.5-acre tract carved out of the entire 152-acre Braun property, pursuant to Minn.St. 514.03, subd. 3.
*348 1. The principal contention of the bank is that, in equity, its 1973 mortgage should be subrogated to its 1970 mortgage and thus granted priority over the 1972 mechanics liens (to the extent of $21,596.35) inasmuch as the proceeds of its second loan were used to pay the balance of the first loan and delinquent taxes in that sum. We hold that, in the factual circumstances of this case, the trial court properly denied such equitable subrogation.
Heisler v. C. Aultman & Co., 56 Minn. 454, 57 N.W. 1053 (1894), in which priority was accorded to a second mortgage over a judgment lien and upon which the bank most heavily relies, is distinguishable in its equitable circumstances. There, plaintiff Heisler was surety on a note made by her son, a note secured by a second mortgage on land purchased by him. A judgment lien on the land was third in priority to this second mortgagebut the plaintiff knew nothing of its existence. When her son defaulted on the note, the plaintiff paid the note in full. The second mortgage was discharged, thus elevating priority of the judgment lien. This court affirmed a trial court judgment reinstating the second mortgage and declaring the plaintiff subrogated to the rights of the second mortgagee, thus according her priority over the judgment lienholder to the proceeds of the sheriff's sale of the land. This equitable principle will be applied in the interest of substantial justice, as we held in Heisler, where one party has provided funds used to discharge another's obligations if (a) the party seeking subrogation has acted under a justifiable or excusable mistake of fact and (b) injury to innocent parties will otherwise result.[1]
The bank in this case has not demonstrated such equities in its favor. Unlike the unsophisticated individual wholly unaware of a judgment lien, the bank is a professional lender with knowledge of construction in progress giving rise to inchoate liens for contractors and materialmen. Its failure to consider potential priority conflicts and to obtain subordination agreements from them, as well as its failure to ascertain that its mortgagor was maintaining insurance in force, cannot be deemed justifiable as an excusable mistake.
The mechanics lienholders, moreover, are innocent parties whose rights could be substantially impaired, if not lost, were equitable subrogation granted to the bank. Their only recourse is to the 39.5-acre tract of land subject to their liens. The bank has undisputed priority on the remaining 112 acres covered by its 1973 mortgage.
2. Emil Braun, the property owner, paid Hedberg $4,400 on March 30, 1973, for which Hedberg gave Braun a lien waiver as to all labor and materials "furnished or acquired prior to date hereof." Hedberg's claim as a mechanics lienholder is for labor and material delivered to Braun for construction subsequent to that date. Notwithstanding the clear language of that lien waiver, the bank contends that the waiver subordinated Hedberg's future lien rights to its 1973 mortgage.
The bank really premises its argument on the asserted fact that Hedberg "knew" at the time of the $4,400 payment that the funds therefor came from the proceeds of the bank's 1973 loan. It is probably true that Hedberg knew at the time that a commitment for the 1973 loan had been made, but it is not proven that Hedberg knew the loan in fact had been madebut the result in either case is the same. Minn.St. 514.05, which governs the time at which a lien attaches, provides that, as against a mortgagee, the lien attaches at the time of the "actual and visible beginning of the improvement on the ground." See, e. g., M. E. Kraft Exca. & Grad. Co. v. Barac Const. Co., 279 Minn. 278, 156 N.W.2d 748 (1968). The actual and visible beginning of the improvement occurred in 1972, not in 1973. Therefore, whatever notice Hedberg or other *349 lien claimants had of the 1973 mortgage has no effect on their priority. The argument is, in essence, merely a variation of the bank's claim for equitable subrogation.
Affirmed.
OTIS, J., took no part in the consideration or decision of this case.
NOTES
[1] The other cases where the equitable subrogation doctrine has been applied involve generally similar fact situations, and use the same standards. Sucker v. Cranmer, 127 Minn. 124, 149 N.W. 16 (1914); Elliott v. Tainter, 88 Minn. 377, 93 N.W. 124 (1903); Emmert v. Thompson, 49 Minn. 386, 52 N.W. 31 (1892).
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7 B.R. 866 (1980)
In the Matter of Frank A. VINCENT and Kitty A. Vincent, his wife, Debtors.
ST. PETERSBURG FEDERAL SAVINGS AND LOAN ASSOCIATION, Plaintiff,
v.
Frank A. VINCENT and Kitty A. Vincent, his wife, Defendants.
Bankruptcy No. 80-889.
United States Bankruptcy Court, M.D. Florida, Tampa Division.
December 29, 1980.
*867 Wm. Fletcher Belcher, St. Petersburg, Fla., for St. Petersburg Federal Sav.
David W. Steen, Tampa, Fla., for debtor.
FINDINGS OF FACT AND CONCLUSIONS OF LAW ON COMPLAINT TO MODIFY STAY
ALEXANDER L. PASKAY, Chief Judge.
THIS IS an adversary proceeding commenced by a complaint filed by St. Petersburg Federal Savings & Loan Association (Savings & Loan) pursuant to Bankruptcy Rule 701. The Complaint seeks a relief from the automatic stay imposed by § 362(e) of the Bankruptcy Code. The underlying facts as appear from the record established at the Final Evidentiary Hearing can be briefly summarized as follows:
The Savings & Loan is the holder of a promissory note and mortgage dated March 10, 1978, executed by Frank A. Vincent and Kitty E. Vincent, the Debtors involved in this Chapter 11 business reorganization proceeding. The mortgage encumbers certain real property located in Pinellas County, Florida which is the residence of the Debtors. The record further reveals that the Debtors are in default and have not made any payments since May 9, 1979, have not paid the 1979 real estate taxes and have failed to maintain hazard, fire or flood insurance on the subject property.
On October 19, 1979, the Savings & Loan commenced a foreclosure proceeding in a Circuit Court of the Sixth Judicial Circuit in and for Pinellas County, Florida. On June 5, 1980, the Circuit Court entered a *868 final judgment in the foreclosure proceeding, which parenthetically, also involved as defendant, the holder of the second mortgage, Southern Discount Company (Southern Discount). The final judgment entered by the Circuit Court determined that the Debtors are indebted to the Savings & Loan in the total amount of $81,642.61 and to Southern Discount in the amount of $10,517.42; and that both the Savings & Loan and Southern Discount hold a valid lien, securing said indebtednesses. The final judgment ordered the property to be sold at a public sale. The sale was scheduled for July 1, 1980. On June 24, 1980, or after the entry of the final judgment but before the sale, the Debtors filed their joint petition for relief under Chapter 11 of the Bankruptcy Code, therefore, by virtue of the automatic stay imposed by § 362 of the Bankruptcy Code, neither the Savings & Loan nor Southern Discount was able to proceed and complete the foreclosure sale.
It is conceded, and it is apparent from the record, that there is a definite equity in the subject property. It is also clear and without dispute that this property was, and still is, at this time, the residence of these debtors and claimed exempt as their homestead under Art. X, § 4 of the Florida Constitution. It further appears that Mr. Vincent, who is an insurance agent, maintains an office in a property which he inherited from his mother. This property has an approximate value of $69,000, on which there are no contractual encumbrances, but which property may be subject to a possible tax claim by the IRS. The tax liability, if any, is yet to be resolved, pending the conclusion of an audit.
The total scheduled unsecured obligations of these Debtors is in the neighborhood of $9,000 and the plan yet to be filed will supposedly propose a full satisfaction of these obligations out of the proceeds to be obtained from the sale of their residence. Although the Debtors have been aware for a year and a half that they will most likely lose their residence and also their equity in the same, the property was not listed for sale until November 24, 1980, although counsel for the Debtors intimated that the property was listed earlier in the spring of 1980 and the Debtors received an offer to purchase this property for $120,000, which offer they refused.
It is the contention of the Debtors that inasmuch as the Savings & Loan has failed to establish lack of equity in the subject property, it has failed to carry the burden placed on a secured creditor by § 362(d) of the Bankruptcy Code. In addition, the Debtors contend that the preservation of their equity in this property is indispensable to their efforts to obtain rehabilitation under Chapter 11 of the Code, therefore, they are entitled to preserve the protection of the automatic stay until they are able to liquidate the subject property.
In opposing the extension of the automatic stay, the Savings & Loan contends that the Debtor, who is an insurance agent, conducts his business out of his business premises and the residence has not been used for the conduct of his business. Thus, inasmuch as this is a business reorganization proceeding and not a proceeding under Chapter 13 by an individual who seeks a readjustment of his debts, the loss of the residence would have no direct impairment on the Debtor's business. In support of its position, the Savings & Loan cites In re Sulzer, 2 B.R. 630 (Bkrtcy.S.D.N.Y.1980). In Sulzer, supra the debtor, who was a psychoanalyst, sought to preserve the automatic stay in order to prevent the loss of his residence through foreclosure. The Debtor maintained his office in his home and claimed that foreclosure would inhibit or prevent an effective Chapter 11 reorganization. The Court in Sulzer, supra rejected the contention of the Debtor that it would be economically more advantageous for him to carry on his practice in his residence than to pay rent and held that there was insufficient grounds to prevent the secured party from foreclosing its mortgage because the loss of the residential property would not interfere with the debtor's ability to either practice his profession or to fund the plan. Although Sulzer, supra is somewhat analogous to the facts of the case at bar, this Court for reasons to be stated below finds *869 that authority inapposite to the circumstances of this case.
The relief sought by the Savings & Loan is based on § 362(d) which sets for the grounds for relief from the automatic stay. These grounds are stated in the alternative. The stay may be lifted or vacated either for "cause" under § 362(d)(1) including lack of adequate protection, or under § 362(d)(2)(A), (B) if the Debtor does not have any equity in the property and the property in question is not necessary to effectuate a reorganization. The lack of adequate protection for the interest of a secured creditor is one cause for relief under § 362(d)(1).
Section 361 of the Bankruptcy Code provides several alternative methods of adequately protecting a secured creditor and § 361(3) provides that if the secured party realizes the "indubitable equivalent" of its interest in the collateral, it is adequately protected. There are numerous decisions which have construed the meaning of the term indubitable equivalent, particularly with respect to the scope and reach of sub. (3) of § 361 of the Bankruptcy Code. Those decisions have held that an equity cushion in and of itself is legally sufficient to satisfy the adequate protection requirement of § 361(3) and would prevent the lifting of the automatic stay under § 362. Thus, in the case of In re San Clemente Estates, 5 B.R. 605, 2 CBC 2d 1003 (Bkrtcy.S.D.Cal. 1980) the court held that a secured creditor's interest in property may be adequately protected by the value of the collateral itself even though that method of protection is not specifically provided for by the Code; see also, In re Rogers Development Corp., 2 B.R. 679, 5 B.C.D. at 1394 (Bkrtcy.E.D.Va. 1980); In re Blazon Flexible Flyer, Inc., 407 F.Supp. 861 (N.D.Ohio 1976); In re McAloon, 1 B.R. 766, 5 B.C.D. 1207 (Bkrtcy.E.D. Pa.1980); In re Shockley Forest Industries, 3 C.C.H., B.L.Rep. ¶ 67,683 at 78,202 (N.D. Ga.1980).
Thus, even assuming that § 362(d)(1) is the applicable controlling provision, the secured party cannot prevail and have the stay lifted for "cause" because under the cases cited it is adequately protected in light of the undisputed fact that the Debtors have ample equity in the subject property.
This Court is, however, satisfied that § 362(d)(2) as the alternative ground for obtaining adequate protection is controlling in cases where, as here, the secured party's interest is in real property and the automatic stay is sought to be lifted for the purpose of foreclosing the mortgage. This conclusion is both indicated and supported by the Code's legislative history. See 124 Cong. Rec.H. 11,092-3 (Sept. 28, 1978); S. 17,409 (Oct. 6, 1978).
Under § 362(d)(2), before the stay can be lifted, there must appear both a lack of equity in the Debtor's property and also a showing that the property is not necessary for an effective reorganization. Pursuant to § 362(g) of the Code, the burden to show lack of equity in the property is on the party seeking relief from stay while the Debtor has the burden with respect to the remaining issues, i.e. the property is necessary to an effective reorganization. In re Anchorage Boat Sales, 4 B.R. 635 (Bkrtcy.E. D.N.Y.1980).
Considering this record, this Court is satisfied that the plaintiff has not satisfied the burden of establishing lack of debtor equity, a point not disputed by the parties and in addition, the Debtor has carried its burden to show that the subject property is necessary for an effective reorganization.
Since the enactment of the Bankruptcy Reform Act of 1898 by Pub.L. 95-595, there seems to be some confusion between the purpose of Chapters 11 and 13 of the Bankruptcy Code, especially if the latter involves an individual engaged in business. This confusion is understandable and can easily be explained by merely pointing out the vast difference between need of a business for the type of relief afforded by Chapter 11 and the relief afforded by Chapter 13 of the Code. The problem is further complicated by the fact that the automatic stay provisions together with its limiting provisions which were designed to protect the *870 parties affected by the stay, apply with some exception to both Chapters even though the two Chapters were designed to achieve vastly different purposes. Although, Chapter 11 was designed to effectuate a total reorganization of a large business and to that extent, is simply a modernized and updated version of the pre-Code Chapter X corporate reorganization proceeding, it also expressly authorizes "liquidation" plans. Thus, unlike a business reorganization under Chapter X of the Bankruptcy Act of 1898, the Bankruptcy Code now expressly permits a plan under Chapter 11 which contemplates a sale of all, or substantially all, of the property of the estate, thus a liquidating plan at the outset. § 1123(a)(5)(D), 11 U.S.C. § 1123(a)(5)(D); H.Rep. 95-595, 95th Cong. 1st Sess. at 406 (1977), U.S.Code Cong. & Admin.News 1978, p. 5963; S.Rep.95-989, 95th Cong. 2d Sess. at 118, U.S.Code Cong. & Admin.News 1978, p. 5787 (1978).
The plan proposed by these debtors, contemplates the sale of the subject real property and using the equity realized from the sale to fully satisfy the holders of unsecured claims after paying off in full the first and second mortgagees.
The fact that these Debtors have an interest in other property which is presently involved in a probate proceeding is without great significance, especially in light of the fact that the property is charged with a trust interest and may ultimately be assessed with an additional tax claim by the IRS. Thus, whether or not funds could be realized from the sale of the property tied-up in probate is without significance because it is doubtful that the proceeds would be sufficient to pay the unsecured creditors and certainly would not be sufficient to pay off the secured creditors.
In light of the foregoing, this Court is satisfied that under § 362(d)(2) these debtors did establish that they have an adequate equity cushion in the subject property which provides adequate protection to the secured creditor. In addition, these Debtors have shown that the property in question is necessary to effectuate a Chapter 11 liquidation plan inasmuch as other potential assets of these Debtors, not subject to the jurisdiction of this Court at present, could not be utilized to fund the proposed plan.
Having concluded that the Savings & Loan is not entitled to relief from stay at present, this leaves for consideration the question of how long this creditor can be held at bay and under what terms and conditions should the automatic stay be extended.
In light of the past history of this case, the Debtors' delay and apparent unwillingness to undertake any meaningful steps to liquidate this asset, the Court is satisfied that it is equitable to set a firm deadline for the liquidation of this asset. Accordingly, unless the property is sold within 90 days from December 22, 1980, the Savings and Loan should be permitted to complete its foreclosure action and the automatic stay shall be lifted upon ex parte application.
A separate final judgment will be entered in accordance with the foregoing.
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IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
COMMONWEALTH OF PENNSYLVANIA, : No. 411 MAL 2017
:
Respondent :
: Petition for Allowance of Appeal from
: the Order of the Superior Court
v. :
:
:
TAMARRA GEARY, :
:
Petitioner :
ORDER
PER CURIAM
AND NOW, this 31st day of October, 2017, the Petition for Allowance of Appeal
is DENIED.
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Gerald C. Mann AUSTIN 11. -r~xaS
X-Y
Hon. Fred Norris Opinion No. O-3132
County Auditor Re: Can a county of 20,635 population,
Polk County according to the 1940 Census be charged
Livingston, Texas with commissions or fees for the county
treasurer, and another related question7
Dear Sir:
Your letter of February 5, 1941, requesting an opinion
of this department, later modified by your recent letter of May
24, presents the following questions:
“1. Can a county of 20635 population, accord-
ing’to the 1940 Census, charge commissions or fees
for the County Treasurer?
“2. Should the treasurer in the above mention-
ed County deposit his fees into the officer’s Salary
Fund?
Xe have restated your first question in the caption
set forth above as we understand it.
Article 3943, Vernon’s Annotated Civil Statutes, in
part, provides:
“The commissions allowed to any county treasurer
shall not exceed Two Thousand Dollars ($2000,00) an-
nually; *** .I’
. .
Section 13, Article 3912e, Vernon’s Annotated Civil
Statutes, in part, provides:
“The Commissioners’ Court in counties hav-
ing a population of twenty thousand (20,000)
inhabitants or more, and less than one hundred
and ninety thousand (190,000) inhabitants ac-
cording to the last preceding Federal Census,
is hereby authorized and it shall be its duty
to fix the salaries of all the following named
officers, to-wit: sheriff, assessor and col-
lector of taxes, county judge, county attorney,
including criminal district attorneys and coun-
ty attorneys who perform the duties of district
Hon. Fred Norris, page 2
attorneys, district clerk, county clerk, treas-
urer? hide and animal inspector. Each of said
officers shall be paid in money an annual salary
in twelve (12) equal installments of not less
than the total sum earned as compensation by
him in his official capacfty for the ffscal
year 1935> and not more than the maximum amount
allowed such officer under laws exfsting on Aug-
ust 24, 1935; ***."
Section 7, Article 3912e, Vernon’s Annotated Cfvil
Statutes, reads, in part ) as follows:
‘*All monies drawn from said Officers’ Salary
Fund or funds shall be pafd out only on warrants
approved by the county auditor in counties having
a county auditor; otherwise all claims against
said fund shall first have been audfted and ap-
proved by the Commissioners’ Court of said county
and the monies shall be disbursed on such ap-
proved claims by warrants drawn by the county treas-
urer on said fund.‘”
Section 5, Article 3912e, of said statutes, in part,
provides:
“It shall be the duty of all officers to
charge and collect in the manner authorized by
law all fees and commissions which are permitted
by law to be assessed and collected for all of-
ficial service performed by them. As and when
such fees are collected they shall be deposited
in the Officers’ Salary Fund, or funds provided
fn this Act. ****‘I
Section 3, of Article 391.2e, of said statutes, pro-
vldes:
“In all cases where the Commissioners’
Court shall have de.termined that county officers
or precinct officers in such county shall be
compensated for their services by the payment
of an annual salary neither the State of Texas
nor any county shal f be charged with or pay to
any of the offfcers so compensated, any fee or
commission for the performance of any or all of
the dutfes of their offices but such officers
shall receive said salary in lieu of other fees,
commissions or compensatfon. which they would
Hon. Fred Norris, page 3
otherwise be authorized to retain; provided,
however, that the assessor and collector of
taxes shall continue to collect and retain for
the benefit of the Officers! Salary Fund or
funds hereinafter provided for all fees and
commissions which he is authorized under law
to collect; and it shall be his duty to account
for and to pay all such monies received by him
into the fund created and provided for under
the provisions of this Act; provided further,
th.t the provisions of this Section shall not
affect the payment of costs in civil cases by
the State but all such costs so paid shall be
accounted for by the officers collecting the
same, as they are required under the provisions
of this Act to account for fees, commissions
and costs collected from private parties."
The county treasurer, being specifically named in
Section 13, Article 3912e, supra, the method of fixing the
county treasurer's compensation formerly prescribed by Article
3941, Revised Civil Statutes, 1925, has been superseded by the
foregoing provisions of the Officers' Salary Law as they apply
to countfes of twenty thousand (20,000) inhabitants or more,
The law provides that a county treasurer in such counties shall
draw all warrants on the Officers" Salary Fund, which must be
approved by the county auditor.
Relative to your first two questions, the foregoing
statutes require the officers designated to deposit all fees
and commissions collected for all official services performed
by them in the Officers' Salary Fund. Since they are prohibited
from makfng any charge to the county9 such commissions as pre-
scribed in Article 3941, Revised Civil Statutes, are no longer
"permftted by law to be assessed and collected" as provided in
Sectfon 5, of ,Article 3912e, supra.
It is, therefore, the opinion of this department that
your questions in the order presented should be answered in the
following manner:
1. Question No. 1. is answered in the negatfve.
2. Commissions authorized by Article 3941, Revised
Cfvil Statutes, 1925, can no longer be charged to the county in
those counties with twenty thousand (20,000) inhabitants or more,
Hon. Fred Norris, page 4
therefore are not to be deposited in the Officers8 Salary
Fund.
Yours very truly
LTTORNEYGENERfi OF TEXAS
By /s/ Wm. J. R. King
Wti. J. R. King, Assistant
APPROVEDJUL 8, 1941
Is/ Grover Sellers
FIRST ~ASSISTtiT ATTORNEYGENERAL
This opinion considered and approved in limited conference-
WJRK:RS:wb
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409 N.W.2d 915 (1987)
Roxana Marlene PARKER, Appellant,
v.
Roy Michael THARP, Respondent,
Arthur Van Sickle, Defendant,
Honeywell, a Delaware corporation, licensed to do business in Minnesota, Respondent.
No. C7-87-553.
Court of Appeals of Minnesota.
August 11, 1987.
Colia F. Ceisel, St. Paul, for appellant.
Frederick M. Hass, Brooklyn Center, for Roy Michael Tharp.
Robert J. Mabel, Honeywell, Inc., Minneapolis, for Honeywell.
Heard, considered and decided by PARKER, P.J., and NIERENGARTEN and MULALLY,[*] JJ.
*916 OPINION
PARKER, Judge.
Appellant Roxana Marlene Parker was assaulted by a coworker at the workplace during working hours. In her action for assault, she named her employer, respondent Honeywell, Inc., as a defendant under the theory of vicarious liability. Finding that Parker's exclusive remedy against Honeywell was under the worker's compensation laws, the trial court granted summary judgment for Honeywell. We affirm.
FACTS
On April 9, 1985, two employees of Honeywell, Inc., Roxana Marlene Parker and Roy Michael Tharp, had a disagreement on Honeywell's premises during business hours. Their argument involved invitations to an office luncheon. Eventually, Tharp forcibly shoved Parker out of his office, allegedly injuring her. Parker subsequently brought suit for personal injury, naming Honeywell as a defendant along with Tharp and Tharp's supervisor.[1] The trial court granted summary judgment for Honeywell, ruling that Parker's exclusive remedy against it was under the worker's compensation laws.
ISSUE
Did the trial court err in ruling that Parker's exclusive remedy against Honeywell was under the worker's compensation laws?
DISCUSSION
I
Minn.Stat. § 176.021 (1986) requires employers to "pay compensation in every case of personal injury or death of an employee arising out of and in the course of employment * * *." "Personal injury" is defined as
injury arising out of and in the course of employment * * *. Where the employer regularly furnished transportation to employees to and from the place of employment such employees are subject to this chapter while being so transported, but shall not include an injury caused by the act of a third person or fellow employee intended to injure the employee because of personal reasons, and not directed against the employee as an employee, or because of the employment.[2]
Minn.Stat. § 176.011, subd. 16 (1986) (emphasis added).
Parker claims that Tharp's assault was intended to injure her because of personal reasons and was not directed against her as an employee or because of her employment. Therefore, she asserts that she was not entitled to worker's compensation and the "exclusive remedy" language of the statutes is irrelevant.[3]
Many previous decisions have interpreted the exclusion set forth in section 176.011, subd. 16. In a decision interpreting the statute's predecessor, the supreme court discussed the exclusion:
That the injury is intentionally inflicted does not ipso facto preclude compensation. Compensation cases arising from assault fall mostly into three groups. Noncompensable are cases where the assailant was motivated by personal animosity toward his victim, arising from circumstances wholly unconnected with the employment.
*917 In contrast and compensable are injuries resulting from assault where provocation or motivation arises solely out of the activity of the victim as an employe[e].
In a middle ground are cases * * * where the assault was directed against the victim, neither "as an employe[e]" nor for "reasons personal to him." Injuries so arising are ordinarily compensable.
A noncompensable assault must have been for "reasons personal" to the victim. Also, it must not have been "directed against him as an employee or because of his employment."
Hanson v. Robitshek-Schneider Co., 209 Minn. 596, 599-600, 297 N.W. 19, 21-22 (1941) (citations and emphasis omitted).
Subsequent cases have stated that the fundamental question is whether the claimant was injured, "not merely while he was at his employment, but because he was at his employment, in touch with associations and conditions inseparable from it." Dufloth v. City of Monticello, 308 Minn. 451, 241 N.W.2d 645, 646 (1976); Cunning v. City of Hopkins, 258 Minn. 306, 314-15, 103 N.W.2d 876, 882 (1960); Petro v. Martin Baking Co., 239 Minn. 307, 311, 58 N.W.2d 731, 734 (1953).
Pursuant to these standards, the supreme court has held that worker's compensation was available when a prank on the job resulted in injuries (Cunning), when an employee died of a heart attack after engaging in a fight over work-related matters (Petro), and when an employee was fatally assaulted while walking to his car after work (Hanson). The court has held that worker's compensation was not available when the victim goaded the assailants into "fistic combat" for reasons only marginally related to his employment, and "as a result [he] was pummelled by one of them." Goodland v. L.S. Donaldson Co., 227 Minn. 583, 587, 36 N.W.2d 4, 6 (1949).
Applying the Hanson "three group" method of analysis here leads to the conclusion that worker's compensation was available. While the assault may not have arisen "solely out of the activity of the victim as an employee," we cannot say it was "wholly unconnected with the employment." It occurred at the workplace, during working hours, and arose out of a discussion about office affairs.[4] Unlike the assault in Goodland, the assault here would not have occurred if Tharp and Parker did not work together. Thus, it seems that this case belongs in the "middle ground." According to Hanson, injuries in this middle ground are ordinarily compensable. Hanson, 209 Minn. at 600, 297 N.W. at 22.
Applying the "fundamental question" analysis adopted in later cases yields the same result. In order for compensation to be available under this standard, the injury must have occurred because Parker was "at her employment, in touch with associations and conditions inseparable from it." Parker was in fact at her employment when the assault occurred, and the assault arose out of a discussion about associations and conditions inseparable from her employment namely, planning an office lunch. Therefore, under either of the standards used in interpreting section 176.011, subd. 16, Parker could have received worker's compensation.
II
Minn.Stat. § 176.031 (1986) provides that "[t]he liability of an employer prescribed by [the worker's compensation statutes] is exclusive and in the place of any other liability to such employee * * * entitled to recover damages on account of such injury or death." The trial court concluded that this statute precluded Parker's action against Honeywell.
Minn.Stat. § 176.031 indicates the legislature's intent to make worker's compensation the exclusive remedy for most injuries arising out of and in the course of employment. *918 To that effect, Minn.Stat. § 176.001 (1986) stresses the fact that "[t]he workers' compensation system in Minnesota is based on a mutual renunciation of common law rights and defenses by employers and employees alike. Employees' rights to sue for damages over and above medical and health care benefits and wage loss benefits are to a certain degree limited by the provisions of this chapter * * *."
The supreme court has carved out a narrow exception to the exclusive nature of the worker's compensation laws. See, e.g., Boek v. Wong Hing, 180 Minn. 470, 231 N.W. 233 (1930) (holding that an employer who intentionally and maliciously assaulted an employee could not avoid common law liability on the ground that worker's compensation was available). If the employer displays "malicious or deliberate intent," an employee has the option of suing for damages at common law or proceeding under the worker's compensation statutes. Breimhorst v. Beckman, 227 Minn. 409, 426, 35 N.W.2d 719, 730 (1949) (holding that "such intent may not be inferred from mere negligence, though it be gross"); see also Hildebrandt v. Whirlpool Corp., 364 N.W.2d 394 (Minn.1985) (worker's compensation was exclusive remedy when employer allegedly concealed a known workplace hazard, because there was no conscious and deliberate intent to inflict injury).
This exception applies only when the intentional tort was committed directly by the employer. Here the intentional tort was committed by a co-employee. There was no evidence proffered to show that Tharp occupied a position of policy-making authority at Honeywell, nor has it been shown that his assault was committed to further the ends of his employer. Therefore, we cannot find Honeywell directly liable for Parker's injuries.
Parker asserts that Honeywell could be liable under the doctrine of vicarious, rather than direct, liability. For Hoenywell to be liable, however, there must be a showing of malicious or deliberate intent. A corporate entity is by its nature incapable of harboring such intent, and we find no authority for imputing Tharp's malicious intent to Honeywell. Therefore, the doctrine of vicarious liability does not apply.
The deliberate intent exception seems to have been adopted so that employers who commit intentional torts against their employees cannot use the exclusive remedy provision of the worker's compensation laws to avoid personal liability for their wrongful acts. Such policy considerations do not apply in cases such as this in which the employer does not commit the intentional tort directly.[5]
Finally, Parker argues that if she is not allowed to pursue her action against Honeywell, there would be a "gap in coverage." She apparently claims there would be no coverage when the assailant's actions are not sufficiently connected to his employer to impose vicarious liability and the victim's actions are not sufficiently connected to qualify for worker's compensation. Parker is correct in asserting that the victim would have no remedy against the employer in such a situation; however, if the actions of neither the assailant nor the victim are related to their employment, there is no reason why the employer should be liable. The victim in such a case would still be able to pursue an action directly against the assailant, just as Parker remains free to pursue her action against Tharp.
DECISION
The worker's compensation statutes provide Parker's exclusive remedy against Honeywell.
Affirmed.
NOTES
[*] Acting as judge of the Court of Appeals by appointment pursuant to Minn. Const. art. 6, § 2.
[1] Tharp's supervisor was apparently dismissed as a party defendant, and Tharp is not a party to this appeal. Parker's suit against Honeywell also charged the corporation with sexual harassment. The trial court granted summary judgment for Honeywell on that issue, and its ruling has not been appealed.
[2] Although the wording of the statute makes it appear that the underscored language may apply only when the injuries occur during employer-provided transportation, no previous decisions have so limited the statute.
[3] It should be noted that Parker did in fact receive worker's compensation for her medical expenses; therefore, it seems that worker's compensation was available to her. Parker contends that she never knowingly accepted the worker's compensation benefits and therefore has not waived her right to a common law action. Although we find no authority for this proposition, our holding makes it unnecessary to determine whether there was a waiver.
[4] Parker argues that the assault was unrelated to her employment because it arose out of an argument about a social or extracurricular activity. This theory might be compelling if the assault had actually occurred at the luncheon, but it is not convincing because the assault occurred at the office during working hours.
[5] In addition, the "fellow servant doctrine" would seem to bar Parker's suit against Honeywell under the theory of vicarious liability. The fellow servant doctrine provides that an employer cannot be held liable (outside the worker's compensation system) for injuries suffered by its employee as a result of the negligence, carelessness or misconduct of a fellow employee who was engaged in the same common or general employment as the injured employee. Lunderberg v. Bierman, 241 Minn. 349, 356, 63 N.W.2d 355, 360 (1954).
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Case: 19-11801 Date Filed: 07/14/2020 Page: 1 of 2
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 19-11801
________________________
D.C. Docket No. 1:16-cv-00097-MW-GRJ
SABAL TRAIL TRANSMISSION, LLC,
Plaintiff- Appellant,
versus
.981 ACRES OF LAND IN LEVY COUNTY, FLORIDA,
UNKNOWN OWNERS, if any,
ROBERT B. ANGLE, JR.,
Defendants- Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Florida
________________________
(July 14, 2020)
Before WILLIAM PRYOR, Chief Judge, ROSENBAUM, Circuit Judge, and
MOORE, * District Judge.
PER CURIAM:
*
Honorable K. Michael Moore, Chief United States District Judge for the Southern
District of Florida, sitting by designation.
Case: 19-11801 Date Filed: 07/14/2020 Page: 2 of 2
This appeal is DISMISSED, sua sponte, for lack of jurisdiction. Sabal Trail
Transmission, LLC, challenges the decision of the district court that Robert B.
Angle, Jr., as executor of the estate of Eileen Kay Wynne, is entitled to attorney’s
fees and costs the estate incurred in defending this condemnation action. Because
the district court has not set the amount of attorney’s fees and costs to be awarded,
no final decision yet exists on this issue, and we lack jurisdiction over this appeal.
See 28 U.S.C. § 1291; Sabal Trail Transmission, LLC v. 3.921 Acres of Land in
Lake Cty., 947 F.3d 1362, 1370 (11th Cir. 2020).
2
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564 A.2d 739 (1989)
Keykavous HEMMATI, Appellant,
v.
UNITED STATES, Appellee.
No. 87-909.
District of Columbia Court of Appeals.
Argued December 14, 1988.
Decided September 26, 1989.
*740 Paul E. Nystrom, Jr., appointed by the court, for appellant.
Edith S. Marshall, Asst. U.S. Atty., with whom Jay B. Stephens, U.S. Atty., and Michael W. Farrell, Asst. U.S. Atty. at the time the brief was filed, were on the brief, for appellee.
Before NEWMAN, TERRY and SCHWELB, Associate Judges.
TERRY, Associate Judge:
Appellant Hemmati was convicted of unlawful entry, in violation of D.C.Code § 22-3102 (1989), for having refused to leave the office of a United States Senator at the direction of the Senator's administrative assistant. On appeal he offers several challenges to his arrest and conviction; we reject them all and affirm the judgment of the trial court.
I
Senator Robert C. Byrd of West Virginia has a suite of offices in the Hart Senate Office Building. On the morning of April 1, 1987, appellant Hemmati entered the front office reception area and presented himself to one of Senator Byrd's staff assistants, Carol Kiser, saying that he would like to see the Senator. He did not disclose the purpose of his visit, however, stating only that he wanted to see Senator Byrd that day in person and would not leave until he did so. Mr. Hemmati then sat down on a couch in the reception room. Kiser explained to him that the Senator was on the Senate floor and was therefore unavailable,[1] but Hemmati insisted that he would not leave the office and would wait. Although she tried to elicit the reason for his visit, Hemmati would not engage in any dialogue. He found it "difficult ... to communicate his needs" and said only that he wanted the Senator to come back to the office, regardless of his other duties on the Senate floor. Kiser's impression was that Hemmati "had one goal in mind, and he would not accept anything less. He demanded to see Senator Byrd." Because he appeared to be "intense and determined," Kiser testified, she began to feel somewhat frightened.
The evidence also showed that in the past Mr. Hemmati had disrupted Senator Byrd's offices by pounding on desks and threatening hunger strikes. On one occasion the Senator's chief case worker had spent considerable time with Hemmati, even though he was not a citizen of West Virginia and thus was not a constituent of the Senator.[2] At the end of that interview, which lasted for more than an hour, the case worker explained to Mr. Hemmati that Senator Byrd could not help him with his perceived problems.
Faced with a person who had been disruptive in the past, knowing that the reception area was "where the center of everything is, where people come and go," and having to deal with constituents arriving and telephones ringing, Kiser sought guidance from her supervisor, Joan Drummond. As the Senator's administrative assistant, Mrs. Drummond was in charge of the day-to-day operations of the office. She was authorized in the Senator's absence to act in his behalf and to direct the activities of other staff members. After hearing Kiser's account of Hemmati's behavior, Drummond told her to call the Capitol Police.
Detective James Powell, answering the call, spoke with Mr. Hemmati for about twenty minutes in an effort to persuade him to leave, but Hemmati still refused. Kiser and Powell then went back to Mrs. Drummond for further instructions. Powell told Mrs. Drummond that, under Capitol *741 Police guidelines, the person lawfully in charge of the office had to approve any request for someone to leave; the police could not take any action until this was done. Accordingly, under the authority vested in her by Senator Byrd, Mrs. Drummond directed Carol Kiser to ask Hemmati to leave the office, and authorized Detective Powell to arrest Hemmati if he refused to comply.
Powell and Kiser then returned to the reception area, where Kiser asked Hemmati at least three times to leave. On each of these three occasions Detective Powell explained to Mr. Hemmati that he would be arrested if he refused to go. Hemmati, however, persisted in refusing to leave until he could meet with the Senator in person. Detective Powell thereupon placed him under arrest.
Hemmati testified in his own defense. His testimony revealed that he had formerly worked for the University of California at Riverside, and that he thought he had been mistreated there and unjustly "forced to leave." He said that he had sent numerous letters requesting assistance to officials of the United States government, including President Reagan and various members of Congress, and that he had appealed to the Department of Justice and the Equal Employment Opportunity Commission. He felt that he had a right to seek help from Senator Byrd because, as Majority Leader, he was "a Senator of the country," and that like every member of Congress, the Senator was "fully responsible... for any type of corruption of any state and federal agency...." For this reason, he testified, his presence at the office of Senator Byrd "was completely legal."
II
Under D.C.Code § 22-3102 (1989), a person may be convicted of unlawful entry on public or private property if he or she remains on that property, without lawful authority, after having been told to leave by the person lawfully in charge. When public property is involved, this court has also required the government to prove an "additional specific factor establishing the [defendant's] lack of a legal right to remain." O'Brien v. United States, 444 A.2d 946, 948 (D.C.1982) (citations omitted). The purpose of this requirement is to protect all citizens against "capricious and arbitrary enforcement [of the unlawful entry statute] by public officials," so that "an individual's otherwise lawful presence [on public property] is not conditioned upon the mere whim of a public official...." Leiss v. United States, 364 A.2d 803, 806 (D.C. 1976) (citations omitted), cert. denied, 430 U.S. 970, 97 S.Ct. 1654, 52 L.Ed.2d 362 (1977); see Carson v. United States, 419 A.2d 996, 998 (D.C.1980). It is, moreover, a "well-established rule that the government may regulate speech and communicative conduct on public property only in a narrow and reasonably necessary manner which serves significant government interests," and that "[a]ny regulation impinging upon such activity must be content-neutral and non-discriminatory." Smith v. United States, 445 A.2d 961, 964-965 (D.C.1982) (en banc) (citations omitted). Invoking these principles, Hemmati argues that his arrest and subsequent conviction violated his rights under the First Amendment to the Constitution.[3] We hold, to the contrary, that neither Hemmati nor anyone else has an unqualified constitutional right to meet with a Senator (or any other high public official) in person, at a time and place of his own choosing.[4]
*742 "Nothing in the First Amendment or in [the Supreme] Court's case law interpreting it suggests that the rights to speak, associate, and petition require government policymakers to listen or respond to individuals' communications on public issues." Minnesota Board for Community Colleges v. Knight, 465 U.S. 271, 285, 104 S.Ct. 1058, 1066, 79 L.Ed.2d 299 (1984). "There must be a limit to individual argument in such matters if government is to go on." Bi-Metallic Investment Co. v. State Board of Equalization, 239 U.S. 441, 445, 36 S.Ct. 141, 142, 60 L.Ed. 372 (1915). We think the same can reasonably be said a fortiori about communications on private issues, such as Mr. Hemmati sought to engage in with Senator Byrd. Further, Hemmati had no right under the circumstances to remain in the Senator's office after being told by Carol Kiser, at the direction of the person lawfully in charge the Senator's administrative assistantto leave. It is settled law that "the First Amendment does not guarantee access to property simply because it is owned or controlled by the government." United States Postal Service v. Greenburgh Civic Associations, 453 U.S. 114, 129, 101 S.Ct. 2676, 2685, 69 L.Ed.2d 517 (1981) (citations omitted). "The State, no less than a private owner of property, has power to preserve the property under its control for the use to which it is lawfully dedicated." Adderley v. Florida, 385 U.S. 39, 47, 87 S.Ct. 242, 247, 17 L.Ed.2d 149 (1966); accord, e.g., Perry Education Ass'n v. Perry Local Educators' Ass'n, 460 U.S. 37, 46, 103 S.Ct. 948, 955, 74 L.Ed.2d 794 (1983); Greenburgh, supra, 453 U.S. at 129, 101 S.Ct. at 2685.[5] We think it is clear that Hemmati had no substantive right under the First Amendment to see Senator Byrd personally or to remain in his office after being asked to leave.[6]
Even if Hemmati's First Amendment rights were implicated in this case, we would have to conclude that his rights were not violated because the evidence clearly established the "additional specific factor" of which the cases speak. Additional specific factors have taken a variety of forms in a variety of contexts. See, e.g., Shiel v. United States, 515 A.2d 405, 407-408 (D.C.1986) (early closing regulation implemented in Capitol Rotunda to facilitate security for Presidential address), cert. denied, ___ U.S. ___, 108 S.Ct. 1477, 99 L.Ed.2d 706 (1988); O'Brien v. United States, supra, 444 A.2d at 948 (regulation prohibiting specified activities within fifteen feet of any escalator on transit authority property); Carson v. United States, supra, 419 A.2d at 998-999 (chain across restricted portion of White House lawn); Leiss v. United States, supra, 364 A.2d at 806-807 (posted visiting hours); cf. Whittlesey v. United States, 221 A.2d 86, 89 (D.C.1966) (posted sign stating White House visiting hours informed defendants of unlawful character of their actions).[7]
*743 The additional specific factor in this case, if it presented a genuine First Amendment issue (which it does not), would be the established policy in Senator Byrd's officeand apparently throughout the Senatewhich Mrs. Drummond identified as the "rule of congressional courtesy." Under this policy, appointments would generally be made for Senator Byrd's West Virginia constituents, but citizens from other states were referred as a matter of course to their own Senators. According to Mrs. Drummond's uncontradicted testimony:
Now, people who come in the office who are not West Virginians, who are not constituents, operate under an informal but very closely followed policy called the rule of congressional courtesy, where we expect to take care of the Senator's constituents from West Virginia and other Senators from other states are expected to take care of the problems of their constituents.
So, in almost every situation, if a non-[West Virginian] comes in the office and says he wants to see Senator Byrd, it's pointed out to him that he's not a constituent, that he should go see the Senator from his state. And if that person then refuses and wants to stay, then that then ... the kind of situation that we had [with Mr. Hemmati] would occur.
Thus, even if we thought that an additional specific factor had to be proved in this case, that factor existed in Senator Byrd's policy of routinely referring other Senators' constituents to them, and almost always refusing to see such persons himself. This is a content-neutral policy, unrelated to the exercise of First Amendment rights, and narrowly tailored to further a significant governmental interest: that Senator Byrd's office be able to serve his constituents fully and effectively. This policy, communicated to Mr. Hemmati, put him on notice that he had no right to insist on seeing Senator Byrd or to remain in the office until the Senator spoke with him.[8]
This court, since the earliest challenges to the unlawful entry statute, has consistently held that the statute may be properly and constitutionally invoked to protect "the orderly processes of the Congress, or ... the safety of individual legislators, staff members, visitors, or tourists, or their right to be free from intimidation, undue pressure, noise or inconvenience." United States v. Nicholson, 97 Daily Wash.L. Rptr. 1213, 1218-1219 (D.C.Ct.Gen.Sess. July 17, 1969) (emphasis added), aff'd and quoted with approval, 263 A.2d 56, 57 *744 (D.C.1970).[9] Senators' offices, unlike streets and parks, are neither operated as nor intended to be conduits for unrestricted expressive activity. Unlike the Capitol Rotunda or grounds, but much like the White House, Senate offices "requir[e] order and efficiency for the day-to-day performance of vital and often sensitive administrative activities...." Leiss v. United States, supra, 364 A.2d at 808; see note 5, supra. To preserve the character and usefulness of this species of public property, we deem it essential to enable a United States Senator, through delegation of authority to his or her staff, to invoke the unlawful entry statute when circumstances warrant.
The evidence showed that Mr. Hemmati had disrupted Senator Byrd's offices on "several" prior occasions by "pound[ing] on people's desks and threatening hunger strikes...." His obstreperous conduct violated the right of Senator Byrd's "staff members ... to be free from intimidation, undue pressure, noise, or inconvenience." United States v. Nicholson, supra, 263 A.2d at 57. We also note that Hemmati was not arrested for the content of his speech, but because of his conduct. Hemmati refused to communicate his message to the staff on the day he was arrested, demanding only to see Senator Byrd personally.[10] As we have said, he had no substantive right to have this demand met. It is equally clear that Hemmati had adequate notice that his conduct was prohibited and that he would be subject to criminal sanctions. We find no First Amendment violation.
III
Hemmati's next contention is that the jury was improperly instructed on the offense of unlawful entry and that the jury instructions violated his right to equal protection of the laws. The trial court gave the standard instruction on unlawful entry,[11] to which defense counsel did not object. Included in the instruction was the following language:
Evidence has been introduced that the defendant believed he had a right to remain present in the area in question. One who remains present in a restricted area with a bona fide belief of his legal authority to remain there is not guilty of unlawful entry. Thus, you cannot find the defendant guilty of unlawful entry unless you are convinced beyond a reasonable doubt that he did not have a good faith in his legal authority to remain in the area after being directed to leave.[12]
When the jury sent a note asking the court to "review" this instruction for them, the court simply reread the language we have quoted.
Later, however, the jurors reported that they were deadlocked and asked to be dismissed, or in the alternative for further instructions. The court then read the standard instruction in toto again, but clarified for the jurors, one of whom asked for an explanation in "laymen's terms," the meaning of the "bona fide belief" portion of the instruction. The court explained:
Now, evidence was introduced in this case that the defendant believed he had a *745 right to remain present in the area in question.
One who remains present in a restricted area with a bona fide belief of his legal authority to remain there is not guilty of unlawful entry.
Bona fide belief, otherwise known as a good faith belief, is defined as a belief for which there is a reasonable basis. Thus you cannot find the defendant guilty of unlawful entry unless you are convinced beyond a reasonable doubt that he did not have a good faith belief, that is, a belief with a reasonable basis, in his legal authority to remain in the area after being directed to leave.
Now, with that instruction, ladies and gentlemen, I hope that clarifies what may have been a somewhat murky area for you. And I hope with that instruction you can reach a verdict. [Emphasis added.]
Defense counsel did not object to this instruction, proposing only that a bona fide belief be defined as one for which there is a "reasonable and sincere basis." Hemmati now contends, however, that the trial judge's definition of a bona fide belief "as a belief for which there is a reasonable basis" was error.
Hemmati's position is in direct conflict with this court's precedents. This court has repeatedly held, as the trial court in this case instructed the jury, that "[a] bona fide belief must have some reasonable basis before an accused can claim that such a belief exonerates his behavior." Jackson v. United States, 357 A.2d 409, 411 (D.C. 1976) (citation omitted), quoted with approval in Gaetano v. United States, 406 A.2d 1291, 1293 (D.C.1979). We have also emphasized that "[a] bona fide belief must have some justification some reasonable basis." Smith v. United States, 281 A.2d 438, 439 (D.C.1971), quoted with approval in Gaetano, supra, 406 A.2d at 1293. That is precisely how the trial court defined bona fide belief for the jurors. It is no defense to a charge of unlawful entry, as Hemmati erroneously maintains, that the crime was committed out of a sincere personal or political belief, however genuine, in the rightness of one's actions. United States v. Dougherty, 154 U.S.App.D.C. 76, 100-101 & n. 54, 473 F.2d 1113, 1137-1138 & n. 54 (1972); see Arshack v. United States, 321 A.2d 845, 852-853 (D.C.1974) (acts of conscience, civil disobedience, and proclaimed allegiance to higher law are not acceptable defenses). In light of these and similar precedents, the trial court's instruction on good faith belief was entirely proper.[13]
IV
Before the trial began, defense counsel sought to subpoena Senator Byrd, asserting that the Senator "might be in a position to provide information with respect to to what extent Mr. Hemmati has a right to access to his office." When questioned by the court, however, counsel admitted that Senator Byrd had "no direct involvement" in the case or in the events leading to Mr. Hemmati's arrest. The court ruled that the relevance of Senator Byrd's testimony had not been sufficiently shown and refused to enforce the subpoena. This ruling was correct for at least two reasons.
First, there was no showing or proffer by the defense, either before or during *746 trial, that the Senator had any direct knowledge of the facts of the case or that his testimony was otherwise relevant or essential to a fair trial. See Whittlesey v. United States, supra, 221 A.2d at 90; cf. United States v. Valenzuela-Bernal, 458 U.S. 858, 867, 102 S.Ct. 3440, 3446, 73 L.Ed.2d 1193 (1982) (defendant claiming denial of right to compulsory process "must at least make some plausible showing of how [the witnesses'] testimony would have been both material and favorable to his defense" (footnote omitted)). Second, there is nothing in the record to suggest that Senator Byrd could have amplified or contradicted in any respect the testimony of his employees, Carol Kiser and Joan Drummond. Consequently, his testimony would have been needlessly repetitious, and a waste of a high public official's time in contravention of public policy. See Davis v. United States, 390 A.2d 976, 980-981 (D.C.1978); Overholser v. De Marcos, 80 U.S.App.D.C. 91, 94, 149 F.2d 23, 26, cert. denied, 325 U.S. 889, 65 S.Ct. 1579, 89 L.Ed. 2002 (1945).[14]
Affirmed.
NOTES
[1] At that time Senator Byrd was Majority Leader of the Senate. His duties in that office required him to spend a great deal of time on the Senate floor when the Senate was in session.
[2] Hemmati was a native of Iran and had lived in California for several years.
[3] Among the rights secured by the First Amendment is "the right of the people ... to petition the Government for a redress of grievances." This appears to be the principal right which appellant claims to have been infringed in this case. His brief also makes passing mention of his right to freedom of speech, however, so we shall assume that his arguments on appeal embrace both of these First Amendment rights. See also note 6, infra.
[4] Because Hemmati never raised his First Amendment claims in the trial court, through a motion to dismiss or otherwise, he is not entitled to reversal of his conviction on First Amendment grounds unless he can demonstrate plain error. See Eissa v. United States, 485 A.2d 610, 611 (D.C.1984), cert. denied, 474 U.S. 1013, 106 S.Ct. 544, 88 L.Ed.2d 474 (1985). We find no plain error in this case; indeed, as we shall discuss, we find no error at all.
[5] See also Jeanette Rankin Brigade v. Chief of Capitol Police, 342 F.Supp., 575, 584 (D.D.C.) (noting that the Capitol Grounds are "traditionally... open to the public," but "excluding such places as the Senate and House floors, committee rooms, etc." (emphasis added)), aff'd, 409 U.S. 972, 93 S.Ct. 311, 34 L.Ed.2d 236 (1972); United States v. Murphy, 114 Daily Wash.L.Rptr. 2149, 2156 (D.C.Super.Ct. August 8, 1986) (citing Jeanette Rankin Brigade and distinguishing between the public character of the Capitol Rotunda and the non-public character of an "office of a member of Congress").
[6] Appellant contends that his First Amendment right of assembly was also infringed. This contention is meritless because the right of assembly protects group activity, not the conduct of an individual. See DeJonge v. Oregon, 299 U.S. 353, 364, 57 S.Ct. 255, 260, 81 L.Ed. 278 (1937) (right to assemble is right of citizens to meet peaceably for a lawful purpose); Thorne v. Jones, 765 F.2d 1270, 1273-1274 (5th Cir.1985) (right of assembly "connotes a gathering, not a visitation"), cert. denied, 475 U.S. 1016, 106 S.Ct. 1198, 1199, 89 L.Ed.2d 313 (1986).
[7] In cases involving the White House, this court has not always required proof of an additional specific factor when there was evidence of an order to quit by someone lawfully in charge. In Smith v. United States, supra, a Secret Service policy forbidding any type of demonstration on the White House grounds was cited by this court, "not because ... it has any proscriptive weight, but simply to show that enforcement of the unlawful entry statute by the White House security people is reasonable and not content oriented." 445 A.2d at 966 (emphasis added). The court went on to say that "it would have been easier for any of us to decide this case" if there had been some regulation or public notice proscribing the defendants' specific conduct. Id. Because of the "unique nature" of the White House and its grounds, however, the court ruled that a blanket prohibition of any form of demonstration within the grounds was permissiblein other words, that an additional specific factor need not always be proved in White House cases noting, nevertheless, that the appellants' First Amendment argument "might well be persuasive if we were dealing with almost any other form of public property." Id. at 965.
The government urges us to hold likewise here, but we decline to do so. Smith is one of a series of cases, dating back more than twenty years to Whittlesey, supra, in which we have repeatedly declared that the White House is unique. Although there is much sound law to be found in these opinions, it is clear from all of them that the exercise of First Amendment rights within the White House complex may be regulated in a "more stringent [manner] ... than would be tolerated on most other government properties." Smith v. United States, supra, 445 A.2d at 965; accord, Leiss v. United States, supra, 364 A.2d at 808. We will continue to rely on these cases in other respects, both in this opinion and elsewhere, but we cannot ignore the requirement of an additional specific factor in non-White House cases. See M.A.P. v. Ryan, 285 A.2d 310, 312 (D.C.1971).
[8] Detective Powell's testimony also showed that the purpose of the additional specific factor to guard against arbitrary and capricious exercises of discretion by public officials, especially police officers was otherwise met in this case, at least with respect to the Capitol Police. Powell made clear that he exercised little or no discretion in effecting Hemmati's arrest, following Capitol Police policy to make an arrest only on the instruction of the person in charge of a Senator's office. Given the limited discretion available to Detective Powell, this case is easily distinguishable from those on which Hemmati relies, such as Shuttlesworth v. City of Birmingham, 382 U.S. 87, 86 S.Ct. 211, 15 L.Ed.2d 176 (1965), and Papachristou v. City of Jacksonville, 405 U.S. 156, 92 S.Ct. 839, 31 L.Ed.2d 110 (1972), in which statutes were so broad and vague as to give police officers virtually unlimited discretion.
[9] The opinion of the trial court in Nicholson is printed as an appendix to Dellums v. Powell, 184 U.S.App.D.C. 275, 305, 566 F.2d 167, 197 (1977), cert. denied, 438 U.S. 916, 98 S.Ct. 3146, 57 L.Ed.2d 1161 (1978).
[10] The Supreme Court has made clear that "[i]t is the obligation of the person desiring to engage in assertedly expressive conduct to demonstrate that the First Amendment even applies. To hold otherwise would be to create a rule that all conduct is presumptively expressive." Clark v. Community for Creative Non-Violence, 468 U.S. 288, 293 n. 5, 104 S.Ct. 3065, 3069 n. 5, 82 L.Ed.2d 221 (1984). Hemmati never communicated any message other than (1) that he wanted to see Senator Byrd, and (2) that he would go on a hunger strike if this demand went unmet. He was not arrested because of these messages, but because of his refusal to leave an office where he had no right to be.
[11] Criminal Jury Instructions for the District of Columbia, No. 4.44(B) (3d ed. 1978).
[12] This language appears in brackets as the last paragraph of the standard instruction. The comment following the instruction states that "the bracketed language ... [should] be given where evidence is introduced that the defendant entered or remained on premises with a bona fide belief of his right to be there...."
[13] Hemmati also contends that because the court expanded upon the standard jury instruction in his case, he was somehow denied his right to equal protection of the laws. To prevail on this claim, however, Hemmati must demonstrate at a minimum that he has been treated differently from those charged with the same crime and that the difference in treatment lacks a rational justification. See, e.g., Washington v. United States, 130 U.S.App.D.C. 374, 382, 401 F.2d 915, 922 (1968). There is nothing in the record of this case to suggest that Hemmati was treated differently from similarly charged defendants. On the contrary, because the instruction in this case was in accordance with well-settled law, it is clear that Hemmati was treated in the same manner as other defendants in other cases. Furthermore, the variation in the instruction clearly had a rational purpose, viz., to alleviate the jurors' confusion and to ensure that their verdict would be based on a proper understanding of the law.
[14] We also reject, as totally without merit, Hemmati's challenge to the sufficiency of the evidence. Viewed in the light most favorable to the government, e.g., Byrd v. United States, 388 A.2d 1225, 1229 (D.C.1978), the evidence was plainly sufficient to prove that Mr. Hemmati was guilty of unlawful entry.
Hemmati's principal argument is that although the evidence may have showed that his presence was against the will of Carol Kiser, it did not show that it was against the will of Joan Drummond, as the information alleged, nor did it prove that Kiser had the authority to ask him to leave. This court has held, however, that more than one person may be lawfully in charge of designated premises. Whittlesey v. United States, supra, 221 A.2d at 91. We have also recognized that the person in charge may act through an agent in ordering someone to leave. Grogan v. United States, 435 A.2d 1069, 1071 (D.C.1981). The evidence in this case was sufficient to permit a finding that Joan Drummond was in charge of the office and that she exercised her authority through her agent, Carol Kiser.
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
Seavon Pierce, )
)
Petitioner, )
) Case: 1:15-cv—OOO8O
V ) Assigned To : Unassigned
) Assign. Date : 1/15/2015
) Description: Habeas Corpus/2241
President Barack Obama er al., )
)
Respondents. )
MEMORANDUM OPINION
Petitioner, proceeding pro se, is a California state prisoner incarcerated in Corcoran,
California. He has submitted a document captioned “Habeas Relief" and cites 28 U.S.C. § 2241-
2255. The Court will grant the application to proceed in forma pauperis and will dismiss the
case for lack of j urisdiction.
The purported petition fails sorely to comply with the pleading requirements set forth at
28 U.S.C. § 2242 and Rule 2(c) of the Rules Governing Section 2254 Cases. To the extent that
petitioner is challenging his conviction, federal court review of state convictions is available
under 28 U.S.C. § 2254 after the exhaustion of state remedies. See 28 U.S.C. §2254(b)(l).
Thereafter, "an application for a writ of habeas corpus [] made by a person in custody under the
judgment and sentence of a State court . . . may be filed in the district court for the district
wherein such person is in custody or in the district court for the district within which the State
court was held which convicted and sentenced [petitioner] and each of such district courts shall
have concurrent jurisdiction to entertain the application." 28 U.S.C. § 2241(d). To the extent
that petitioner is seeking habeas relief under § 2241, he must proceed in the district court capable
of exercising personal jurisdiction over his warden. See Stokes v. US. Parole Com ’n, 374 F.3d
1235, 1239 (DC. Cir. 2004) (“[A] district court may not entertain a habeas petition involving
present physical custody unless the respondent custodian is within its territorial jurisdiction”);
Rooney v. Sec ’y ofArmy, 405 F.3d 1029, 1032 (DC. Cir. 2005) (habeas “jurisdiction is proper
only in the district in which the immediate . . . custodian is located”) (internal citations and
quotation marks omitted).
Because petitioner has no recourse in this Court under any of the applicable habeas
provisions, this action will be dismissed. A separate Order accompanies this Memorandum
Opinion.
W5
DATE: January [2 ,2015 United States District dge
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PS4-087 NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 15-2254
___________
ANTHONY E. WILLIAMS,
Appellant
v.
COMMONWEALTH OF PENNSYLVANIA DEPARTMENT OF CORRECTIONS;
STATE CORRECTIONAL INSTITUTION MERCER SCI; STATE CORRECTIONAL
INSTITUTION CAMP HILL; STATE CORRECTIONAL INSTITUTE
GRATERFORD; LEHIGH COUNTY, C/O LEHIGH COUNTY; LEHIGH COUNTY
CLERK OF JUDICIAL RECORDS, C/O LEHIGH COUNTY SOLICITOR; BRIAN
THOMPSON, INDIVIDUAL AND IN HIS OFFICIAL CAPACITY AS
SUPERINTENDENT; BRENDA GOODALL, INDIVIDUAL AND IN HER OFFICIAL
CAPACITY AS RECORD SUPERVISOR; PAUL G. THERIAULT, INDIVIDUAL
AND IN HIS OFFICIAL CAPACITY ASCCPM; MARTIN P. AUBEL, INDIVIDUAL
AND IN HIS OFFICIAL CAPACITY AS DEPUTY SUPERVISOR; AMANDA
CAUVEL, INDIVIDUAL AND IN HER OFFICIAL CAPACITY RECORDS
SPECIALIST; JEFFREY P. HOOVLER, INDIVIDUAL AND IN HIS OFFICIAL
CAPACITY AS FACILITY GRIEVANCE COORDINATOR; MARY ANN
DURBOROW, INDIVIDUAL AND IN HER OFFICIAL CAPACITY AS RECORD
SPECIALIST II; LINDA GRAVES, INDIVIDUAL AND IN HER OFFICIAL
CAPACITY AS UNIT MANAGER; MICHAEL APPELGARTH, INDIVIDUAL AND
IN HIS OFFICIAL CAPACITY AS COUNSELOR; TIMOTHY HENRY, INDIVIDUAL
AND IN HIS OFFICIAL CAPACITY AS DCC DIRECTOR; TERRI L. RICHARDSON,
INDIVIDUAL AND IN HER OFFICIAL CAPACITY; NORA M. WILLIAMS,
INDIVIDUAL AND IN HER OFFICIAL CAPACITY; MONICA B. KNOWLDEN,
INDIVIDUAL AND IN HER OFFICIAL CAPACITY; MELISSA L. MYERS,
INDIVIDUAL AND IN HER OFFICIAL CAPACITY; JAMES T. ANTHONY,
INDIVIDUAL AND IN HIS OFFICIAL CAPACITY AS JUDGE; TONI A. REMER,
INDIVIDUAL AND IN HER OFFICIAL CAPACITY AS CHIEF DEPUTY OF
LEHIGH COUNTY; VIRGINIA SCHULER, INDIVIDUAL AND IN HER OFFICIAL
CAPACITY AS ASST. CHIEF DEPUTY OF LEHIGH COUNTY
____________________________________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(E.D. Pa. Civil Action No. 5-14-cv-03765)
District Judge: Honorable Edward G. Smith
____________________________________
Submitted Pursuant to Third Circuit LAR 34.1(a)
March 3, 2016
Before: CHAGARES, KRAUSE and GREENBERG, Circuit Judges
(Opinion filed: March 10, 2016)
___________
OPINION*
___________
PER CURIAM
Anthony Williams, proceeding pro se, appeals an order of the United States
District Court for the Eastern District of Pennsylvania dismissing his civil rights action.
For the reasons that follow, we will affirm.
Williams, a former state prisoner, filed an action in District Court pursuant to 42
U.S.C. § 1983 against the Pennsylvania Department of Corrections, several state
correctional institutions, Lehigh County, and numerous individuals in connection with the
calculation of his date of release from prison. The District Court reviewed the complaint
pursuant to 28 U.S.C. § 1915(e)(2)(B). On August 4, 2014, the District Court dismissed
with prejudice Williams’ claims against the Commonwealth entities, reasoning that these
defendants are not subject to suit under § 1983 and are entitled to Eleventh Amendment
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
2
immunity. The District Court dismissed without prejudice Williams’ claims against the
remaining defendants because he had not alleged how his sentence was improperly
calculated, the rights that were violated, and how each defendant was personally involved
in violating his rights. Williams was afforded 30 days to file an amended complaint.
On November 24, 2014, after the 30-day period had expired, Williams filed an
amended complaint claiming violations of his Eighth and Fourteenth Amendment rights
and false imprisonment. Williams alleged that his maximum sentence had expired on or
before March 6, 2011, but that he was not released from prison until May 25, 2012, after
he successfully sought relief in state court. On December 29, 2014, Williams moved for
reconsideration of the August 4, 2014 order of dismissal. Williams stated that his
original complaint was missing the statement of facts section and that he included this
section in his amended complaint. Williams also stated that the Clerk’s Office had sent
the August 4, 2014 decision to the wrong address.
On January 13, 2015, the District Court denied the motion for reconsideration on
the ground that Williams had not articulated a cognizable basis to reconsider its dismissal
order. The District Court noted that the Clerk’s Office had recorded his address
incorrectly but stated that it would review his amended complaint as if it had been timely
filed. The District Court again dismissed with prejudice Williams’ claims against the
Commonwealth entities. The District Court also dismissed with prejudice Williams’
claims against a state court judge based on judicial immunity and his claims against
Lehigh County for failure to state a claim upon which relief could be granted.
3
With regard to the remaining defendants, the District Court dismissed Williams’
claims for damages against state officials in their official capacities, and ruled that he had
failed to state claims for violations of his Eighth and Fourteenth Amendment rights in
their individual capacities. The District Court explained that Williams’ claim that the
defendants had imprisoned him beyond his maximum release date is cognizable under the
Eighth Amendment, but that Williams had not included any allegations plausibly
establishing that the defendants acted with deliberate indifference or were personally
involved in violating his rights. The District Court gave Williams 30 days to file a
second amended complaint as to these defendants.
On March 10, 2015, Williams moved for a 180-day extension of time to file a
second amended complaint. He asserted that the Clerk’s Office did not send him the
Court’s decision when it was issued and that he needed an extension due to the number of
defendants he named in his complaint, his lack of a readily available computer, and an
impending sheriff’s sale of his home. Williams also asked for other relief, including
having the District Court send his correspondence via certified mail.
On March 11, 2015, the District Court granted Williams’ motion to the extent he
asked for an extension of time, but gave him 30 days to file a second amended complaint.
Noting that the docket reflected that the Clerk’s Office had mailed its decision to the
address Williams provided, the District Court explained that Williams had already had 60
days to file his second amended complaint and that his request for 180 days was
unreasonable. The District Court denied Williams’ other requests, ruled that no further
4
extensions would be granted, and stated that it would dismiss the action without further
notice if Williams failed to file a second amended complaint within 30 days. On April
28, 2015, after more than 30 days had passed and Williams had not filed a second
amended complaint, the District Court dismissed the action with prejudice. This appeal
followed.
We have jurisdiction pursuant to 28 U.S.C. § 1291. Our standard of review is
plenary. Tourscher v. McCullough, 184 F.3d 236, 240 (3d Cir. 1999).
Williams’ brief consists primarily of the procedural history of his case and the
history of his proceedings in state court challenging the calculation of his sentence.
Williams appears to contend that the District Court’s order of dismissal was erroneous in
light of its knowledge that he was not receiving its orders and his request to receive court
correspondence via certified mail. He asks that his case be reopened and scheduled for
trial. Williams asserts that his claim is not frivolous, as shown by the relief he was
granted in state court.
The District Court docket reflects that Williams may not have timely received the
District Court’s initial decision entered on August 4, 2014, allowing him to file an
amended complaint, because the street address in the Court’s file was missing a number.
Williams, however, suffered no prejudice because the District Court reviewed his
amended complaint and allowed him to file a second amended complaint correcting its
deficiencies.
5
The District Court’s subsequent decisions appear to have been sent to the address
Williams provided. Williams’ notice of appeal, filed on May 11, 2015, demonstrates that
he timely received the District Court’s April 28, 2015 case dispositive order. To the
extent Williams did not timely receive the January 13, 2015 decision allowing him to file
a second amended complaint,1 he was not prejudiced because he was granted an
extension of time to file it. Although Williams asserts in his brief that he did not receive
the March 11, 2015 order granting his motion for an extension of time, he does not state
that he ever inquired as to the status of his motion even though he allegedly had problems
receiving court correspondence. The District Court did not dismiss his action until April
28, 2015, almost seven weeks later.
Williams also does not state that he is prepared to file a second amended
complaint. Instead, he seeks to proceed to trial. However, as explained by the District
Court, at this stage Williams was required to amend his complaint and allege how each
named defendant was personally involved in the purported violation of his rights. See
Rode v. Dellarciprete, 845 F.2d 1195, 1207-08 (3d Cir. 1988) (dismissing claims against
defendants where plaintiff had not averred personal involvement in the alleged wrongs).
The District Court did not err in ruling that his amended complaint was deficient in this
regard.
1
The District Court docket reflects that on February 9, 2015, the Clerk’s Office sent
Williams another copy of the January 13, 2015 decision after he reported that he had not
received it.
6
The District Court gave Williams more than one opportunity to amend his
complaint and he did not correct its deficiencies. Accordingly, we will affirm the
judgment of the District Court.
7
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265 S.W.2d 714 (1954)
REYNOLDS et al.
v.
MANLEY et al.
No. 5-176.
Supreme Court of Arkansas.
March 15, 1954.
*715 Mehaffy, Smith & Williams, Pat Mehaffy, John T. Williams and R. Ben Allen, Little Rock, for appellants.
Bates, Poe & Bates, Waldron, for appellees.
WARD, Justice.
This is an appeal from a judgment against appellants based on injuries received in an automobile collision and in favor of John Manley, John Manley as guardian of his three children, and John Manley as administrator of the estate of his wife. The principal ground urged by appellants for a reversal is that there is no substantial evidence to support the verdict of the jury and the judgment of the trial court.
On October 27, 1951 John Manley, accompanied by his wife, Lucy, and their three minor children, was driving south on highway No. 71 toward Texarkana. As he was approaching the south end of Index bridge a large trailer truck going north came to a halt supposedly for the purpose of allowing Manley's car to clear the bridge. At this time a pickup truck driven by J. P. Harrison, one of the defendants in the trial court, had come up behind the trailer truck. Because of this situation, it is alleged, Manley was forced to pull his car to the right off the 18 foot concrete highway and onto a concrete extension slab which extended from the bridge south along the west side of the main highway for a distance of approximately 200 feet, and when he came to the end of the extension slab, it is contended, the right wheel of his car went off the end of the extension slab and into a hole or rut. This, it is contended, caused him to lose control of his car and caused his car to swerve to the left into the direct path of a car being driven north at the time by one Perry Lay. As a result of the collision Manley and his three children were injured *716 and his wife, Lucy, died a few days later. The extent of the injuries and the amount of recovery are matters that need not be discussed in this opinion.
The concrete extension slab mentioned above is approximately 3 feet wide at the bridge and the south end is approximately 14 inches wide. This extension slab was constructed by appellants pursuant to a contract with the State Highway Department. The U. S. Bureau of Public Roads participated with the State in the construction project. Incidental to the contract it was a part of appellants' job to backfill on the west side and at the south end of the extension slab and also repair or build the shoulder on the west side of the concrete road and immediately south of the end of the extension slab for a distance of approximately 34 feet. The material to be used in backfilling and in building the shoulder is one of the questions to be discussed later.
Appellees' action is based on the alleged negligence of appellants in the construction of the extension slab and the shoulder. Hereafter we will refer to the shoulder as the extension shoulder. In their original complaint appellees alleged that appellants were negligent in that they "dug an excavation and opening several feet in length extending along the west side of the slab approximately one foot in width and approximately one foot in depth and left there without guards and it was [left] open without giving warning, which created a hidden or indiscernible hazard dangerous to the public". Appellees have apparently abandoned this specific allegation of negligence except insofar as it relates to the allegations contained in their amendment to the complaint where appellants' negligence is stated thus: Appellants left "the hole opening an excavation described in the original complaint in a careless and negligent manner, making a hole and opening apparent and imminently dangerous in the public highway where motorists were likely to drive their cars, and after so doing then refilled, and left, the hole and opening with improper materials and dirt without tamping the fill, as should have been done, which acts were carelessness and negligence, and by not so tamping and packing the sand with the proper dirt and materials went and left a hole apparent and imminently dangerous * * *." The undisputed proof shows [and appellees do not contend otherwise] that when the contractors finished the job there was no hole left in the extension shoulder and therefore, as we see it, appellees predicate negligence on the allegation that appellants, in backfilling the extension slab and in constructing the extension shoulder used (a) improper materials and (b) did not properly tamp and pack the materials used.
The record shows without contradiction that appellants completed their contract on May 5, 1951; that the job was inspected on May 9, 1951 by appellants' superintendent and by the resident engineer and the assistant construction engineer in charge of bridge work for the Highway Department; that the job was formally inspected on May 22, 1951 by the State Highway Department engineer and by the officer in charge of construction and maintenance for the U. S. Bureau of Public Roads; that on May 22, 1951 the State Highway Department finally and fully accepted the job from appellants; that on August 7, 1951 the engineer of the U. S. Bureau of Public Roads, who could not be present at the final inspection on May 22, 1951 inspected the entire job and approved the same; and, that the wreck which caused appellees' injuries occurred on October 27, 1951.
Appellants make the contention that, under the above undisputed facts, they can not be held liable for damages, and, in support cite Memphis Asphalt & Paving Co. v. Fleming, 96 Ark. 442, 132 S.W. 222, 223. In that case appellant under contract with a city improvement district constructed a sidewalk along the side of a street and across a branch but did not construct any guard rail or barrier where it extended over the branch, nor was any required by the contract. Appellee was injured by falling from the sidewalk into the branch and the negligence alleged was the failure to construct a guard rail. Appellant's contention *717 was that "it had paved the street and constructed the sidewalk in accordance with the contract, and that the work was completed and accepted before the injury occurred." The court said:
"The proof shows that the street had been paved and the sidewalk constructed in accordance with the contract plans and specifications, and that it had been in fact and formally accepted by the engineer in charge of the district on September 2d, and thrown open to the use of the public, and that plaintiff's injury occurred three days thereafter, and that later the city accepted the improvement of the entire district on October 6th or 7th without any change in the work on this sidewalk. The asphalt company's contract was with the improvement district, not the city. The general rule is that, after the contractor has turned the work over and it has been accepted by the proprietor, the contractor incurs no further liability to third parties by reason of the condition of the work, but the responsibility, if any, for maintaining or using it in its defective condition is shifted to the proprietor". (Emphasis supplied.)
The contract which appellants here had with the State Highway Department was not introduced in the record, but there is no contention on the part of appellees that appellants did nbt construct the extension slab and extension shoulder in accordance with the provisions of the contract, except in one instance which we discuss later, recognizing, of course, appellees contend the construction was done in a negligent manner. It was stated by one of appellants' witnesses that the contract called for dirt to be used in making the fills, whereas the evidence shows the fills were made with a sand and gravel mixture known as s-S. However the undisputed proof shows that this change was first discussed with and sanctioned by representatives of the State Highway Department, and, as so changed, was finally accepted. The unescapable conclusion therefore is that the contract between the appellants and the State Highway Department was changed in this regard by mutual consent. So it must be said here as was said in the Memphis Asphalt case, supra, that the extension slab and extension shoulder were "constructed in accordance with the contract plans and specifications, and that it had been in fact and formally accepted * * *." Although the opinion in the cited case mentions no evidence of negligence on the part of the contractor the general rule stated by the court as copied above leads us to conclude that the same result would have been reached if evidence of negligence had been introduced, unless such negligence had come within the classifications later mentioned.
Appellees strongly insist that appellants were negligent in this instance in using s-5 gravel instead of dirt and in not properly tamping the material used in backfilling and in building the extension shoulder. However, even if it be conceded that the record shows substantial evidence of such negligence, appellants cannot be held liable under the holding announced in the case of Canal Const. Co. v. Clem, 163 Ark. 416, 260 S.W. 442, 443, 41 A.L.R. 4. In that case Clem, in the trial court, recovered damages against the construction company on account of an injury received while crossing a bridge over a public highway, which injury it was alleged was caused by appellant's negligence in the construction of the bridge. Notwithstanding the proof was ample to show negligence on the part of the construction company in leaving the flooring of the bridge un-nailed, this court reversed the trial court and dismissed the cause of action announcing this rule:
"The general rule is well established that an independent contractor is not liable for injuries to a third person occurring after the contractor has completed the work and turned it over to the owner and the same has been accepted by him, though the injury resulted from the contractor's failure to properly carry out his contract."
It is our best judgment that the facts in the case under consideration place it squarely *718 within the general rule announced in the above mentioned decisions.
There are, however, some exceptions to this general rule, under which exceptions a contractor may be held liable even though there has been an approval and acceptance of the completed job. One of the exceptions noted in the Memphis Asphalt case, supra, is where the job is "turned over by the contractor in a manner so negligently defective as to be imminently dangerous to third persons." An exception to the general rule is also noted in the Canal Const. Co. case, supra. The courts and authorities in general recognize at least two exceptions to the general rule upon which appellees here rely, namely: (a) Where a defect in construction caused by the negligence of the contractor is so concealed that it could not reasonably be detected on inspection by the proprietor; and, (b) Where the job is turned over by the contractor in a manner so negligently defective as to be imminently dangerous to third persons. We shall now discuss these exceptions as they relate to the evidence introduced in this case.
(a) Were the defects, if any, concealed from the State? Appellees contend that dirt should have been used instead of sand and gravel, that appellants should have used an air hammer instead of using heavy trucks or vehicles with pneumatic tires for compaction, and that appellants were negligent in not doing so. Again conceding for the present that appellees are right in this contention, yet it cannot reasonably be said that this situation was in any way concealed from the State Highway Department. The undisputed facts are that officials of the State Highway Department were present when all this work was being done, that they not only knew how it was being done but actually directed what materials to use, and that they approved and accepted the work with full knowledge.
Mr. M. O. Thornton, the resident engineer with the State Highway Department in charge of this job, testified: "Q. Did they perform that and every phase of that work under your direct supervision? A. Yes sir, that's right". When Thornton was asked about the last work done on shoulder he stated: "A. On May 5, Saturday morning, the trenches were filled or what we refer to as backfilling, the edges of the pavement with gravel on both sides of the road, both sides of the pavement. Q. Were you present when that was done? A. I was".
(b) We cannot agree with appellees' contention that the contractors here turned over the job to the State and Federal authorities in such a condition that it was imminently dangerous to persons who might later use the highway.
The job here was completed on May 5, 1951 and the accident occurred on October 27, 1951. In the meantime approximately 200,000 cars had used the highway. Of course not all but many of the cars must have gone over this slab and shoulder, because there were ruts in the shoulder when the accident happened and there must have been ruts before that because the shoulder had been reconditioned practically every week by the maintenance department of the State. There is of course no contention that any hole or rut was left when the job was completed. If the best possible judgment was not used in the selection of material and method of compaction it was not the misjudgment of appellants but of the State Highway Department. Again, in speaking of the final phases of the work, Thornton testified:
"Q. Who selected and passed on the material that went into that hole or trench there at the end of the bridge? A. I did.
"Q. What kind of material was used there with reference to whether it was sand or gravel? A. It was sandy gravel.
"Q. Why did you require the contractor to put gravel there, if you did? A. I consulted with my superior, the assistant construction engineer, Mr. E. E. Hurley, as to which would possibly be more advisable and the best construction and he concurred with me *719 that it would be better to backfill that widening strip with gravel than with the sandly loam soil, that it possibly wouldn't scour quite as much and that we could get equal compaction which in the event that traffic should go off, it would be a little better to be on a gravel surface than on soil, and we did that".
When Thornton was asked about the method of compaction he stated:
"A. Placing and rolling of backfill material in a close place with a motor patrol pneumatic tire operation is considered better than with the steel rollers or steel equipment".
Black's Law Dictionary, Fourth Edition, describes "Imminent" as: "Near at hand; mediate rather than immediate; close rather than touching; impending; on the point of happening; threatening; perilous". The case of Jaroniec v. C. O. Hasselbarth, Inc., 223 App.Div. 182, 228 N.Y.S. 302, 305, in discussing a manufactured article which was alleged to be "imminently dangerous", quoted with approval the following language:
"There must be knowledge of a danger, not merely possible, but probable. It is possible to use almost anything in a way that will make it dangerous, if defective. That is not enough to charge the manufacturer with a duty independent of his contract."
Under the facts and circumstances disclosed by the entire record here it would be, in our judgment, most unreasonable to hold that appellants, as contractors, by their negligence created an imminently dangerous situation which caused appellees' injuries and the death of Mrs. Manley. The effects of such a holding are so obvious and so far-reaching as to compel caution. Road construction contractors, under such holding, would be subjected to potential liabilities so great as to deter them from undertaking such work, or it would force them to demand such exorbitant prices as to make further road construction impossible, and it is not apparent at what point of time such liability would cease. When appellants here undertook and performed this contract job they could reasonably expect that the shoulder would have to be repaired from time to time and that this would be done by the maintenance division of the State Highway Department. This was in fact done. Not only did the State recondition this shoulder practically every week during the five months previous to the accident but it actually did a major repair job only a few days before the accident. It is obvious therefore that the condition which caused the accident was not the condition which existed when appellants finished the job or when the job was approved and accepted.
It is in regard to some of the features of this case mentioned above that distinguishes it from many of the cases relied on by appellees for a reversal, and in particular the case of Southern Exp. Co. v. Texarkana Water Co., 54 Ark. 131, 15 S.W. 361, which case was recognized as an exception to the general rule in the Canal Construction case, supra. In the Southern Express case, supra, the water company dug a trench in the public street and improperly refilled it in such a way that rains caused the filling material to wash or settle. As a result appellant's horse fell or stepped into the sunken portion and was injured. The effect of the opinion appears to be that the water company's negligence was the proximate cause of the injury, though the court said such "negligence was the proximate cause of the defect in the street * * *." It was further stated by the court that it was the duty of the water company to anticipate and provide for the material effect of rains upon earth excavated and repaired. The court also said: "If guilty of no negligence in the performance of its duty to replace the street in the condition in which it found it, the defendant would not be liable for a dangerous condition subsequently occasioned by natural causes."
The opinion in the Southern Express case, supra, is short and does not discuss the question from the standpoint of imminent danger as an exception to the general *720 rule, yet it apparently rests on that basis as was recognized in the Canal Construction case, supra. As we view the opinion it does not apply to and is distinguishable from the case under consideration. First, there was no contract between the water company and the city, and so there was no inspection and acceptance by the city. Second, it was not unreasonable for the water company to anticipate that rain would cause the dirt to sink if it was not properly packed and there appears to be no contention that it was. Here it is admitted by appellants that a road shoulder, whether constructed with dirt or s-S gravel, will be affected by rain and traffic, but they also had a right to expect, as before stated, the State would keep it in a safe condition for use by the traveling public notwithstanding rain and traffic. There is also a third and vital distinction between the two cases. As before noted, the court in the Southern Express case, supra, stated that the company's negligence was the proximate cause of the defect. Although the court's opinion does not so state, it apparently based its conclusion as to proximate cause on the absence of proof that the ditch had been refilled by the city, but that it was in the same condition as it was left by the water company. Such of course is not the situation here. We therefore cannot agree that the opinion in the Southern Express case, supra, is authority for holding here that the alleged negligence of appellants, even if any is shown, was the proximate cause of the rut in the extension shoulder which, it is conceded, was made by heavy traffic months after they had finished the job and after the State Highway Department had inspected and accepted the work and had assumed full responsibility for keeping it in repair.
Appellees cite many other cases but none of them are relied on to the extent that the Southern Express case, supra, is relied on, and it would serve no useful purpose to discuss them. We have carefully examined each cited case and find that they either do not apply to the facts here or can be distinguished on facts or principles of law from the Memphis Asphalt case, supra, and the Canal Construction case, supra.
For the reasons stated above the judgment of the trial court is reversed and the cause of action, appearing to have been fully developed, is dismissed.
McFADDIN and MILLWEE, JJ., dissent
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636 F.2d 1222
Hamptonv.Hanrahan
77-1210, 77-1370, 77-1698
UNITED STATES COURT OF APPEALS Seventh Circuit
8/26/80
1
N.D.Ill.
REVERSED AND REMANDED; AFFIRMED
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Case: 13-3154 Document: 15 Page: 1 Filed: 03/27/2014
NOTE: This order is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
HENRY W. MAYFIELD,
Petitioner,
v.
UNITED STATES POSTAL SERVICE,
Respondent.
______________________
2013-3154
______________________
Petition for review of the Merit Systems Protection
Board in No. DA0752120095-I-2.
______________________
ON MOTION
______________________
Before PROST, O’MALLEY and TARANTO, Circuit Judges.
PER CURIAM.
ORDER
Henry W. Mayfield seeks review of a decision of the
Merit Systems Protection Board (“Board”) sustaining the
United States Postal Service’s decision to remove May-
field for unacceptable performance. Because of the limits
of our jurisdiction to review mixed cases, i.e., challenges
to an adverse action that was allegedly based, at least in
Case: 13-3154 Document: 15 Page: 2 Filed: 03/27/2014
2 MAYFIELD v. USPS
part, upon prohibited discrimination, we grant the agen-
cy’s motion to the extent that we transfer the case to
federal district court.
BACKGROUND
Mr. Mayfield was employed as a city mail carrier with
the Postal Service’s Valley Ranch Station in Irving, Texas
until December 10, 2011, when he was removed for,
among other things, refusing to deliver mail.
In May 2012, Mr. Mayfield appealed his removal to
the Board. He asserts that his removal was motivated by
racial discrimination, as well as retaliation for his prior
equal employment opportunity activity, whistleblowing
disclosure, and a lawsuit accusing the Postmaster and
several co-workers of identity theft.
In September 2012, the administrative judge who was
assigned to the case sustained the removal action. As to
Mr. Mayfield’s racial discrimination allegations, the
administrative judge found that there was no evidence
suggesting the agency’s action was disparate when com-
pared with the penalties imposed on employees who were
not in his protected group who were charged with or
engaging in the same conduct. In that regard, the admin-
istrative judge pointed out that the employees identified
by Mr. Mayfield did not work in the same facility and did
not have the same supervisors as Mr. Mayfield, and there
was no evidence indicating they purposely refused to
deliver the mail.
With regard to Mr. Mayfield’s protected activity alle-
gations, the administrative judge found that Mr. Mayfield
had failed to demonstrate that the removal action was
taken because of the protected activity as opposed to his
refusal to deliver the mail. After the Board affirmed the
administrative judge’s initial decision in July 2013, Mr.
Mayfield timely appealed to this court.
Case: 13-3154 Document: 15 Page: 3 Filed: 03/27/2014
MAYFIELD v. USPS 3
DISCUSSION
This court’s jurisdiction to review decisions of the
Board involving cases of discrimination is limited by
statute. See 5 U.S.C. § 7703. We have jurisdiction to
review a Board determination that an employee’s case is
not appealable to the Board, regardless of whether the
employee has sought to raise claims of agency discrimina-
tion. See 5 U.S.C. §7703(b)(1); 5 U.S.C. § 7702(a)(1)(A);
Conforto v. Merit Sys. Prot. Bd., 713 F.3d 1111, 1118 (Fed.
Cir. 2013). We do not have jurisdiction to review cases
involving discrimination allegations. See 5 U.S.C.
§7703(b)(2); Kloeckner v. Solis, 133 S. Ct. 596, 607 (2012).
This case falls outside of our limited review authority.
The Board did not dismiss Mr. Mayfield’s appeal for lack
of jurisdiction. Rather, it exercised jurisdiction over the
case and rejected Mr. Mayfield’s allegation that his re-
moval was motivated by racial discrimination. Because
this court lacks jurisdiction and judicial review of a Board
decision in a mixed case that includes a discrimination
claim is instead assigned to the district courts, we grant
the agency’s motion to the extent that we transfer the
petition to the United States District Court for the North-
ern District of Texas. See 28 U.S.C. § 1631 (authorizing
transfer of an appeal to the court it could have been
brought at the time it was filed or noticed).
Accordingly,
IT IS ORDERED THAT:
The motion is granted to the extent that the petition
is transferred to the United States District Court for the
Northern District of Texas pursuant to 28 U.S.C. § 1631.
Case: 13-3154 Document: 15 Page: 4 Filed: 03/27/2014
4 MAYFIELD v. USPS
FOR THE COURT
/s/ Daniel E. O’Toole
Daniel E. O’Toole
Clerk of Court
s19
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340 S.E.2d 701 (1986)
315 N.C. 444
STATE of North Carolina
v.
Franklin D. GARDNER, Jr.
No. 390A84.
Supreme Court of North Carolina.
February 18, 1986.
*703 Lacy H. Thornburg, Atty. Gen. by Henry T. Rosser, Asst. Atty. Gen., Raleigh, for the State.
Adam Stein, Appellate Defender, and Marc D. Towler, Asst. Appellate Defender, Raleigh, for defendant-appellant.
MEYER, Justice.
Defendant brings forward two assignments of error on appeal. The first involves the cross-examination of the defendant concerning his post-arrest silence. In addition, defendant argues that double jeopardy principles prohibit his conviction and sentencing for both breaking or entering and felony larceny pursuant to that breaking or entering. For the reasons set forth below, we find no error and, therefore, affirm the decision of the Court of Appeals.
Defendant was convicted of breaking or entering a home in Gastonia, North Carolina, while the occupants were on vacation, and of felony larceny pursuant to the breaking or entering. The value of the goods stolen was placed at approximately $4,000. Evidence against the defendant consisted of the testimony of Bobby Grigg, who lived with his parents in a house across the street from the victim's residence. Grigg saw the defendant at approximately 6:00 p.m. on the day of the break in. Grigg, the defendant, and an unidentified man rode in defendant's car to visit one of Grigg's friends. After leaving *704 Grigg at his house at 7:30 p.m., the defendant and the unidentified man drove off.
Later that night as Grigg was walking to a friend's house, the defendant and the unidentified man pulled up in defendant's car and asked Grigg to accompany them to Blacksburg, South Carolina. Grigg noticed some guns, a television, a stereo, and a file cabinet in the trunk and back seat of defendant's car. Defendant told Grigg that he had broken into the Barrow residence.
At some point during the trip, the defendant stopped and removed the file cabinet from his car. Grigg's fingerprints were later found on the file cabinet.
In Blacksburg, defendant met with Bobby Cooper, to whom he eventually sold a rifle and a revolver. These items were later recovered and identified as items stolen from the victim's home.
Defendant presented two alibi witnesseshis girl friend and his father. Defendant testified on his own behalf and denied seeing Grigg at any time on the evening of the break-in.
I.
Defendant first argues that in cross-examining him concerning his post-arrest silence, the prosecutor committed "plain error of constitutional magnitude." Defendant's theory at trial was that Grigg's testimony "was a calculated attempt to `frame'" him. On cross-examination, the following exchange took place:
Q. Are you saying he's [Grigg] concocted this entire story because you didn't loan him some money when you were playing pool?
A. To tell you the truth, I don't know why he's got me in on this.
Q. You don't have any idea, do you?
A. No, sir.
Q. Did you have an occasion to talk with Detective Duncan?
A. No, sir.
Q. You ever seen Detective Duncan?
A. You talking about that lady?
Q. Yes, sir.
A. No, sir.
Q. You ever talk to any detective about this?
A. I talked to one. When they looked me up, they come [sic] and got me off my job, and I went down there in Gaffney, and they locked me up over there, and a detective and plain clothed officer in a uniform come [sic] down there and got me and brought me up here.
Q. What, if any, statement did you give that officer?
A. Any statement?
Q. Yes, sir.
A. I don't [sic] give him no [sic] statement.
Q. You didn't give him a statement did you?
A. No, sir. He was asking me questions about this break-in.
Q. And you didn't give a statement, did you?
A. No, sir. I didn't know what he was talking about.
There was no objection to the testimony. Nevertheless, defendant now complains that "by so attempting to impeach the defendant's exculpatory testimony on the basis of [his] post-arrest silencei.e., the defendant's failure to relate either his alibi or Bobby Grigg's possible motive for implicating defendant in a crimethe prosecutor violated the defendant's constitutional right to remain silent and, thus, denied the defendant a fair trial." We do not agree.
It is undisputed that defendant did not object to any of the cross-examination set out above. Failure to make timely objection or exception at trial waives the right to assert error on appeal, N.C.R. App.P. 10(b)(1); State v. Murray, 310 N.C. 541, 545, 313 S.E.2d 523, 527 (1984); State v. Oliver, 309 N.C. 326, 334, 307 S.E.2d 304, 311 (1983); and a party may not, after trial and judgment, comb through the transcript of the proceedings and randomly insert an *705 exception notation in disregard of the mandates of App.R. 10(b). State v. Oliver, 309 N.C. at 335, 307 S.E.2d at 312. When a defendant contends that an exception, in the words of App.R. 10(b)(1), "by rule or law was deemed preserved or taken without" objection made at trial, he has the burden of establishing his right to appellate review by showing that the exception was preserved by rule or law or that the error alleged constitutes plain error. In so doing, he must alert the appellate court that no action was taken by counsel at trial and then establish his right to review by asserting the manner in which the exception was preserved or how the error may be noticed although not brought to the attention of the trial court. State v. Oliver, 309 N.C. at 335, 307 S.E.2d at 312. As the majority decision in the Court of Appeals notes, defendant did not comply with these requirements and should be deemed to have waived his right to except on appeal to the cross-examination.
Even had defendant properly preserved and brought forward his exceptions, however, the cross-examination complained of entitles defendant to no relief. When first asked by the prosecution, "You ever talk to any detective about this?" defendant responded, "I talked to one." Following the apparent admission by defendant that he had talked to a detective about at least some aspects of the crime and the accusations against him, the prosecutor sought to ascertain what had been said. At that time, defendant denied having made any statement regarding the crime, because the detective "was asking me questions about this break-in," and defendant "didn't know what he [the detective] was talking about." The prosecutor then shifted his cross-examination to other matters.
This cross-examination did not violate defendant's constitutional right to remain silent. Defendant clearly indicated that he had not, in fact, remained silent but had talked with a detective about the matter. He further indicated that his conversation with the detective was not an inculpatory or exculpatory statement but rather a disavowal of any knowledge whatsoever of the crime. Under such circumstances, the cross-examination cannot be construed as an unconstitutional attempt by the State to use defendant's post-arrest silence to impeach his testimony at trial, the cross-examination did not involve an attempt to impeach defendant's credibility by reason of post-arrest silence, but was an inquiry into an admitted conversation between defendant and a police officer. Defendant's response to the cross-examination was that he was unable to make any statement to the officer because he had no knowledge of the crime. This was totally consistent with defendant's position at trial and had no impeaching effect.
Stripped of excess verbiage, the cross-examination testimony consisted of a question by the prosecutor as to whether defendant had talked to any detective "about this"; defendant's response that he had talked to one detective; the prosecutor's question of what defendant had said to the detective; and defendant's response that he didn't know anything about the break-in that was the subject of the detective's inquiry. The clear implication of defendant's response is that he stated to the detective that he knew nothing of the break-in under investigation.
Whatever motives prompted the cross-examination questions, neither they nor defendant's responses constituted an impermissible comment upon the defendant's invocation of his constitutional right to remain silent.
However, even assuming, arguendo, the violation of a constitutional right, admission of the evidence complained of was harmless beyond a reasonable doubt. State v. Taylor, 280 N.C. 273, 185 S.E.2d 677 (1972); N.C.G.S. § 15A-1443(b) (1983). This is so because the evidence presented by the State was very convincing. State v. Black, 308 N.C. at 741, 303 S.E.2d at 807; State v. Brown, 306 N.C. 151, 164, 293 S.E.2d 569, 578, cert. denied, 459 U.S. 1080, 103 S.Ct. 503, 74 L.Ed.2d 642 (1982). As was said in State v. Williams, 288 N.C. 680, 693, 220 S.E.2d 558, 568 (1975), "[T]his *706 evidence was of such insignificant probative value when compared with the overwhelming competent evidence of guilt that its admission did not contribute to defendant's conviction and therefore admission of the evidence was harmless error beyond a reasonable doubt." See also State v. Castor, 285 N.C. 286, 293, 204 S.E.2d 848, 853 (1974) (Huskins, J., dissenting).
Nor does this cross-examination without objection by defendant constitute "plain error" which would entitle defendant to relief upon our review of his subsequently asserted exceptions. In State v. Black, 308 N.C. 736, 303 S.E.2d 804 (1983), this Court adopted the plain error rule with regard to App.R. 10(b)(1) when no objection or exception to evidence presented and admitted was made at trial. In so doing, this Court quoted with approval from United States v. McCaskill, 676 F.2d 995, 1002 (4th Cir.), cert. denied, 459 U.S. 1018, 103 S.Ct. 381, 74 L.Ed.2d 513 (1982), as follows:
[T]he plain error rule ... is always to be applied cautiously and only in the exceptional case where, after reviewing the entire record, it can be said the claimed error is a "fundamental error, something so basic, so prejudicial, so lacking in its elements that justice cannot have been done," or "where [the error] is grave error which amounts to a denial of a fundamental right of the accused," or the error has "resulted in a miscarriage of justice or in the denial to appellant of a fair trial" or where the error is such as to "seriously affect the fairness, integrity or public reputation of judicial proceedings" or where it can be fairly said "the instructional mistake had a probable impact on the jury's finding that the defendant was guilty."
In State v. Walker, ___ N.C. ___, 340 S.E.2d 80 (1986), we said this:
The plain error rule applies only in truly exceptional cases. Before deciding that an error by the trial court amounts to "plain error," the appellate court must be convinced that absent the error the jury probably would have reached a different verdict. State v. Odom, 307 N.C. at 661, 300 S.E.2d [375] at 378-79 [(1983) ]. In other words, the appellate court must determine that the error in question "tilted the scales" and caused the jury to reach its verdict convicting the defendant. State v. Black, 308 N.C. at 741, 303 S.E.2d at 806-07. Therefore, the test for "plain error" places a much heavier burden upon the defendant than that imposed by N.C.G.S. § 15A-1443 upon defendants who have preserved their rights by timely objection. This is so in part at least because the defendant could have prevented any error by making a timely objection. Cf. N.C.G.S. § 15A-1443(c) (defendant not prejudiced by error resulting from his own conduct).
Id. at , 340 S.E.2d at 83.
Even had the exchange on cross-examination constituted error, we conclude that, absent such error, the jury probably would have reached the same result.
II.
Defendant next argues that his conviction and sentencing in the same trial for both felony breaking or entering and felony larceny violates the prohibition against double jeopardy contained in the Fifth Amendment to the United States Constitution and in N.C. Const. art. I, § 19. On the felony larceny charge, two felony theories were presented to the jury in the alternative N.C.G.S. § 14-72(b)(2), breaking or entering, and N.C.G.S. § 14-72(a), property worth more than $400.00. The jury did not specify the theory it relied upon, and it would be pure speculation to suggest which theory it relied upon. We, therefore, for the purposes of deciding this case, construe this ambiguous verdict in favor of the defendant, State v. Williams, 235 N.C. 429, 70 S.E.2d 1 (1952), and assume that the felony larceny verdict was predicated upon a finding that defendant committed the larceny pursuant to the breaking or entering. Thus, we assume that the predicate crime of breaking or entering was used to raise the larceny charge to the compound crime of felony larceny.
*707 We are thus required to decide whether the prohibition in either the United States or North Carolina Constitution against placing a person twice in jeopardy prohibits, in a single trial, convictions and punishment for both breaking or entering and felony larceny based upon that breaking or entering. We hold that conviction and punishment for both in a single trial is not prohibited by the provisions of either Constitution.
The argument advanced by defendant has been presented under various titles: double jeopardy, lesser-included offense, an element of the offense, multiple punishment for the same offense, merged offenses, etc. The defendant and the State have briefed and argued the issue as one of "double jeopardy." We choose to avoid any lengthy discussion of the appropriate title, as it is the principle of law rather than the characterization of the issue that is important. The Double Jeopardy Clause protects against (1) a second prosecution for the same offense after acquittal, (2) a second prosecution for the same offense after conviction, and (3) multiple punishments for the same offense. North Carolina v. Pearce, 395 U.S. 711, 89 S.Ct. 2072, 23 L.Ed.2d 656 (1969); see also State v. Murray, 310 N.C. 541, 547, 313 S.E.2d 523, 528 (1984).
We are not here concerned with category (1) because there has been no prior acquittal, nor with category (2) because there was only one prosecution, i.e., both charges were tried contemporaneously in the same trial.
When analyzing the precise issue now before us as one of double jeopardy, courts across the nation have often tended to confuse rather than clarify the legal principles involved because of the failure to recognize and differentiate between single-prosecution and successive-prosecution situations. In People v. Robideau, 419 Mich. 458, 355 N.W.2d 592, reh'g denied, 420 Mich. 1201, 362 N.W.2d 219 (1984), the Michigan Supreme Court recently spoke to a possible reason for the obvious confusion among various court decisions which address the double jeopardy issue:
We ... come to the conclusion that much of the inconsistency in double jeopardy analysis results from the failure to clearly distinguish between single-prosecution and successive-prosecution cases....
Successive-prosecution cases involve the core values of the Double Jeopardy Clause, the common-law concepts of autrefois acquit and convict. (Citation omitted). Where successive prosecutions are involved, the Double Jeopardy Clause protects the individual's interest in not having to twice "run the gauntlet", in not being subjected to "embarrassment, expense and ordeal", and in not being compelled "to live in a continuing state of anxiety and insecurity", with enhancement of the "possibility that even though innocent he may be found guilty". (Citation omitted).
....
Different interests are involved when the issue is purely one of multiple punishments, without the complications of a successive prosecution. The right to be free from vexatious proceedings simply is not present. The only interest of the defendant is in not having more punishment imposed than that intended by the Legislature. The intent of the Legislature, therefore, is determinative.
Robideau, 419 Mich. at 484-85, 355 N.W.2d at 602-3.
Since defendant was tried for both offenses at a single trial, we will interpret his contention to be that he has been subjected to multiple punishments for the same offense.
Where multiple punishment is involved, the Double Jeopardy Clause acts as a restraint on the prosecutor and the courts, not the legislature. Brown v. Ohio, 432 U.S. 161, 97 S.Ct. 2221, 53 L.Ed.2d 187 (1977). The Double Jeopardy Clauses of both the United States and North Carolina Constitutions prohibit a court from imposing more punishment than that intended by the legislature. "[T]he question whether punishments imposed by *708 a court after a defendant's conviction upon criminal charges are unconstitutionally multiple cannot be resolved without determining what punishments the Legislative Branch has authorized." Whalen v. United States, 445 U.S. 684, 688, 100 S.Ct. 1432, 1435-36, 63 L.Ed.2d 715, 721 (1980). Recent expression of this principle is found in Ohio v. Johnson, 467 U.S. 493, ___, 104 S.Ct. 2536, 2541, 81 L.Ed.2d 425, 433, reh'g denied, ___ U.S. ____, 105 S.Ct. 20, 82 L.Ed.2d 915 (1984):
In contrast to the double jeopardy protection against multiple trials, the final component of double jeopardyprotection against cumulative punishmentsis designed to ensure that the sentencing discretion of courts is confined to the limits established by the legislature. Because the substantive power to prescribe crimes and determine punishments is vested with the legislature, United States v. Wiltberger, 18 U.S. (5 Wheat) 76, 93, 5 L.Ed. 37 (1820), the question under the Double Jeopardy Clause [of] whether punishments are "multiple" is essentially one of legislative intent, see Missouri v. Hunter, 459 U.S. 359, 74 L.Ed.2d 535, 103 S.Ct. 673 (1983).
In State v. Murray, 310 N.C. 541, 547, 313 S.E.2d 523, 528 (1984), this Court said:
[T]he Supreme Court of the United States has held that, where a legislature clearly expresses its intent to proscribe and punish exactly the same conduct under two separate statutes, a trial court in a single trial may impose cumulative punishments under the statutes. Missouri v. Hunter, 459 U.S. 359, 103 S.Ct. 673, 74 L.Ed.2d 535 (1983).
Missouri v. Hunter, 459 U.S. 359, 103 S.Ct. 673, 74 L.Ed.2d 535 (1983), which is controlling here, was decided as a result of the Missouri Supreme Court's misperceptions of the nature of the Double Jeopardy Clause's protection against multiple punishments.
"With respect to cumulative sentences imposed in a single trial, the Double Jeopardy clause does no more than prevent the sentencing court from prescribing greater punishments than the legislature intended." Id. at 366, 103 S.Ct. at 678, 74 L.Ed.2d at 542. "[T]he question of what punishments are constitutionally permissible is not different from the question of what punishment the Legislative Branch intended to be imposed." Albernaz v. United States, 450 U.S. 333, 344, 101 S.Ct. 1137, 1145, 67 L.Ed.2d 275, 285 (1981). Thus, the issue is whether the legislature intended the offenses of breaking or entering and felony larceny pursuant to the breaking or entering to be separate and distinct offenses. See State v. Perry, 305 N.C. 225, 287 S.E.2d 810 (1982).
In State v. Midyette, 270 N.C. 229, 154 S.E.2d 66 (1967), we recognized that when a person is acquitted of or convicted and sentenced for an offense, the prosecution is prohibited from subsequently (i.e., in a subsequent, separately tried case) indicting, convicting, or sentencing him a second time for that offense, or for any other offense of which it, in its entirety, is an essential element. However, the Court went on to hold, "What the state cannot do by separate indictments returned successively and tried successively, it cannot do by separate indictments returned simultaneously and consolidated for simultaneous trial." Id. at 234, 154 S.E.2d at 70. This latter language in State v. Midyette and the holding in that case has been rendered no longer authoritative by recent U.S. Supreme Court decisions such as Missouri v. Hunter and Ohio v. Johnson and the language in our recent case of State v. Murray. State v. Midyette is hereby overruled.
Traditionally, the United States Supreme Court has applied what has been referred to as the Blockburger test in analyzing multiple offenses for double jeopardy purposes. The opinion in Blockburger v. United States, 284 U.S. 299, 304, 52 S.Ct. 180, 182, 76 L.Ed. 306, 309 (1932), stated:
The applicable rule is that where the same act or transaction constitutes a violation of two distinct statutory provisions, the test to be applied to determine whether there are two offenses or only *709 one, is whether each provision requires proof of a fact which the other does not.
If what purports to be two offenses actually is one under the Blockburger test, double jeopardy prohibits successive prosecutions, Brown v. Ohio, 432 U.S. 161, 97 S.Ct. 2221, 53 L.Ed.2d 187 (1977); Harris v. Oklahoma, 433 U.S. 682, 97 S.Ct. 2912, 53 L.Ed.2d 1054 (1977); Illinois v. Vitale, 447 U.S. 410, 65 L.Ed.2d 228 (1980), but, as was made clear in Missouri v. Hunter, 459 U.S. 359, 103 S.Ct. 673, 74 L.Ed.2d 535 (1983), double jeopardy does not prohibit multiple punishment for offenses when one is included within the other under the Blockburger test if both are tried at the same time and if the legislature intended for both offenses to be separately punished. The Blockburger test is used by the federal courts in cases involving violations of federal law in single prosecution situations as an aid to determining legislative intent. When each statutory offense has an element different from the other, the Blockburger test raises no presumption that the two statutes involve the same offense.
In single prosecution situations, the presumption raised by the Blockburger test is only a federal rule for determining legislative intent as to violations of federal criminal laws and is neither binding on state courts nor conclusive. When utilized, it may be rebutted by a clear indication of legislative intent; and, when such intent is found, it must be respected, regardless of the outcome of the application of the Blockburger test. That is, even if the elements of the two statutory crimes are identical and neither requires proof of a fact that the other does not, the defendant may, in a single trial, be convicted of and punished for both crimes if it is found that the legislature so intended. Missouri v. Hunter, 459 U.S. 359, 103 S.Ct. 673, 74 L.Ed.2d 535 (1983); Albernaz v. United States, 450 U.S. 333, 101 S.Ct. 1137, 67 L.Ed.2d 275 (1981); People v. Robideau, 419 Mich. 458, 355 N.W.2d 592, reh'g denied, 420 Mich. 1201, 362 N.W.2d 219 (1984).
Though breaking or entering is not inevitably an element of felony larceny, if, as defendant points out, one looks beyond the elements of the two crimes (breaking or entering and felony larceny, in the abstract) and considers the facts, i.e., evidence used to prove the crimes, evidence of the crime of breaking or entering was, in fact, used to prove defendant guilty of "felonious" larceny. This is so because the legal theory upon which the State relied to convict defendant of the compound crime of felony larceny was that the larceny was committed pursuant to the breaking or entering.
In Brown v. Ohio, 432 U.S. 161, 97 S.Ct. 2221, 53 L.Ed.2d 187 (1977), and Illinois v. Vitale, 447 U.S. 410, 100 S.Ct. 2260, 65 L.Ed.2d 228 (1980), the United States Supreme Court made it clear that a factual analysis rather than a definitional analysis must be undertaken by the courts in determining whether successive prosecutions are barred by the double jeopardy clause of the United States Constitution. Those cases do not apply, however, when a defendant is simultaneously tried for two offenses having overlapping facts and the question is whether the legislature intended for each offense to be separately punished.
In State v. Murray, 310 N.C. 541, 313 S.E.2d 523 (1984), the defendant was tried in the same trial on charges of armed robbery and larceny. Defendant argued that his protections against double jeopardy had been violated in that he had been subjected to multiple punishments for the same offense. This Court rejected defendant's argument and stated:
[E]ven where evidence to support two or more offenses overlaps, double jeopardy does not occur unless the evidence required to support the two convictions is identical. If proof of an additional fact is required for each conviction which is not required for the other, even though some of the same acts must be proved in the trial of each, the offenses are not the same. State v. Perry, 305 N.C. 225, 287 S.E.2d 810 (1982). *710 State v. Murray, 310 N.C. at 548, 313 S.E.2d at 529. See also State v. Brown, 308 N.C. 181, 301 S.E.2d 89 (1983); State v. Revelle, 301 N.C. 153, 270 S.E.2d 476 (1980).
In Whalen v. United States, 445 U.S. 684, 100 S.Ct. 1432, 63 L.Ed.2d 715 (1980), the United States Supreme Court concluded that Congress did not intend multiple punishment when the defendant was convicted in a single trial of rape and of felony murder with rape as the felony, even though felony murder did not in all cases require proof of rape. There, the Court said: "There would be no question in this regard if Congress, instead of listing the six lesser included offenses in the alternative, had separately proscribed the six different species of felony murder under six statutory provisions. It is doubtful that Congress could have imagined that so formal a difference in drafting had any practical significance...." Id. at 694, 100 S.Ct. at 1439, 63 L.Ed.2d at 725.
The "factual" approach, rather than the "definitional" approach, is applied by this Court to prohibit multiple punishment in a single prosecution in the circumstance of the felony-murder rule. The felony-murder rule is a rule of ancient application under which there is a fictional transfer of the malice which plays a part in the underlying felony to the unintended homicide so that the homicide is deemed committed with malice.
At common law, the author of an unintended homicide is guilty of murder if the killing takes place in the perpetration of a felony. This in essence constitutes the doctrine of felony-murder (also known as the doctrine of constructive malice).
Coke is probably responsible for the birth of the doctrine when, in 1644 [sic], he said "that a death caused by any unlawful act is murder." He illustrated thus: If a man shoots at a wild fowl and accidentally kills a man, that is an excusable homicide because the act of shooting is not unlawful; but if a man shoots at a cock or hen belonging to another man and accidentally kills a man, that is murder because the act is unlawful. The doctrine was later limited to cases where the unlawful act amounted to a felony. It was in this posture basically that the doctrine found its way eventually into American law. Although the doctrine of felony-murder has long since been abrogated in England, the doctrine has flourished in the United States, albeit over the years limitations have been imposed upon its operation.
In the typical case of felony-murder, there is no malice in "fact", express or implied; the malice is implied by the "law". What is involved is an intended felony and an unintended homicide. The malice which plays a part in the commission of the felony is transferred by the law to the homicide. As a result of the fictional transfer, the homicide is deemed committed with malice; and a homicide with malice is common law murder.
2 Wharton's Criminal Law § 145 (1979).
In State v. Thompson, 280 N.C. 202, 185 S.E.2d 666 (1972), superseded on other grounds by statute, we held that the crimes of felony breaking and entering and felony larceny merged with the crime of murder committed in the perpetration of those felonies. We reasoned that "[t]echnically, feloniously breaking and entering a dwelling [and, by extension, any underlying felony] is never a lesser included offense of the crime of murder." Id. at 215, 185 S.E.2d at 675. However, proof of the breaking or entering was an "indispensable element" in the State's proof of the murder, and hence "the separate verdict of guilty of felonious breaking and entering affords no basis for additional punishment." Id. at 215-16, 185 S.E.2d at 675. Unfortunately, the Court used this terminology: "In this sense, the felonious breaking and entering was a lesser-included offense of the felony murder." Id. at 216, 185 S.E.2d at 675. (Emphasis added). The confusion resulting from the failure to recognize and differentiate between successive-prosecution and single-prosecution situations previously addressed herein appears *711 to have been the basis for this statement.
[T]he separate verdict of guilty of felonious breaking and entering affords no basis for additional punishment. If defendant had been acquitted in a prior trial of the separate charge of felonious breaking and entering, a plea of former jeopardy would have precluded subsequent prosecution on the theory of felony-murder. (Citation omitted).
....
... For the reasons stated above with reference to the felonious breaking and entering count in the separate bill of indictment, the felonious larceny was, under the circumstances of this case, a lesser included offense of the felony-murder, in the special sense above mentioned. The jury's verdict in the murder case established that defendant killed Ernest Mackey while engaged in the perpetration of the interrelated crimes of felonious breaking and entering and of felonious larceny.
State v. Thompson, 280 N.C. at 216, 185 S.E.2d at 675.
However well entrenched the felony-murder merger rule may be in this State, the reasoning expressed in Thompson for its being, i.e., that the breaking and entering and the felony larceny were "lesser included offense(s) of the the felony murder" and that the fact that Thompson could not be tried on the murder charge if he had been acquitted "in a prior trial" of the felony of breaking and entering or felony larceny, was erroneous. Clearly, what we refer to as the felony-murder rule is not founded upon the concept of "lesser-included offense" or upon the concept of "indispensable element of the offense" but upon the need to supply the element of malice where, in the strict sense, none existed. Other cases in which this Court has arrested judgment on the underlying felony under the felony-murder rule include: State v. Woods, 286 N.C. 612, 213 S.E.2d 214 (1975), death sentence vacated, 428 U.S. 903, 96 S.Ct. 3207, 49 L.Ed.2d 1208 (1976) (kidnap and rape); State v. McLaughlin, 286 N.C. 597, 213 S.E.2d 238 (1975), death sentence vacated, 428 U.S. 903, 96 S.Ct. 3206, 49 L.Ed.2d 1208 (1976) (arson); State v. Moore, 284 N.C. 485, 202 S.E.2d 169 (1974) (armed robbery); State v. Carroll, 282 N.C. 326, 193 S.E.2d 85 (1972) (armed robbery); and State v. Peele, 281 N.C. 253, 188 S.E.2d 326 (1972) (armed robbery).
The United States Supreme Court reached a similar result eight years after Thompson in Whalen v. United States, 445 U.S. 684, 100 S.Ct. 1432, 63 L.Ed.2d 715 (1980). Whalen was decided not on the basis of double jeopardy, but on the basis of legislative intentthe Court holding that, though it could have done so, Congress had not authorized multiple punishments for rape and first-degree felony murder committed during the course of the rape.
In State v. Carey, 288 N.C. 254, 218 S.E.2d 387 (1975), death sentence vacated, 428 U.S. 904, 96 S.Ct. 3209, 49 L.Ed.2d 1209 (1976), this Court attempted to clarify the application of our felony-murder rule as follows:
It seems to us that the better practice where the State prosecutes a defendant for first-degree murder on the theory that the homicide was committed in the perpetration or attempt to perpetrate a felony under the provisions of G.S. 14-17, would be that the solicitor should not secure a separate indictment for the felony. If he does, and there is a conviction of both, the defendant will be sentenced for the murder and the judgment will be arrested for the felony under the merger rule. State v. McLaughlin, 286 N.C. 597, 213 S.E.2d 238 (1975); State v. Moore, 284 N.C. 485, 202 S.E.2d 169 (1974). If the separate felony indictment is treated as surplusage, and only the murder charge submitted to the jury under the felony-murder rule, then obviously the defendant cannot thereafter be tried for the felony. State v. Peele, 281 N.C. 253, 188 S.E.2d 326 (1972).
State v. Carey, 288 N.C. at 274-75, 218 S.E.2d at 400.
*712 It is not error, however, to deny a motion to dismiss the underlying felony charge. As this Court said in Thompson, wherein the defendant was charged with felony breaking and entering and felony murder:
The motion for judgment as in case of nonsuit with reference to the felonious breaking and entering count in the separate indictment was properly overruled. Although a remote possibility, conceivably the jury could have found beyond a reasonable doubt that defendant feloniously broke into and entered the Mackey apartment but not that defendant shot and killed Ernest Mackey. Under appropriate instructions as to this contingency, it was proper to submit the felonious breaking and entering count in the separate indictment.
State v. Thompson, 280 N.C. at 215, 185 S.E.2d at 675.
These and other cases have firmly established that in this State a defendant may not be punished both for felony murder and for the underlying, "predicate" felony, even in a single prosecution. Whether in other situations multiple punishments may be imposed when a defendant, in a single trial, is convicted of multiple offenses when some are fully, factually embraced within others is to be determined on the basis of legislative intent.
As the United States Supreme Court stated in Missouri v. Hunter, 459 U.S. at 368-69, 103 S.Ct. at 679, 74 L.Ed.2d at 543-44:
[S]imply because two criminal statutes may be construed to proscribe the same conduct under the Blockburger test does not mean that the Double Jeopardy Clause precludes the imposition, in a single trial, of cumulative punishments pursuant to those statutes.... Where, as here, a legislature specifically authorizes cumulative punishment under two statutes, regardless of whether those two statutes proscribe the "same" conduct under Blockburger, a court's task of statutory construction is at an end and the prosecutor may seek and the trial court or jury may impose cumulative punishment under such statutes in a single trial. (Emphasis added).
See also Ohio v. Johnson, 467 U.S. 493, 104 S.Ct. 2536, 81 L.Ed.2d 425 (1984).
In reaching our decision in the present case, we first reiterate that the intent of the legislature is determinative. The Double Jeopardy Clause plays only a limited role in deciding whether cumulative punishments may be imposed under different statutes at a single criminal proceedingthat role being only to prevent the sentencing court from prescribing greater punishments than the legislature intended. We further reiterate that where our legislature "specifically authorizes cumulative punishment under two statutes, regardless of whether those two statutes proscribe the `same' conduct under Blockburger, a court's task of statutory construction is at an end and the prosecutor may seek and the trial court or jury may impose cumulative punishment under such statutes in a single trial." Missouri v. Hunter, 459 U.S. at 368-69, 103 S.Ct. at 679, 74 L.Ed.2d at 544. See State v. Price, 313 N.C. 297, 327 S.E.2d 863 (1985).
The traditional means of determining the intent of the legislature where the concern is only one of multiple punishments for two convictions in the same trial include the examination of the subject, language, and history of the statutes.
With regard to the subject of the two crimes of breaking or entering and larceny, it is clear that the conduct of the defendant is violative of two separate and distinct social norms, the breaking into or entering the property of another and the stealing and carrying away of another's property.
The statutory history of the two crimes predates the turn of the twentieth century. At common law, larceny was a felony regardless of the value of the property stolen. State v. Cooper, 256 N.C. 372, 124 S.E.2d 91 (1962). In 1895, the legislature changed the common law, making larceny of property valued under $20.00 a misdemeanor. However, there was a proviso added which stated that if the larceny was from the person or pursuant to a breaking *713 and entering, the section would not apply. 1895 Pub. Laws ch. 285. Thus, the common law rule making larceny a felony regardless of value was left intact by the legislature when the larceny was committed pursuant to a breaking and entering. State v. Cooper, 256 N.C. 372, 124 S.E.2d 91 (1962), determined that a thief who stole property in a breaking or entering should not get the benefit of the new misdemeanor provision, but should continue to face the harsher penalties of the common law. Over the years, the legislature amended the statute several times, raising the monetary level under which larceny would be treated as a misdemeanor in derogation of the common law. At the same time, it increased the number of exceptions to the statute. See, e.g., 1913 Pub.Laws ch. 118; 1949 N.C.Sess.Laws ch. 145; 1959 N.C. Sess.Laws ch. 1285.
The statute remained in this form until 1969. In that year, the General Assembly rewrote N.C.G.S. §§ 14-51, 14-53, 14-54, 14-55, 14-56, 14-57, and 14-72 in acts which were titled as "clarifications" of the laws. 1969 N.C.Sess.Laws ch. 522, ch. 543. The 1969 amendments to N.C.G.S. § 14-72 provided, inter alia, that larceny committed pursuant to a burglary (N.C.G.S. § 14-51), breaking out of a dwelling house burglary (N.C.G.S. § 14-53), breaking or entering (N.C.G.S. § 14-54), or burglary involving the use of explosives (N.C.G.S. § 14-57) would be a felony regardless of the value of the property stolen. Rather than continuing to leave the common law rule in effect by implication as to those specified circumstances of larceny, the legislature codified that rule, specifically stating that larceny is a felony regardless of value in those situations. Thus, the statute as presently constituted was intended to clarify, not change, the previous enactments.
Even the placement of these two crimes in the General Statutes may be some indication that the legislature intended that they be separate and distinct. Chapter 14 of the General Statutes, entitled "Criminal Law," is divided into eleven subchapters composed of seventy-four different articles. Breaking or entering (N.C.G.S. § 14-54) is found under Article 14 of Subchapter IV, entitled "Offenses Against the Habitation and Other Buildings," while larceny is found under Article 16 of Subchapter V, entitled "Offenses Against Property."
With regard to the judicial history of the treatment of the two crimes, this Court has uniformly and frequently held, from as early as the turn of the century, that breaking and/or entering and larceny are separate and distinct crimes. E.g., State v. Hooker, 145 N.C. 581, 59 S.E. 866 (1907); State v. Brown, 308 N.C. 181, 301 S.E.2d 89 (1983). Our appellate courts have also sustained convictions for both breaking or entering and felony larceny pursuant to breaking or entering in a single trial. See State v. Harris, 279 N.C. 307, 182 S.E.2d 364 (1971); State v. Greer, 270 N.C. 143, 153 S.E.2d 849 (1967); State v. Aaron, 29 N.C.App. 582, 225 S.E.2d 117, cert. denied, 290 N.C. 663, 228 S.E.2d 455 (1976), cert. denied, 430 U.S. 908, 97 S.Ct. 1180, 51 L.Ed.2d 585 (1977). It would appear that we have also approved multiple punishments for both offenses. See State v. Morgan, 265 N.C. 597, 144 S.E.2d 633 (1965), overruled on other grounds, 275 N.C. 439, 168 S.E.2d 401 (1969). These many years of uniform construction have been acquiesced in by our legislature. Had conviction and punishment of both crimes in a single trial not been intended by our legislature, it could have addressed the matter during the course of these many years.
The two crimes of breaking or entering and felony larceny carry the same penaltiesboth are Class H felonies, punishable by a maximum of ten years imprisonment. N.C.G.S. § 14-1.1. It is noteworthy that under defendant's analysis herethat the crime of breaking or entering is a lesser-included offense of felony larceny pursuant to a breaking or enteringfirst- and second-degree burglary and burglary with explosives (Class C, D, and E felonies, respectively, carrying maximum sentences of 50, 40, and 30 years, respectively) would be lesser-included offenses of the Class H felony of larceny. Our legislature could not have intended such an absurd result.
*714 We do not believe that our legislature intended that the crime of breaking or entering should subsume the co-equal crime of felony larceny committed pursuant to the breaking or entering. We conclude that the legislature intended that the crime of breaking or entering and the crime of felony larceny pursuant to that breaking or entering be separately punished.
We hold that a defendant may be tried for, convicted of, and punished separately for the crime of breaking or entering and the crime of felony larceny following that breaking or entering when the cases are jointly tried. Finally, we note that this question might have been avoided altogether by the presentation of the felony larceny to the jury upon specific verdict issues.
AFFIRMED.
EXUM, Justice, dissenting as to Part II.
I concede that under Missouri v. Hunter, 459 U.S. 359, 103 S.Ct. 673, 74 L.Ed.2d 535 (1983), the Double Jeopardy Clause of the Fifth Amendment to the United States Constitution does not preclude punishing this defendant for both felonious breaking or entering and felonious larceny, of which, we must assume, the breaking or entering is an essential element, so long as our legislature so intended.
I think Hunter was incorrectly decided. It is based, in my view, on a misapplication of principles formulated by the United States Supreme Court in earlier cases and designed to resolve double jeopardy questions other than the one presented here and in Hunter. The misapplication is understandable because as the Supreme Court itself acknowledged in Albernaz v. United States, 450 U.S. 333, 343, 101 S.Ct. 1137, 1144-45, 67 L.Ed.2d 275, 284 (1981), its "decisional law in the [double jeopardy] area is a veritable Sargasso Sea which could not fail to challenge the most intrepid judicial navigator." Now a majority of our Court has, by slavishly following Hunter and misapplying some of the same precedents there relied on, determined to entangle itself in this Sargasso Sea even after being forewarned by the Court which created it and decided Hunter based upon it. Forewarned, for the majority, is not, alas, to be forearmed.
I concede, of course, that we are bound by Hunter insofar as we must decide this case under the Double Jeopardy Clause of the Fifth Amendment. We are not bound to follow Hunter and are free to follow our own precedents on the subject insofar as we base decision on the double jeopardy prohibition contained in the Law of the Land Clause in Article I, section 19 of the North Carolina Constitution. See State v. Crocker, 239 N.C. 446, 80 S.E.2d 243 (1954) (Law of Land Clause includes prohibition against double jeopardy).
Unlike those of the United States Supreme Court, our precedents speak with one clear, unambiguous voice on the subject. The majority recognizes as much in that it finds it necessary to overrule State v. Midyette, 270 N.C. 229, 154 S.E.2d 66 (1976), and to find "erroneous" the stated rationale for the Court's decision in State v. Thompson, 280 N.C. 202, 185 S.E.2d 666 (1972), in order to sustain its position.
We should in this case follow our precedents, avoid the United States Supreme Court's Sargasso Sea, and hold that to punish both for the breaking or entering and for the larceny in this case violates the double jeopardy prohibition of Article I, section 19 of the North Carolina Constitution.
The essential fallacy in the majority opinion and the United States Supreme Court's Hunter opinion is the failure to distinguish between two different situations which call for different applications of double jeopardy principles. The first situation is that in which a single criminal transaction amounts to the violation of two or more criminal statutes, neither of which violation forms an essential element of the other. The question is: Can the state convict and punish for each criminal offense committed? In this context the United States Supreme Court has concluded that it can so long as the legislature so intended. Albernaz v. United States, 450 U.S. 333, 101 *715 S.Ct. 1137, 67 L.Ed.2d 275 (1981); Blockburger v. United States, 284 U.S. 299, 52 S.Ct. 180, 76 L.Ed. 306 (1932). This Court, without discussing the question of legislative intent, has concluded that it can. State v. Barefoot, 241 N.C. 650, 86 S.E.2d 424 (1955); State v. Davis, 223 N.C. 54, 25 S.E.2d 164 (1943). This was the context addressed by the language in State v. Murray, 310 N.C. 541, 547, 313 S.E.2d 523, 528 (1984), here relied on by the majority. These cases note that determination of whether the single transaction really constitutes more than one offense or only one offense may require an examination of the various elements involved in the offenses and may ultimately rest on whether each offense has an element the other does not. But once it is established through this test that two or more different criminal offenses have been committed, albeit by only one factual transaction, the double jeopardy prohibition does not preclude punishing each different offense committed if the legislature intended that each be separately punished.
This is not the question presented in this appeal, although the majority sometimes treats the appeal as if it were. The question presented in this appeal may be put as follows: When a defendant is simultaneously convicted of two or more crimes and one of those crimes constitutes an essential element of the other so that without this elemental crime there could be no conviction of the other compound crime, does the double jeopardy prohibition preclude punishing defendant both for the compound crime and the elemental crime. Until Hunter, the United States Supreme Court cases relied on by the majority do not answer this question. Except for Hunter, these cases do not hold that this question resolves itself to one of legislative intent.
The closest case factually to the one before us is Whalen v. United States, 445 U.S. 684, 100 S.Ct. 1432, 63 L.Ed.2d 715 (1980). In Whalen defendant was convicted of first degree "felony murder" on the theory that he murdered his victim during the perpetration of a rape. He was also convicted of the rape. He was given consecutive sentences for both the first degree murder and the rape. The United States Supreme Court held that consecutive sentences could not be imposed for both crimes on the ground "that Congress did not authorize consecutive sentences for rape and for a killing committed in the course of the rape...." 445 U.S. at 693, 100 S.Ct. at 1438, 63 L.Ed.2d at 725, and "[t]he Double Jeopardy Clause at the very least precludes federal courts from imposing consecutive sentences unless authorized by Congress to do so." 445 U.S. at 689, 100 S.Ct. at 1436, 63 L.Ed.2d at 722 (emphasis supplied). Whalen does not hold, indeed it could not have held given its view of congressional intent, that had Congress intended consecutive punishments for both the rape and the murder it would have been constitutionally permissible.
As I have previously noted, Albernaz and Blockberger, and our own Murray, involved situations where one transaction resulted in defendants' convictions of one or more crimes. In none of the cases was one of the crimes an essential element of another. The cases address the question of whether in law one or more crimes were committed and if so whether each crime could be punished separately and cumulatively. The Court looked to see whether each crime had elements not present in the others to answer the first question and to legislative intent to answer the second.
Our felony murder cases provide a perfect analogy for resolving this case and should be considered as controlling it. It has, as the majority concedes, long been the law in this jurisdiction that the state may not punish both for the felony murder and the underlying felony which constitutes an essential element of the felony murder. State v. Martin, 309 N.C. 465, 308 S.E.2d 277 (1983); State v. Williams, 284 N.C. 67, 199 S.E.2d 409 (1973); State v. Thompson, 280 N.C. 202, 185 S.E.2d 666 (1972). This result has sometimes been referred to as the "merger rule," or "merger doctrine." State v. Silhan, 302 N.C. 223, 262-63, 275 S.E.2d 450, 478 (1981); *716 State v. Jeffries, 55 N.C.App. 269, 290, 285 S.E.2d 307, 320 (1982). The true basis for the rule, however, lies in the double jeopardy prohibition.
In considering whether to permit the underlying felony of armed robbery in a capital, felony murder prosecution to be considered as an aggravating circumstance, this Court had reason to consider the application of the merger rule in concluding that the underlying felony, if used to convict defendant of first degree felony murder, could not also be considered as an aggravating circumstance at the sentencing phase. State v. Cherry, 298 N.C. 86, 257 S.E.2d 551 (1979), cert. denied, 446 U.S. 941, 100 S.Ct. 2165, 64 L.Ed.2d 796 (1980). For a unanimous Court, Justice, now Chief Justice Branch wrote:
Although designed to prevent double jeopardy, a problem with which we are not here confronted, we think the merger rule sheds light on the question before us. Once the underlying felony has been used to obtain a conviction of first degree murder, it has become an element of that crime and may not thereafter be the basis for additional prosecution or sentence. Neither do we think the underlying felony should be submitted to the jury as an aggravating circumstance in the sentencing phase when it was the basis for, and an element of, a capital felony conviction.
298 N.C. at 113, 251 S.E.2d at 567-68 (emphasis supplied).
Neither do I think, as does the majority, that this Court erred in State v. Thompson, 280 N.C. 202, 185 S.E.2d 666 (1972), when it said, in a felony murder case, that the underlying felony of felonious breaking or entering was a lesser included offense of the felony murder in the sense that it was "an essential and indispensable element in the state's proof of murder committed in the perpetration of the felony of feloniously breaking into and entering that particular dwelling." 280 N.C. at 215, 185 S.E.2d at 675. This language was quoted with approval and emphasized in State v. McLaughlin, 286 N.C. 597, 213 S.E.2d 238 (1975).
The reason, of course, that the underlying felony in a felony murder prosecution is a lesser included offense of the felony murder is because once the state has proved the felony murder it has proved all of the elements of the underlying offense and in addition the other elements necessary to prove the felony murder. The underlying felony is a lesser included offense in a felony murder prosecution in the same sense as the joyriding offense was held to be a lesser included offense of auto theft for double jeopardy purposes in Brown v. Ohio, 432 U.S. 161, 97 S.Ct. 2221, 53 L.Ed.2d 187 (1977). The Court there said:
Here the Ohio Court of Appeals has authoritatively defined the elements of the two Ohio crimes: joyriding consists of taking or operating a vehicle without the owner's consent, and auto theft consists of joyriding with the intent permanently to deprive the owner of possession. App. 22. Joyriding is the lesser included offense. The prosecutor who has established joyriding need only prove the requisite intent in order to establish auto theft; the prosecutor who has established auto theft necessarily has established joyriding as well.
432 U.S. at 167, 97 S.Ct. at 2226, 53 L.Ed.2d at 195. The Court in Brown held that a defendant who had pled guilty to joyriding could not later be prosecuted for auto theft, saying:
If two offenses are the same ... for purposes of barring consecutive sentences at a single trial, they necessarily will be the same for purposes of barring successive prosecutions. Where the judge is forbidden to impose cumulative punishment for two crimes at the end of a single proceeding, the prosecutor is forbidden to strive for the same result in successive proceedings. Unless `each statute requires proof of an additional fact which the other does not' the Double Jeopardy Clause prohibits successive prosecutions as well as cumulative punishment. *717 432 U.S. at 166, 97 S.Ct. at 2225, 53 L.Ed.2d at 194-95 (citations in original deleted). The Supreme Court then concluded that proof of auto theft necessarily proved joyriding. There were no additional elements of joyriding which were not included in the crime of auto theft. Therefore both offenses were the same, and both successive prosecutions and double punishment were prohibited by the Double Jeopardy Clause.
In State v. Williams, 295 N.C. 655, 249 S.E.2d 709 (1978), defendant kidnapped two women, forced them at gunpoint to a deserted place where he then robbed both, shot onecausing serious injury but not deathand raped the other. He was convicted at one trial of kidnapping, rape, armed robbery, and felonious assault. One of the questions in the case was whether he could be sentenced for all crimes, the sentences to be served consecutively. The argument was made that the robbery, the rape and the assault were essential elements required to prove "aggravated" kidnapping under the kidnapping statute as it was then written. We concluded that these felonies were not elements of kidnapping nor were they sentence-enhancing factors. Defendant, we concluded under the statute as it was then written, could have been given the same punishment for kidnapping whether or not these other offenses had occurred, unless defendant could have proved certain mitigating factors then provided for in the statute.
Importantly in Williams this Court acknowledged as valid the principle relied on by defendant "that when a criminal offense in its entirety is an essential element of another offense a defendant may not be punished for both offenses...." Id. at 659, 249 S.E.2d at 713. The Court went on to say:
This principle is frequently applied in felony-murder cases when the underlying felony is used as an essential element of first degree murder. In such cases punishment for the murder precludes punishment also for the underlying felony. (Citations omitted.) The principle, however, is not limited to felony murder, but applies in any situation in which one criminal offense is in its entirety an essential element of another offense. State v. Midyette, 270 N.C. 229, 154 S.E.2d 66 (1967). The basis for each application is the constitutional prohibition against double jeopardy. Amends. V and XIV, U.S. Const.; Art. I, § 19, N.C. Const. See cases cited in 4 N.C. Index 3d, Criminal Law, §§ 26-26.9.
Id., 249 S.E.2d n. 3.
In Midyette two indictments were consolidated for trial. In one, No. 483, defendant was charged with the felonious assault of one W.I. Robertson by shooting him with a .22 caliber pistol. In the second case, No. 484, defendant was charged with resisting a public officer, to wit, W.I. Robertson, while in the discharge of his duty "by firing at and hitting the said officer with bullets from a .22 caliber pistol." Defendant was convicted and sentenced on both offenses. On appeal, this Court arrested judgment in the resisting arrest case. The Court said that having been convicted of the felonious assault against Robertson, defendant "could not thereafter be lawfully indicted, convicted and sentenced a second time for that offense, or for any other offense of which it, in its entirety, is an essential element." 270 N.C. at 233, 154 S.E.2d at 70. The Court went on to say that the state by its allegations in the indictments had made the assault case an essential element of the resisting arrest case, saying:
By the allegations it elects to make in an indictment, the state may make one offense an essential element of another, though it is not inherently so, as where an indictment for murder charges that the murder was committed in the perpetration of a robbery. In such a case, a showing that the defendant has been previously convicted, or acquitted, of the robbery so charged will bar his prosecution under the murder indictment. State v. Bell, 205 N.C. 225, 170, 171 S.E. 50.
Id. Finally the Court noted that under the indictments by which defendant was tried *718 the State could not convict the defendant of resistance of a public officer in the performance of his duty without proving the defendant guilty of the exact offense [the felonious assault] for which he has been convicted and sentenced [in the assault case].
Id. at 234, 154 S.E.2d at 70.
The above authorities of this Court should control this case. Here, the breaking or entering was an essential element of the felonious larceny. Without it, defendant could not have been convicted of felonious larceny, assuming, as we must, that this was the theory of felonious larceny upon which the jury relied. Consequently, the state may not punish defendant for both the felonious larceny and the felonious breaking or entering.
To me, it simply makes no sense to say that the constitutional double jeopardy prohibition provides no check on legislative but only on judicial power. If, as the United States Supreme Court has said many times, and as the majority here acknowledges, the double jeopardy prohibition means that the state cannot punish more than once for a single offense, this must mean that the legislature cannot authorize courts to punish more than once for a single offense. I would so interpret this state's constitution, notwithstanding what the United States Supreme Court has held with regard to the federal constitution.
The expression that the double jeopardy prohibition applies more to the courts than it does to the legislature arises from the fact that only courts punish for crime. The legislature defines crimes and sets punishments, but it does not punish. Since only courts punish, the prohibition against double punishment must of necessity be directed more to courts than to the legislature. The expression means that courts must not apply legislatively prescribed punishments so as, in effect, to punish more than once for a single offense. It does not mean that the legislature is free to authorize the courts to punish more than once for a single offense.
Under our precedents when one crime, the elemental crime, is used as an essential element to prove another compound crime, which could not be proved without this element, and defendant is convicted simultaneously of both the compound crime and the elemental crime, both convictions cannot stand and be separately punished. To do so, this Court has consistently held, is to convict and punish for the elemental crime twicea violation of the double jeopardy prohibition. These holdings seem eminently sound to me.
Even if the majority's position that the double jeopardy question resolves itself into one of legislative intent is adopted, I find no evidence in the statutes of any legislative intent to authorize punishment for both felonious larceny and felonious breaking when the latter constitutes an essential element of the former. In Missouri v. Hunter, 459 U.S. 359, 103 S.Ct. 673, 74 L.Ed.2d 535 (1983), upon which the majority primarily relies, the Missouri legislature had expressly authorized punishment for the primary felony ["armed criminal action"] and additional punishment for the elemental felony ["first degree robbery"]. I do not think we should, as the majority does, imply from the statutory history of the larceny and breaking statutes a legislative intent to authorize punishment for the felonious larceny and in addition punishment for the felonious breaking which forms an essential element of the larceny. The breaking and larceny statutes were passed, or amended, before Missouri v. Hunter was decided when decisions of both this Court and the United States Supreme Court provided no support for the notion that the legislature could authorize punishment for a primary offense and additional punishment for an offense forming an essential element thereof. It seems clear to me that when the larceny and breaking statutes were passed and amended, our legislature would not have thought it had the power to authorize punishment for both felonious larceny and felonious breaking when the latter was an essential element of the former. Not thinking *719 it had the power, it would not have intended to exercise it.
The majority argues that this Court has "approved multiple punishments" for breaking or entering when this crime is an essential element of felonious larceny, i.e., that punishment may be imposed both for the breaking offense and the larceny offense when defendant is tried and convicted of both at the same trial and the former is an essential element of the latter. It then argues that since the legislature has acquiesced in this Court's "approval," it must intend the result we approved.
The majority relies solely on State v. Morgan, 265 N.C. 597, 144 S.E.2d 633 (1965), for the proposition that our Court has heretofore approved the result it reaches today. In Morgan defendant was indicted in one count of the bill for felonious breaking or entering a certain storehouse and in another count with the larceny of goods of less than $200 in value. He entered pleas of guilty to both counts. He was sentenced in the breaking case to not less than two nor more than four years and received a similar sentence in the larceny case, the latter to begin at the expiration of the former. Defendant's sole contention on appeal was that the sentences imposed were excessive and harsh and "unwarranted by the true spirit of the statute." This Court, in a per curiam opinion, affirmed the judgments, saying simply:
Under the provisions of G.S. 14-54, the crime charged in the first count, to which defendant pleaded guilty, is punishable by a sentence in prison of four months to ten years.
The crime charged in the second count in the bill of indictment, to wit, larceny of property from a storehouse, with felonious intent, et cetera, is a felony as at common law, without regard to the value of the property stolen. S. v. Cooper, 256 N.C. 372, 124 S.E.2d 91.
The court below could have imposed a maximum sentence of ten years on each count.
There is no merit in defendant's contention, and the sentences imposed by the court below will be upheld.
265 N.C. at 598, 144 S.E.2d at 633.
Morgan is too slender a reed to support the majority's legislative-acquiescence-in-judicial-approval theory. First, there was no contention in Morgan that the sentences imposed violated the double jeopardy prohibition. Second, defendant entered pleas of guilty to the crimes charged. It was not, therefore, incumbent upon the Court to determine upon which theory defendant might have been convicted of felonious larceny had he not pled guilty.
A defendant, nothing else appearing, pleads guilty to a charge contained in a bill of indictment not to a particular legal theory by which that charge may be proved. His plea waives his right to put the state to its proof. It obviates the necessity for the state's invocation of some particular legal theory upon which to convict defendant. The question of which theory, if there is more than one available, upon which defendant might be guilty does not arise. His plea of guilty means, nothing else appearing, that he is guilty upon any and all theories available to the state.
State v. Silhan, 302 N.C. 223, 263, 275 S.E.2d 450, 478 (1981). Finally, the result in Morgan, insofar as it stood for the proposition that the larceny count in the bill of indictment was sufficient to charge a felony, was overruled in State v. Jones, 275 N.C. 432, 168 S.E.2d 380 (1969).
MARTIN and FRYE, JJ., join in this dissenting opinion.
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722 F.2d 653
Jerry Larry COLLIER, Plaintiff-Appellant,v.Sergeant TATUM, Officer, Defendant-Appellee.
No. 83-8537.
United States Court of Appeals,Eleventh Circuit.
Dec. 20, 1983.
Appeals from the United States District Court for the Southern District of Georgia.
Before GODBOLD, Chief Judge, RONEY and TJOFLAT, Circuit Judges.
RONEY, Circuit Judge:
1
This motion for leave to proceed in forma pauperis came to me as a single judge matter. See Eleventh Circuit Rule 17(d)(4). I referred the motion to my motions panel (See Eleventh Circuit Internal Operating Procedure IV(E)(3)) because it raises an issue as to partial filing fees, not previously decided by published opinion in this Circuit, that is more suitable for initial panel consideration than for review after single judge action. See Eleventh Circuit Rule 17(d); Fed.R.App.P. 27(c).
2
Jerry Larry Collier, a prisoner at the Georgia State Prison in Reidsville, Georgia, and a consistent litigant in the federal courts, filed a number of civil rights actions in the Southern District of Georgia. Collier's in forma pauperis affidavit indicated that he had $140.37 in his prison account. The district court ordered Collier to pay a partial fee of $15.00 in each of four cases, or to explain why he was unable to do so. Collier responded stating that he now had only $.30 in his prison account. After further inquiry from the court, Collier failed to pay the filing fees or to explain the decrease in his account and the court dismissed the cases. The district court denied Collier's request to proceed in forma pauperis on appeal and denied a certificate of probable cause, finding that the appeal was taken in bad faith. Collier then moved for leave to proceed in forma pauperis in this Court, filing an affidavit showing no assets.
3
There are two controlling issues in this case: first, whether a prisoner-plaintiff may be required to pay a partial filing fee for an appeal, and second, whether the district court may consider a recent decrease in a prisoner's assets in determining whether to grant the prisoner indigent status.
4
28 U.S.C.A. Sec. 1915(a) provides that a court may permit the commencement of a civil action without prepayment of fees "by a person who makes affidavit that he is unable to pay such costs." The statute does not indicate what a court should do if the person is able to pay part, but not all of the costs.
5
This Circuit has never expressly ruled on whether prisoners can be required to pay partial filing fees for their appeals. In Green v. Estelle, 649 F.2d 298 (5th Cir.1981), a precedent in this Circuit, the Court held that a partial fee of forty percent of the prisoner's assets was inappropriate under the circumstances, but did not address "the question of whether the imposition of a 'partial payment' requirement might be proper in other cases." 649 F.2d at 302. Other circuits have approved partial fee requirements. See, e.g., Smith v. Martinez, 706 F.2d 572 (5th Cir.1983); Williams v. Estelle, 681 F.2d 946 (5th Cir.1982); Evans v. Croom, 650 F.2d 521 (4th Cir.1981), cert. denied, 454 U.S. 1153, 102 S.Ct. 1023, 71 L.Ed.2d 309 (1982); In re Stump, 449 F.2d 1297 (1st Cir.1971). But cf. Caldwell v. United States, 682 F.2d 142 (7th Cir.1982) (conditioning leave to proceed in forma pauperis on payment of filing fees in monthly installments was improper). Courts have required prisoners to pay partial fees in an attempt to handle the flood of pro se Sec. 1983 prisoner actions now in federal court "by weeding out those where it appears the plaintiff himself has some financial resources but has such lack of good faith in his action that he is unwilling to make any contribution, however small, towards meeting its filing costs." Evans v. Croom, 650 F.2d 521, 523 (4th Cir.1981).
6
The type of actions at which the rule is directed, though generally stated in passable pro forma allegations, considering the liberality in pleading allowed pro se complaints, has proved all too often to be without merit and frequently appears to have been begun without any real hope of success as 'mere outlets for general discontent in having to undergo penal restraint or of personal satisfaction in attempting to harass prison officials' or to enjoy what one describes as a prisoner's 'field day in the courts, at public expense,' Weller v. Dickson, 314 F.2d 598, 601 (9th Cir.1963), cert. denied, 375 U.S. 845, 84 S.Ct. 97, 11 L.Ed.2d 72. If the prisoners, by filing an indigent affidavit in such actions, may acquire at will indigent status, they will have every incentive to indulge any inclination they may have to harass their custodian. After all, they have nothing to lose and everything to gain.
7
Id. (footnotes omitted). By requiring a partial fee, courts force the prisoner "to 'confront the initial dilemma which faces most other potential civil litigants: is the merit of the claim worth the cost of pursuing it?' " Braden v. Estelle, 428 F.Supp. 595, 596 (S.D.Tex.1977).
8
Based on the reasoning of the other circuits which have so held, we hold that a district court may, in its discretion, require a partial filing fee of a prisoner-plaintiff who has some assets but is unable to pay the full amount of the fee.
9
Although Collier's in forma pauperis affidavit of September 27, 1982 stated he had $140.37 in his prison account, he stated he had only $.30 in his account on February 25, 1983, a week after the district court ordered him to pay partial fees. The district court considered this decrease in Collier's account, and Collier's failure to explain it, in dismissing the case. We hold there was no error in this approach.
10
Other courts have held that in determining whether to grant indigent status to a prisoner-plaintiff, the district court may "inquire whether, if a prisoner has no cash credit at the moment of filing, he had disabled himself by a recent drawing on his account and if so, for what purposes." Evans v. Croom, 650 F.2d 521, 525 (4th Cir.1981) (quoting In re Stump, 449 F.2d 1297, 1298 (1st Cir.1971)), cert. denied, 454 U.S. 1153, 102 S.Ct. 1023, 71 L.Ed.2d 309 (1982). See Carter v. Telectron, Inc., 452 F.Supp. 939, 942 (S.D.Tex.1976) (court is not bound by plaintiff's economic status at time of filing, but should take into account all relevant changes prior to and subsequent to filing of suit), modified, 554 F.2d 1369 (5th Cir.1977). Where decreases in a prisoner's account are considered, courts have required that the prisoner be given a reasonable opportunity to explain withdrawals from his account:
11
[I]n order for withdrawals from that account to be a basis for denial of indigent status, the district court must be able to say either from the nature or timing of the withdrawal, or both, or from other specific circumstances, that the purpose of the withdrawal appears to have been intended to avoid his obligation under the rule to pay in whole or in part filing costs. And, before reaching such conclusion, the prisoner should be given some reasonable opportunity, after appropriate notice, to explain and refute any finding to that effect, just as he has a right, after notice, to bring to the court's attention other factors that may authorize either excusing entirely any payment or reducing same.
12
Evans v. Croom, 650 F.2d at 525-26.
13
We follow the lead of those cases. Such a rule affords adequate protection for a prisoner-plaintiff who is unable to pay even partial fees. In this case, Collier was given an adequate opportunity to explain his situation. The district court's order of February 17, 1983 required Collier to pay partial fees of $15.00 in each case within twenty days, and stated:
14
If plaintiff is unable to pay this amount he is ordered to submit reasons for this inability within the time allotted for payment. Failure to pay or explain non-payment within the allotted time will result in dismissal of this action.
15
Although he was given adequate notice and opportunity, Collier made no attempt to explain the decrease in his account from $140.37 to $.30. The district court's order of April 25, 1983 stated:
16
Plaintiff is not unfamiliar with the policy toward in forma pauperis applicants in this Court. He has proceeded in that status in several previous suits. Most recently, he has been refused indigent status for the very reasons at issue here. His account reflected a balance too high not to require partial payment; the balance dropped drastically upon notification of this policy; and plaintiff provided no explanation for the decrease. Misc. No. 482-28.
17
Plaintiff, as a pro se litigant, has received great liberality from this Court in years past. However, when the Court cannot determine whether an inmate's account has been depleted intentionally to avoid court costs, the inmate has been instructed specifically in that regard, and has refused to supply a sufficient explanation, the Court cannot but refuse to allow the inmate to proceed in forma pauperis.
18
Under these circumstances, the district court did not abuse its discretion in considering the unexplained decrease in Collier's account in denying in forma pauperis status.
19
Since defendant refused to pay any partial fee, it becomes unnecessary to determine whether the amount of the partial fee required here, $15.00 in each of four cases, was within the district court's discretion. We note, however, that courts have generally adopted a flexible standard, providing for a small progressive rate of payment and subject to a showing of special circumstances justifying a different payment. Courts have looked to both a prisoner's trust account balance and to his income in establishing the amount of payment. See e.g., Smith v. Martinez, 706 F.2d 572 (5th Cir.1983) (no abuse of discretion in requiring prisoner to pay $3.00 court costs, where he received about $20.00 per month from his family); Williams v. Estelle, 681 F.2d 946 (5th Cir.1982) (no abuse of discretion in requirement that prisoner pay $8.00 fee, where he had $27.40 in his account and received about $30.00 per month from his family); Evans v. Croom, 650 F.2d 521 (4th Cir.1981) (approving district court plan requiring prisoners to pay partial filing fees not to exceed 15% of their income in the six-month period preceding their complaint), cert. denied, 454 U.S. 1153, 102 S.Ct. 1023, 71 L.Ed.2d 309 (1982); In re Stump, 449 F.2d 1297 (1st Cir.1971) (prisoner with $218.00 required to pay $15.00 fee).
20
We doubt if these cases can be decided on a strict percentage basis. In Green v. Estelle, 649 F.2d 298 (5th Cir.1981), the Court found that the district court abused its discretion in requiring a paraplegic prisoner to pay a partial fee of $12.00 which represented 40% of his total assets at the time he filed his pro se civil rights complaint. In Green, however, the payment would have left the prisoner with only $18.00, and the court noted that the death of the prisoner's mother had left him without his primary source of income.
21
In any event, the district court should enjoy a wide discretion in deciding what is fair in a particular case, taking into consideration the purpose of the rule, the litigation history of the defendant, the apparent good faith in prosecution of the lawsuit, the actual dollars involved as well as the percentages, and our basic policy that this Court is open to all good faith litigants, rich and poor alike. The application for leave to appeal in forma pauperis is
22
DENIED.
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 18-1958
SHANNON ASHFORD,
Plaintiff - Appellee,
v.
PRICEWATERHOUSECOOPERS LLP,
Defendant - Appellant.
Appeal from the United States District Court for the District of South Carolina, at
Columbia. Cameron McGowan Currie, Senior District Judge. (3:18-cv-00904-CMC-SVH)
Argued: January 30, 2020 Decided: April 3, 2020
Before NIEMEYER, QUATTLEBAUM, and RUSHING, Circuit Judges.
Reversed and remanded with instructions by published opinion. Judge Quattlebaum wrote
the opinion in which Judge Niemeyer and Judge Rushing joined.
ARGUED: Helgi C. Walker, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C.,
for Appellant. John Charles Ormond, Jr., ORMOND DUNN, Columbia, South Carolina,
for Appellee. ON BRIEF: Stacy K. Wood, PARKER POE ADAMS & BERNSTEIN
LLP, Charlotte, North Carolina; Jason C. Schwartz, GIBSON, DUNN & CRUTCHER
LLP, Washington, D.C., for Appellant.
QUATTLEBAUM, Circuit Judge:
The Federal Arbitration Act expresses a strong policy in favor of arbitration. Based
on that, the Supreme Court and our Court have consistently held that contractual provisions
capable of being reasonably read to call for arbitration should be construed in favor of
arbitration. Following our precedent, we construe the arbitration provision in the
employment agreement between Shannon Ashford and PricewaterhouseCoopers, LLP
(“PwC”) to require arbitration of Ashford’s Title VII claims. We also conclude that the
arbitration provision was neither procedurally nor substantively unconscionable.
Therefore, we reverse the district court’s denial of PwC’s motion to compel arbitration of
Ashford’s Title VII claims and remand the case with instructions to compel.
I.
PwC hired Ashford in March 2015 as an associate in its Columbia, South Carolina
advisory group. To confirm her employment, Ashford electronically executed an
employment agreement containing arbitration provisions. 1
1
An early example of an arbitration provision in the United States comes from
President George Washington. In his will, Washington provided “all disputes (if unhappily
any should arise) shall be decided by three impartial and intelligent men known for their
probity and good understanding” who “shall, unfettered by Law, or legal constructions,
declare their sense of the Testators intention; and such decision is, to all intents and
purposes to be as binding on the Parties as if it had been given in the Supreme Court of the
United States.” Washington’s Will, reprinted in The Writings of George Washington, 294
(J. Fitzpatrick ed. 1938).
2
The agreement required arbitration of all “Covered Claims,” including claims under
“federal, state and local laws regarding employment . . . and any other claims arising under
any federal, state or local statute[,] ordinance, regulation, public policy or common law.”
J.A. 45. It expressly excluded, however, “[c]laims that arise under Title VII of the Civil
Rights Act of 1964, which prohibits employment discrimination on the basis of race, color,
religion, sex, and national origin, unless and until federal law no longer prohibits the Firm
from mandating arbitration of such claims.” J.A. 46. The agreement applied to the “Firm,”
defined to include “[PwC] and/or any of its subsidiaries or affiliates based in the United
States.” J.A. 45.
Later, after being passed over for several promotions, Ashford sued PwC in South
Carolina state court alleging race discrimination under Title VII of the Civil Rights Act of
1964 and 42 U.S.C. § 1981, and retaliation under Title VII. PwC then removed the case to
federal court and moved to compel arbitration, and to stay or dismiss the proceedings, in
accordance with the terms of Ashford’s employment agreement.
In support of its motion, PwC argued that the Title VII exclusion in Ashford’s
agreement did not apply to her claims because federal law no longer prohibited PwC from
mandating arbitration of Title VII claims. According to PwC, at the time the agreement’s
arbitration provisions were drafted, PwC was subject to the Franken Amendment to the
Defense Appropriations Act for Fiscal Year 2010—which bars certain defense contractors
from mandating arbitration of Title VII claims in employment contracts. See 48 C.F.R. §§
222.7402(a)(1)(i), 252.222–7006, 222.7400–7405. However, when Ashford’s employment
3
began, PwC no longer performed the types of work that invoked the prohibition on
mandatory arbitration and, thus, was no longer subject to the Amendment. 2
The district court granted PwC’s motion as to Ashford’s Section 1981 claim but
denied it as to her Title VII claims. Applying New York law pursuant to the agreement’s
choice of law provision, the district court concluded that the Title VII exclusion remained
in effect. The district court concluded that the “unless and until federal law no longer
prohibits” language in the Title VII exclusion required a change of federal law. Since the
law did not change, the district court reasoned her Title VII claims were still excluded from
the mandatory arbitration provision. It further found that the agreement’s definition of
“Firm” included PwC and any of its subsidiaries or affiliates. Based on this language, the
district court determined that PwC was required to establish that neither PwC nor any of
its subsidiaries or affiliates were prohibited from mandating the arbitration of Title VII
claims by federal law. But since PwC only presented evidence that it was not prohibited
from mandating the arbitration of Title VII claims, the court ruled that PwC failed to
establish that the Title VII exclusion did not apply. Finally, the district court alternatively
concluded that if the Title VII exclusion ceased to apply because of a change in facts, rather
than a change of law, it was procedurally and substantively unconscionable.
2
Through a declaration, a PwC employee testified that PwC has not been a party to
any non-commercial contract with the U.S. Department of Defense in excess of one million
dollars during the time relevant to this litigation. Ashford does not dispute this issue.
4
PwC timely appealed the district court’s order. 3 We have jurisdiction over this
interlocutory appeal pursuant to 9 U.S.C. § 16.
II.
PwC’s appeal requires us to consider two primary issues. First, does Ashford’s
employment agreement exclude her Title VII claims from the mandatory arbitration
requirement? If so, that ends our inquiry and the judgment of the district court should be
affirmed. But if not, we must then consider whether the Title VII exclusion is
unconscionable. We address each of these issues in turn.
A.
We first consider whether the employment agreement excludes Ashford’s Title VII
claims from arbitration. In doing so, we “review de novo the enforceability of an arbitration
provision, and apply a strong federal policy in favor of enforcing arbitration agreements.”
Dillon v. BMO Harris Bank, N.A., 856 F.3d 330, 333 (4th Cir. 2017) (internal quotation
marks omitted). Congress enacted the Federal Arbitration Act (“FAA”) to curb
“widespread judicial hostility to arbitration agreements.” AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 339 (2011). The FAA requires courts to “rigorously . . . enforce
arbitration agreements according to their terms . . . .” Epic Sys. Corp. v. Lewis, 138 S. Ct.
1612, 1620 (2018) (internal quotation marks omitted). The FAA’s policy of favoring
3
Neither party objected to the district court’s order compelling the arbitration of
Ashford’s Section 1981 claim.
5
arbitration augments “ordinary rules of contract interpretation,” Choice Hotels Int’l, Inc. v.
BSR Tropicana Resort, Inc., 252 F.3d 707, 710 (4th Cir. 2001), and requires all ambiguities
to be resolved in favor of arbitration. Wash. Square Secs., Inc. v. Aune, 385 F.3d 432, 436
(4th Cir. 2004). It applies with equal force to employment agreements providing for the
arbitration of discrimination claims brought under Title VII of the Civil Rights Act. Murray
v. United Food and Commercial Workers Int’l. Union, 289 F.3d 297, 301 (4th Cir. 2002).
1.
With that background in mind, we turn to PwC’s first argument. PwC insists the
agreement requires arbitration of Ashford’s Title VII claims if either the law changed to
allow PwC to arbitrate Title VII claims or facts changed so that any federal prohibition of
mandatory arbitration of such claims no longer applied to PwC. In contrast, Ashford
contends the agreement requires arbitration of Title VII claims only in the event of a change
of law. It is undisputed that no such change in law has occurred. Therefore, for PwC to
prevail, the agreement must allow arbitration of Title VII claims if facts change so that the
prohibition of mandatory arbitration of Title VII claims does not apply to PwC.
Importantly, under precedent from the Supreme Court and this Court, we must read
the Title VII exclusion in favor of arbitration if we can reasonably do so.
[T]here is a presumption of arbitrability in the sense that “[a]n order to
arbitrate the particular grievance should not be denied unless it may be said
with positive assurance that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute. Doubts should be resolved in
favor of coverage.”
AT&T Techs., Inc. v. Commc’ns Workers of America, 475 U.S. 643, 650 (1986) (quoting
United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582–83 (1960)); see
6
also Aune, 385 F.3d at 436. Thus, we ask if the agreement can be read to permit arbitration
here.
We conclude that it can. The key language from the agreement is “unless and until
federal law no longer prohibits the Firm from mandating arbitration of such claims.”
Critically, this language does not say that the only way PwC can mandate arbitration of
Title VII claims is if federal law no longer prohibits PwC from mandating arbitration due
to a change in law. Instead, it looks more broadly as to whether PwC is no longer prohibited
from mandating arbitration of Title VII claims, regardless of the reason.
Further, for federal law to prohibit PwC from mandating arbitration of Title VII
claims, there must be both a legal prohibition against mandating arbitration and facts tying
PwC to that prohibition. The pertinent legal prohibition is the Franken Amendment to the
Defense Appropriations Act for Fiscal Year 2010. That amendment bars defense
contractors from mandating arbitration of Title VII employment claims. But the prohibition
only applied to those engaged in certain defense contracting. At the time the agreement
was drafted, PwC performed the type of defense contracting work that subjected it to the
Franken Amendment. Together, the existence of the prohibition—the law—and PwC’s
defense contracting work—the facts—combined to prohibit PwC from mandating
arbitration of Title VII claims.
And since both the law and the facts were required to prohibit PwC from mandating
arbitration of Title VII claims, a change in either could result in federal law “no longer
prohibit[ing] PwC from mandating arbitration” of such claims. Here it was a change in the
relevant facts. PwC ceased performing the type of defense contracting work that subjected
7
it to the Franken Amendment. As a result, the federal law prohibiting mandatory arbitration
of such claims no longer applied to PwC.
The agreement can be reasonably read to cover a change in facts, like the change
that occurred here, that results in federal law no longer prohibiting PwC from mandating
arbitration of Title VII claims. While the language of the agreement at issue is admittedly
not a model of clarity, we do not review it with a clean slate. The FAA and our precedent
tip the scales decidedly in favor of arbitration. Since the reading advanced by PwC is a
reasonable interpretation of the language agreed to by the parties, we must construe the
agreement to permit the arbitration of Ashford’s Title VII claims.
2.
Next, PwC argues it established that the “Firm” as referred to in the agreement was
no longer prohibited from mandating arbitration of Title VII claims. Once again, the
agreement defined the “Firm” to include “[PwC] and/or any of its subsidiaries or affiliates
based in the United States.” J.A. 45. The resolution of this issue centers on whether PwC
was permitted to show that only PwC was no longer prohibited from mandating arbitration
of Title VII claims or whether PwC was required to show that PwC and all its affiliates and
subsidiaries were no longer prohibited. The inclusion of “or” in the definition of the “Firm”
is critical. By using “or,” the parties agreed Title VII claims were subject to arbitration if
PwC or any of its subsidiaries or affiliates were no longer prohibited from mandating
arbitration of Title VII claims. Ashford sued PwC, her employer. Therefore, we need only
determine if it is prohibited by federal law from mandating arbitration of Title VII claims.
Since, as set forth above, it no longer is, the Title VII exclusion does not apply.
8
In sum, the FAA’s policy of favoring arbitration governs our resolution of the
applicability of the Title VII exclusion. And that result is neither harsh nor unfair. After
all, Ashford did not waive any substantive rights by agreeing to arbitrate her Title VII
claims. See Murray, 289 F.3d at 301 (internal quotation marks omitted). She merely agreed
to present her Title VII claims to an arbitrator rather than a judge or jury. She will still have
an opportunity to present her case and obtain relief if PwC is found to have discriminated
against her.
B.
Having determined that the Title VII exclusion does not prohibit the arbitration of
Ashford’s Title VII claims, we must next consider whether that provision was
unconscionable. To address this issue, we begin with a review of the applicable state’s
unconscionability law—which the parties agree is New York. “An unconscionable contract
has been defined as one which is so grossly unreasonable or unconscionable in the light of
the mores and business practices of the time and place as to be unenforcible [sic] according
to its literal terms.” Gillman v. Chase Manhattan Bank, N.A., 534 N.E.2d 824, 828 (N.Y.
1988) (internal quotation marks omitted). Unconscionability requires a showing that the
contract was both procedurally and substantively unconscionable when made. Id. The
procedural element requires us to examine the “contract formation process and the alleged
lack of meaningful choice.” Id. at 828. “The focus is on such matters as the size and
commercial setting of the transaction . . . whether deceptive or high-pressured tactics were
employed, the use of fine print in the contract, the experience and education of the party
9
claiming unconscionability, and whether there was disparity in bargaining power.” Id.
(internal citation omitted).
The record does not support a conclusion of procedural unconscionability.
Ashford’s argument to the contrary is primarily based on her contention that only PwC
would know if the Franken Amendment no longer applied to PwC at the time of any Title
VII claim. According to Ashford, since such information is solely in the possession of PwC,
the applicability of the Title VII exclusion was “at least as deceptive as hidden language or
fine print.” J.A. 177. But this contention, even if true, relates to the substance of the
agreement, not the contract formation process or the lack of meaningful choice.
Accordingly, Ashford’s lack of knowledge about the applicability of the Title VII exclusion
does not establish procedural unconscionability.
Ashford’s other argument in favor of procedural unconscionability is that she lacked
equal bargaining power with PwC. However, unequal bargaining power alone does not
render a contract procedurally unconscionable. Indeed, if unequal bargaining power were
enough to create procedural unconscionability, virtually all agreements requiring
employees to arbitrate would be unconscionable as employers generally have greater
bargaining power than potential employees. Plainly, that is not the law.
And Ashford is not your run of the mill employee. She is a professional consultant
with one of the largest firms in the country with degrees from Stanford University,
Columbia University and Harvard University. Both her job duties and impressive
educational background cut against Ashford’s procedural unconscionability argument.
10
While the lack of procedural unconscionability is fatal to Ashford’s argument,
substantive unconscionability is also lacking. Substantive unconscionability focuses on
“the substance of the bargain to determine whether the terms were unreasonably favorable
to the party against whom unconscionability is urged[.]” Id. at 829. “[T]here have been
exceptional cases where a provision of the contract is so outrageous as to warrant holding
it unenforceable on the ground of substantive unconscionability alone.” Id. But this is not
such a contract. Importantly, arbitration agreements in employment contracts that bind both
parties equally are not per se unconscionable under New York law. See Eisen v. Venulum
Ltd., 244 F. Supp. 3d 324, 342 (W.D.N.Y. 2017); Sablosky v. Edward S. Gordon Co., Inc.,
535 N.E.2d 643, 647 (1989).
Faced with this uphill battle, Ashford repeats the argument she made concerning
procedural unconscionability. She contends that, under PwC’s reading of the Title VII
exclusion, only PwC would know whether the facts allowed arbitration. Putting aside that
nothing in the agreement prohibits her from asking PwC about whether the exclusion
applies, we agree the relevant information would likely be in PwC’s hands. But we fail to
see how that renders the Title VII exclusion substantively unconscionable. The terms of
the agreement indicate that, at a minimum, there was a risk that any Title VII claim might
have to be arbitrated. Aware of that risk, Ashford had the option to work for PwC or seek
employment elsewhere. But after agreeing to work for PwC and executing the company’s
employment agreement, she cannot now avoid the agreement’s arbitration and Title VII
exclusion provisions. Ashford’s argument that these provisions are unconscionable is not
supported by the record.
11
III.
For these reasons, Ashford’s Title VII claims are subject to arbitration. The district
court’s denial of PwC’s motion to compel arbitration of Ashford’s Title VII claims is
reversed. We remand this case to the district court with instructions to dismiss the
complaint and compel arbitration.
REVERSED AND REMANDED WITH INSTRUCTIONS
12
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44 F.3d 348
Terry THRIFT, Jr., Plaintiff-Counter Defendant-AppellantCross-Appellee,v.Sandra HUBBARD, as Independent Administratrix of the Estateof Victor Mark Hubbard, Deceased, et al.,Defendants-Counter Plaintiffs-AppelleesCross-Appellants,v.EMIS SOFTWARE, INC., Counter Defendant-Appellant, Cross-Appellee.
No. 93-8609.
United States Court of Appeals,Fifth Circuit.
Feb. 15, 1995.Rehearing Denied March 16, 1995.
Charles W. Scholz, San Antonio, TX, for appellant.
Sharon E. Callaway, Thomas H. Crofts, Jr., Crofts, Callaway & Jefferson, Charles Darby Riley, San Antonio, TX, for appellee.
Appeal from the United States District Court for the Western District of Texas.
Before SMITH and EMILIO M. GARZA, Circuit Judges, and STAGG, District Judge.*
EMILIO M. GARZA, Circuit Judge:
1
This appeal arises out of a suit over soured business dealings among the various parties involved. Terry Thrift, Jr., and EMIS Software appeal the district court's judgment on issues of alter ego and the sufficiency of the pleadings. The Estate of Victor Hubbard and Sandra Hubbard ("the Hubbards") and Peerless Technologies Corporation ("Peerless") cross-appeal the district court's judgment, alleging errors on issues of prejudgment interest, usury, and contract ambiguity. We affirm in part, vacate in part, and remand.
2
* The Hubbards formed Peerless as a spinoff of the software division of a company called PECO.1 Under the agreement between Peerless and PECO, Peerless received ownership rights to the division's software and other fixed assets, but PECO retained a reversionary interest in the software and fixed assets. Peerless also agreed to pay royalties to PECO on sales of the software. One of the software packages that PECO transferred to Peerless was called EMIS, then version 1.0. After its formation, Peerless continued to develop EMIS, eventually developing versions 1.1 and 1.2.
3
Thrift became involved with Peerless when he purchased stock in the company. He later agreed to fund a revolving-credit loan to Peerless, and he and Peerless entered into a Revolving Credit Note and Security Agreement to that effect. Thrift received certain rights to various Peerless assets under the Agreement, and the Hubbards pledged one-half of their Peerless stock as additional security. Peerless defaulted on the note, and Thrift sent the Hubbards a notice of default and demanded payment. The pledged stock was transferred to Thrift, after which the parties negotiated a second Revolving Credit Note.
4
Thrift also agreed to fund Peerless' buyout of PECO's reversionary interest in Peerless. The Assignment and Option Agreement executed for that purpose assigned rights in various fixed assets to Thrift, with Peerless to lease those assets from Thrift in exchange for royalty payments. Thrift gave Victor Hubbard a check for $100,000 to fund the buyout, and Hubbard deposited the funds in a Peerless account. Before the buyout was executed, the IRS seized $87,122.85 from the Peerless account for unpaid employment taxes. Peerless refunded the difference ($12,877.15) to Thrift and executed a note to Thrift for the seized funds. Thrift then agreed to finance the buyout once more, but he made payment directly to PECO and paid only $75,000.
5
Thrift also made a short-term loan of $17,981 to Peerless. Under the terms of the loan, accounts receivable should have provided the basis for repayment, but no repayment ever occurred.
6
The Hubbards shortly thereafter formed a new company, GP Services, to act as a reseller of software for Peerless. They also moved some of Peerless' assets to their new GP Services offices. Thrift eventually visited the Peerless offices and discovered the Hubbards' actions. Bill Schaeffer, Peerless' Chief Operating Officer, agreed to change the locks on the Peerless offices to prevent further removal of assets.
7
Thrift then sent the Hubbards a notice of default on the revolving credit notes and demanded payment. He also demanded payment of past-due royalties and the $17,981 short-term loan. Peerless assigned accounts receivable to Thrift due to the unpaid debts, and Thrift returned all his Peerless stock to Peerless.
8
Thrift later formed his own company, EMIS Software, Inc., and EMIS Software and GP Services signed a Major Account Reseller Agreement ("MAR") under which EMIS Software licensed GP Services to resell EMIS program packages. Thrift later cancelled the MAR pursuant to its terms. After various contacts between EMIS Software representatives, including Thrift, and various customers of GP Services, some of the customers withdrew from dealings with GP Services.
9
Thrift ultimately sued the Hubbards and Peerless,2 alleging breach of contract, fraud, and violations of the Texas Deceptive Trade Practices-Consumer Protection Act ("DTPA"), in connection with the Hubbards' and Peerless' nonpayment of funds due and owing under the two Revolving Credit Notes, the funds advanced and royalties due under the Assignment and Option Agreement, and the funds lent under the $17,981 short-term arrangement. Thrift also sought declaratory relief regarding rights in all versions of EMIS.
10
The Hubbards and Peerless responded with counterclaims against Thrift and EMIS Software, Inc., alleging copyright infringement, misappropriation of trade secrets, usury, conversion, and breach of fiduciary duty. Peerless also sought injunctive relief concerning the use of EMIS versions 1.1 and 1.2. Lastly, the Hubbards alleged that Thrift and EMIS Software, Inc. had interfered with contractual relations, defamed the Hubbards, and intentionally inflicted emotional distress on them.
11
By agreement, the parties tried the case before a magistrate judge. After denying the Hubbards' and Peerless' motion for judgment as a matter of law, the magistrate judge submitted the case to a jury that decided as follows:
12
1. Thrift received ownership of all versions of EMIS under the Assignment and Option Agreement.
13
2. The Hubbards and Peerless committed fraud against Thrift.
14
3. Peerless was the alter ego of the Hubbards.
15
4. Thrift interfered with both existing and prospective contractual relations of the Hubbards, and EMIS Software interfered with the Hubbards' prospective contractual relations.
16
5. Thrift intentionally inflicted emotional distress on the Hubbards.
17
6. The stock transfer to Thrift after Peerless' default on the first Revolving Credit Note constituted a foreclosure and satisfaction of the debt under that note.
18
The jury awarded varying amounts of damages on the parties' successful claims, and the magistrate judge awarded prejudgment interest on certain claims. The magistrate judge overruled each party's postjudgment motions. Thrift, EMIS Software, the Hubbards, and Peerless all appeal the judgment on various grounds.
II
19
* Thrift argues first that the Hubbards should be held individually liable for the unremitted funds from the $100,000 transaction because the jury found that Peerless was the alter ego of the Hubbards. The trial court applied the alter ego doctrine to only the $17,981 loan.
20
The liability of a shareholder for contractual debts of a corporation is limited by statute.
21
A holder of shares ... shall be under no obligation to the corporation or to its obligees with respect to ... (2) any contractual obligation of the corporation on the basis that the holder, owner, or subscriber is or was the alter ego of the corporation, ... unless the obligee demonstrates that the holder, owner or subscriber caused the corporation to be used for the purpose of perpetrating and did perpetrate an actual fraud on the obligee primarily for the direct personal benefit of the holder, owner, or subscriber....
22
Tex.Bus.Corp. Act Ann. art. 2.21(A) (West Supp.1995). The alter ego doctrine provides one way by which an obligee can pierce the corporate veil to reach a shareholder's assets. Western Horizontal Drilling, Inc. v. Jonnet Energy Corp., 11 F.3d 65, 68 (5th Cir.1994); Fidelity & Deposit Co. v. Commercial Cas. Consultants, Inc., 976 F.2d 272, 274 (5th Cir.1992) (commenting that alter ego is one form of corporate disregard under Texas law); see also Coastal Shutters & Insulation, Inc. v. Derr, 809 S.W.2d 916, 921 (Tex.App.--Houston [14th Dist.] 1991, no writ) ("Alter ego applies when there is such unity or a blurring of identity between two corporations or a corporation and an individual that the separateness of the single corporation has ceased and holding only the corporation liable would cause injustice.").3 Proving that a corporation is the alter ego of a shareholder alone is not enough; in order to pierce the corporate veil, the obligee must also demonstrate fraud by and direct personal benefit to the obligor. See Atlantic Richfield Co. v. Long Trusts, 860 S.W.2d 439, 446 (Tex.App.--Texarkana 1993, writ denied) ("[W]hen actual fraud for the benefit of the perpetrating shareholder can be shown, the various doctrines of disregarding the corporate entity, including alter ego and a sham to perpetrate a fraud, are still very much alive."); Farr v. Sun World Sav. Ass'n, 810 S.W.2d 294, 296 (Tex.App.--El Paso 1991, no writ) ("Carefully preserved, however, is the right of a person to go behind the corporate entity in order to establish individual shareholder liability by a showing of actual or common law fraud.").
23
The Hubbards contend that Thrift failed to satisfy the fraud element of article 2.21 for the $100,000 transaction.4 We agree. Special Interrogatory # 21 asked whether the Hubbards had committed fraud in either the $100,000 or the $17,981 transaction,5 and Special Interrogatory # 22 asked what compensation would be appropriate.6 The jury answered "Yes" in all three spaces in question 21, but only awarded compensation in question 22 against Peerless for fraud in connection with the $17,981 transaction. The jury therefore found that the Hubbards did not commit fraud in the $100,000 transaction.7
24
Thrift argues that question # 21 queried only about fraud through misrepresentations and that he had sufficiently proved fraud in the $100,000 transaction in other ways; therefore, he asks that we limit the jury's finding of no fraud with respect to the $100,000 transaction to misrepresentations. Interrogatory # 21, however, did not ask if the Hubbards had committed fraud through misrepresentations; it asked if they had committed fraud. The misrepresentations only impacted the definition of fraud. Thrift had the burden of proving fraud, and if he believed that fraud encompassed more than the definition provided in the instruction, he should have requested an instruction to that effect and objected to its absence. Thrift, however, did not object to the instruction's definition of fraud, and he is now bound by the jury's finding.8
25
Nonetheless, Thrift argues that, notwithstanding the jury's finding, the district court should have found that fraud generally committed by the Hubbards satisfied the actual fraud component of article 2.21. We disagree. The liability imposed under article 2.21 concerns "shareholder liability for acts of the corporation in connection with contract claims," Farr, 810 S.W.2d at 296 (emphasis added), and requires a showing of actual fraud in those acts, see, e.g., Atlantic Richfield Co., 860 S.W.2d at 446 (imposing liability where fraud was in those transactions at issue in case); Farr, 810 S.W.2d at 297 (describing evidence relevant to fraud determination, all of which evidence related to transaction at issue). The jury found fraud only in relation to the $17,981 claim, and it found no fraud in relation to the $100,000 claim. Accordingly, the Hubbards' fraudulent conduct was not "in connection with" the $100,000 debt, and article 2.21 prevents individual liability of the Hubbards for that debt.
26
The Hubbards also challenge the trial court's decision on the alter ego issues. They contend that they should not be held personally liable for the $17,981 transaction because Thrift failed to prove that they received any direct personal benefit. The evidence showed, however, that the funds that Peerless should have used to repay Thrift were instead used, among other purposes, by the Hubbards to make payments on the lease for the Peerless offices. The payments directly benefited the Hubbards because Victor Hubbard held the lease in his own name. These facts supported the jury's finding of alter ego. Therefore, the trial court correctly used the jury's finding of alter ego to hold the Hubbards individually liable for the $17,981 debt. See Tex.Bus.Corp. Act Ann. art. 2.21(A) (West Supp.1995) (allowing imposition of individual liability under alter ego theory where fraud and direct personal benefit have been shown).
B
27
Thrift contends next that the Hubbards should not recover for interference with prospective business relations and that the district court erred in instructing the jury on the issue because the Hubbards failed to plead that cause of action. A court may instruct the jury on an issue only if the issue has been properly tried by the parties. Neubauer v. City of McAllen, 766 F.2d 1567, 1575 (5th Cir.1985) (holding that failure to try issue made instruction on that issue reversible error). "The trial court has no duty to give the jury an exegesis of legal principles that might enable a plaintiff to recover or to instruct the jury on issues not fairly raised by the pleadings, the pretrial order, or the course of the trial." Laird v. Shell Oil Co., 770 F.2d 508, 510 (5th Cir.1985).
28
The issue of interference with prospective business relations was not tried by implied consent. The trial record contains numerous objections, both individual and continuing, to the admission of evidence of Thrift's interfering conduct for the purpose of proving interference with prospective relations. Moreover, even without objections, the admission of this evidence does not result in trial by implied consent because the evidence was also relevant to the issue of interference with existing contracts.9 Accordingly, we look to the pleadings and the pretrial order to determine if the Hubbards properly raised the issue. The Hubbards respond that even if their pleadings were defective, the Hubbards' proper inclusion of the issue in the pretrial order superseded the pleadings and made the issue available for trial.10 Thrift, however, contested the issue in the pretrial order, arguing defective pleadings.11 Although the magistrate judge never ruled on this objection, he implicitly overruled the objection by admitting the evidence of Thrift's interfering conduct during the trial.12
29
We review a trial court's interpretation of a pretrial order only for abuse of discretion. Hall, 937 F.2d at 212; Flannery, 676 F.2d at 129. Under the Federal Rules of Civil Procedure, a pleading, or pretrial order, need not specify in exact detail every possible theory of recovery--it must only "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957).13 Accordingly, the Hubbards satisfied the Rule 8 requirement if they gave notice of both causes of action.14
30
Texas law recognizes a cause of action for either interference with existing or with prospective contractual relations. Juliette Fowler Homes v. Welch Assocs., Inc., 793 S.W.2d 660, 665 (Tex.1990) ("Texas law protects existing and prospective contracts from interference."); Exxon Corp. v. Allsup, 808 S.W.2d 648, 659 (Tex.App.--Corpus Christi 1991, writ denied) ("Texas law protects prospective as well as existing contracts from third party interference."). Tortious interference with an existing contract consists of:
31
(1) the existence of a contract subject to interference,
32
(2) a willful and intentional act of interference,
33
(3) such act was a proximate cause of damage, and
34
(4) actual damage or loss occurred.
35
Browning-Ferris, Inc. v. Reyna, 865 S.W.2d 925, 926 (Tex.1993).15 Interference with prospective contracts has slightly different elements:
36
(1) a reasonable probability that the parties would have entered into a contractual relationship,(2) an intentional and malicious act by the defendant that prevented the relationship from occurring, with the purpose of harming the plaintiff,
37
(3) the defendant lacked privilege or justification to do the act, and
38
(4) actual harm or damage resulted from the defendant's interference.
39
Allsup, 808 S.W.2d at 659. These two torts differ primarily in that interference with prospective relations requires the plaintiffs to prove both that they had a reasonable probability of obtaining a contract16 and that the defendant acted with malice.17
40
The pretrial order included the following "Additional Contested Issue[ ] of Fact":
41
Did Terry Thrift and/or EMIS Software, Inc. defame the Hubbards, interfere with business or contractual relationships of the Hubbards, or intentionally or recklessly inflict emotional distress on the Hubbards in the following transactions:
42
(1) Sunbelt Transformer
43
(2) Laventhol Horwath
44
(3) TFC Corporation
45
(4) Grammco/Andrews
46
While it is arguable whether the pleadings adequately distinguished between the two causes of action,18 the pretrial order clearly identified both "business" and "contractual" relationships. Accordingly, we cannot say the magistrate judge abused his discretion in determining that the pretrial order gave Thrift sufficient notice of both claims.
C
47
Peerless argues that the Assignment and Option Agreement ("A/O Agreement") was not ambiguous and that the district court should not have submitted the special interrogatory that asked the jury to determine whether the A/O Agreement had transferred ownership of EMIS 1.1 and 1.2 to Thrift. Whether a contract is ambiguous is a question of law. Watkins v. Petro-Search, Inc., 689 F.2d 537, 538 (5th Cir.1982).19 Accordingly, we review this issue de novo. See Hanssen v. Qantas Airways Ltd., 904 F.2d 267, 269 (5th Cir.1990) (reviewing question of ambiguity de novo ).
48
A contract is ambiguous "when its meaning is uncertain and doubtful or it is reasonably susceptible to more than one meaning...." Towers of Tex., Inc. v. J & J Sys., Inc., 834 S.W.2d 1, 2 (Tex.1992).20 In making this determination, a court evaluates the language of the instrument in light of the surrounding circumstances existing at the time of the contract.21
The provision in the A/O Agreement stated:
49
Thrift and Peerless intend that Thrift will provide a payment of $100,000 to Peerless for the purpose of making the payment to PECO to terminate the Definitive Agreement, and in exchange will receive: (a) title to Software, with Peerless retaining an exclusive license to use and market....
50
The definition section defined "software" as follows:
51
"Software" shall mean all software products identified generally in Exhibit A to the Definitive Agreement, which is Attachment 1(a) to this Agreement (including source code, object code and related documentation and marketing information) all of which were assigned to Peerless under the Definitive Agreement.
The Agreement further provided:
52
In consideration of the payment to Peerless of $100,000, Peerless assigns to Thrift all its rights, title and interest in the following property:
53
(a) All Software including all copyrights, trade secret rights and other proprietary rights to software source code, object code and related documentation.
54
Lastly, Attachment 1(a) lists "EMIS (Executive Management Information System") as one of the software products.
55
Peerless argues that, because Exhibit A to the Definitive Agreement between PECO and Peerless (the "PECO Agreement") included only EMIS 1.0 at the time it was drafted, the A/O Agreement unambiguously transferred rights to only EMIS 1.0. Neither party contests that, at the time that Exhibit A to the PECO Agreement was drafted, EMIS only included version 1.0. At the time that the A/O Agreement was drafted and signed, however, EMIS included 1.0, 1.1, and 1.2. The software "identified generally" in Exhibit A to the PECO Agreement was "EMIS." Nothing in the A/O Agreement clarifies what date the A/O Agreement intended to use as the benchmark--the date of the PECO Agreement with its Exhibit A or the date of the A/O Agreement with its Attachment 1(a). Consequently, the district court properly found that the A/O Agreement was ambiguous and submitted the question to the jury. See Watkins, 689 F.2d at 538 ("[O]nce the contract is found to be ambiguous, the determination of the parties' intent through the extrinsic evidence is a question of fact."); see also Staff Indus., 846 S.W.2d at 546 ("When the contract contains an ambiguity, its interpretation becomes a question of fact based on the intention of the parties to it.").
56
Peerless also argues that, even if the A/O Agreement is ambiguous, the jury's finding that it transferred rights to all versions of EMIS to Thrift was against the great weight of the evidence, and, therefore, the district court should not have denied Peerless' request for a new trial. We will overturn a decision denying a motion for a new trial only where we find an abuse of discretion by the district court. Jones v. Wal-Mart Stores, Inc., 870 F.2d 982, 986 (5th Cir.1989); see also E.E.O.C. v. Clear Lake Dodge, 25 F.3d 265, 271 n. 5 (5th Cir.1994) (stating that a district court may grant a new trial if the verdict is against the great weight of the evidence, but reviewing that decision for abuse of discretion). "[A]ll the evidence must be viewed in a light most favorable to the jury's verdict," id. at 987, and we will uphold the district court's denial unless the evidence points "so strongly and overwhelmingly in favor of one party that ... [a] reasonable [jury] could not arrive at a contrary [decision]," Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969), and therefore the district court abused its discretion in letting the verdict stand. Thrift testified that he believed that the A/O Agreement transferred rights to all versions of EMIS. Moreover, the Hubbards' attorney testified that the contract between PECO and Peerless had not been incorporated into the A/O Agreement, and he conceded that contract terms generally are construed as of the date of formation. We hold that a reasonable jury could find that the A/O Agreement transferred rights to all three versions of EMIS to Thrift. Accordingly, we will not overturn the district court's refusal to disturb the jury's verdict on this issue.
D
57
Peerless asserts next that the district court erred when it held that, as a matter of law, Peerless had not proven its usury claim. " 'Usury' is interest in excess of the amount allowed by law." Tex.Rev.Civ.Stat.Ann. art. 5069-1.01(d) (West 1987). " 'Interest' is the compensation allowed by law for the use or forbearance or detention of money; provided however, this term shall not include any time price differential however denominated arising out of a credit sale." Tex.Rev.Civ.Stat.Ann. art. 5069-1.01(a) (West 1987). "The essential elements of a usurious transaction are (1) a loan of money; (2) an absolute obligation that the principal be repaid; and (3) the exaction from the borrower of a greater compensation than the amount allowed by law for the use of money by the borrower." Najarro v. SASI Int'l, Ltd., 904 F.2d 1002, 1005 (5th Cir.1990), cert. denied, 498 U.S. 1048, 111 S.Ct. 755, 112 L.Ed.2d 775 (1991); accord First Bank v. Tony's Tortilla Factory, Inc., 877 S.W.2d 285, 287 (Tex.1994). We construe the usury statute strictly, First Bank, 877 S.W.2d at 287 ("Usury statutes are penal in nature and should be strictly construed."), and favor Thrift whenever any doubt occurs, see Tygrett v. University Gardens Homeowners' Ass'n, 687 S.W.2d 481, 485 (Tex.App.--Dallas 1985, writ ref'd n.r.e.) ("Any doubt as to the intention of the legislature to punish the conduct of the party should be resolved in favor of the defendant.").
58
Peerless argues that, because Thrift advanced no new funds, the Second Note is usurious on its face. We disagree. In determining the effect of the Second Note, we consider all the relevant documents as well as the surrounding circumstances.22 Tygrett, 687 S.W.2d at 485 ("The question of usury must be determined by a construction of all the documents constituting the transaction, interpreted as a whole, and in light of the attending circumstances."). Although the initial paragraph of the Second Note states that Peerless promises to pay $109,776.10, the remainder of the instrument clearly explains in its title that it is a "Revolving Credit Note" and also that the amount Peerless must pay is limited only to the unpaid principal and any interest due thereon.The unpaid principal balance of this note at any time shall be the total amounts loaned or advanced hereunder by the holder hereof, less the amount of payments or prepayments of the principal made by or for the account of Maker. It is contemplated that the Maker may repay portions of the outstanding principal balance of this note at such time as it may receive payment from its account debtors and therefore, by reason of these prepayments hereon there may be such time when no indebtedness is owing hereunder ....
59
Plaintiff's Ex. 21 (Feb. 19, 1987 Revolving Credit Note ("Second Note")). We presume that Thrift did not intend the Second Note to be usurious. See Tygrett, 687 S.W.2d at 485 ("[T]here is a presumption that the parties intended a nonusurious contract; when the contract by its terms, construed as a whole, is doubtful, or even susceptible to more than one reasonable construction, the court will adopt the construction which comports with legality."). Moreover, the Second Note contained a savings clause, and Texas courts have held that savings clauses demonstrate a party's intent that the instrument be nonusurious. See F.S.L.I.C. v. Kralj, 968 F.2d 500, 505 (5th Cir.1992) ("Texas state courts have construed savings clauses to defeat an interpretation of a contract that would violate the usury laws."). Accordingly, the Second Note obligated Peerless to pay no more than what was advanced, and thus is not usurious on its face.
60
Peerless also argues that, because the foreclosure satisfied the debt that the Hubbards and Peerless owed, Thrift's demand for pay-off constituted usury. Because the Second Note is not usurious on its face, Peerless bears the burden of proving usury. See Najarro, 904 F.2d at 1005-06 ("Where the transaction appears lawful on its face, the party claiming usury has the burden of proof."). On May 20, 1987, Thrift sent a letter to Peerless demanding payment on the Second Note. See Plaintiff's Ex. 30 ("Demand Letter") ("This is to place in writing my verbal demand made this morning for pay off of the $109,776.10 Revolving Credit Note, dated February 19, 1987 .... I demand that any payment received by you from this day forward be signed over to me until such time as principal and interest is paid."). Peerless argues that this letter demanded payment of the face amount, $109,776.10. We disagree. Nowhere in the letter does Thrift demand $109,776.10--he merely demands payoff of the note. Moreover, the demand for signed-over payments "until such time as principal and interest is paid" does not ask for more than what was currently due on the note. If, as Peerless claims, nothing is due, then Thrift's letter demands nothing.23 Construing the Demand Letter in favor of legality, see Tygrett, 687 S.W.2d at 485 (presuming construction that is not usurious), we hold that it demands only the unpaid principal and accrued interest, however much that actually is. Cf. Tanner Dev. Co. v. Ferguson, 561 S.W.2d 777, 789 (Tex.1977) (refusing to consider demand letter usurious because it claimed unpaid balance and not full face amount of note). Therefore, the district court correctly found as a matter of law that Peerless had failed to establish a claim for usury.
E
61
Peerless contends further that the district court improperly awarded annual compounding of the prejudgment interest on the $87,122.85 note. The parties agree that the note provided the rate applicable for prejudgment interest--eighteen percent (the contract specified the "highest rate allowed by applicable law"). They disagree as to whether and to what extent compounding is allowed.
62
Because the note provided the rate for prejudgment interest, we look first to determine if the note also provided guidance on compounding. Cf. FDIC v. Blanton, 918 F.2d 524, 532-33 (5th Cir.1990) (refusing to apply statutory rate when parties had agreed to different rate). Thrift argues that the note parallels the contract in Texon Energy Corp. v. Dow Chemical Co., 733 S.W.2d 328 (Tex.App.--Houston [14th Dist.] 1987, writ ref'd n.r.e.), which provided for monthly compounding because it applied an annual interest rate monthly. Id. at 331. Here, the note also applies an annual interest rate, but nothing in the note defines the frequency of application. Accordingly, the note is not dispositive on this issue.24
63
"The Texas law of prejudgment interest can fairly be described as bewildering." Concorde Limousines, Inc. v. Moloney Coachbuilders, Inc., 835 F.2d 541, 548 (5th Cir.1987). Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549, 554 (Tex.1985), provides the benchmark for awards of prejudgment interest. Although Cavnar was a wrongful death case, Texas courts have extended its application to cases involving economic damages.25 Under Cavnar, "a prevailing plaintiff may recover prejudgment interest compounded daily (based on a 365-day year) on damages that have accrued by the time of judgment." Cavnar, 696 S.W.2d at 554 (emphasis omitted).
64
After Cavnar, the Texas legislature enacted reform statutes specifying judgment interest in particular types of cases. Peerless argues that, because the note determined the interest rate, simple interest under article 5069-1.05, Sec. 1 should apply.26 Section 1, however, defines only the rate; it is silent as to compounding. Therefore, we revert to the common law and Cavnar. Spangler v. Jones, 861 S.W.2d 392, 398 (Tex.App.--Dallas 1993) (holding that, where statute did not apply, Cavnar remained the law).
65
Apparently, the district court awarded annual compounding because one holding in Cavnar looked to article 5069-1.05, Sec. 2.27 That Cavnar holding, however, only applies when damages are unascertainable under the contract. In this case, the note clearly defined the damages, and the incorporation of Sec. 2 is not necessary.28 Consequently, Cavnar's default specification of daily compounding applies, and the district court should have calculated prejudgment interest on the note with daily compounding. See State v. Enterprise Bank, 873 S.W.2d 117, 119 (Tex.App.--Waco 1994, writ denied) (explaining that daily compounding applies unless statute dictates otherwise); Ciba-Geigy Corp. v. Stephens, 871 S.W.2d 317, 321-22 (Tex.App.--Eastland 1994, writ denied) (same); O'Reilly, 797 S.W.2d at 401 (applying daily compounding to economic damages cases); Allen v. Allen, 751 S.W.2d 567, 576 (Tex.App.--Houston [14th Dist.] 1988, writ denied) (compounding daily under Cavnar ).29
66
The Hubbards argue additionally that the district court erred when it set the start of prejudgment interest accrual on their intentional infliction of emotional distress claims at 180 days after the filing of those claims. They challenge both the 180-day clock and its start on the date of filing of the emotional distress claims rather than that of the original suit.
67
Article 5069-1.05, Sec. 6 provides that prejudgment interest begins to accrue 180 days after the date the defendant first received written notice of the claim or on the day suit is filed, whichever occurs first. The Hubbards argue that the filing of their original suit in February, 1988, triggered the accrual of prejudgment interest. We disagree, because the Hubbards did not allege intentional infliction of emotional distress in their original complaint. The purpose of prejudgment interest is to encourage settlement. Cavnar, 696 S.W.2d at 554. If a defendant has no notice of a claim, there is nothing to encourage. Thrift first received written notice of the Hubbards' emotional distress claims when the Hubbards amended their pleadings to include these claims. Consequently, prior to the first notice, Thrift could not have settled the claim, and the district court properly used the date of the amended complaint to trigger the accrual of prejudgment interest.
68
The district court erred, however, in applying the 180-day delay. The 180-day delay specified in the statute only applies to the "first written notice" portion. Hughes v. Thrash, 832 S.W.2d 779, 787 (Tex.App.--Houston [1st Dist.] 1992). Thrift first received written notice of the emotional distress claim on November 13, 1990, when the Hubbards amended their complaint. Therefore, 180 days after that first written notice corresponded to May 12, 1991. "The day suit was filed," however, was November 13, 1990, and the statute starts accrual of prejudgment interest on the earlier of the two dates. Consequently, because November 13, 1990 ("the day suit was filed") predated May 12, 1991 (180 days after the first written notice), prejudgment interest on the Hubbards' emotional distress claims should have started accruing on November 13, 1990, the date the Hubbards amended their suit to allege emotional distress.
III
69
For the foregoing reasons, we AFFIRM all portions of the district court's judgment except the awards of prejudgment interest to Thrift on the $87,122.85 note and to the Hubbards on their intentional infliction of emotional distress claims. We VACATE these two awards and REMAND them to the district court for proper recalculation.
*
District Judge of the Western District of Louisiana, sitting by designation
1
Victor Hubbard was the sole director and president of Peerless. Sandra Hubbard was also an officer
2
Thrift sued the Hubbards and Peerless both individually and under an alter-ego theory
3
See also Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 228 (Tex.1990) ("An alter ego relationship may be shown from the total dealings of the corporation and the individual."); Mancorp, Inc. v. Culpepper, 836 S.W.2d 844, 846 (Tex.App.--Houston [1st Dist.] 1992, no writ) ("The 'injustice' to be avoided in alter ego cases is that of leaving the plaintiff with an uncollectible judgment against the corporation, while allowing its alter ego to go free.")
4
Because the dispositive issue is whether Thrift satisfied the elements of the statute, the parties' arguments regarding the present status of Castleberry v. Branscum, 721 S.W.2d 270 (Tex.1986), do not bear on the resolution of this question
5
Special Interrogatory 21 stated as follows:
Did Peerless or Victor Hubbard or Sandra Hubbard commit fraud in the transactions involving the $100,000 advanced by Thrift in December, 1986 or the $17,981 advanced in February, 1987?
The burden of proof for this question is upon the plaintiff.
ANSWER: "YES" or "NO" for each of the following:
Peerless:
Victor Hubbard:
Sandra Hubbard:
INSTRUCTIONS
"Fraud" consists of the following elements:
(1) a material representation was made;
(2) the representation was false;
(3) when the speaker made the representation he knew it was false or made it recklessly without any knowledge of its truth and as a positive assertion;
(4) the speaker made the representation with intent that it should be acted upon by Terry Thrift;
(5) Terry Thrift acted in reliance upon the representation;
(6) Terry Thrift thereby suffered injury.
6
Special Interrogatory # 22 stated as follows:
What amount of money, if any, would fairly and reasonably compensate Terry Thrift for the damage, if any, suffered by him as a result of the fraud you have found in the preceding special question?
The burden of proof for this question is upon the plaintiff.
ANSWER IN DOLLARS AND CENTS ONLY FOR THE FOLLOWING FOR WHOM YOU ANSWERED "YES" IN Question No. 21.
Peerless:
Victor Hubbard:
Sandra Hubbard:
7
The district court instructed the jury that damage is an element of fraud
8
See Fed.R.Civ.P. 51 ("No party may assign as error the giving or the failure to give an instruction unless the party objects thereto before the jury retires to consider its verdict, stating distinctly the matter objected to and the grounds of the objection."); McDaniel v. Anheuser-Busch, Inc., 987 F.2d 298, 306 (5th Cir.1993) ("A party has the burden to request the submission of its issues to the jury and to request instructions on each such issue.... [F]ailure to object to the wording of a special issue prevents a party from objecting to such wording on appeal."); Pan Eastern Exploration Co. v. Hufo Oils, 855 F.2d 1106, 1123 (5th Cir.1988) ("A party must ordinarily object precisely to the wording of jury instructions and interrogatories ....")
9
See Quillen v. International Playtex, Inc., 789 F.2d 1041, 1043-44 (4th Cir.1986) (refusing to hold that defendant had impliedly consented where evidence presented went to pleaded issue primarily; therefore, "the defendant would have been caught unaware" of the new issue); Trinity Carton Co. v. Falstaff Brewing Corp., 767 F.2d 184, 192 (5th Cir.1985) (holding that trial by consent "requires that the parties actually recognize the issue to have been litigated"), cert. denied, 475 U.S. 1017, 106 S.Ct. 1202, 89 L.Ed.2d 315 (1986); id. at 193 ("Trial by consent may not be deemed where evidence concerning the issue that is maintained to have been thusly tried is also relevant to other issues that in fact have been pleaded and tried, at least in the absence of clear notice that such issue was being raised.")
10
See Branch-Hines v. Hebert, 939 F.2d 1311, 1319 (5th Cir.1991) ("It is a well-settled rule that a joint pretrial order signed by both parties supersedes all pleadings and governs the issues and evidence to be presented at trial ...."); Hall v. State Farm Fire & Cas. Co., 937 F.2d 210, 212 (5th Cir.1991) ("Once entered, a pretrial order governs the trial."); Flannery v. Carroll, 676 F.2d 126, 129 (5th Cir.1982) ("The claims, issues, and evidence are limited by the [pretrial] order and the course of the trial is thereby narrowed to expedite the proceeding.")
11
The issue regarding tortious interference contained Thrift's reservation: "Plaintiff/counter-defendants contend any such question should be limited to defendants' pleadings which do not allege interference with business relations and do not mention Grammco/Andrews."
The relevant portion of the Hubbards' pleadings is as follows:
B. Interference with Contractual Relationships
1
Thrift intentionally and willfully induced TFC, Inc. to breach and violate the provisions of a contract between TFC, Inc. of Minnesota and the Hubbards d/b/a GP Services. Such contract called for the delivery of hardware and software and services to TFC, Inc. for the approximate amount of $37,000.00. Thrift falsely represented to TFC, Inc. that the Hubbards had no right to sell the software in question and made other false representations. Such inducement by Thrift was without legal excuse or other justification and has resulted in Thrift wrongfully damaging the Hubbards by depriving them of profits which they otherwise would have received under the contract
2
Thrift intentionally and willfully induced two other customers of the Hubbards. Sunbelt Transformers and Laventhol & Horwath to breach agreements with the Hubbards, d/b/a GP Services, and to cancel orders for hardware and software and services. Thrift, either individually or by and through authorized agen[ ]ts, falsely represented to said companies that the Hubbards had no right to sell the software in question and made other false representations. Such inducements by Thrift were without legal excuse or other justification and have resulted in Thrift wrongfully damaging the Hubbards by wrongfully depriving them of profits which they otherwise would have received under the contracts
3
Thrift, by and through authorized agents, has sent letters to all of the customers of the Hubbards d/b/a GP Services for the purpose of inducing said [sic] customers to cancel their dealings with the Hubbards and to instead deal with Thrift's new corporation, EMIS SOFTWARE, Inc. Such letters falsely represented that the Hubbards had no right to sell the software which they were selling and made other false representations. Such letters were sent without legal excuse or other justification and have resulted in losses of sales, referral, and reputation suffered by the Hubbards
4
Thrift acted with malicious intent in all instances set out above in that he persuaded the contracting parties to breach their contracts out of spite and ill-will towards the Hubbards and for the sole purpose of causing economic injury to the Hubbards, and because they refused to cooperate with Thrift's plan to defraud the creditors of Peerless. The Hubbards seek exemplary damages far in excess of the Court's minimum jurisdictional amount
12
Moreover, because the issue was raised in the pretrial order, even if objected to, Thrift cannot, and indeed did not, argue that admission of evidence on this issue caused any surprise
13
See also Fed.R.Civ.P. 8(a) (requiring only "a short and plain statement"), 8(e) ("Each averment of a pleading shall be simple, concise, and direct."); Colle v. Brazos County, Tex., 981 F.2d 237, 243 (5th Cir.1993) ("A plaintiff's complaint ordinarily need only be a short and plain statement that gives the defendant notice of what the claim is and the grounds upon which it rests."); Perkins v. Silverstein, 939 F.2d 463, 467 (7th Cir.1991) (requiring plaintiffs to "identify the grounds upon which their claims are based ... even under the liberal notice pleading" (footnote omitted)); Bechtel v. Robinson, 886 F.2d 644, 650 n. 9 (3d Cir.1989) ("[A]s long as the issue is pled, a party does not have to state the exact theory of relief in order to obtain a remedy.")
14
See Torres Ramirez v. Bermudez Garcia, 898 F.2d 224, 226-27 (1st Cir.1990) (holding that, if basis described, "the parties were therefore aware of plaintiff's legal theory" even where the theory was mischaracterized (citation omitted)); Lamborn v. Dittmer, 873 F.2d 522, 526 (2d Cir.1989) (holding that the pretrial order did not adequately disclose a theory because it did not give notice of that theory); In re Burzynski, 989 F.2d 733, 738-39 (5th Cir.1993) (assessing whether plaintiff had stated cause of action by alleging the elements of each tort)
15
See Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 939 (Tex.1991) (setting out elements of cause of action for tortious interference); Juliette Fowler Homes, 793 S.W.2d at 664 (same); see also Allsup, 808 S.W.2d at 654 (applying elements); CF & I Steel Corp. v. Pete Sublett & Co., 623 S.W.2d 709, 713 (Tex.Civ.App.--Houston [1st Dist.] 1981, writ ref'd n.r.e.) (evaluating findings on elements)
16
See Caller-Times Publishing Co. v. Triad Communications, Inc., 855 S.W.2d 18, 21 (Tex.App.--Corpus Christi 1993, no writ) ("To prove tortious interference with prospective contracts or business relationships, the plaintiff must prove ... a contractual relationship that the plaintiff had a reasonable probability of realizing ...."); American Medical Int'l, Inc. v. Guirintano, 821 S.W.2d 331, 337 (Tex.App.--Houston [14th Dist.] 1991, no writ) ("To recover on a cause of action for tortious interference with a prospective business relationship, the plaintiff must show: (1) there was a reasonable probability that he would have entered into a business relationship ...."); see also Verkin v. Melroy, 699 F.2d 729, 733 (5th Cir.1983) (requiring knowledge of prospective relationship)
17
See CF & I Steel Corp., 623 S.W.2d at 715 ("Interference with a business relationship is similar to the tort of contract interference. It is not necessary to establish the existence of a valid contract, but the interference with a general business relationship is actionable only if the defendant's interference is proven to be motivated by malice."); see also Deauville Corp. v. Federated Dep't Stores, Inc., 756 F.2d 1183, 1196 (5th Cir.1985) (holding that the difference between interference with contract and prospective relations is that second tort requires showing of 'malice'); Verkin, 699 F.2d at 733 (requiring intent to harm)
18
Thrift contends that the pleading heading "Interference with Contractual Relationships" necessarily limits the Hubbards' pleading to existing contracts. The heading does not specify only existing contracts, however, and the term "Contractual Relationships" can encompass both existing and future relationships. Next, Thrift argues that the Hubbards' pleading allegations related only to existing contracts. Although we can identify statements implying only existing contracts, there are also references to future contracts. For example, allegation B.3 refers to "dealings" and "losses of ... referral." Moreover, the allegations allege both the knowledge of the prospective relationship and the intent to harm required to show malice. See supra note 11
19
See also Anheuser-Busch Cos., Inc. v. Summit Coffee Co., 858 S.W.2d 928, 935 (Tex.App.--Dallas 1993, writ denied) ("Construction of an unambiguous contract is a legal issue to be decided by the court.... The question of whether a contract is ambiguous is a question of law." (citations omitted)), cert. granted and judgment vacated, --- U.S. ----, 115 S.Ct. 1309, --- L.Ed.2d ---- (1995); Staff Indus., Inc. v. Hallmark Contracting, Inc., 846 S.W.2d 542, 545-46 (Tex.App.--Corpus Christi 1993, no writ) ("Whether a contract is ambiguous is a question of law for the court to decide ....")
20
See Watkins, 689 F.2d at 538 (According to Texas law, "[a] contract is ambiguous when it is reasonably susceptible to more than one meaning, in the light of the surrounding circumstances and after applying established rules of construction."); see also Kurtz v. Jackson, 859 S.W.2d 609, 611 (Tex.App.--Houston [1st Dist.] 1993, no writ) ("A contract is ambiguous only when there is a genuine uncertainty which of two or more meanings is correct.... If there is but one reasonable interpretation of the contract, it is not ambiguous." (citations omitted)); Staff Indus., 846 S.W.2d at 546 ("A contract, however, is ambiguous when its meaning is uncertain and doubtful or it is reasonably susceptible to more than one meaning."); Loehr v. Kincannon, 834 S.W.2d 445, 446 (Tex.App.--Houston [14th Dist.] 1992, no writ) (same)
21
However, when a question relating to the construction of a contract or its ambiguity is presented, the court is to take the wording of the contract in the light of the surrounding circumstances, in order to ascertain the meaning that would be attached to the wording "by a reasonably intelligent person acquainted with all operative usages and knowing all the circumstances prior to and contemporaneous with the making of the integration, other than oral statements by the parties of what they intended to mean."
Watkins, 689 F.2d at 538 (quoting Sun Oil Co. v. Madeley, 626 S.W.2d 726, 731 (Tex.1981)); see also Stephanz v. Laird, 846 S.W.2d 895, 899 (Tex.App.--Houston [1st Dist.] 1993, writ denied) ("Whether a contract is ambiguous is a legal question, reviewable by an appellate court in light of the circumstances present when the parties entered into the contract."); Staff Indus., 846 S.W.2d at 546 ("The intention of the parties is to be ascertained to the extent possible from the language of the contract itself, construed in connection with the circumstances surrounding the execution of the contract. These surrounding circumstances include what the particular industry considered to be the norm or reasonable and prudent at the time." (citations omitted)).
22
Thrift contends that the Second Note was a renewal of the First Note; the Hubbards do not agree with this characterization
23
At the time Thrift wrote the letter, he believed that the stock transfer had not satisfied the original debt
24
Peerless argues that allowing compounded interest would impermissibly add to the contract. Awards of prejudgment interest are damages, however, and need not be specified in the contract nor agreed to by the parties
25
See Enterprise-Laredo Assocs. v. Hachar's, Inc., 839 S.W.2d 822, 839 (Tex.App.--San Antonio 1992, writ denied) ("[P]rejudgment interest may be awarded on a breach of contract claim."); O'Reilly v. Grafham, 797 S.W.2d 399, 401-02 (Tex.App.--Austin 1990, no writ) (holding that Cavnar rule applies to "non-personal injury, economic damages" cases)
26
Tex.Rev.Stat.Ann. art. 5069-1.05, Sec. 1 (West Supp.1995) provides:
All judgments of the courts of this state based on a contract that provides for a specific rate of interest earn interest at a rate equal to the lesser of:
(1) the rate specified in the contract; or
(2) 18 percent.
27
Tex.Rev.Stat.Ann. art. 5069-1.05, Sec. 2 (West Supp.1995) provides for judgment interest where no contract has specified the rate
28
Because incorporation of Sec. 2 is not necessary, we need not address the conflict in Fifth Circuit law concerning what form of compounding should apply when Sec. 2 is incorporated. Compare Law Offices of Moore & Assocs. v. Aetna Ins. Co., 902 F.2d 418, 421 (5th Cir.1990) (daily compounding) and Concorde Limousines, 835 F.2d at 550 (daily compounding) with Guest v. Phillips Petroleum Co., 981 F.2d 218, 223 (5th Cir.1993) (annual compounding). We note, however, that we would be bound by the earliest decision, Concorde Limousines, to apply daily compounding. See In re Howard, 972 F.2d 639, 641 (5th Cir.1992) (viewing earlier decision as binding when conflict exists); see also Broussard v. Southern Pac. Transp. Co., 665 F.2d 1387, 1389 (5th Cir.1982) (en banc) ("The general rule in this Circuit is that one panel cannot overrule another panel."). The Texas courts have exhibited a similar conflict. Compare Spangler, 861 S.W.2d at 399 (using daily compounding and overruling OKC Corp., infra) and City of Houston v. Wolfe, 712 S.W.2d 228, 230 (Tex.App.--Houston [14th Dist.] 1986, writ ref'd) (daily compounding) with Enterprise-Laredo Assocs., 839 S.W.2d at 839 (annual compounding) and OKC Corp. v. UPG Inc., 798 S.W.2d 300, 307 (Tex.App.--Dallas 1990, writ denied) (annual compounding), overruled as stated in Spangler, 861 S.W.2d at 399
29
Peerless also argues that compounding would result in a usurious rate. Usury however does not apply to judicial awards of prejudgment interest. Sage St. Assocs. v. Northdale Constr. Co., 863 S.W.2d 438, 440 (Tex.1993)
| {
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} |
376 Mass. 338 (1978)
380 N.E.2d 662
COMMONWEALTH
vs.
ROY E. McGUIRK.
Supreme Judicial Court of Massachusetts, Middlesex.
February 6, 1978.
September 8, 1978.
Present: HENNESSEY, C.J., QUIRICO, KAPLAN, WILKINS, & ABRAMS, JJ.
Stephen Hrones for the defendant.
Kathleen King Parker, Assistant Attorney General, for the Commonwealth.
ABRAMS, J.
The defendant Roy E. McGuirk was convicted of murder in the second degree on his plea of guilty. McGuirk now seeks to withdraw his guilty plea on the ground that it was involuntary because he was not informed that malice aforethought is an element of the offense to which he pleaded.[1] See Henderson v. Morgan, 426 U.S. 637 (1976).
*339 The defendant was indicted for murder in the first degree on October 1, 1974. On July 14, 1975, his guilty plea to murder in the second degree was accepted, and he was sentenced to a life term at the Massachusetts Correctional Institution at Walpole. On July 16, 1976, the defendant moved for a new trial which motion was denied after an evidentiary hearing on the voluntariness issue. The defendant appealed under G.L.c. 278, §§ 33A-33G. We affirm the denial of the defendant's motion for a new trial.
We summarize the facts.[2] At about 6 A.M. on June 29, 1974, the defendant returned to his apartment after an evening of partying. He had been drinking and had consumed three "speed" tablets, the last of which had been taken at 3:30 A.M. In his apartment he found Lynn Darcey, a young woman whom the defendant had at one time allowed to live there, and the victim, Nicholas Zoffreo, who was a stranger to the defendant. He was surprised by their presence and very angry that his apartment was being used without his permission. An argument developed among the defendant, Lynn Darcey, and the victim; the defendant struck the victim and continued beating him until he was dead.
On October 23, 1974, the defendant was arraigned. He was represented by appointed counsel, at present a member of the judiciary, who continued to represent the defendant through his guilty plea. It is conceded that the defendant received competent advice and representation at all times. At the arraignment, the indictment charging the defendant with murder in the first degree was read to him, and he pleaded not guilty.
At the time the case was reached for trial, and after consulting with his family and counsel, the defendant decided to plead guilty to murder in the second degree. At *340 the change of plea hearing, the judge questioned the defendant concerning his age and educational background. The defendant stated that he was twenty-five years old and that he had completed three years of high school. The judge then asked the defendant, "Do you understand the charge against you?" The defendant replied that he did. The judge continued, "To make it perfectly clear, you are being charged with the crime of murder. The indictment charges that on the 29th day of June 1974 at Cambridge, you did assault and beat one Nicholas Zoffreo with intent to kill and murder him, and by such assault and beating did kill and murder Nicholas Zoffreo. Now, do you understand this charge against you?" McGuirk replied, "Yes, sir."
The judge then asked the defendant to relate the facts of the June 29 incident. The defendant explained his anger at finding his apartment being used in his absence and stated that an argument had ensued. The defendant then said: "Nicky came towards me; I thought he was going to hit me or something. I just started hitting on him, and I didn't stop until I realized what I just kept on hitting him, I didn't realize I killed him. I just panicked from there." The defendant admitted striking the first blow and also stated that he was sorry for what had happened for he was "not a person that goes around killing people like that." The detective who had investigated the homicide testified at the plea hearing. He related statements from an eyewitness that the defendant had thrown a fit of temper and had beat, kicked, and strangled the victim with a rope or wire and had suffocated him with pillows and blankets.[3] The detective said that *341 the defendant had made an admission to the person who had helped him dispose of the body in the Charles River that he had received rope burns as a result of the pressure used in garrotting the victim. After informing the defendant of the constitutional rights being waived by him and the maximum penalty for murder in the second degree and inquiring into the voluntariness of the plea, the judge accepted the guilty plea.
The defendant now argues that his plea is invalid under Henderson v. Morgan, 426 U.S. 637 (1976), because "[a]t the guilty plea hearing no inquiry was made as to whether the defendant understood the elements of the offense of Second-Degree Murder nor was he informed as to what such elements were."[4] Specifically, the defendant argues that he was not told that malice aforethought is an element of murder in the second degree. We need not decide whether Henderson v. Morgan is to be applied retroactively since we conclude that, even if the standards set forth in Henderson are applied to this case, the defendant's plea was not invalid.
In Henderson, the defendant, who had formerly been classified as retarded and committed to a State school for mental defectives,[5] was released to become a laborer on the victim's farm. After an argument during which the victim threatened to return the defendant to State custody, *342 the defendant decided to run away. That night the defendant entered the victim's room with a knife to collect his wages. The victim awoke and began screaming; the defendant then stabbed and killed her. At the arraignment on an indictment for murder in the first degree, the indictment, which charged that the defendant had "willfully" stabbed the victim, was read to him. He subsequently pleaded guilty to murder in the second degree. At the plea hearing, the defendant, in direct colloquy with the judge, stated that his plea was based on the advice of his attorneys and that he understood he was accused of killing the victim. However, there was no mention of the mental element of murder in the second degree under the relevant State law, N.Y. Penal Law § 1046 (McKinney 1967), "a design to effect the death of the person killed." Defense counsel, at sentencing, stated that the defendant meant no harm to the victim; rather, the defendant with his uncontrollable temper, had panicked in the excitement and tension of the screaming and had then assaulted the victim. The judge, after an evidentiary hearing on the defendant's argument to withdraw his plea, specifically found that the defendant had not been advised on the requisite mental element at any time by his concededly competent counsel or the judge.
The Supreme Court, reviewing the totality of the circumstances, determined that the defendant's plea was involuntary in a constitutional sense because if the defendant is ignorant of a critical element of an offense, his plea of guilty to that offense cannot serve as an intelligent admission of guilt.
The Court assumed that the defendant would have pleaded guilty even if he had been informed of the intent requirement. It further assumed that there was abundant evidence of the defendant's guilt. Henderson v. Morgan, supra at 644. But the Court noted that, although intent to kill could have been proved by the evidence even if the defendant's actual state of mind were consistent with innocence or manslaughter and even if a design to *343 effect death almost inevitably would have been inferred from the evidence that the defendant repeatedly stabbed the victim, a jury would not have been required to draw that inference and, if they believed defense counsel's version, could have returned a verdict of manslaughter in the first degree defined under the relevant State Law, N.Y. Penal Law § 1050 (McKinney 1967), to include a killing "[i]n the heat of passion, but in a cruel and unusual manner, or by means of a dangerous weapon." Henderson v. Morgan, supra at 645 n. 16. The defendant's guilt had thus not been established by an admission of guilt because his statement that he had killed the victim did not necessarily admit that he was guilty of murder in the second degree as defined by the relevant State law and the intent element had not otherwise been established by facts stipulated to or admitted in the record. Therefore, the defendant's guilt was not established in any of the three constitutionally permissible ways: a verdict of guilty after trial, and admission of guilt in open court, or a plea of guilty accompanied by a claim of innocence in accordance with the standards of North Carolina v. Alford, 400 U.S. 25 (1970).
As we read Henderson, the plea was involuntary not simply because the record of the guilty plea hearing contained no explanation of the elements of murder in the second degree, but also because there was nothing that could "serve as a substitute for ... a voluntary admission ... that [defendant] had the requisite intent. Defense counsel did not purport to stipulate to that fact; they did not explain to him that his plea would be an admission of that fact; and he made no factual statement or admission necessarily implying that he had such intent." Henderson v. Morgan, supra at 646. The opinion, in our view, thus indicates that the deficiency in the Henderson case can be cured in at least one of three ways: (1) an explanation of the essential elements by the judge at the guilty plea hearing; (2) a representation that counsel has explained to the defendant the elements he admits by his *344 plea;[6] (3) defendant's statements admitting to facts constituting the unexplained element or stipulations to such facts. See Note, Due Process Guilty Pleas Constitutional Standards of Voluntariness Were Not Satisfied by a Plea of Guilty Where Defendant was Unaware that Intent to Kill was an Essential Element of the Crime, 5 Am. J. Crim. L. 105, 112-113, 117 (1977).
We turn now to the facts of this case to determine whether the standard of Henderson v. Morgan, supra, has been satisfied. McGuirk contends he was not informed that malice aforethought is an element of murder in the second degree. We assume malice is a critical element within the meaning of Henderson for it is the element which distinguishes murder from manslaughter. Commonwealth v. Hicks, 356 Mass. 442, 445 (1969). Commonwealth v. York, 9 Met. 93, 102 (1845). Although the public interest in reducing collateral attacks on guilty pleas may call for an explanation on the record in understandable terms of the elements of the offense to which the defendant pleads,[7] we believe no error was committed in this case in accepting the defendant's guilty plea and denying his motion for a new trial because his admission to a protracted beating of the victim is an admission of the malice element necessary for murder in the second degree.
Murder in the second degree is the unlawful killing of a human being with malice aforethought. Commonwealth v. McCauley, 355 Mass. 554, 559 (1969). Commonwealth *345 v. Leate, 352 Mass. 452, 456 (1967). Commonwealth v. Bedrosian, 247 Mass. 573, 576 (1924). Malice aforethought is a term of art which includes any intent to inflict injury without legal excuse or palliation. Commonwealth v. Campbell, 375 Mass. 308, 311-312 (1978). Commonwealth v. Hicks, supra at 444-445. Commonwealth v. Leate, supra at 456. Commonwealth v. York, supra, at 104-105. While a specific intent to kill satisfied the malice requirement, under Massachusetts law, unlike under the State law involved in Henderson, actual intent to kill is not a necessary element of murder in the second degree. Commonwealth v. Mangum, 357 Mass. 76, 85 (1970). Commonwealth v. Chance, 174 Mass. 245, 252 (1899). An intention to inflict injury on the victim which is not justified on any lawful ground or palliated by the existence of any mitigating circumstances is malicious within the meaning of the law. Commonwealth v. Bedrosian, supra at 576.
The defendant does not claim his actions were justified nor do the circumstances appearing in the record indicate justification or palliation. While the defendant stated that the victim came toward him and that he thought the victim "was going to hit me or something," fear of an assault would not justify the defendant's response. Commonwealth v. Hartford, 346 Mass. 482, 490 (1963). In any event, a right to self-defense would not accrue until the defendant had availed himself of all proper means to avoid combat. Commonwealth v. Hartford, supra at 490. Commonwealth v. Houston, 332 Mass. 687, 690 (1955). See Commonwealth v. Shaffer, 367 Mass. 508 (1975). Nor were circumstances disclosed which would provide a basis for a finding of a killing from a sudden transport of passion or heat of blood on a reasonable provocation, which finding would supply mitigating circumstances and thereby cleanse the defendant's actions of their malicious quality in law. Commonwealth v. Hartford, supra at 490-491. Even if the woman in his apartment had been the defendant's girl friend, which he denies, jealousy or anger *346 at finding her with another man would not serve as sufficient provocation to reduce his act to manslaughter. See Commonwealth v. Bermudez, 370 Mass. 438 (1976). The defendant's intoxication also does not relieve his actions of their malicious quality in law. Commonwealth v. Johnson, 374 Mass. 453, 462-464 (1978). Commonwealth v. Sires, 370 Mass. 541, 548 (1976). Commonwealth v. Rogers, 351 Mass. 522, 532-533, cert. denied, 389 U.S. 991 (1967). Commonwealth v. Soaris, 275 Mass. 291, 299-300 (1931).
The defendant maintained at the evidentiary hearing on his motion for a new trial that he did not intend to inflict serious bodily injury on the victim and did not believe death likely as the result of his actions. The judge, however, was not required to find such statements credible. The fact that the defendant now denies he had the requisite intent does not preclude or make erroneous the judge's finding of fact "that the Defendant understood the meaning of the indictment and the substance of the charge against him." Moreover, "an act causing death may be murder, manslaughter, or misadventure, according to the degree of danger attending it. If the danger is very great ... it is murder.... The very meaning of the fiction of implied malice in ... cases at common law was, that a man might have to answer with his life for consequences which he neither intended nor foresaw. To say that he was presumed to have intended them, is merely to adopt another fiction, and to disguise the truth. The truth was, that his failure or inability to predict them was immaterial, if, under the circumstances known to him, the court or jury, as the case might be, thought them obvious.... [I]mplied malice signifies the highest degree of danger, and makes the act murder...." Commonwealth v. Pierce, 138 Mass. 165, 178 (1884). See also Commonwealth v. York, 9 Met. 93, 101-103 (1845).
McGuirk's claims at the hearing on the motion for a new trial are not the type of equivocation found in Henderson v. Morgan. There, defense counsel admitted that *347 the defendant struck or stabbed the victim forty-five times with a knife. However, this admission, which admitted only the act of killing, not the mens rea of the crime charged under the applicable law, was coupled with statements that the defendant had meant no harm but had panicked.[8] In Henderson there were no statements by the defendant or his counsel necessarily implying that the defendant acted with the requisite intent. In contrast, McGuirk's admission to a protracted beating was an admission of the element of malice necessary to constitute murder in the second degree. Compare Commonwealth v. Santo, 375 Mass. 299, 306 (1978), and Commonwealth v. Hicks, 356 Mass. 442, 445 (1969), with Commonwealth v. Campbell, 352 Mass. 387, 398-399 (1967).
In summary, McGuirk's admission that he struck the first blow and continued to beat the victim in the absence of any justifying or mitigating circumstances is a sufficient admission of an "intent to inflict injury upon [the victim] without legal excuse or palliation." Commonwealth v. Mangum, 357 Mass. 76, 85 (1970). See also Commonwealth v. Amazeen, 375 Mass. 73, 80-81 (1978). Therefore, under the standards enunciated in Henderson, as we read the opinion, the defendant's plea was not involuntary.
Although there is some conflict concerning the proper meaning of Henderson, a number of other courts have interpreted that decision as we have and have found a defendant's admission to facts implying guilt sufficient to satisfy Henderson or a rule of criminal procedure similar to Henderson in its import. See United States v. Coronado, 554 F.2d 166, 173 (5th Cir.), cert. denied, 434 U.S. 870 (1977) (no reversible error where trial judge failed to explain the meaning of conspiracy since defendant admitted *348 to facts establishing his guilt); State v. Henry, 114 Ariz. 494, 497-498 (1977) (defendant's statements admitting to an intent to burglarize were sufficient to uphold his guilty plea to murder in the first degree based on a felony-murder theory); People v. Davis, 76 Mich. App. 187, 189 (1977) (defendant's admission that he stabbed the victim with a knife was sufficient to uphold his plea of guilty to murder in the second degree since malice is "present even where there is no actual intent to kill if the actual intent is to inflict great bodily harm or to engage in behavior the natural tendency of which is to cause death or great bodily harm," and could be inferred from this admission). See also State v. Devine, 114 Ariz. 574 (1977).
Since the defendant's plea was not involuntary, the order denying the motion to withdraw the guilty plea and for a new trial is affirmed.
So ordered.
NOTES
[1] Other grounds which were urged before the trial court but which were not briefed or argued before this court are deemed waived. Stranad v. Commonwealth, 366 Mass. 847 (1974). Commonwealth v. Ellis, 356 Mass. 574, 575 (1970). Cf. Mass. R.A.P. 16 (a) (4), as amended, 367 Mass. 919 (1975).
[2] The record consists of the transcripts of the defendant's arraignment, guilty plea hearing, and motion for a new trial; an affidavit of defense counsel; a psychiatric report; and the judge's findings on the defendant's motion for a new trial.
[3] Defense counsel, who is characterized by McGuirk as experienced and capable, did not quarrel with this factual recitation at the plea hearing. However, at the evidentiary hearing on the motion for a new trial the defendant attempted to introduce some documents, including an autopsy report, to rebut some of these statements by the eyewitness. The documents were excluded. The defendant, however, has failed to argue his exceptions concerning these documents before this court, and the exceptions are therefore deemed waived. Commonwealth v. Amazeen, 375 Mass. 73, 74 n. 1 (1978). In any event, the defendant was not prejudiced by the exclusion of the documents since in reaching our conclusion we do not rely on the statements of the eyewitness; rather we rest our decision on the defendant's own admissions.
[4] Although not an issue before us, we note that the burden of proof on the issue of the voluntariness of a plea always remains on the Commonwealth. See Commonwealth v. Morrow, 363 Mass. 601, 604 (1973).
[5] In this case there is no evidence that the defendant possessed unusually low mental capabilities. McGuirk had completed three years of high school, and had no difficulty speaking or understanding English.
[6] Normally it must also be found that the defendant understood the explanation by the judge or counsel. But see Allard v. Helgemoe, 572 F.2d 1 (1st Cir.1978), where the defendant, though competent to stand trial and to appreciate the wisdom of counsel's advice to plead guilty, was of insufficient intelligence to comprehend the intent element of the offense to which he pleaded guilty. The question of the ability of the defendant to understand the elements of the offense is not present in this case. See note 5, supra.
[7] The type of statements used in jury charges may be helpful in conveying the requisite information. See United States v. Coronado, 554 F.2d 166, 172 (5th Cir.), cert. denied, 434 U.S. 870 (1977).
[8] Such equivocation not only suggests that the defendant may have misunderstood the elements of the offense but also should alert the trial judge to the advisability of further inquiry to ensure an intelligent plea. State v. Ohnemus, 254 N.W.2d 524 (Iowa 1977).
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Case: 16-50629 Document: 00514030512 Page: 1 Date Filed: 06/13/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-50629 FILED
June 13, 2017
Lyle W. Cayce
UNITED STATES OF AMERICA, Clerk
Plaintiff - Appellee
v.
SERGIO JIMENEZ-IBARRA, also known as Sergio Ibarra-Jimenez, also
known as Sergio Jimenez, also known as Sergio Ibarra,
Defendant - Appellant
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:16-CR-16-1
Before REAVLEY, OWEN, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
Defendant Sergio Jimenez-Ibarra appeals his 27-month below-
Guidelines sentence imposed following his guilty-plea conviction for illegal
reentry into the United States following deportation in violation of 8 U.S.C.
§ 1326. He contends, for the first time on appeal, that the district court erred
by enhancing his sentence 12 levels pursuant to Section 2L1.2(b)(1)(B) of the
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 16-50629 Document: 00514030512 Page: 2 Date Filed: 06/13/2017
No. 16-50629
Guidelines because his 2006 Texas conviction does not constitute a “drug
trafficking offense.” It is possible that Jimenez-Ibarra’s claimed error
regarding his sentencing enhancement is unreviewable. Nevertheless, we
conclude that the district court did not plainly err. We AFFIRM.
FACTUAL AND PROCEDURAL BACKGROUND
Sergio Jimenez-Ibarra, a citizen of Mexico, pled guilty in 2006 in Texas
state court to a violation of Section 481.112(b) of the Texas Health and Safety
Code. 1 That was a felony conviction even though Jimenez-Ibarra received only
a 60-day sentence. In July 2006, he was deported and notified that he could
not return to the United States without permission. In October 2013, federal
agents found him in Texas. He had been arrested by state authorities for
aggravated assault with a deadly weapon on his wife. Jimenez-Ibarra
remained in state custody for the next two years. A jury found him guilty of
the assault charge, and he was sentenced to three years in prison. He was
paroled in December 2015 and transferred to federal custody.
In March 2016, Jimenez-Ibarra pled guilty before a federal magistrate
judge to illegal reentry, in violation of 8 U.S.C. § 1326(a) and (b). At
sentencing, his base offense level of 8 was increased by 12 levels pursuant to
Guideline Section 2L1.2(b)(1)(B). The district court adopted the
recommendation in the Presentence Investigation Report (“PSR”) that
Jimenez-Ibarra’s previous Texas felony drug offense for “possession with intent
1 Section 481.112(b) is the penalty provision of the statute, which states: “An offense
under [Section 481.112(a)] is a state jail felony if the amount of the controlled substance to
which the offense applies is, by aggregate weight, including adulterants or dilutants, less
than one gram.” TEX. HEALTH & SAFETY CODE § 481.112(b). This subsection is linked to
subsection 481.112(a), which sets forth the actual offense: “[A] person commits an offense if
the person knowingly manufactures, delivers, or possesses with intent to deliver a controlled
substance listed in Penalty Group 1.” Id. § 481.112(a).
2
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No. 16-50629
to deliver a controlled substance P[enalty Group] I, less than 1 gram” was a
“drug trafficking offense.” After a three-level acceptance-of-responsibility
reduction, Jimenez-Ibarra’s total offense level was 17, with an advisory
Guidelines range of 30 to 37 months. Jimenez-Ibarra did not object to the PSR
but requested a downward variance that the Government opposed. The district
court sentenced Jimenez-Ibarra to 27 months in prison, followed by three years
of supervised release. Jimenez-Ibarra timely appealed.
DISCUSSION
Jimenez-Ibarra’s primary contention is that his prior Texas felony
conviction does not constitute a drug-trafficking offense for purposes of
applying the 12-level enhancement of Section 2L1.1(b)(1)(B). He contends that
the Texas statute is overbroad because it criminalizes certain substances,
namely position isomers of cocaine, that are not covered by the Controlled
Substances Act (“CSA”). He further asserts that the district court erred in
relying on the PSR’s characterization of his offense. Instead, the court “could
not exclude the possibility that his” state conviction “rested on a substance that
is not covered by the CSA: a position isomer of cocaine.” Jimenez-Ibarra also
argues the Government failed to establish that the controlled substance
underlying his state-court conviction is covered by the CSA.
Before we consider the merits of Jimenez-Ibarra’s challenge to his
sentence, we examine our standard of review. Generally, we review a district
court’s application or interpretation of the Guidelines de novo. United States
v. Reyna-Esparza, 777 F.3d 291, 293–94 (5th Cir. 2015). That standard
governs our review of preserved errors. United States v. Neal, 578 F.3d 270,
273 (5th Cir. 2009). Our analysis of unpreserved errors is determined by
whether the defendant waived or forfeited his argument below.
3
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No. 16-50629
“Waiver and forfeiture are two different means by which a defendant
may react to an error made by the government or the district court in the
proceedings in his case.” United States v. Dodson, 288 F.3d 153, 160 (5th Cir.
2002). “Forfeiture is the failure to make the timely assertion of a right[.]”
United States v. Arviso-Mata, 442 F.3d 382, 384 (5th Cir. 2006). We review
forfeited errors under the plain-error standard. Id. “[W]aiver is the intentional
relinquishment or abandonment of a known right.” United States v. Olano,
507 U.S. 725, 733 (1993). “It occurs by an affirmative choice by the defendant
to forego any remedy available to him, presumably for real or perceived
benefits resulting from the waiver.” Dodson, 288 F.3d at 160. An error that is
waived is unreviewable. United States v. Rodriguez, 602 F.3d 346, 350 (5th
Cir. 2010). “Review of invited errors is almost similarly precluded,” with those
errors being “reviewed only for manifest injustice.” Id. at 350–51.
We examine how Jimenez-Ibarra’s counsel dealt with the issue at
sentencing. During the sentencing hearing, counsel stated that the PSR was
accurate in concluding that a 12-level enhancement could be applied due to
Jimenez-Ibarra’s prior offense. Counsel, though, requested a downward
variance to an 18-to-24 month Guidelines range based on the fact that the
underlying offense “was charged as a possession with intent to deliver for less
than one gram,” was Jimenez-Ibarra’s first drug offense, and “there was no
plea bargain to anything less.” Obviously, then, no objection was made to the
applicability of the enhancement, just its suitability.
Both parties assume our analysis is governed under the familiar plain-
error standard for forfeited errors. We apply that more demanding standard
because we affirm even under plain-error review.
To establish plain error, Jimenez-Ibarra must show an error that was
clear or obvious and that affected his substantial rights. See Puckett v. United
States, 556 U.S. 129, 135 (2009). Even if he makes such a showing, we have
4
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No. 16-50629
the discretion to correct the error but only if it “seriously affect[s] the fairness,
integrity or public reputation of judicial proceedings.” Id. (quoting Olano, 507
U.S. at 736). We pretermit deciding whether the district court erred because,
as explained below, Jimenez-Ibarra cannot establish that any error was plain.
“‘Plain’ error is error so clear or obvious that ‘the trial judge and
prosecutor were derelict in countenancing it, even absent the defendant’s
timely assistance in detecting it.’” United States v. Delgado, 672 F.3d 320, 330
(5th Cir. 2012) (en banc) (quoting United States v. Hope, 545 F.3d 293, 296 (5th
Cir. 2008)). Determining whether an error is “clear or obvious” requires us to
“look to the state of the law at the time of appeal,” and “decide whether
controlling circuit or Supreme Court precedent has reached the issue in
question, or whether the legal question would be subject to reasonable
dispute.” United States v. Fields, 777 F.3d 799, 802 (5th Cir. 2015).
The Texas statute underlying Jimenez-Ibarra’s 2006 conviction prohibits
the knowing manufacture, delivery, or possession with intent to deliver “a
controlled substance listed in Penalty Group 1.” TEX. HEALTH & SAFETY CODE
§ 481.112(a). Penalty Group 1 includes “Cocaine, including: (i) its salts, its
optical, position, and geometric isomers, and the salts of those isomers . . . .”
Id. § 481.102(3)(D) (emphasis added). On the other hand, the CSA covers
“cocaine, its salts, optical and geometric isomers, and salts of isomers,” but does
not expressly list position isomers of cocaine. See 21 U.S.C. § 812 sched.
II(a)(4); see also 21 U.S.C. § 802(14) (“As used in schedule II(a)(4), the term
‘isomer’ means any optical or geometric isomer.”). According to Jimenez-
Ibarra, because the Texas statute covers position isomers of cocaine and the
CSA does not, the Texas statute is overbroad and his prior conviction is not
categorically a “drug trafficking offense” under federal law.
The Government sets forth three arguments that it suggests preclude a
finding of clear or obvious error. First, it argues that had Jimenez-Ibarra not
5
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No. 16-50629
remained silent on the issue, it would have been able to provide expert
testimony that the CSA’s broad definition of cocaine includes position isomers.
On this point, the Government relies on the general rule that “questions of fact
capable of resolution by the district court can never constitute plain error.”
United States v. Chung, 261 F.3d 536, 539 (5th Cir. 2001). Jimenez-Ibarra
responds by arguing that whether the CSA includes position isomers of cocaine
is a legal question determined by the statute’s plain language.
The Government next argues that Jimenez-Ibarra has not established a
realistic probability that an individual could be prosecuted under the Texas
statute for possession with intent to deliver a position isomer of cocaine, which
it characterizes as a theoretical molecule. On various occasions we have
applied a “common-sense approach” and determined that a technically
overbroad statute qualifies as a predicate offense for a Guidelines
enhancement if there is no “realistic probability” that the state would actually
apply its statute to conduct outside the scope of the federal definition of the
crime. See United States v. Teran-Salas, 767 F.3d 453, 460 (5th Cir. 2014); see
also United States v. Carrasco-Tercero, 745 F.3d 192, 197–98 (5th Cir. 2014).
To counter this point, Jimenez-Ibarra once again asserts that the plain
language of the statute controls and establishes that there is indeed a realistic
probability of prosecution for a Section 481.112 offense based on position
isomers of cocaine.
The final argument raised by the Government focuses on the fact that
we have yet to determine whether the Texas controlled-substances schedules
are broader than those listed in the CSA. This argument seeks to undercut
Jimenez-Ibarra’s assertion that the Texas statute at issue is similar to certain
California statutes, which this court and the Ninth Circuit have held do not
categorically qualify as drug-trafficking offenses. For example, we adopted the
reasoning of the Ninth Circuit and held that for a violation of California Health
6
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No. 16-50629
and Safety Code Section 11351 to qualify as a “drug trafficking offense,” it
required the application of the modified-categorical approach because the
California statute was divisible. United States v. Gomez-Alvarez, 781 F.3d 787,
792–94 (5th Cir. 2015).
Each of the Government’s arguments and their respective counterpoints
lead us to the same conclusion: Any error that occurred was not clear or
obvious. To begin with, the state of the law is not clear on whether the Texas
controlled-substances schedules are broader than those listed in the CSA. See
Fields, 777 F.3d at 802. “We ordinarily do not find plain error when we have
not previously addressed an issue.” United States v. Evans, 587 F.3d 667, 671
(5th Cir. 2009). That is because “if the law is unsettled within the circuit, any
error cannot be plain.” Fields, 777 F.3d at 805. Moreover, based on our prior
decision in Teran-Salas, it is at least subject to reasonable dispute whether
there is a “realistic probability” that Texas would apply its statute to
individuals charged with possession with intent to deliver position isomers of
cocaine. See Teran-Salas, 767 F.3d at 458. Errors subject to reasonable
dispute are never plain. See United States v. Ellis, 564 F.3d 370, 377–78 (5th
Cir. 2009).
AFFIRMED.
7
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375 B.R. 155 (2007)
In re GLOBAL INDUSTRIAL TECHNOLOGIES, INC., et al., Debtors.
Global Industrial Technologies, Inc. and Harbison-Walker Refractories Company, Movants,
v.
Ash Trucking Company, Inc., Respondent.
Ash Trucking Company, Inc., Movant,
v.
Global Industrial Technologies, Inc. and Harbison-Walker Refractories Company, Respondents.
Bankruptcy No. 02-21626-JKF.
United States Bankruptcy Court, W.D. Pennsylvania.
September 21, 2007.
*156 Reed Smith Shaw & McClay, Amy M. Tonti, Andrew J. Muha, Brian T. Himmel, David Ziegler, Gregory L. Taddonio, Paul M. Singer, Robert P. Simons, Reed Smith *157 LLP, Pittsburgh, PA, Nicholas R. Pagliari, Quinn Buseck Leemhuis Toohey & Kroto Inc., Erie, PA, for Debtors.
MEMORANDUM OPINION[1]
JUDITH K. FITZGERALD, Bankruptcy Judge.
On November 2, 2005, this court issued a Memorandum Opinion and Order disallowing the claim of Ash Trucking. Counsel for Ash Trucking at the time the objection to claim was filed, Richard A. Getty and C. Thomas Ezzell, were both of the firm of Getty & Mayo, LLP. On November 18, 2005, four days after the time to appeal expired,[2] Ash Trucking filed a motion to set aside the Memorandum Opinion and Order, Doc. No. 5077, asserting that they had not been timely received and that the attorney most directly involved on its behalf, C. Thomas Ezzell, was no longer with the law firm of Getty & Mayo, LLP. This court denied that motion on November 29, 2005, Doc. No. 5104, because the assertion in the motion that counsel for Ash Trucking did not timely receive the Memorandum Opinion and Order was unsupported by a recitation of facts or a declaration or affidavit. Further, there had been no notice to this court that Mr. Ezzell had left the firm and no notice of change of counsel or address had been filed. In fact, Mr. Getty remains counsel for Ash Trucking and his address has not changed throughout these proceedings. In addition, every notice involving his client has been directed to his attention, by name, even when also directed to Mr. Ezzell. The docket and the Memorandum Opinion and Order indicate that both Mr. Ezzell and Mr. Getty were served by mail at the address they provided to the court.[3]
The November 29, 2005, order was appealed and by Opinion and Order of Court dated May 4, 2006, Civ. Action No. 06-79, Doc. No. 12, Bankruptcy Case No. 02-21626, Doc. No. 5922, the District Court vacated our order and remanded for "a comprehensive and thorough analysis of the issue of excusable neglect as set forth in" Pioneer Investment Services Co. v. Brunswick Assoc. Ltd. Partnership, 507 U.S. 380, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993), which examined late proofs of claim in the context of Bankruptcy Rule 9006. We will discuss the factors considered in Pioneer Investment throughout this Memorandum Opinion. We note that Pioneer Investment does not provide an "out" for all negligent conduct. The negligent conduct must be excusable.
Ash Trucking's Motion to Set Aside requests that the court, in effect, vacate and reenter its November 2, 2005, order so that Ash Trucking can timely file a notice of appeal. We therefore will address the Motion to Set Aside as a request to enlarge the time to appeal under Rule 8002 which is governed by Bankruptcy Rule 9006(b).[4] This approach will encompass *158 the excusable neglect analysis under Pioneer Investment that the District Court directed we undertake. Rule 9006 provides, in pertinent part, as follows:
(b) Enlargement.
(1) In General. Except as provided in paragraphs (2) and (3) of this subdivision, when an act is required or allowed to be done at or within a specified period by these rules or by a notice given thereunder or by order of court, the court for cause shown may at any time in its discretion (1) with or without motion or notice order the period enlarged if the request therefor is made before the expiration of the period originally prescribed or as extended by a previous order or (2) on motion made after the expiration of the specified period permit the act to be done where the failure to act was the result of excusable neglect.
. . .
(3) Enlargement Limited. The court may enlarge the time for taking action under Rules . . . 8002 . . ., only to the extent and under the conditions stated in those rules.
Bankruptcy Rule 8002(a) requires that a notice of appeal from an order of the bankruptcy court be filed within 10 days of the entry of the order.[5] Under Rule 8002(c)(2) a written motion requesting extension of the time to file a notice of appeal must be made within ten days of the order being appealed "except that such a motion filed not later than 20 days after the expiration of the time for filing a notice of appeal may be granted upon a showing of excusable neglect." Thus, the excusable neglect analysis must be undertaken pursuant to Rules 9006(b)(3) and 8002(c)(2).
Case law in this circuit' consistently has held that the appeal deadline in bankruptcy cases is jurisdictional. See In re Allegheny Health Educ. & Research Foundation, 2006 WL 1440228 (3d Cir. May 25, 2006); In re Smith, 165 Fed.Appx. 961 (3d Cir.2006); In re Flanagan, 999 F.2d 753 (3d Cir.1993); In re Colon, 941 F.2d 242 (3d Cir.1991); In re Universal Minerals, Inc., 755 F.2d 309 (3d Cir.1985). This court's Memorandum Opinion and Order were entered on November 2, 2005, docketed on November 4, 2005, and mailed that same day to Mr. Getty and Mr. Ezzell in accordance with internal procedures as discussed below. See Doc. No. 5034. The motion to set aside our Memorandum Opinion and Order was filed at Doc. No. 5077 on November 18, 2005. Accordingly, the Motion `to Set Aside, treated as a motion to extend the time to appeal, is timely. If excusable neglect is shown, an extension of time to appeal could be granted. Having received and read the pleadings and briefs and having heard argument of counsel, we find that, although Mr. Getty arguably established neglect, it was not *159 excusable neglect. Further, the reasons he offers to support his failure to timely appeal are insufficient under Pioneer Investment.
We first analyze the circumstances surrounding the failure to timely appeal, as suggested by Pioneer Investment. The Motion to Set Aside refers to the fact that Mr. Ezzell did not get notice. However, Mr. Ezzell apparently is no longer with Mr. Getty's firm, did not file the motion to set aside the Memorandum Opinion and Order and, to date, has not filed any documents, affidavits, or pleadings nor has he appeared in connection with the motion to set aside the Memorandum Opinion and Order. Moreover, the address on file for Mr. Ezzell (and Mr. Getty) in this proceeding and in the District Court, see infra, are the same as that stated in all Ash Trucking filings. Further, Mr. Getty has always been identified as counsel for Ash Trucking and was, and continues to be, served with all notices pertaining to his client. Mr. Getty referred to a change of address but, in all pleadings that he filed in this bankruptcy case (and in the District Court appeal) he lists the same address as that to which notices have been mailed with respect to Ash Trucking. Mr. Ezzell has never filed a change of address regarding this matter and Mr. Getty continues to file pleadings on behalf of Ash Trucking using the same address and clearly he, not Mr. Ezzell, is the attorney representing Ash Trucking.[6]
Assuming, without deciding, that, for purposes of this matter, Mr. Getty has standing to raise the alleged and unsubstantiated lack of notice to Mr. Ezzell,[7] we address the remaining issues.
There is a notation at the end of the November 2, 2005, Memorandum Opinion *160 and of the `accompanying Order that states that "[t]he Case Administrator will electronically send copies of the Memorandum Opinion and Order to the parties listed on the current service list in addition, to those listed below." Those "listed below," i.e., those who received paper mailing directly from the court, as opposed to notice from the Case Administrator, include Mr. Getty and Mr. Ezzell at the same address which is the only address that has been on file in this court since the inception of the litigation with respect to Ash Trucking. This procedure of mailing is followed by the Court with respect to all memorandum opinions.[8]
With respect to Mr. Getty's assertion that the failure to timely appeal should be excused because Mr. Ezzell left the firm, we reiterate, and it is apparent from pleadings filed here and in the appeal, that Mr. Getty himself continues to represent Ash Trucking with respect to its claim(s) against this Debtor. He files the pleadings and he has appeared, telephonically or otherwise, at hearings on this matter. We also note that the law firm with which Mr. Getty is associated changed its name[9] more than once during the course of the litigation over Ash Trucking's claim but the address did not change and in every name change Mr. Getty's name is listed first.[10] There were no facts stated in the *161 motion which would justify granting the Motion to Set Aside under Pioneer Investment or any other standard of which this court is aware.
At the May 31, 2006, hearing we granted Mr. Getty the opportunity to supplement the record `concerning excusable neglect and gave counsel for Debtor an opportunity to respond. Argument was held on September 21, 2006. Mr. Getty states in his supplemental pleading that his billing records "demonstrate that counsel first saw the Order [on the Memorandum Opinion] on November 16, 2005," two days after the appeal period expired. Supplemental Brief, Doc. No. 5254, at 4 (emphasis added). However, when Mr. Getty first laid eyes on the Memorandum Opinion and Order does not mean that the Memorandum Opinion and Order arrived at his address that day. The court also gave Mr. Getty an opportunity to supplement the record with respect to his request but, although he filed additional pleadings, he alleged no new facts and proffered no evidence to establish excusable neglect. See Doc. No. 6264.[11]
Mr. Getty stated that he continually has trouble receiving his mail. He offers no evidence in support of this assertion and, even if true, that fact is insufficient to establish excusable neglect. Nothing has been proffered to show what, if any, steps Mr. Getty has taken to combat his allegedly unreliable mail delivery. One thing he could have done, but did not do, was to monitor the docket. It is counsel's responsibility to monitor the docket. See, e.g., In re Barbel, 212 Fed.Appx. 87, 89 (3d Cir.2006); In re Taylor, 217 B.R. 465, 469 (Bankr.E.D.Pa.1998). Furthermore, whether or not he experienced problems with the mail in his office, lack of notice of entry of an order "does not affect the time to appeal or relieve or authorize the court to relieve a party for failure to appeal within the time allowed, except as permitted in Rule 8002." Fed.R.Bankr.P. 9022(a).
Under the circumstances, Mr. Getty has not established excusable neglect and, therefore, his request will be denied. Mr. Getty's failure to "see" the Memorandum Opinion and Order until twelve days after it was issued is not the standard. That Mr. Ezzell left the firm is not diapositive either. Mr. Getty is and always has been counsel for Ash Trucking in this matter and has been mailed notices at the same address throughout. Since August 4, 2006, he also has apparently been sent electronic notices. See note 10, supra.
Similarly, lack of appropriate or effective internal office procedures, while perhaps indicative of neglect, is not excusable neglect and in fact is evidence of the need to monitor the docket. His assertion that he continually has trouble receiving his mail is (1) unsubstantiated by any facts of record and (2) further highlights his obligation, and failure, to monitor the docket *162 or to take other steps to inform himself of events in this case. These factors militate against a finding of excusable neglect. See In re Philbert, 340 B.R. 886, 890 (Bankr. N.D.Ind.2006). "No rule of law better settled than that a court of equity will not aid a part whose application is destitute of . . . reasonable diligence." Hammond v. Hopkins, 143 U.S. 224, 250, 12 S.Ct. 418, 36 L.Ed. 134 (1892).
A final factor articulated in Pioneer Investment is the danger of prejudice to the Debtor. Debtor's counsel explained during oral argument on September 21, 2006, a very real prejudice, this delay in filing the appeal presents to this estate. After Ash Trucking's claim was disallowed, Debtor concluded its negotiations with the Trade Committee for a 90 percent distribution in order to achieve their consent to the plan. Shortly thereafter the plan of reorganization was filed. Ash Trucking's claim was at least $500,000 and possibly in the millions of dollars. As such, it was significant and would have had to have been accounted for in negotiations if it had been allowed. Counsel for Ash Trucking acknowledged at that hearing that allowance of its claim would have had an impact on the plan. Doc. No. 6725, Transcript of September 21, 2006, at 21-22, 24.
Based on the foregoing, we find that Mr. Getty has not established excusable neglect with respect to the failure to timely file a notice of appeal. Although we note that Mr. Getty is now, receiving electronic notice through the CM/ECF system, we will mail him paper copies of this Memorandum Opinion and Order to the address on file in this court under every version of firm name he has used since the claim objection process with respect to Ash Trucking began in this court.
NOTES
[1] The court's jurisdiction was not at issue. This Memorandum Opinion constitutes our findings of fact and conclusions of law.
[2] The Memorandum Opinion and Order of November 2, 2005, were docketed on November 4, 2005. The time to appeal runs from the date an order is docketed of record.
[3] Until August 4, 2006, Mr. Getty's name did not appear on Notices of Electronic Filing under the CM/ECF system. Until an attorney takes the necessary steps to obtain electronic notice under the CM/ECF system such notices are not sent.
[4] The parties agreed that Ash Trucking's Motion to Set Aside would be treated as a motion for reconsideration which is governed by Fed. R.Bankr.P. 3008. Rule 3008 provides:
A party in interest may, move for reconsideration of an order allowing or disallowing a claim against the estate. The court after a hearing on notice shall enter an appropriate order.
Bankruptcy Rule 9023 provides that Fed. R.Civ.P. 59 "applies in cases under the Code, except as provided in Rule 3008." Rule 59 addresses motions for new trial or to alter or amend judgment, all of which must "be filed within ten days of entry of a judgment. The Advisory Committee Notes to Rule 9023 states that "[n]o similar time limit is contained in Rule 3008 which governs reconsideration of claims." Because Rule 9006(b)(2) prohibits enlargement of time for taking action under, inter alia, Rule 9023, and because the order entered by the District Court directs us to consider excusable neglect, we must consider the Motion to Set Aside in the context of Rule 9006 and Rule 8002. Rule 9006(b)(2) prohibits enlargement of time for taking action under, inter alia, Rule 9023.
[5] If certain motions, such as a motion for reconsideration, to amend or make additional findings of fact, etc., are timely filed after the entry of the order, the time to appeal begins to run after the entry of the order disposing of such motion. Fed.R.Bankr.P. 8002(b).
[6] Pioneer Investment also discusses whether the movant acted in good faith. Good faith does not appear to be an issue. However, we note disparities in what Mr. Getty has reported to the court and what the record reflects as the facts, to the extent they bear on good faith.
Mr. Getty stated that he filed a change of address in the District Court. Filing in District Court is ineffective with respect to Bankruptcy Court proceedings. Furthermore, the address in the so-called change of address filing is the same as that stated on the District and Bankruptcy Court dockets, on the notice of appeal, and on all pleadings. In addition, the document identified on the District Court docket as a change of address states the same mailing address as that used on all pleadings in both courts. That is, Mr. Getty has had the same address at all relevant times. Thus, it is unclear what the purpose of the filing of the change of address in the District Court was, but, nonetheless, there is no issue regarding his address. It never changed and Mr. Getty admitted that. See Affidavit at Doc. No. 6265.
Moreover, even if his address had changed, the law imposes on counsel an obligation to file changes of address. Accordingly, any delay that would be experienced due to a failure to file a change of address, if one existed, would have been both "foreseeable and easily preventable" and therefore inexcusable. Taylor v. American Property Locators, Inc., 220 B.R. 854, n. 1 (E.D.Pa.1998). The court in Taylor relied on Pioneer Investment and found no excusable neglect based on counsel's failure to formally notify the court of a change of address. Cf. In re A.H. Robins Co., Inc., 197 B.R. 491, 492 (E.D.Va.1994)("the failure of actual notice is not determinative of the sufficiency of notice under due process, particularly where, as here, the failure of actual notice is due to the fault of the movant [there is] no duty to search for claimants or counsel who choose to change addresses without sharing that information with . . . the Court").
[7] The docket reflects that copies of the Memorandum Opinion and Order were mailed to Mr. Getty and Mr. Ezzell. Mr. Getty's name was listed first on the "cc" list at the end of both the Opinion and the Order. See Doc. No. 5034. We also note that when mail is returned to the court as undeliverable for any reason, the fact of return of the mailing is docketed. There, is no such docket entry on the record of this case.
[8] The Memorandum Opinion and Order were issued on November 2, 2005, Doc. No. 5034, and docketed on November 4, 2005, at 8:38 a.m. Paper copies of opinions are-mailed the day they are docketed to those listed under "cc" after the Judge's signature. Because this Memorandum Opinion and Order were docketed in the morning, they would have been placed in the U.S. mail before the close of business that day, in accordance with internal procedures.
[9] When Ash Trucking's counsel filed the response to Debtors' objection to claim and when the pro hac vice motions were filed the law firm's name was Getty & Mayo, LLP. See Doc. No. 2799, filed March 2, 2004. In the motion to set aside, filed on November 18, 2005, the firm is identified as Getty, Hargadon & Keller, PLLC. See Doc. No. 5077. Ash Trucking's Supplemental Brief, filed at Doc. No. 6264, indicates another name change to The Getty Law Group. Currently it appears from the electronic filing receipts associated with each docket entry under CM/ECF that Mr. Getty's firm is now named Getty & Childers, PLLC. The court has determined, through an internet search, that the address for Getty & Childers, PLCC, is, the same as' that for Getty & Mayo, Getty, Hargadon & Keller, and the Getty Law Group.
[10] In the Motion to Set Aside, Mr. Getty requested that he be served by e-mail as well as by U.S. mail. However, CM/ECF is `configured to give electronic notice to those who have made the necessary arrangements through the Clerk's Office to become electronic filers. Until August 4, 2006, as indicated by electronic receipts associated with each docket entry, Mr. Getty was not a CM/ECF electronic filer so would not have received electronic notice. Mr. Getty and Mr. Ezzell, Kentucky attorneys, were both admitted pro hac vice with respect to the Ash Trucking matter. The CM/ECF Procedures applicable in this court permit attorneys admitted pro hac vice to obtain CM/ECF logins and passwords when they, represent a party in a case pending here. See ECF Procedure # 2 ("Attorneys admitted to the bar of this Court (including those admitted pro hac vice), . . . may register as Filing Users of the Court's Electronic Filing System. . . ."). This was applicable at the time of this court's November 2005 Memorandum Opinion and Order and remains true today. See CM/ECF procedures under the Court Procedures Manual link, http://www.pawb.uscourts.gov/cmecf.htm, beginning at page 32.
Furthermore, electronic filing has been mandatory in this district since February 3, 2003, but Mr. Getty did not obtain certification as an electronic filer until August 4, 2006. He did so only after this court entered two orders sanctioning him for not filing electronically and a third order requiring him to immediately make arrangements to become an electronic filer. See Order of June 27, 2006, Doc. No. 6266; Order of July 6, 2006, Doc. No. 6318; Order of July 27, 2006, Doc. No. 6439, respectively. The order of July 27, 2006, was a written order confirming an oral order issued at a hearing on July 21, 2006.
We note that an attorney with an office in Philadelphia, Kenneth Aaron, sometimes files documents on behalf of Ash Trucking. At the time of the Memorandum Opinion he was not on the electronic notice list either. A copy of this Memorandum Opinion and Order is also being sent to Mr. Aaron by U.S. first class mail at the last address appearing for him in a pleading filed in connection with this matter.
[11] In his Supplemental Brief Mr. Getty also states that the attached as "Exhibit A" his time records which establish that he first "saw" the Memorandum Opinion and Order after the appeal deadline. See Doc. No. 6264. No exhibit was attached to the Supplemental Brief nor the accompanying affidavit filed at Doc. No. 6265. Furthermore, even if the mail had arrived late, as opposed to having been seen by Mr. Getty after the deadline, it is counsel's responsibility to monitor the docket. See infra.
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535 So.2d 1156 (1988)
L & L INDUSTRIES, INC., Linda Gail G. Lott and Leslie L. Lott, Sr., Appellants,
v.
PROGRESSIVE NATIONAL BANK, et al., Appellees.
No. 20088-CA.
Court of Appeal of Louisiana, Second Circuit.
November 30, 1988.
Carrol L. Spell, Sr., Lafayette, for appellants, L & L Industries, et al.
Lunn, Irion, Johnson, Salley & Carlisle by Charles W. Salley and James A. Mijalis, *1157 Shreveport, for appellees, Progressive Nat. Bank, Ron C. Boudreaux, Riemer Calhoun, Jr. and Riemer Calhoun, Sr.
Herman L. Lawson, Mansfield, for appellee, Ron C. Boudreaux.
Before MARVIN, FRED W. JONES, Jr. and NORRIS, JJ.
NORRIS, Judge.
This is an appeal by plaintiffs Leslie Lott, Linda Lott and L & L Industries (L & L) from the judgment rejecting their demands against defendants Reimer Calhoun, Jr., Reimer Calhoun, Sr., Ron Boudreaux, and Progressive National Bank (Progressive).
Plaintiffs filed suit June 23, 1986, alleging that Progressive, through its officers and directors, "entered into a course of action calculated to force petitioner, L & L Industries, Inc., into a position whereby said company would either be foreclosed upon by said bank or forced into a financial posture requiring complete liquidation, resulting in ownership of the corporate real estate and other property by the bank and/or certain of its officers or directors." The petition also alleged that the actions of the bank officers and directors caused both Mr. and Mrs. Lott, the sole shareholders of L & L, to suffer health problems. L & L claimed damages of $2,000,000, and Mr. and Mrs. Lott claimed damages of $1,000,000 each.
The specific allegations of bank misconduct set forth in the petition were failing to promptly credit wire transfers from corresponding banks, failing to timely honor letters of credit, forcing L & L to seek substitute financing, not loaning L & L money needed to complete the purchase of a competing business on very favorable terms, and obtaining an assignment of L & L's accounts receivable from Leslie Lott, who was not authorized to execute the same.
Defendants filed an exception of no cause of action as to the claims of Leslie and Gail Lott, which was referred by the trial court to the merits.
We note that substantial portions of this record were made by proffer, after the proposed evidence was ruled inadmissible by the trial judge. Since appellants have not assigned as error these rulings by the trial judge, we do not address them, and the testimony in proffer is not before us. Smith v. Leger, 439 So.2d 1203 (La.App. 1st Cir.1983).
Mr. and Mrs. Lott are the sole stockholders of L & L. The company was organized in 1982, and began manufacturing an outboard motor. It expanded to include the manufacture and sale of boat trailers and hot tubs. In 1983 or 1984 L & L began banking with Progressive National Bank. Reimer Calhoun, Jr., who owns 1/3 of Progressive's stock, has been Chairman of the Board at Progressive since before 1982. Reimer Calhoun, Sr., who also owns 1/3 of Progressive's stock, has been executive vice president of Progressive since March of 1985. Ron Boudreaux, President of Progressive, testified that when he first came to Progressive in March of 1985 L & L had one loan of over $100,000, which he felt was amply collateralized.
During the trial plaintiffs attempted to prove that Progressive failed to assist L & L in purchasing a competing business on very favorable terms, accepted an improper assignment of accounts receivable from L & L, failed to timely honor a letter of credit, did not promptly credit wire transfers from corresponding banks to L & L's account, and refused to loan L & L money. The Lotts also testified that Progressive had engaged in these activities in an attempt to force L & L to go bankrupt and suffer foreclosure proceedings. Ron Boudreaux denied each of these charges, and his testimony denying these allegations was corroborated by that of Reimer Calhoun, Sr. and Reimer Calhoun, Jr.
Both Mr. and Mrs. Lott testified that L & L's alleged problems with Progressive affected their health. Their doctor testified in each case that stress would be an aggravating factor in their respective illnesses.
At the conclusion of the trial the judge dismissed the suit as to Reimer Calhoun, *1158 Jr. and Reimer Calhoun, Sr.[1] After receiving briefs from both parties the trial judge entered a judgment sustaining the exception of no cause of action against the Lotts and rejecting the claims of L & L against Ron Boudreaux and Progressive.
Plaintiffs appeal assigning only three errors:
(1) The court erred in sustaining the Exception of No Cause of Action;
(2) The court erred in dismissing the claims against Reimer Calhoun, Sr. and Reimer Calhoun, Jr.
(3) The court erred in holding that the evidence failed to establish any negligence or wrong doing on the part of Progressive.
We find no merit in either of these assignments of error, and affirm.
ISSUE NO. 1
Plaintiffs' first error assigned is that the court erred in granting the exception of no cause of action. The exception was sustained on the ground that the Lotts had no cause of action individually for damages suffered as a result of alleged wrongs committed against the corporation. The Lotts argue that they were sueing for injuries sustained in their personal capacities, not as shareholders of L & L.
The peremptory exception of no cause of action is appropriately sustained only when, assuming the allegations of plaintiffs' petition to be true, plaintiff has not stated a claim for which he can be legally compensated under the applicable substantive law. C.C.P. art. 927; Frain as Tutrix of Beason v. State Farm Ins., 421 So.2d 1169 (La.App. 2d Cir.1982).
The Lotts' petition prayed for damages for mental anguish and physical suffering that resulted from the defendants' conduct. However, the wrongful acts alleged in plaintiffs' petition were all directed towards L & L, not Mr. and Mrs. Lott as individuals. A person cannot recover in tort for mental anguish resulting from injuries suffered by another. Jenkins v. Ouachita School Board, 459 So.2d 143 (La. App. 2d Cir.1984), writ denied 462 So.2d 652 (La.1985); Turner v. State of Louisiana, 494 So.2d 1292 (La.App. 2d Cir.1986). Further, if a corporation has sustained a loss then only that corporation can sue to recover it. A person who conducts business in corporate form and reaps the benefit of incorporation cannot sue individually for damages incurred by the corporation. Hinchman v. Oubre, 445 So.2d 1313 (La. App. 5th Cir.1984). Here, the only wrongful acts alleged were those against L & L. The Lotts cannot recover for mental anguish and attendant physical suffering resulting from any alleged wrongful acts against the corporation of which they are the shareholders and officers.
Further, the trial judge found that the plaintiffs had not proved any wrongful action, either intentional or negligent, practiced by the bank against L & L or anyone connected therewith. Based on the record, this factual finding is not clearly wrong. Arceneaux v. Domingue, 365 So.2d 1330 (La.1978). Therefore, even if the exception of no cause of action had been improperly granted the evidence adduced at trial mandates the result that Leslie and Linda Lott's claims be rejected for lack of proof by a preponderance of the evidence of any wrongful actions on the part of the bank or its officers.
ISSUE NO. 2
Appellants' second assignment of error is that the court erred in dismissing plaintiffs' suit as to Reimer Calhoun, Sr. and Reimer Calhoun, Jr.
In a non-jury trial, the proper standard to be applied by the trial judge in ruling on a motion for dismissal is a preponderance of the evidence. The judge must weigh and evaluate all the evidence presented upon completion of the plaintiffs' case, and must grant dismissal if the plaintiff has not established proof by a preponderance of the evidence. Proof by a preponderance of the evidence simply means that, taking the evidence as a whole, such proof shows that *1159 the fact or cause sought to be proved is more probable than not. Mott v. Babin Motors, Inc., 451 So.2d 632 (La.App. 3d Cir.1984); Caldwell v. Texas Industries, Inc., 419 So.2d 86 (La.App.2d Cir.1982), writ denied 423 So.2d 1149 (La.1982); Atkins v. Frazell, 470 So.2d 505 (La.App. 1st Cir.1985). The trial judge has much discretion in determining whether a motion for dismissal should be granted. Mott v. Babin Motors, Inc., supra.
Here, the plaintiffs' presentation essentially made no mention of the Calhouns. No plaintiff witness attributed any conduct they deemed inappropriate to either of the Calhouns. Careful review of the record reveals a complete absence of any evidence tending to show a wrongful action by either Reimer Calhoun Sr., or Reimer Calhoun, Jr.
We find the trial judge did not abuse his great discretion in granting the motion to dismiss the suit as to Reimer Calhoun, Sr. and Reimer Calhoun, Jr.
Appellants' second assignment of error has no merit.
ISSUE NO. 3
Appellants' final assignment of error is that the court erred in holding that the evidence failed to establish any negligence or wrongdoing on the part of Progressive in its financial dealings with L & L.
In brief, appellants argue only that the July 10, 1985 assignment of accounts receivable signed by Leslie Lott, L & L's vice-president, instead of by Linda Lott, the president, was invalid; and that Progressive's actions in notifying L & L's debtors of the assignment and advising the debtors to send payment directly to Progressive stifled L & L's cash flow.
On March 13, 1984, L & L executed a resolution authorizing Leslie Lott, as president, to borrow and mortgage on behalf of the corporation. Progressive had in its files a resolution which authorized the president of L & L to borrow money and sign notes for the corporation. On January 2, 1985, at a special meeting of L & L's Board of Directors, Linda Lott replaced Leslie Lott as president of L & L, and Leslie Lott was named vice-president of L & L. Apparently Progressive was furnished a copy of this resolution.
Shortly before July 10, 1985, L & L negotiated a loan from Progressive. An assignment of accounts receivable was to serve as collateral for this loan. On July 10, 1985, Ron Boudreaux went to L & L's offices, and had Leslie Lott sign the assignment. Linda Lott was out of town that day.
Plaintiffs argue that the assignment was invalid because it was not signed by the president of L & L as specified in L & L's resolutions.
The appellants' premise, that the assignment of accounts receivable was not valid, is unfounded. L & L's by-laws expressly give the vice-president the authority to act as president when the president is unavailable or incapacitated. The evidence shows that on the date the assignment of accounts receivable was signed Linda Lott was out of town and unavailable. Thus, under L & L's corporate by-laws Leslie Lott, the vice-president, was authorized to execute the assignment of accounts receivable.
However, assuming but not holding that the assignment signed by Leslie Lott was invalid, we must conclude that it was later ratified by the corporation.
The general rule is that contracts entered into or other transactions engaged in without authorization may be ratified either expressly or by implication by those having authority, provided the action was not prohibited by statute or the corporation's charter, and is not contrary to public policy. McCarty v. Panzico, 467 So.2d 1229 (La.App. 2d Cir.1985). Ratification occurs when personnel with the authority to bind the corporation acquire knowledge of the unauthorized act and thereafter fail to repudiate it within a reasonable time. This rule is particularly applicable when the delay in repudiation is a long one, the failure to repudiate is accompanied by acts indicating approval of the unauthorized act, or the circumstances call for a quick repudiation. McCarty v. Panzico, supra. A *1160 corporation cannot accept the benefits of an unauthorized contract and then deny its ratification. Hamm v. Southeast La. Emergency Med. Serv., 414 So.2d 835 (La. App. 4th Cir.1982); Campbell v. Pipe Technology Inc., 499 So.2d 111 (La.App. 1 Cir. 1986), writ denied 502 So.2d 117 (La.1987); Greenleaf Plantation, Inc. v. Kieffer, 403 So.2d 100 (La.App. 3d Cir.1981), writ denied 409 So.2d 675 (La.1981).
Although the president of L & L, Linda Lott, was aware of the assignment of accounts receivable, L & L made no complaint about the assignment of accounts receivable until the filing of this lawsuit. To the contrary, L & L accepted the loan proceeds collateralized by this assignment, and on several occasions the president of L & L, Linda Lott, provided the bank with lists of L & L's accounts receivable pursuant to this assignment.
In light of L & L's acceptance of the benefits received from the assignment, the officers' knowledge of the assignment and their failure to repudiate, and the president's action in providing the bank with information necessary for L & L to periodically receive the loan proceeds and effect the assignment of the accounts receivable, we conclude that the assignment was ratified by L & L.
With appellants' major premise repudiated, we can find no merit in their final assignment of error. The trial judge did not err in finding that plaintiffs established neither a scheme to bankrupt L & L nor any actionable negligence on the part of Progressive Bank or its officers in dealing with L & L or the Lotts.
The judgment of the court below is affirmed. Costs of this appeal are assessed to the appellants.
AFFIRMED.
NOTES
[1] At the close of plaintiffs' case defendants moved to dismiss the suit as to all defendants. In accord with C.C.P. art. 1672 the trial judge declined to render any judgment until the close of all the evidence.
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In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
(Filed: July 25, 2019)
* * * * * * * * * * * * * * *
MICHAEL J. GORDON, Parent and *
Natural Guardian of J.M.G., *
*
Petitioner, * No. 17-743V
*
v. * Chief Special Master Dorsey
*
SECRETARY OF HEALTH * Interim Attorneys’ Fees and Costs.
AND HUMAN SERVICES, *
*
Respondent. *
*
* * * * * * * * * * * * * * *
David P. Murphy, David Murphy Esq., Greenfield, IN, for petitioner.
Colleen C. Hartley, U.S. Department of Justice, Washington, DC, for respondent.
DECISION AWARDING INTERIM ATTORNEYS’ FEES AND COSTS
On March 26, 2019, Andrew Downing filed a motion to withdraw as petitioner’s counsel
in the above-captioned case. Motion (“Mot.”) to Withdraw dated Mar. 26, 2019 (ECF No. 45).
On April 12, 2019, by leave of the undersigned, Mr. Downing filed a motion for interim
attorneys’ fees and costs. Motion for Interim Attorneys’ Fees and Costs dated Apr. 12, 2019
(ECF No. 55) (“Interim Mot.”).
For the following reasons, the undersigned GRANTS petitioner’s motion for interim fees
and costs and awards $16,483.50 in fees and $3,224.39 in costs, for a total award of $19,707.89.
I. Procedural History
On June 6, 2017, Michael Gordon (“petitioner”) filed a petition in the National Vaccine
Injury Compensation Program (“Vaccine Program”) on behalf of his minor child, J.M.G.
Petitioner alleges that the DTaP, Hepatitis B, rotavirus, Hib, PCV, and IPV vaccines J.M.G.
received on May 13, 2014, and July 16, 2014, caused him to suffer external hydrocephalus and
developmental delays. Amended Petition at 2-3.
At the time the petition was filed, petitioner appeared pro se. On February 9, 2018,
petitioner filed a motion to substitute Mr. Downing as his counsel. On February 20, 2018,
respondent filed a Rule 4(c) Report recommending against compensation. Respondent’s Report
(“Resp. Rept.”) (ECF No. 26). In response to the undersigned’s March 22, 2018 Order,
petitioner filed updated medical records on May 17, 2018, and a statement of completion on May
23, 2018. Petitioner’s Exhibits (“Pet. Exs.”) 7-9. On May 30, 2018, petitioner filed his amended
1
petition and subsequently filed an export report and medical literature on August 17, 2018.
Amended Petition; Pet. Exs. 10-15.
On March 26, 2019, Mr. Downing filed a Motion to Withdraw as Attorney for petitioner,
and on April 12, 2019, he filed a motion by leave of the Chief Special Master for interim fees
and costs. Counsel stated that he was “unable to continue acting as Petitioner’s Counsel in this
matter and has determined that he has no alternative but to seek this withdrawal.” Mot. to
Withdraw at 2. He indicated that petitioner intended to either seek new counsel to represent him
in this matter or proceed pro se. Id. The motion requested that petitioner be given sixty days
within which to retain new counsel. Id.
Petitioner now requests $16,483.50 in interim fees and $3,224.39 in interim costs, for a
total award of $19,707.89, to compensate Mr. Downing. Interim Mot. at 5. On April 15, 2019,
respondent filed a response to petitioner’s motion. Respondent’s Response dated Apr. 15, 2019
(ECF No. 56). Respondent recommended that the Chief Special Master “exercise her discretion
and determine a reasonable award for attorneys’ fees and costs,” provided that the Chief Special
Master finds that petitioner had a reasonable basis upon which to bring his claim, and that
awarding interim fees and costs complies with the standard set forth in Avera v. Secretary of
Health & Human Services, 515 F.3d 1343 (Fed. Cir. 2008). Id. at 3.
This matter is now ripe for adjudication.
II. Legal Standard
Petitioner is entitled to an interim award of reasonable attorneys’ fees and costs if the
undersigned finds that he brought his petition in good faith and with a reasonable basis. Avera,
515 F.3d at 1352; 42 U.S.C. § 300aa-15(e)(1); see also Shaw v. Sec’y of Health & Human
Servs., 609 F.3d 1372 (Fed. Cir. 2010); Woods v. Sec’y of Health & Human Servs., 105 Fed. Cl.
148, 154 (Fed. Cl. 2012); Friedman v. Sec’y of Health & Human Servs., 94 Fed. Cl. 323, 334
(Fed. Cl. 2010); Doe 21 v. Sec’y of Health & Human Servs., 89 Fed. Cl. 661, 668 (Fed. Cl.
2009); Bear v. Sec’y of Health & Human Servs., No. 11-362V, 2013 WL 691963, at *5 (Fed. Cl.
Spec. Mstr. Feb. 4, 2013); Lumsden v. Sec’y of Health & Human Servs., No. 97-588V, 2012 WL
1450520, at *6 (Fed. Cl. Spec. Mstr. Mar. 28, 2012). A petitioner “bears the burden of
establishing the hours expended.” Wasson v. Sec’y of Health & Human Servs., 24 Cl. Ct. 482,
484 (1991) (affirming special master’s reduction of fee applicant’s hours due to inadequate
recordkeeping), aff’d after remand, 988 F.2d 131 (Fed. Cir. 1993) (per curiam). Reasonable
attorneys’ fees are determined by “multiplying the number of hours reasonably expended on the
litigation times a reasonable hourly rate.” Avera, 515 F.3d at 1347-48 (quoting Blum v. Stenson,
465 U.S. 886, 888 (1984)). Special masters have “wide discretion in determining the
reasonableness” of attorneys’ fees and costs, Perreira v. Sec’y of Health & Human Servs., 27
Fed. Cl. 29, 34 (1992), aff’d, 33 F.3d 1375 (Fed. Cir. 1994), and may increase or reduce the
initial fee award calculation based on specific findings. Avera, 515 F.3d at 1348.
In making reductions, a line-by-line evaluation of the fee application is not required.
Wasson, 24 Cl. Ct. at 484. Special masters may rely on their experience with the Vaccine Act
and its attorneys to determine the reasonable number of hours expended. Id. Just as “[t]rial
courts routinely use their prior experience to reduce hourly rates and the number of hours
2
claimed in attorney fee requests . . . [v]accine program special masters are also entitled to use
their prior experience in reviewing fee applications.” Saxton v. Sec’y of Health & Human
Servs., 3 F.3d 1517, 1521 (Fed. Cir. 1993).
In Avera, the Federal Circuit stated, “Interim fees are particularly appropriate in cases
where proceedings are protracted and costly experts must be retained.” 515 F.3d at 1352. In
Shaw, the Federal Circuit held that “where the claimant establishes that the cost of litigation has
imposed an undue hardship and there exists a good faith basis for the claim, it is proper for the
special master to award interim attorneys’ fees.” 609 F.3d at 1375. In the past, interim fees have
been rewarded in the context of withdrawal of counsel. See Rehn v. Sec’y of Health & Human
Servs., 126 Fed. Cl. 86, 92 (Fed. Cl. 2016) (“If there is an indefinite delay in ‘receiving fees . . .
until the matter is ultimately resolved,’ it may be particularly appropriate to award interim fees to
an attorney who has withdrawn.”). Further, the undersigned has previously awarded interim fees
to Mr. Downing after he withdrew as counsel in another matter. See Fuller v. Sec’y of Health &
Human Servs., No. 15-1470V, 2016 U.S. Claims LEXIS 1003 (Fed. Cl. Spec. Mstr. July 5,
2016). Given Mr. Downing’s explanation that he has withdrawn from the case, the undersigned
finds that an award of interim fees and costs is reasonable.
III. Discussion
a. Reasonable Attorneys’ Fees
i. Requested Hourly Rates
Petitioner requests compensation for Mr. Downing at a rate of $385.00 per hour for the
total of 35.10 hours he has expended in the case. Interim Mot., Ex. A at 13. In addition, he also
seeks to recover fees for work performed by two paralegals, Mr. Robert Cain and Ms. Danielle
Avery, who each billed at a rate of $135.00 per hour. Id. The requested rates of Mr. Downing,
Mr. Cain, and Ms. Avery have previously been found reasonable. Silver v. Sec’y of Health &
Human Servs., No. 16-1019V, 2018 U.S. Claims LEXIS 1058 (Fed. Cl. Spec. Mstr. July 31,
2018) (Special Master Sanders awarding Mr. Downing $385.00 per hour and Mr. Cain and Ms.
Avery each $135.00 per hour). The undersigned has also awarded fees to Mr. Downing at a rate
comparable to those now requested. See Fuller, 2016 U.S. Claims LEXIS 1003. The requested
rates are consistent with the ranges provided in McCulloch v. Sec’y of Health & Human Servs.,
No. 09-293V, 2015 WL 5634323 (Fed. Cl. Spec. Mstr. Oct. 18, 2016). Thus, the undersigned
finds the requested fees reasonable and grants them in full.
ii. Requested Hours
Petitioner requests compensation for a total of 57.10 hours of work on his case from 2018
to the present. Interim Mot., Ex. A at 12. 35.10 hours were expended by Mr. Downing; 6.60
hours by Mr. Cain; and 15.40 by Ms. Avery. Id. at 13. After carefully reviewing the billing
records, the undersigned finds that the hours spent are reasonable and will thus reimburse them
in full.
For the reasons discussed above, the undersigned awards petitioner a total of $16,483.50
in interim fees.
3
b. Costs
Like attorneys’ fees, a request for reimbursement of costs must be reasonable. Perreira,
27 Fed. Cl. at 34. Reasonable expert costs are calculated using the same lodestar method as is
used when calculating attorneys’ fees. Masias v. Sec’y of Health & Human Servs., No. 99-
697V, 2009 WL 1838979, at *37 (Fed. Cl. Spec. Mstr. June 12, 2009).
Petitioner requests a total of $3,224.39 for costs incurred by Mr. Downing. Interim Mot.,
Ex. A at 13. These costs are associated with retaining an expert witness and covering expenses
such as expert reports, faxes, photocopies, PACER, and postage. Interim Mot., Ex. A at 12.
Petitioner’s expert, Dr. Karen Harum, is a board-certified pediatrician with a specialty certificate
in neurodevelopmental disabilities. Interim Mot. at 5. Dr. Harum’s rate is $350.00 per hour,
totaling $3,150.00 for nine hours of time spent on this case. Interim Mot., Ex. A at 17. Dr.
Harum was awarded this hourly rate by the Vaccine Program previously. See Cakir v. Sec’y of
Health and Human Servs., No. 15-1474V, 2017 U.S. Claims LEXIS 522 (Fed. Cl. Spec. Mstr.
April 18, 2017). The undersigned finds the requested costs to be reasonable and well-
documented in the invoices submitted by petitioner and awards them in full.
IV. Conclusion
For the reasons set forth above, the undersigned finds that it is reasonable to compensate
petitioner’s former counsel as follows:
Requested attorneys’ fees for Andrew Downing: $ 16,483.50
Total fees for Andrew Downing: $ 16,483.50
Requested attorneys’ costs: $ 3,224.39
Total attorneys’ costs: $ 3,224.39
Total Fees and Costs Awarded: $ 19,707.89
Accordingly, the undersigned awards $19,707.89, representing reimbursement for
all interim attorneys’ fees and costs, in the form of a check jointly payable to petitioner and
petitioner’s former attorney, Mr. Andrew Downing.
In the absence of a motion for review filed pursuant to RCFC Appendix B, the Clerk of
Court SHALL ENTER JUDGMENT in accordance with this decision.1
IT IS SO ORDERED.
The Clerk is directed to mail a copy of this Decision to:
1
Pursuant to Vaccine Rule 11(a), entry of judgment is expedited by the parties’ joint filing of
notice renouncing the right to seek review.
4
Andrew D. Downing
3030 N. Third Street
Suite 790
Phoenix, AZ 85012
/s/ Nora Beth Dorsey
Nora Beth Dorsey
Chief Special Master
5
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FILED
NOT FOR PUBLICATION JUL 30 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CECILIA V. GREGORIO, No. 11-17490
Plaintiff - Appellant, D.C. No. 2:10-cv-00407-JRG
v.
MEMORANDUM*
GEICO GENERAL INSURANCE
COMPANY, et al.
Defendant - Appellee.
Appeal from the United States District Court
for the District of Arizona
Joseph R. Goodwin, Chief District Judge, Presiding
Argued and Submitted June 13, 2013
San Francisco, California
Before: SCHROEDER and CALLAHAN, Circuit Judges, and VANCE, Chief
District Judge.**
Plaintiff-Appellant Cecilia Gregorio appeals the district court's grant of
summary judgment to defendant GEICO Insurance Company on her claims of
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Sarah S. Vance, Chief District Judge for the U.S.
District Court for the Eastern District of Louisiana, sitting by designation.
1
breach of contract and breach of good faith and fair dealing. These claims are
based on GEICO's refusal to pay Gregorio uninsured/underinsured ("UM/UIM")
benefits under her umbrella insurance policy. We have jurisdiction over this appeal
pursuant to 28 U.S.C. § 1291, and we affirm.1
I
This court reviews de novo the district court's grant of summary judgment.
Buono v. Norton, 371 F.3d 543, 545 (9th Cir. 2004). "Summary judgment is
appropriate when there is no genuine issue of material fact and the moving party is
1
As a preliminary matter, we address GEICO's motion to strike several
portions of Gregorio's Excerpts of Record (EOR). GEICO contends that these
documents were not filed with the district court, as is required by Federal Rule of
Appellate Procedure 10(a). That motion is GRANTED IN PART.
Gregorio has waived any arguments based on facts not before the district
court when it rendered summary judgment. See Peterson v. Highland Music, Inc.,
140 F.3d 1313, 1321 (9th Cir. 1998). We therefore will not admit into the record
documents filed in the district court after its consideration of the summary
judgment motion. Accordingly, we strike those portions of Gregorio's EOR that
were not before the district court before it denied Gregorio's motion to reconsider
the grant of summary judgment, to wit:
(1) All pages of plaintiff's Exhibit 1 except 1-8, 14-21, 25-26, 29-30, 37,
41-53, 58-59, 62-63, 65-68, 85-105, 110-125, 129-152, 162-173, 182-
185, 194-201, 206-212, 214-221, 226-233, 235, and 238-241.
(2) ER Vol. 2, page 82 (the first page of plaintiff's Exhibit 2).
(3) Plaintiff's Exhibit 5.
GEICO's motion to strike is denied insofar as it relates to Exhibit 1, pages 1-
8, 66-68, 85, 129, 151-52, 210-12; and Exhibit 2, page 2, because these documents
were presented to the district court with plaintiff's motion for reconsideration.
2
entitled to judgment as a matter of law." Karuk Tribe of Cal. v. U.S. Forest Serv.,
681 F.3d 1006, 1017 (9th Cir. 2012).
II
The district court was correct in holding that Gregorio's umbrella policy
unambiguously lacks UM/UIM coverage. The policy expressly excludes
"[p]ersonal injury or property damage resulting from an uninsured or underinsured
motorist claim unless a premium is shown for the uninsured or underinsured
motorist coverage in the declarations." The declarations page, in turn, does not list
a premium for UM/UIM coverage. Moreover, the umbrella policy provides only
third-party liability coverage, as it covers only "damages an insured must pay (1)
legally; or (2) by agreement with [GEICO's] written consent; because of personal
injury or property damage covered by this policy." These provisions
unambiguously demonstrate that the umbrella policy does not provide UM/UIM
coverage.
III
Gregorio argues that even if the plain language of the policy does not
include UM/UIM coverage, the district court erred by failing to take into account
her reasonable expectations of coverage.
3
In Arizona, courts apply the reasonable expectations doctrine to claims
based on standardized insurance contracts. See First Am. Title Ins. Co. v. Action
Acquisitions, LLC, 187 P.3d 1107, 1113 (Ariz. 2008) (en banc); Darner Motor
Sales, Inc. v. Universal Underwriters Ins. Co., 682 P.2d 388, 396-99 (Ariz. 1984).
Arizona courts generally limit the application of the doctrine to four contexts:
1. Where the contract terms, although not ambiguous to the court, cannot
be understood by the reasonably intelligent consumer who might check
on his or her rights, the court will interpret them in light of the objective,
reasonable expectations of the average insured;
2. Where the insured did not receive full and adequate notice of the term
in question, and the provision is either unusual or unexpected, or one that
emasculates apparent coverage;
3. Where some activity which can be reasonably attributed to the insurer
would create an objective impression of coverage in the mind of a
reasonable insured;
4. Where some activity reasonably attributable to the insurer has induced
a particular insured reasonably to believe that he has coverage, although
such coverage is expressly and unambiguously denied by the policy.
Gordinier v. Aetna Cas. & Sur. Co., 742 P.2d 277, 283-84 (Ariz. 1987) (internal
citations omitted). Gregorio's claim falls into none of these categories.
The first Gordinier category is not applicable because a reasonably
intelligent consumer could easily understand that there is no suggestion of
UM/UIM coverage in the GEICO policy. The exclusion of UM/UIM coverage is
itself plain, and the coverage provision clearly states that the policy covers only
4
damages the insured must pay. Further, the policy excludes "personal injury to any
insured," and provides that it pays damages "on behalf of," not "to," an insured.
The second category is inapplicable because Gregorio received a copy of the
policy, which set forth the UM/UIM exclusion in plain language on the third page
of a six-page document. The exclusion was not buried in an unexpected section of
a voluminous policy. Further, the provision hardly "emasculates apparent
coverage," as the coverage provision of the policy states that it applies to the
insured's liability to pay damages, the policy is entitled "Personal Umbrella
Liability Insurance Agreement," and the policy includes no first-party coverage.
Nor does Gregorio's case fall within either the third or the fourth Gordinier
category. Her threadbare recollection of a nine-year old conversation with a
GEICO representative, in which she does not recall whether UM/UIM coverage
was mentioned, does not provide more than a "mere . . . scintilla of evidence"
supporting her reasonable expectations claim. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 252 (1986). Gregorio could not dispute that a different GEICO
representative called her back with a quote for an umbrella policy. That
representative denied having made any representation to Gregorio that UM/UIM
insurance was included in the policy and averred that she explained that the policy
5
was a liability policy. Gregorio could not dispute this testimony because she could
not recall the details of the conversation.
Thus, the record contains no probative evidence that GEICO engaged in any
activity that would create an objective impression of coverage in the mind of a
reasonable insured, or that induced this particular insured to believe that she had
coverage. See Gordinier, 742 P.2d at 284. Gregorio's recollection is too vague to
indicate that she clearly conveyed to GEICO her desire that UM/UIM coverage be
included in her umbrella policy, much less that GEICO assured her that the
coverage would be included. See First Am. Title Ins. Co., 187 P.3d at 1114 (noting
that a subjective expectation of coverage on the part of the insured, without more,
does not trigger the reasonable expectations doctrine). Deviation from the written
terms of an insurance policy must be based on something more than an insured's
"fervent hope usually engendered by loss," Darner, 682 P.2d at 395, and the
reasonable expectations doctrine "does not require insurers to read their insureds'
minds." Sec. Ins. Co. of Hartford v. Andersen, 763 P.2d 251, 258 (Ariz. Ct. App.
1986), vacated in part, 763 P.2d 246 (Ariz. 1988). Accordingly, the district court
did not err in granting summary judgment.
6
IV
Given the unambiguous language of the policy, and that Gregorio has failed
to demonstrate that she had a reasonable expectation of UM/UIM coverage, her
bad faith claim against GEICO is also without merit. See Deese v. State Farm
Mut. Auto. Ins. Co., 838 P.2d 1265, 1267-68 (Ariz. 1992) (en banc) (bad faith
claim requires showing "the absence of a reasonable basis for denying benefits of
the policy and the defendant's knowledge or reckless disregard of the lack of a
reasonable basis for denying the claim").
V
Gregorio also contends that the district court erroneously relied on two
articles describing umbrella policies in its analysis of Gregorio's coverage. The
district court's citation of the articles was not an abuse of discretion since the court
referred to the articles only to confirm its legal conclusion that Gregorio's policy
provided only liability insurance. In any event, because the policy at issue
unambiguously excluded UM/UIM coverage and Gregorio's reasonable
expectations claim fails, any such error is harmless.
VI
Because we hold that Gregorio's reasonable expectations claim fails on the
merits, we need not address GEICO's argument that the claim is barred by the
7
statute of limitations. See United States v. Gonzales, 669 F.3d 974, 979 (9th Cir.
2012) (court of appeals "may affirm on any ground supported by the record").
AFFIRMED.
8
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538 F.2d 340
U. S.v.Coffman
No. 75-2041
United States Court of Appeals, Ninth Circuit
1/8/76
D.Hawaii
AFFIRMED
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557 S.E.2d 291 (2001)
210 W.Va. 237
STATE of West Virginia Plaintiff Below, Appellee,
v.
Timothy A. CAVALLARO, Defendant Below, Appellant.
No. 29635.
Supreme Court of Appeals of West Virginia.
Submitted November 6, 2001.
Decided November 28, 2001.
*292 Richard H. Lorensen, Greenbrier County Public Defender, Michael R. Whitt, Lewisburg, for the Appellant.
Darrell V. McGraw, Jr., Attorney General, Heather D. Foster, Assistant Attorney General, Charleston, for Appellee.
PER CURIAM:
Timothy A. Cavallaro, appellant/defendant below (hereinafter referred to as "Mr. Cavallaro"), appeals a conviction and sentence for unlawful wounding,[1] and a subsequent sentence of life imprisonment under the state's recidivist statute. Here, Mr. Cavallaro contends that the trial court was without jurisdiction to impose a life sentence under the recidivist statute.[2] The state has confessed error on this matter and agrees with Mr. Cavallaro that the life sentence should be vacated.[3] Based upon the parties' arguments on appeal, the record designated for appellate review, and the pertinent authorities, we affirm the conviction and sentence for unlawful wounding. However, we reverse that part of the judgment that imposes a life imprisonment sentence under the recidivist statute.
I.
FACTUAL AND PROCEDURAL HISTORY
On August 12, 1999, a security guard for a Lewisburg Wal-Mart store approached Mr. Cavallaro to question him about shoplifting at the store. Mr. Cavallaro attempted to flee the scene in his automobile. During his attempted escape, Mr. Cavallaro injured the Wal-Mart security guard with his car.[4]
Mr. Cavallaro was apprehended after the incident and indicted on several charges, one of which was malicious wounding.[5] The case was tried before a jury. On June 1, 2000, the jury returned a verdict finding Mr. Cavallaro guilty of unlawful wounding, a lesser included offense of malicious wounding. After the jury was discharged, the state filed an information alleging Mr. Cavallaro had four prior felony convictions. The information sought a sentence of life imprisonment under the recidivist statute. Mr. Cavallaro was not required to answer the recidivist information until the next term of court. The next term of court began the following week, on June 6, 2000.
On July 3, 2000, Mr. Cavallaro was required, in open court, to answer the recidivist information. At that time, Mr. Cavallaro moved the trial court to dismiss the information because he was not required to answer it prior to the expiration of the term of court in which he was convicted. The trial court denied the motion. Mr. Cavallaro thereafter decided to stand mute. He neither admitted nor denied the allegations contained in the information. Consequently, a jury was summoned on September 21, 2000, to decide the issues. The jury returned a verdict against Mr. Cavallaro. On October 4, 2000, the trial court entered an order sentencing Mr. Cavallaro to life imprisonment. It is from this sentence that Mr. Cavallaro now appeals.
II.
STANDARD OF REVIEW
We must determine whether Mr. Cavallaro's sentence to life imprisonment complied with the requirements of the state's recidivist statute. We have held that "[w]here the issue on an appeal from the circuit court is clearly a question of law or *293 involving an interpretation of a statute, we apply a de novo standard of review." Syl. pt. 1, Chrystal R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995). "However, in addition to the de novo standard of review, where an evidentiary hearing is conducted upon a motion to dismiss this Court's `clearly erroneous' standard of review is ordinarily invoked concerning a circuit court's findings of fact." State v. Davis, 205 W.Va. 569, 578, 519 S.E.2d 852, 861 (1999).
III.
DISCUSSION
Prior to answering the recidivist information, Mr. Cavallaro motioned the trial court to dismiss the information. The basis for his motion was that no request was made of him to answer the information prior to the expiration of the term of court in which he was convicted. The trial court denied his motion. Now, Mr. Cavallaro contends that it was error for the trial court to deny the motion. Here, the state concedes that the recidivist proceeding was invalid and that the life sentence should be vacated. We agree.
West Virginia Code § 61-11-19 (2000), which sets forth the procedures governing recidivist proceedings, provides in pertinent part:
It shall be the duty of the prosecuting attorney when he has knowledge of former sentence or sentences to the penitentiary of any person convicted of an offense punishable by confinement in the penitentiary to give information thereof to the court immediately upon conviction and before sentence. Said court shall, before expiration of the term at which such person was convicted, cause such person or prisoner to be brought before it, and upon an information filed by the prosecuting attorney, setting forth the records of conviction and sentence, or convictions and sentences, as the case may be, and alleging the identity of the prisoner with the person named in each, shall require the prisoner to say whether he is the same person or not.
The provisions of this statute are mandatory. The statute must be complied with fully before an enhanced sentence for recidivism may be imposed. See Syl. pt. 2, Wanstreet v. Bordenkircher, 166 W.Va. 523, 276 S.E.2d 205 (1981) ("Habitual criminal proceedings providing for enhanced or additional punishment on proof of one or more prior convictions are wholly statutory. In such proceedings, a court has no inherent or common law power or jurisdiction. Being in derogation of the common law, such statutes are generally held to require a strict construction in favor of the prisoner.").
The disposition of the present case is controlled by State ex rel. Housden v. Adams, 143 W.Va. 601, 103 S.E.2d 873 (1958). Housden was a habeas corpus attack by the defendant on his sentence of life in prison under our recidivist statute. The defendant contended that the life sentence was invalid because he had been convicted of the underlying criminal offense in one term of court, and in a subsequent term of the court he was charged and sentenced under the recidivist statute. We agreed with the defendant in Housden that the recidivist statute required that he be arraigned (not tried) on the recidivist information during the same term of court in which he was convicted of the underlying crime. We held in syllabus point 3 of Housden:
A person convicted of a felony cannot be sentenced under the habitual criminal statute, [W. Va.] Code § 61-11-19, unless there is filed by the prosecuting attorney with the court at the same term, and before sentencing, an information as to the prior conviction or convictions and for the purpose of identification the defendant is confronted with the facts charged in the information and cautioned as required by the statute.
In this case, immediately after the jury was discharged, the prosecutor expressly informed the trial court that a recidivist information was being filed against Mr. Cavallaro and that the trial court had to confront Mr. Cavallaro regarding the information. The trial court erroneously believed that so long as the information was filed during the term of court in which Mr. Cavallaro was convicted, the recidivist statute was followed. Consequently, the trial court delayed arraigning Mr. Cavallaro on the recidivist information until the subsequent term of court.
Pursuant to Housden, the trial court was without jurisdiction under the facts of this *294 case to permit the prosecution and sentence of Mr. Cavallaro on the recidivist information. Consequently, we must reverse the recidivist sentence. In doing so, however, we do not disturb the sentence for the underlying conviction of unlawful wounding. See Syl. pt. 7, State ex rel. Beckett v. Boles, 149 W.Va. 112, 138 S.E.2d 851 (1964) ("A petitioner... upon whom punishment by imprisonment for an invalid additional period has been improperly imposed under the habitual criminal statute, may be relieved of the void portion of the punishment, but will not be discharged from serving the maximum term provided by statute for the principal offense.").
IV.
CONCLUSION
Based upon the foregoing, we affirm the conviction and sentence for unlawful wounding. In addition, we reverse that part of the judgment imposing life imprisonment under the recidivist statute. Finally, we remand this case for further disposition not inconsistent with this opinion.
Affirmed in part; Reversed in part; Remanded.
NOTES
[1] Mr. Cavallaro was also convicted and sentenced for reckless driving, destruction of property, and shoplifting. Mr. Cavallaro did not assign error to, nor does he appeal, the latter convictions and sentences.
[2] Mr. Cavallaro made three other assignments of error: denial of a bench trial, the introduction of a video tape, and the denial of a motion for judgment of acquittal on the unlawful wounding charge. However, Mr. Cavallaro stated in his brief that if "this Court finds clear error and reverses [his] sentencing ... pursuant to the recidivist statutes, [he] would waive and give up his secondary appeal grounds."
[3] The state did not brief the other assignments of error.
[4] The security guard was thrown from the car as he attempted to prevent Mr. Cavallaro from leaving.
[5] Other charges included in the indictment are not before this Court.
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562 F.2d 1259
Maddoxv.Internal Revenue Service*
No. 77-2438
United States Court of Appeals, Fifth Circuit
10/17/77
1
S.D.Fla.
2
AFFIRMED***
*
Summary Calendar case; Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5 Cir., 1970, 431 F.2d 409
***
Opinion contains citation(s) or special notations
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893 F.2d 693
22 Collier Bankr.Cas.2d 500, 20 Bankr.Ct.Dec. 68
In the Matter of CLARK PIPE AND SUPPLY CO., INC., Debtor.Claude R. SMITH, as Trustee for the Debtor, Clark Pipe andSupply Co., Inc., Appellee,v.ASSOCIATES COMMERCIAL CORPORATION, Appellant.
No. 88-3376.
United States Court of Appeals,Fifth Circuit.
Jan. 24, 1990.Rehearing and Rehearing En Banc Denied Jan. 24, 1990.
Rex E. Lee, Washington, D.C., Richard W. Bussoff, Linton W. Carney, Jr., Monroe & Lemann, New Orleans, La., for appellant.
Philip K. Jones, Jr., Liskow & Lewis, New Orleans, La., for appellee.
Appeal from the United States District Court for the Eastern District of Louisiana.
ON SUGGESTION FOR REHEARING EN BANC
(Opinion April 25, 1989, 5 Cir., 1989, 870 F.2d 1022)
Before POLITZ and JOLLY, Circuit Judges, and HUNTER*, District Judge.
E. GRADY JOLLY, Circuit Judge:
1
Treating the suggestion for rehearing en banc filed in this case by Associates Commercial Corporation ("Associates"), as a petition for panel rehearing, we hereby grant the petition for rehearing. After re-examining the evidence in this case and the applicable law, we conclude that our prior opinion was in error. We therefore withdraw our prior opinion and substitute the following:1
2
In this bankruptcy case we are presented with two issues arising out of the conduct of the bankrupt's lender during the ninety days prior to the bankrupt's filing for protection from creditors. The first is whether the lender improved its position vis-a-vis other creditors during the ninety-day period and thus received a voidable transfer. If so, the second question is whether the lender engaged in such inequitable conduct that would justify subordination of the lender's claims to the extent that the conduct harmed other creditors. Since we decide that equitable subordination is an inappropriate remedy in this case, we need not decide whether avoiding the transfer and equitable subordination are duplicative or complementary remedies.
3
* Clark Pipe and Supply Company, Inc., ("Clark") was in the business of buying and selling steel pipe used in the fabrication of offshore drilling platforms. In September 1980, Associates and Clark executed various agreements under which Associates would make revolving loans secured by an assignment of accounts receivable and an inventory mortgage. Under the agreements, Clark was required to deposit all collections from the accounts receivable in a bank account belonging to Associates. The amount that Associates would lend was determined by a formula, i.e., a certain percentage of the amount of eligible accounts receivable plus a certain percentage of the cost of inventory. The agreements provided that Associates could reduce the percentage advance rates at any time at its discretion.
4
When bad times hit the oil fields in late 1981, Clark's business slumped. In February 1982 Associates began reducing the percentage advance rates so that Clark would have just enough cash to pay its direct operating expenses. Clark used the advances to keep its doors open and to sell inventory, the proceeds of which were used to pay off the past advances from Associates. Associates did not expressly dictate to Clark which bills to pay. Neither did it direct Clark not to pay vendors or threaten Clark with a cut-off of advances if it did pay vendors. But Clark had no funds left over from the advances to pay vendors or other creditors whose services were not essential to keeping its doors open.
5
One of Clark's vendors, going unpaid, initiated foreclosure proceedings in February and seized the pipe it had sold Clark. Another attempted to do so in March. The resulting priority dispute was resolved only in litigation. See Mitsubishi International Corp. v. Clark Pipe & Supply Co., 735 F.2d 160 (5th Cir.1984), and In the Matter of Clark Pipe, Inc. Debtor, 759 F.2d 19 (5th Cir.1985) (Mitsubishi International Co.; Interpipe, Inc.; Nichimen Co., Inc.; and Berg Steel Pipe Corp., all pipe vendors, and the Walworth Co., Inc., a valve vendor, had valid vendors' privileges in the goods they had sold Clark that, under Louisiana law, primed Associates' inventory mortgage). When a third unpaid creditor initiated foreclosure proceedings in May, Clark sought protection from creditors by filing for reorganization under Chapter 11 of the Bankruptcy Code.
6
The case was converted to a Chapter 7 liquidation on August 31, 1982, and a trustee was appointed. In 1983, the trustee brought this adversary proceeding against Clark's lender, Associates. The trustee sought the recovery of alleged preferences and equitable subordination of Associates' claims. Following a one-day trial on August 28, 1986, the bankruptcy court entered judgment on April 10, 1987, and an amended judgment on June 9, 1987. The court required Associates to turn over $370,505 of payments found to be preferential and subordinated Associates' claims. The district court affirmed on May 24, 1988. 87 B.R. 21.
II
7
* The first issue before us is whether the bankruptcy court was correct in finding that Clark, by selling its inventory and thereby converting the inventory to accounts receivable that had been assigned to Associates, made a preferential transfer to Associates that should be avoided in accordance with sections 547(b) and (c)(5) of the Bankruptcy Code. Under section 547(c)(5),2 a voidable preferential transfer occurred if Associates improved its position over the ninety-day period between February 5 and May 7 to the prejudice of unsecured creditors.3
8
In order to determine whether Associates improved its position during the ninety-day preference period, we must apply the test we adopted in Matter of Missionary Baptist Foundation of America, Inc., 796 F.2d 752, 760 (5th Cir.1986) (Missionary Baptist II ):
9
The "two-point net improvement" test of Section 547(c)(5) requires ... a computation of (1) the loan balance outstanding ninety days prior to the bankruptcy; (2) the value of the [collateral] on that day; (3) the loan balance outstanding on the day the bankruptcy petition was filed; and (4) the value of the [collateral] on that day.
10
By comparing the loan balance minus the value of Associates' collateral on February 5 with the loan balance minus the value of Associates' collateral on May 7, it can be determined whether Associates improved its position during the ninety-day period. The loan balances on February 5 and May 7 are not at issue here. The dispute concerns the value to be assigned the collateral.
11
Associates argues that in valuing the inventory, the bankruptcy court should have employed the going-concern method of valuation rather than the liquidation method. Associates contends that because the bankruptcy court employed the wrong valuation method, it found a preference where there was none. Moreover, Associates contends that even if the liquidation method is appropriate here, the bankruptcy court improperly viewed the value of inventory from the debtor's perspective rather than the creditor's perspective, and subtracted out operating costs of Clark bearing no relation to the liquidation of inventory. Finally, Associates argues that because the bankruptcy court failed to give reasons for its choice of valuation method, and the district court merely affirmed the bankruptcy court without discussing the valuation question, we must reverse and remand.
B
12
We consider first whether the record is sufficiently complete to permit review in the absence of precisely articulated reasons for the actions of the bankruptcy court. In Missionary Baptist II we remanded, finding the record unreviewable because, in applying section 547(c)(5), the bankruptcy judge had not given specific reasons for his choice of valuation method. 796 F.2d at 761-62. Viewing this record as a whole, however, we conclude that it is adequate for purposes of review. In its Conclusions of Law, the bankruptcy court rejected Associates' argument that going-concern value should be used in determining the value of the collateral and explicitly accepted the expert testimony offered by the trustee that liquidation value should be used. That expert testimony contained reasons in support of its conclusion. Thus, we conclude that the bankruptcy court adopted the reasoning of the trustee's expert, and therefore we cannot say that the case must be remanded before we can properly review it on appeal.
C
13
Having concluded that the record is reviewable, we must examine the record to determine whether the bankruptcy court adopted the appropriate method of valuing the collateral. The Code does not prescribe any particular method of valuing collateral, but instead leaves valuation questions to judges on a case-by-case basis. See H.R.Rep. No. 595, 95th Cong. 1st Sess. 216, 356 (1977), reprinted in 1978 U.S.Code Cong. & Ad.News 5787, 5963, 6176, 6312. Valuation is a mixed question of law and fact, the factual premises being subject to review on a "clearly erroneous" standard, and the legal conclusions being subject to de novo review. In re Ebbler Furniture and Appliances, Inc., 804 F.2d 87, 89 (7th Cir.1986); Matter of Missionary Baptist Foundation of America, 712 F.2d 206, 209 (5th Cir.1983) (Missionary Baptist I ). Associates' collateral consisted of inventory and receivables. Since the parties stipulated the value of the accounts receivable, the sole issue was the value of the inventory.
14
The bankruptcy court adopted the view of the trustee's expert that Clark was in the process of liquidation throughout the ninety-day period from February 5 to May 7. This finding of fact was not clearly erroneous. Thus, for purposes of determining whether Associates improved its position at the expense of other creditors during that period, we conclude that the liquidation method of valuing the collateral was proper at both ends of the preference period.
15
Associates maintains that even if the liquidation method is appropriate in this case, the bankruptcy court improperly valued inventory from the perspective of the debtor (Clark), rather than the creditor (Associates). Moreover, Associates contends that in valuing the inventory, the bankruptcy court erroneously deducted all of Clark's corporate expenses, including general overhead.
16
We agree with Associates that the bankruptcy court erroneously valued inventory from the perspective of the debtor rather than the creditor. The "ultimate goal" of the improvement in position test is to "determine whether the secured creditor is in a better position than it would have been had bankruptcy been declared ninety days earlier." Cohen, Value Judgments: Accounts Receivable Financing and Voidable Preferences Under the New Bankruptcy Code, 66 Minn.L.Rev. 639, 663-64 (1982) (emphasis added); H.R.Rep. No. 595, 95th Cong., 1st Sess. 216, 374 (1977), reprinted in 1978 U.S.Code Cong. & Ad.News 6176, 6330 ("A creditor ... is subject to preference attack to the extent he improves his position during the 90-day period before bankruptcy."); see also Missionary Baptist II, 796 F.2d at 761. Cases that have addressed the valuation of inventory in the "improvement in position" test have repeatedly focused on value in the hands of the creditor. See, e.g., In re Ebbler Furniture and Appliances, Inc., 804 F.2d at 89 ("Section 547(c)(5) prevents a secured creditor from improving its position at the expense of an unsecured creditor during the 90 days prior to filing the bankruptcy petition."); Matter of Lackow, 752 F.2d 1529, 1530 (11th Cir.1985) ("In order to fall within [the Sec. 547(c)(5) ] exception to preferential transfers a creditor['s] financial position [must not have] improve[d] within the ninety days prior to bankruptcy."). The bankruptcy court's adoption of a debtor perspective, by valuing inventory based upon a realization percentage to the debtor, contravenes the time-honored creditor focus of section 547(c)(5) and undermines the purposes of that provision. Thus, the courts below erred in valuing inventory from the perspective of Clark, rather than Associates. The appropriate measure of collateral value here is the net amount that could be received by Associates if, and when, it could have seized and sold the inventory.4 See, e.g., In re Ebbler Furniture and Appliances, Inc., 804 F.2d at 92 ("The value of [a secured party's] interest depends on what [it] could do, outside of bankruptcy, to realize on its security. What it could do is seize and sell the inventory.") (Easterbrook, J., concurring).
17
Because we have determined that the courts below erroneously focused on the value of inventory in the hands of Clark, Associates' contention that the bankruptcy court erroneously deducted expenses of Clark unrelated to the cost of liquidation is largely rendered moot. However, we emphasize that, on remand, only costs related to a seizure and sale by Associates should be deducted in determining the value of inventory in the hands of Associates. Furthermore, in valuing inventory (or receivables) the court should consider the specific economic realities surrounding a transfer. In this connection we note that, even if the bankruptcy court's decision to value the inventory from the vantage point of the debtor had been correct, its choice of a value of 60% below cost is subject to serious question in the light of consistent record testimony to the effect that (i) the pipe market was stable during the ninety-day period, (ii) the fair market value of pipe was approximately 100% of cost, (iii) Clark actually liquidated inventory during the ninety-day period at 93-123% of cost and (v) pipe vendors were willing to give credit for returned pipe at or near 100% of cost. See In re Ebbler Furniture and Appliances, Inc., 804 F.2d 87 (7th Cir.1986), for a useful discussion of the valuation of collateral under the improvement in position test.
18
The parties stipulated at trial that, in the event we determined that the value of inventory from the perspective of Associates was relevant, the case should be remanded for the presentation of evidence on that point. We therefore remand for further proceedings regarding the value of inventory from the perspective of Associates.
III
19
The second issue before us is whether the bankruptcy court was justified in equitably subordinating Associates' claims. This court has enunciated a three-pronged test to determine whether and to what extent a claim should be equitably subordinated: (1) the claimant must have engaged in some type of inequitable conduct, (2) the misconduct must have resulted in injury to the creditors of the bankrupt or conferred an unfair advantage on the claimant, and (3) equitable subordination of the claim must not be inconsistent with the provisions of the Bankruptcy Code. Missionary Baptist I, 712 F.2d at 212. Three general categories of conduct have been recognized as sufficient to satisfy the first prong of the three-part test: (1) fraud, illegality or breach of fiduciary duties; (2) undercapitalization; and (3) a claimant's use of the debtor as a mere instrumentality or alter ego. Id.
20
In essence, the bankruptcy court found that once Associates realized Clark's desperate financial condition, Associates asserted total control and used Clark as a mere instrumentality to liquidate Associates' unpaid loans. Moreover, it did so, the trustee argues, to the detriment of the rights of Clark's other creditors.
21
Associates contends that its control over Clark was far from total. Associates says that it did no more than determine the percentage of advances as expressly permitted in the loan agreement; it never made or dictated decisions as to which creditors were paid. Thus, argues Associates, it never had the "actual, participatory, total control of the debtor" required to make Clark its instrumentality under Krivo Industrial Supply Co. v. National Distillers & Chemical Corp., 483 F.2d 1098, 1105 (5th Cir.1973), modified factually, 490 F.2d 916 (5th Cir.1974) (elaborated in Valdes v. Leisure Resource Group, 810 F.2d 1345, 1354 (5th Cir.1987)). If it did not use Clark as an instrumentality or engage in any other type of inequitable conduct under Missionary Baptist I, argues Associates, then it cannot be equitably subordinated.
22
* We first consider whether Associates asserted such control over the activities of Clark that we should consider that it was using Clark as its mere instrumentality. In our prior opinion, we agreed with the district court and the bankruptcy court that, as a practical matter, Associates asserted total control over Clark's liquidation, and that it used its control in a manner detrimental to the unsecured creditors. Upon reconsideration, we have concluded that we cannot say that the sort of control Associates asserted over Clark's financial affairs rises to the level of unconscionable conduct necessary to justify the application of the doctrine of equitable subordination.5 We have reached our revised conclusion primarily because we cannot escape the salient fact that, pursuant to its loan agreement with Clark, Associates had the right to reduce funding, just as it did, as Clark's sales slowed. We now conclude that there is no evidence that Associates exceeded its authority under the loan agreement, or that Associates acted inequitably in exercising its rights under that agreement.
23
We think it is important to note at the outset that the loan and security agreements between Associates and Clark, which are at issue here, were executed in 1980, at the inception of their relationship. There is no evidence that Clark was insolvent at the time the agreements were entered into. Clark was represented by counsel during the negotiations, and there is no evidence that the loan documents were negotiated at anything other than arm's length or that they are atypical of loan documents used in similar asset-based financings.
24
The loan agreement between Associates and Clark established a line of credit varying from $2.2 million to approximately $2.7 million over the life of the loan. The amount that Associates would lend was determined by a formula: 85% of the amount of eligible accounts receivables plus 60% of the cost of inventory. Under the agreement, Clark was required to deposit all collections from the accounts receivable in a bank account belonging to Associates. Associates would, in turn, re-advance the agreed-upon portion of those funds to Clark on a revolving basis. The agreement provided that Associates could reduce the percentage advance rates at any time in its discretion.
25
When Clark's business began to decline, along with that of the oil patch generally, Associates advised Clark that it would reduce the advance ratio for the inventory loan by 5% per month beginning in January 1982. After that time, the company stopped buying new inventory and, according to the Trustee's expert witness, Clark's monthly sales revenues amounted to less than one-fifth of the company's outstanding accounts payable. Clark prepared a budget at Associates' request that indicated the disbursements necessary to keep the company operating. The budget did not include payment to vendors for previously shipped goods. Associates' former loan officer, Fred Slice, testified as to what he had in mind:
26
If he [the comptroller of Clark] had had the availability [of funds to pay a vendor or other trade creditor] that particular day, I would have said, "Are you sure you've got that much availability, Jim," because he shouldn't have that much. The way I had structured it, he wouldn't have any money to pay his suppliers.
27
....
28
But you know, the possibility that--this is all hypothetical. I had it structured so that there was no--there was barely enough money--there was enough money, if I did it right, enough money to keep the doors open. Clark could continue to operate, sell the inventory, turn it into receivables, collect the cash, transfer that cash to me, and reduce my loans.
29
And, if he had ever had availability for other things, that meant I had done something wrong, and I would have been surprised. To ask me what I would have done is purely hypothetical[;] I don't think it would happen. I think it's so unrealistic, I don't know.
30
Despite Associates' motive, which was, according to Slice, "to get in the best position I can prior to the bankruptcy, i.e., I want to get the absolute amount of dollars as low as I can by hook or crook," the evidence shows that the amount of its advances continued to be based on the applicable funding formulas. Slice testified that the lender did not appreciably alter its original credit procedures when Clark fell into financial difficulty.
31
In our original opinion, we failed to focus sufficiently on the loan agreement, which gave Associates the right to conduct its affairs with Clark in the manner in which it did. In addition, we think that in our previous opinion we were overly influenced by the negative and inculpatory tone of Slice's testimony. Given the agreement he was working under, his testimony was hardly more than fanfaronading about the power that the agreement afforded him over the financial affairs of Clark. Although his talk was crass (e.g., "I want to get the absolute dollars as low as I can, by hook or crook"), our careful examination of the record does not reveal any conduct on his part that was inconsistent with the loan agreement, irrespective of what his personal motive may have been.
32
Through its loan agreement, every lender effectively exercises "control" over its borrower to some degree. A lender in Associates' position will usually possess "control" in the sense that it can foreclose or drastically reduce the debtor's financing. The purpose of equitable subordination is to distinguish between the unilateral remedies that a creditor may properly enforce pursuant to its agreements with the debtor and other inequitable conduct such as fraud, misrepresentation, or the exercise of such total control over the debtor as to have essentially replaced its decision-making capacity with that of the lender. The crucial distinction between what is inequitable and what a lender can reasonably and legitimately do to protect its interests is the distinction between the existence of "control" and the exercise of that "control" to direct the activities of the debtor. As the Supreme Court stated in Comstock v. Group of Institutional Investors, 335 U.S. 211, 229, 68 S.Ct. 1454, 1463, 92 L.Ed. 1911 (1948): "It is not mere existence of an opportunity to do wrong that brings the rule into play; it is the unconscionable use of the opportunity afforded by the domination to advantage itself at the injury of the subsidiary that deprives the wrongdoer of the fruits of his wrong."
33
In our prior opinion, we drew support from In re American Lumber Co., 5 B.R. 470 (D.Minn.1980), to reach our conclusion that Associates' claims should be equitably subordinated. Upon reconsideration, however, we find that the facts of that case are significantly more egregious than we have here. In that case, the court equitably subordinated the claims of a bank because the bank "controlled" the debtor through its right to a controlling interest in the debtor's stock. The bank forced the debtor to convey security interests in its remaining unencumbered assets to the bank after the borrower defaulted on an existing debt. Immediately thereafter, the bank foreclosed on the borrower's accounts receivable, terminated the borrower's employees, hired its own skeleton crew to conduct a liquidation, and selectively honored the debtor's payables to improve its own position. The bank began receiving and opening all incoming mail at the borrower's office, and it established a bank account into which all amounts received by the borrower were deposited and over which the bank had sole control. The bankruptcy court found that the bank exercised control over all aspects of the debtor's finances and operation including: payments of payables and wages, collection and use of accounts receivable and contract rights, purchase and use of supplies and materials, inventory sales, a lumber yard, the salaries of the principals, the employment of employees, and the receipt of payments for sales and accounts receivable.
34
Despite its decision to prohibit further advances to the debtor, its declaration that the debtor was in default of its loans, and its decisions to use all available funds of the company to offset the company's obligations to it, the bank in American Lumber made two specific representations to the American Lumbermen's Credit Association that the debtor was not in a bankruptcy situation and that current contracts would be fulfilled. Two days after this second reassurance, the bank gave notice of foreclosure of its security interests in the company's inventory and equipment. Approximately two weeks later the bank sold equipment and inventory of the debtor amounting to roughly $450,000, applying all of the proceeds to the debtor's indebtedness to the bank.
35
Associates exercised significantly less "control" over the activities of Clark than did the lender in American Lumber. Associates did not own any stock of Clark, much less a controlling block. Nor did Associates interfere with the operations of the borrower to an extent even roughly commensurate with the degree of interference exercised by the bank in American Lumber. Associates made no management decisions for Clark, such as deciding which creditors to prefer with the diminishing amount of funds available. At no time did Associates place any of its employees as either a director or officer of Clark. Associates never influenced the removal from office of any Clark personnel, nor did Associates ever request Clark to take any particular action at a shareholders meeting. Associates did not expressly dictate to Clark which bills to pay, nor did it direct Clark not to pay vendors or threaten a cut-off of advances if it did pay vendors. Clark handled its own daily operations. The same basic procedures with respect to the reporting of collateral, the calculation of availability of funds, and the procedures for the advancement of funds were followed throughout the relationship between Clark and Associates. Unlike the lender in American Lumber, Associates did not mislead creditors to continue supplying Clark. Cf. American Lumber, 5 B.R. at 474. Perhaps the most important fact that distinguishes this case from American Lumber is that Associates did not coerce Clark into executing the security agreements after Clark became insolvent. Instead, the loan and security agreements between Clark and Associates were entered into at arm's length prior to Clark's insolvency, and all of Associates' activities were conducted pursuant to those agreements.
36
Associates' control over Clark's finances, admittedly powerful and ultimately severe, was based solely on the exercise of powers found in the loan agreement. Associates' close watch over Clark's affairs does not, by itself, however, amount to such control as would justify equitable subordination. In re W.T. Grant, 699 F.2d 599, 610 (2d Cir.1983). "There is nothing inherently wrong with a creditor carefully monitoring his debtor's financial situation or with suggesting what course of action the debtor ought to follow." In re Teltronics Services, Inc., 29 B.R. 139, 172 (Bankr.E.D.N.Y.1983) (citations omitted). Although the terms of the agreement did give Associates potent leverage over Clark, that agreement did not give Associates total control over Clark's activities. At all material times Clark had the power to act autonomously and, if it chose, to disregard the advice of Associates; for example, Clark was free to shut its doors at any time it chose to do so and to file for bankruptcy.
37
Finally, on reconsideration, we are persuaded that the rationale of In re W.T. Grant Co., 699 F.2d 599 (2d Cir.1983) should control the case before us. In that case, the Second Circuit recognized that
38
a creditor is under no fiduciary obligation to its debtor or to other creditors of the debtor in the collection of its claim. [citations omitted] The permissible parameters of a creditor's efforts to seek collection from a debtor are generally those with respect to voidable preferences and fraudulent conveyances proscribed by the Bankruptcy Act; apart from these there is generally no objection to a creditor's using his bargaining position, including his ability to refuse to make further loans needed by the debtor, to improve the status of his existing claims.
39
699 F.2d at 609-10. Associates was not a fiduciary of Clark, it did not exert improper control over Clark's financial affairs, and it did not act inequitably in exercising its rights under its loan agreement with Clark.
B
40
Finally, we should note that in our earlier opinion, we found that, in exercising such control over Clark, Associates engaged in other inequitable conduct that justified equitable subordination. Our re-examination of the record indicates, however, that there is not really any evidence that Associates engaged in such conduct. Our earlier opinion assumed that Associates knew that Clark was selling pipe to which the suppliers had a first lien, but the issue of whether the vendors had a first lien on the pipe was not decided by our court until a significantly later time. In addition, although the trustee made much of the point on appeal, after our re-study of the record, we conclude that it does not support the finding that Associates encouraged Clark to remove decals from pipe in its inventory.
41
We also note that the record is devoid of any evidence that Associates misled other Clark creditors to their detriment. See, e.g., Matter of CTS Truss, Inc., 868 F.2d 146, 149 (5th Cir.1989) (lender did not represent to third parties that additional financing was in place or that debtor was solvent, when the opposite was true).
42
When the foregoing factors are considered, there is no basis for finding inequitable conduct upon which equitable subordination can be based. We therefore conclude that the district court erred in affirming the bankruptcy court's decision to subordinate Associates' claims.
IV
43
Because we have held that equitable subordination is inapplicable in this case, we do not address the question whether avoiding the transfer and equitable subordination are duplicative or complementary remedies.
44
For the foregoing reasons, the judgment of the district court is affirmed in part, reversed in part, and the case is remanded for such further proceedings consistent with this opinion as may be necessary.
45
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
*
District Judge of the Western District of Louisiana, sitting by designation
1
Associates does not seek rehearing with regard to our decision that the bankruptcy court correctly determined the existence of a voidable preference and the amount of the preference. Our review of our prior opinion, however, convinces us that our holding with respect to valuation of the collateral is erroneous and should be corrected in order to avoid any precedential effect it may have on this point. We therefore, sua sponte, grant rehearing on that issue as well
2
Sections 547(b) and (c)(5) read:
(b) Except as provided in subsection (c) of this section, the trustee may avoid any transfer of property of the debtor--
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3) made while the debtor was insolvent;
(4) made--
(A) on or within 90 days before the date of the filing of the petition; or
(B) between 90 days and one year before the date of the filing of the petition, if such creditor, at the time of such transfer--
(i) was an insider; and
(ii) had reasonable cause to believe the debtor was insolvent at the time of such transfer; and
(5) that enables such creditor to receive more than such creditor would receive if--
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the provisions of this title.
(c) The trustee may not avoid under this section a transfer--
(5) of a perfected security interest in inventory or a receivable or the proceeds of either, except to the extent that the aggregate of all such transfers to the transferee caused a reduction, as of the date of the filing of the petition and to the prejudice of other creditors holding unsecured claims, of any amount by which the debt secured by such security interest exceeded the value of all security interest for such debt on the later of--
(A)(i) with respect to a transfer to which subsection (b)(4)(A) of this section applies, 90 days before the date of the filing of the petition; or
(ii) with respect to a transfer to which subsection (b)(4)(B) of this section applies, one year before the date of the filing of the petition; and
(B) the date on which new value was first given under the security agreement creating such security interest;
....
3
Associates does not raise the issue of whether Clark's liquidation of inventory, its conversion to accounts receivable, and the subsequent payment of the proceeds to Associates worked to prejudice unsecured creditors where Associates had a security interest in both inventory and accounts receivable. The parties may have assumed that prejudice to the claims of the vendors satisfied this requirement. In any event, we do not reach that issue here. We only note, however, that improvement in position, standing alone, does not establish a preferential transfer--the transfer must be "to the prejudice of other creditors holding unsecured claims...." Coral Petroleum v. Banque Paribas-London, 797 F.2d 1351, 1355-56 (5th Cir.1986) ("For a preference to be voided under section 547, 'it is essential ... that the estate is thereby diminished.' "); Deel Rent-A-Car, Inc. v. Levine, 721 F.2d 750, 755-56 (11th Cir.1983) (citing Continental and Commercial Trust and Savings Bank v. Chicago Title and Trust, 229 U.S. 435, 443-44, 33 S.Ct. 829, 831-32, 57 L.Ed. 1268 (1913)) ("The fact that what was done worked to the benefit of the creditor, and in a sense gave him a preference, is not enough, unless the estate of the bankrupt was thereby diminished."); see also Duncan, Preferential Transfers, the Floating Lien, and Section 547(c)(5) of the Bankruptcy Reform Act, 36 Ark.L.Rev. 1, 29-33 (1982) (Under section 547(c)(5) "the trustee must show that the effect of the improvement was to decrease the amount of property otherwise available for liquidation and distribution to unsecured creditors")
4
On remand, the bankruptcy court may wish to consider, should any party pursue the issue, whether an unexercised vendor's privilege should be considered in valuing inventory from the perspective of Associates. We intimate no views, however, on the possible answers to that question
5
The question whether a creditor's conduct is so unconscionable as to require equitable subordination as a remedy is a conclusion of law, reviewable de novo. See, e.g. Wegner v. Grunewaldt, 821 F.2d 1317, 1322-23 (8th Cir.1987)
| {
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
______________
No. 96-4212
____________
Elizabeth Dunham, as personal *
representative for Douglas Dunham, *
*
Appellant, *
*
v. *
*
City of O’Fallon, Missouri, a *
Municipal corporation; Michael *
Kernan, individually and in his *
official capacity as Police Chief of *
the City of O’Fallon, Missouri; *
Edward Griesenauer, individually *
and in his official capacity as Mayor *
of the City of O’Fallon, Missouri; *
Board of Alderman of the City of *
Appe
als
from
the
Unit
ed
Stat
es
O’Fallon, Missouri, by and through *
Dist
rict
Cour
t
for
the
its individual members; Dennis Henson, *
East
ern
Dist
rict
of
Miss
ouri
individually and in his official capacity *
as Alderman of the City of O’Fallon, * [UNPUBLISHED]
Missouri; Paul Renaud, individually *
and in his official capacity as Alderman *
of the City of O’Fallon, Missouri; *
Henry Dussold, individually and in his *
official capacity as Alderman of the *
City of O’Fallon, Missouri; Eugene *
Moser, individually and in his official *
capacity as Alderman of the City of *
O’Fallon, Missouri; Cliff Hesskamp, *
individually and in his official capacity *
as Alderman of the City of O’Fallon, *
Missouri; Joe Salemi, individually *
and in his official capacity as *
-2-
Alderman of the City of O’Fallon, *
Missouri; Kenneth Molloy, individually *
and in his official capacity as *
Alderman of the City of O’Fallon, *
Missouri; Rose Mack, individually and *
in her official capacity as Alderman *
of the City of O’Fallon, Missouri; *
*
Appellees. *
____________
No. 97-1430
____________
John Fomera; Christine Fomera, *
*
Appellant, *
*
v. *
*
City of O’Fallon, Missouri, a *
Municipal corporation; Michael *
Kernan, individually and in his *
official capacity as Police Chief of *
the City of O’Fallon, Missouri; *
Edward Griesenauer, individually *
and in his official capacity as Mayor *
of the City of O’Fallon, Missouri; *
Board of Alderman of the City of *
O’Fallon, Missouri, by and through *
its individual members; Dennis Henson, *
individually and in his official capacity *
as Alderman of the City of O’Fallon, *
Missouri; Paul Renaud, individually *
and in his official capacity as Alderman *
of the City of O’Fallon, Missouri; *
Henry Dussold, individually and in his *
official capacity as Alderman of the *
-3-
City of O’Fallon, Missouri; Eugene *
Moser, individually and in his official *
capacity as Alderman of the City of *
O’Fallon, Missouri; Cliff Hesskamp, *
individually and in his official capacity *
as Alderman of the City of O’Fallon, *
Missouri; Joe Salemi, individually *
and in his official capacity as *
Alderman of the City of O’Fallon, *
Missouri; Kenneth Molloy, individually *
and in his official capacity as *
Alderman of the City of O’Fallon, *
Missouri; Rose Mack, individually and *
in her official capacity as Alderman *
of the City of O’Fallon, Missouri; *
*
Appellees. *
___________
Submitted:
September 10, 1997
Filed:
September 25, 1997
____________
Before McMILLIAN, ROSS and MURPHY, Circuit Judges.
____________
PER CURIAM.
Elizabeth Dunham, as personal representative for Douglas Dunham, and John
and Christine Fomera appeal from final orders entered in the District Court1 for the
Eastern District of Missouri granting summary judgment in favor of the City of
O’Fallon and other defendants on their employment discrimination and related claims.
1
The Honorable George F. Gunn, Jr., Senior United States District Judge for the
Eastern District of Missouri.
-4-
Fomera v. City of O’Fallon, No. 4:95CV00238 (GFG) (E.D. Mo. Dec. 31, 1996)
(memorandum and order); Dunham v. City of O’Fallon, 945 F. Supp. 1256 (E.D. Mo.
1996).
The district court held that appellants’ employment discrimination and retaliation
claims were barred by the applicable 90-day statute of limitations, 945 F. Supp. at
1260-62, citing Garfield v. J.C. Nichols Real Estate, 57 F.3d 662, 666 (8th Cir.)
(holding dismissal without prejudice does not toll running of statute of limitations on
either federal or state employment discrimination claim), cert. denied, 116 S. Ct. 380
(1995). The district court also held that Elizabeth Dunham was bound by the
allegations in Douglas Dunham’s original and refiled complaints that he had received
a right to sue letter for his age discrimination claim. Id. at 1261. The district court also
held the undisputed facts and applicable law did not support the state law claims for
intentional infliction of emotional distress and loss of consortium. Id. at 1262-63.
We have carefully reviewed the record and we agree with the analysis of the
district court as set forth in its well-reasoned memorandum and order. See 8th Cir. R.
47B. Accordingly, we affirm the judgments of the district court.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH
CIRCUIT.
-5-
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} |
United States Court of Appeals
For the Eighth Circuit
___________________________
No. 18-3589
___________________________
United States of America
Plaintiff - Appellee
v.
Tereall Deshawn Green
Defendant - Appellant
___________________________
No. 18-3591
___________________________
United States of America
Plaintiff - Appellee
v.
Javonta Juan Herbert
Defendant - Appellant
____________
Appeal from United States District Court
for the Northern District of Iowa - Waterloo
____________
Submitted: September 23, 2019
Filed: December 27, 2019
____________
Before GRUENDER, ARNOLD, and GRASZ, Circuit Judges.
___________
GRUENDER, Circuit Judge.
In this consolidated appeal, Tereall Green challenges the district court’s1
denial of his motion to suppress evidence, and both Green and Javonta Herbert
appeal their respective sentences for being a felon in possession of a firearm in
violation of 18 U.S.C. §§ 922(g)(1) and 924(a)(2). We affirm.
I.
At approximately 1:00 a.m. on January 13, 2018, Jordan Ehlers, a police
officer in Waterloo, Iowa, observed a black Nissan Rogue SUV that, based on his
visual estimation, was speeding. Ehlers ran a search of the license plate number on
the SUV, which returned a record for a different vehicle. While following the
vehicle, he also noticed that a license plate frame on the SUV covered a portion of
the license plate and registration. Based on these three facts, Officer Ehlers initiated
a traffic stop.
Once the SUV stopped, Ehlers shined his spotlight on the back of the vehicle,
and he observed passengers making what he perceived as suspicious movements.
Ehlers exited his patrol car and approached the front passenger side of the vehicle.
As the front passenger opened his window, Ehlers immediately smelled alcohol. He
also observed open liquor bottles in the car and noticed that the floorboard appeared
wet. Ehlers requested identification from the driver and from each of the three
passengers. The front seat passenger did not have identification but identified
himself as Tereall Green. Officer Ehlers recognized Green’s name from a prior
1
The Honorable Linda R. Reade, United States District Judge for the Northern
District of Iowa, adopting the report and recommendation of the Honorable C.J.
Williams, Chief Magistrate Judge, United States District Court for the Northern
District of Iowa.
-2-
intelligence report indicating that Green was seen in a Facebook video possessing a
weapon. Ehlers then turned to the back-seat passengers, requesting identification
from each of them. When one of them rolled down his window, Ehlers smelled
marijuana. This passenger identified himself as Deshawn Marks. The other back-
seat passenger said his name was “Spencer Green.” Ehlers noticed that “Spencer
Green” appeared nervous, and he recognized “Green” as Javonta Herbert from prior
contact with him.
After Officers Randy Girsch and Kenneth Schaaf arrived on the scene, Officer
Ehlers asked Tereall Green to exit the SUV. He conducted a brief frisk of Green—
quicker than normal due to the cold temperature. He did not find anything. Ehlers
then frisked Marks, finding clear plastic baggies of marijuana. Because both Green
and Marks were shivering, Officer Girsch offered to let them sit in his patrol car, an
offer both men eventually accepted.
Back at the SUV, Ehlers asked “Spencer Green” to step out of the car. Ehlers
asked if he was Javonta Herbert, and Herbert conceded that was his real name.
Ehlers then conducted a patdown of Herbert. As Ehlers frisked Herbert, Officer
Schaaf used his flashlight to look into the backseat floorboard of the SUV. He saw
a handgun where Herbert had been sitting and immediately yelled “ten thirty-two”—
a police code that indicated he had discovered a firearm in the vehicle. Ehlers placed
Herbert under arrest.
Officer Girsch, who was standing beside the patrol car in which Tereall Green
and Marks were sitting, heard Officer Schaaf call out the “ten thirty-two.” Girsch
decided to handcuff Green while another officer handcuffed Marks. Although he
had observed Ehlers frisk Green earlier in the stop, Officer Girsch frisked him again,
this time conducting a more thorough patdown. Girsch discovered a loaded firearm
hidden in Green’s pants. Green subsequently fled on foot. Officers pursued and
captured him within minutes.
-3-
Both Green and Herbert were indicted on charges of being a felon in
possession of a firearm in violation of 18 U.S.C. §§ 922(g)(1) and 924(a)(2). In pre-
trial matters, the district court denied Green’s motion to suppress evidence gathered
during the traffic stop, finding that Ehlers had probable cause to stop the SUV and
that neither patdown of Green constituted an unreasonable search in violation of the
Fourth Amendment. Green and Herbert both entered conditional guilty pleas.
At sentencing, the district court applied to both Green’s and Herbert’s
guideline calculations a four-level enhancement for possession of a firearm in
connection with another felony offense. See U.S.S.G. § 2K2.1(b)(6)(B). Herbert
objected to the application of the enhancement, and the district court overruled the
objection. For Green, the court calculated a total offense level of 23, a criminal
history category of III, and an advisory guidelines range of 57 to 71 months. After
rejecting Green’s motion for a downward variance, the court imposed a sentence of
71 months’ imprisonment. For Herbert, the court initially calculated a total offense
level of 15, a criminal history category of VI, and an advisory guidelines range of
41 to 51 months. The Government moved for a three-level upward departure
pursuant to U.S.S.G. § 4A1.3 based on Herbert’s underrepresented criminal history.
The district court granted the motion, calculating a new total offense level of 18, a
criminal history category of VI, and a guidelines range of 57 to 71 months’
imprisonment. The district court also sentenced Herbert to 71 months’
imprisonment.
II.
Green appeals the denial of his motion to suppress, arguing that the traffic
stop was unlawful and that the officers lacked reasonable suspicion to frisk him. 2
2
In a heading of his brief, Green suggests that the district court erred in
denying his motion to suppress statements obtained in violation of the Fifth
Amendment. But Green failed to support this conclusion with any argument, facts,
reasoning, or citation to authority, and he did not identify any specific statements the
-4-
He also challenges his 71-month sentence, arguing the district court erred in denying
his motion for a downward variance. Herbert too appeals his 71-month sentence,
arguing we should overrule our decision in United States v. Walker, 771 F.3d 449
(8th Cir. 2014), the district court abused its discretion in departing upwards, and his
sentence is substantively unreasonable. We address each argument in turn.
A.
We first address Green’s argument that the district court erred in denying his
motion to suppress evidence on the basis that the traffic stop was unlawful. Green
claims that Officer Ehlers lacked probable cause to stop the SUV because the driver
“was not driving in a suspicious manner” and the “vehicle in question obeyed the
traffic laws.” Green’s claims are not supported by the record, and we conclude that
the traffic stop was not unlawful.
“We review the denial of a motion to suppress de novo but the underlying
factual determinations for clear error, giving due weight to inferences drawn by law
enforcement officials.” United States v. Tamayo-Baez, 820 F.3d 308, 312 (8th Cir.
2016). “This court will affirm the district court’s denial of a motion to suppress
evidence unless it is unsupported by substantial evidence, based on an erroneous
interpretation of applicable law, or, based on the entire record, it is clear a mistake
was made.” United States v. Collins, 883 F.3d 1029, 1031 (8th Cir. 2018) (per
curiam).
“Under the Fourth Amendment, a traffic stop is reasonable if it is supported
by either probable cause or an articulable and reasonable suspicion that a traffic
violation has occurred.” United States v. Washington, 455 F.3d 824, 826 (8th Cir.
2006). “Even a minor traffic violation provides probable cause for a traffic stop.”
United States v. Harris, 617 F.3d 977, 979 (8th Cir. 2010).
district court should have suppressed. Therefore, we consider Green’s challenge to
the district court’s suppression ruling regarding his statements waived. See United
States v. Howard, 532 F.3d 755, 760 (8th Cir. 2008).
-5-
In this case, the district court found that Officer Ehlers had probable cause to
believe the SUV was in violation of three different Iowa traffic laws. First, the
district court credited Officer Ehlers’s testimony that he observed the SUV speeding.
Though we have cautioned that “there must be sufficient indicia of reliability for a
court to credit as reasonable an officer’s visual estimate of speed,” United States v.
Gaffney, 789 F.3d 866, 869 (8th Cir. 2015), we find the district court’s determination
that the SUV was speeding, based on Ehlers’s credibility, training, and video
evidence, is not clearly erroneous, and therefore Ehlers had probable cause to stop
the vehicle. See id. at 869-70; Iowa Code § 321.285.
Furthermore, Ehlers also observed two other infractions that provided grounds
to stop the SUV. First, Ehlers noticed that the license plate frame on the
SUV covered the letters on the plate and the registration sticker. See Iowa Code
§321.37(3) (“It is unlawful for the owner of a vehicle to place any frame around or
over the registration plate which does not permit full view of all numerals and letters
printed on the registration plate.”). Second, prior to initiating the stop, Officer Ehlers
also ran an inquiry of the license plate which returned a record showing that the
registration belonged on a silver 2004 Mercedes-Benz ML 500, but the plate was on
a black 2011 Nissan Rogue. See Iowa Code § 321.17 (providing, in relevant part,
that it is “a simple misdemeanor . . . for any person to drive . . . a vehicle of a type
required to be registered under this chapter which is not registered”). Because the
license plate frame obscured the plate, Ehlers had probable cause to make a stop, see
Harris, 617 F.3d at 979, and because the plates were registered to a different vehicle,
Ehlers at least had a reasonable suspicion that the SUV may not be properly
registered at all, see United States v. Hollins, 685 F.3d 703, 706 (8th Cir. 2012); see
also United States v. Givens, 763 F.3d 987, 989 (8th Cir. 2014) (“Reasonable
suspicion exists when an officer is aware of particularized, objective facts which,
taken together with rational inferences from those facts, reasonably warrant
suspicion that a crime is being committed.” (internal quotation marks omitted)).
Therefore, initiating a traffic stop was not a violation of the Fourth Amendment.
-6-
We now turn to Green’s argument that the officers lacked a reasonable,
articulable suspicion to frisk him during the stop. Based on his briefing, we are
unsure if Green intends to challenge the reasonableness of the initial frisk as well as
the second. Regardless, we conclude both patdowns were reasonable.
“Officers may conduct a protective pat-down search for weapons during a
valid stop . . . when they have objectively reasonable suspicion that a person with
whom they are dealing might be armed and presently dangerous . . . .” Gaffney, 789
F.3d at 870. “In determining whether reasonable suspicion exists, we consider the
totality of the circumstances in light of the officers’ experience and specialized
training.” United States v. Preston, 685 F.3d 685, 689 (8th Cir. 2012). “A pat-down
is permissible if a reasonably prudent man in the circumstances would be warranted
in the belief that his safety or that of others was in danger.” Id. (brackets and internal
quotation marks omitted).
The first patdown was justified by reasonable, articulable suspicion. Officer
Ehlers recognized Green’s name from a prior intelligence report indicating that
Green possessed a weapon in a Facebook video. Before he conducted a frisk, Officer
Ehlers told Officer Schaaf that he had “recent intel for a [ten] thirty-two”—the
Waterloo Police Department’s code for a weapon—for the “front seat passenger.”
Officer Ehlers also smelled marijuana in the vehicle, and he had observed movement
prior to the stop that he considered suspicious. Given the presence of illegal
narcotics, Ehlers could have suspected that drugs were being transported in the car.
See United States v. Binion, 570 F.3d 1034, 1039 (8th Cir. 2009). “A suspicion on
the part of police that a person is involved in a drug transaction supports a reasonable
belief that the person may be armed and dangerous because weapons and violence
are frequently associated with drug transactions.” United States v. Crippen, 627
F.3d 1056, 1063 (8th Cir. 2010). Viewing the totality of the circumstances, we
conclude that Ehlers had reasonable suspicion that Green was armed and dangerous.
Therefore, the first frisk was reasonable.
-7-
Officer Girsch’s second frisk of Green was also reasonable. Although Girsch
had observed Ehlers’s frisk of Green, it was not unreasonable for him to conduct a
second, more thorough patdown in light of new information that Schaaf had
discovered a firearm, which heightened the risk that other passengers in the vehicle
were armed. Although the presence of a gun in possession of one individual does
not necessarily justify a patdown of a companion of that individual, it is a fact to be
considered in determining the overall reasonableness of the officer’s actions. See
Wilson v. Lamp, 901 F.3d 981, 987 (8th Cir. 2018); United States v. Menard, 95 F.3d
9, 11 (8th Cir. 1996) (concluding that it was reasonable to frisk the companion of an
armed individual because finding one weapon “heightened the threat to officer
safety”). Moreover, given that the first patdown was quick and cursory due to the
frigid temperatures, it was reasonable in light of the discovery of one weapon for
Girsch to conduct a more thorough patdown. See United States v. Osbourne, 326
F.3d 274, 278 (1st Cir. 2003) (finding the thoroughness of the initial frisk to be
among the relevant factors to be considered in evaluating the reasonableness of a
second frisk).
Because Officer Ehlers had probable cause to conduct the traffic stop and both
patdowns were supported by reasonable suspicion, the district court did not err in
denying Green’s motion to suppress evidence seized during the stop. See Binion,
570 F.3d at 1038-40.
B.
We next turn to Green’s and Herbert’s arguments regarding the sentences
imposed by the district court. “When reviewing the imposition of sentences, we first
ensure that the district court committed no significant procedural error,” United
States v. White, 816 F.3d 976, 987 (8th Cir. 2016) (internal quotation marks omitted),
such as “failing to calculate (or improperly calculating) the Guidelines range,
treating the Guidelines as mandatory, failing to consider the § 3553(a) factors,
selecting a sentence based on clearly erroneous facts, or failing to adequately explain
the chosen sentence—including an explanation for any deviation from the
-8-
Guidelines range,” United States v. Gonzalez, 573 F.3d 600, 605 (8th Cir. 2009).
We review a district court’s factual findings for clear error and its application of the
sentencing guidelines de novo. United States v. Johnson, 846 F.3d 1249, 1250 (8th
Cir. 2017).
In the absence of procedural error, we consider the substantive reasonableness
of the sentence imposed under an abuse-of-discretion standard. United States v.
Petersen, 848 F.3d 1153, 1157 (8th Cir. 2017). “A district court abuses its discretion
and imposes an unreasonable sentence when it fails to consider a relevant and
significant factor, gives significant weight to an irrelevant or improper factor, or
considers the appropriate factors but commits a clear error of judgment in weighing
those factors.” United States v. Kreitinger, 576 F.3d 500, 503 (8th Cir. 2009).
Green and Herbert both argue that the court procedurally erred by applying
the four-level enhancement under U.S.S.G. § 2K2.1(b)(6)(B). This enhancement
applies when a defendant “[u]sed or possessed any firearm or ammunition in
connection with another felony offense.” § 2K2.1(b)(6)(B). For his part, Herbert
contends that the district court erred in applying the four-level enhancement because
under the relevant Iowa carrying-weapons offense, “there is no criminal conduct
outside of the possession of the firearm.” See Iowa Code § 724.4(1). He claims the
enhancement is meant to apply when the underlying conviction relates to “conduct
separate and distinct from the mere possession of the firearm.”
Herbert concedes that this argument is controlled by United States v. Walker,
771 F.3d 449 (8th Cir. 2014). In Walker, we held that a violation of Iowa Code
section 724.4(1), as here, constitutes “another felony offense” for purposes of a
§ 2K2.1(b)(6)(B) enhancement. 771 F.3d at 452-53. We thus reject Herbert’s
argument that the § 2K2.1(b)(6)(B) enhancement does not apply. See United States
v. Manning, 786 F.3d 684, 686 (8th Cir. 2015) (“A panel of this Court is bound by a
prior Eighth Circuit decision unless that case is overruled by the Court sitting en
banc.”).
-9-
Recognizing that Walker controls, Green argues that the district court abused
its discretion in denying his motion for a downward variance after applying the
§ 2K2.1(b)(6)(B) enhancement because of the “redundancy” of “the charged
conduct.” We find this argument unavailing. Although a sentencing court “may
choose to deviate from the guidelines because of a policy disagreement,” United
States v. Manning, 738 F.3d 937, 947 (8th Cir. 2014), it was not an abuse of
discretion for the district court to refuse to do so, see United States v. Beckman, 787
F.3d 466, 498-99 (8th Cir. 2015).3
Herbert next argues that the district court procedurally erred by not properly
performing an incremental analysis when it departed upward under
U.S.S.G. § 4A1.3. See United States v. Timberlake, 679 F.3d 1008, 1011 (8th Cir.
2012); Gonzalez, 573 F.3d at 605. Specifically, Herbert contends that the court erred
by departing upward three levels when an “upward departure of two offense levels
would be sufficient” to account for his criminal history because many of his crimes
were committed as a minor or young adult or were property crimes.
“A district court’s decision to depart upward from the advisory guideline
range is reviewed for abuse of discretion, and the extent of that departure is reviewed
for reasonableness.” United States v. Ruvalcava-Perez, 561 F.3d 883, 886 (8th Cir.
2009). Section 4A1.3(a)(1) of the Guidelines provides that a sentencing court may
depart upward “[i]f reliable information indicates that the defendant’s criminal
history category substantially under-represents the seriousness of the defendant’s
criminal history or the likelihood that the defendant will commit other crimes.” If,
as here, a defendant has already met the qualifications for a category VI criminal
3
Green filed a pro se petition for a writ of mandamus after the parties
submitted the briefing in this case. Because a “writ of mandamus is an extraordinary
remedy,” an appellant must establish a “clear and indisputable right” to the relief
sought. Perkins v. Gen. Motors Corp., 965 F.2d 597, 598-99 (8th Cir. 1992). But
Green failed to present any relevant law or cite to any facts to support his petition.
He thus has failed to provide the court with any basis on which to accept his
arguments, and therefore, the petition is denied. See United States v. Sigillito, 759
F.3d 913, 933-34 (8th Cir. 2014).
-10-
history, “the court should structure the departure by moving incrementally down the
sentencing table to the next higher offense level . . . until it finds a guideline range
appropriate to the case.” § 4A1.3(a)(4)(B).
The district court did not abuse its discretion when it decided to depart upward
based on a determination that criminal history category VI substantially
underrepresented the seriousness of Herbert’s criminal history and risk of
recidivism. At sentencing, the district court found that Herbert had a greater number
of criminal history points than was typical of a defendant with a category VI criminal
history even though several criminal offenses had not been scored, that he was at
“an extremely high risk to recidivate,” and that he posed “a risk of danger to the
community.” Herbert has multiple convictions for burglary, theft, harassment, and
disorderly conduct. His record includes no fewer than four convictions for motor
vehicle theft alone, and he has engaged the police in two car chases, crashing one
vehicle into a pole and flipping another. He has also repeatedly committed crimes
while on probation or parole. Indeed, Herbert committed the very crime at issue—
being a felon in possession of a firearm—after having escaped from a detention
facility to which he had been committed for a prior felony conviction. See United
States v. Mosby, 543 F.3d 438, 442 (8th Cir. 2008) (noting that a sentencing court
may consider whether the defendant “repeatedly committed crimes while on
probation or parole” and whether the instant offense was committed “while [the
defendant] was on probation from his last conviction”). We thus conclude that the
district court did not abuse its discretion in determining that Herbert’s “obvious
incorrigibility” demonstrates that “leniency has not been effective,” United States v.
Abrica-Sanchez, 808 F.3d 330, 335 (8th Cir. 2015), and that as a result, the “factors
weigh in favor of . . . [a] decision to upwardly depart,” Gonzalez, 573 F.3d at 607.
We are also satisfied with the district court’s explanation of the extent of its
upward departure and therefore conclude it was reasonable to depart upward three
levels. See Ruvalcava-Perez, 561 F.3d at 886-87. For the same reasons we likewise
reject Herbert’s contention that the district court committed a clear error of judgment
-11-
in refusing to grant his motion for a downward variance under 18 U.S.C. § 3553,
choosing instead to impose a sentence of 71 months’ imprisonment. See id. at 887.
At some length, Herbert sets out a kind of mathematical formula for
calculating an appropriate upward departure. But the Supreme Court has explicitly
rejected that kind of review because such a “formula is a classic example of
attempting to measure an inventory of apples by counting oranges.” See Gall v.
United States, 552 U.S. 38, 49 (2007). This we will not ask a district court to do.
Instead, we review a sentence not based on a mathematical calculation of the extent
of a departure or variance, but as always, with an eye towards its substantive
reasonableness given the individual characteristics of the defendant. See United
States v. Feemster, 572 F.3d 455, 461-62 (8th Cir. 2009) (en banc).
After the upward departure, the court calculated a new guidelines range of 57
to 71 months’ imprisonment, and the district court adequately justified its decision
to impose a sentence at the top of the range. While Herbert argues that the district
court “failed to give appropriate weight to his life circumstances” under
18 U.S.C. § 3553(a) because it should have given more weight to his dysfunctional
upbringing, the district court considered Herbert’s arguments at sentencing, finding
that although “he may have had a dysfunctional upbringing at times, he had the
opportunity to change” through various rehabilitation and probation programs. The
district court instead emphasized that Herbert was a “risk to the safety of the public”
who “lacks respect for the law and for authority.” The court considered Herbert’s
criminal history too, noting that the eighteen criminal history points calculated in the
presentence investigation report were five more than the thirteen required for
category VI, see U.S.S.G. ch. 5, pt. A, and even that number did not reflect several
of Herbert’s prior convictions. See Ruvalcava-Perez, 561 F.3d at 886; Mosby, 543
F.3d at 442. Herbert “must show more than the fact that the district court disagreed
with his view of what weight ought to be accorded certain sentencing factors,”
United States v. Townsend, 617 F.3d 991, 995 (8th Cir. 2010), because a district
court has “wide latitude to weigh the § 3553(a) factors in each case and assign some
factors greater weight than others in determining an appropriate sentence,” White,
-12-
816 F.3d at 988. In light of this wide latitude and Herbert’s extensive criminal
history, we cannot say that the district court abused its discretion in departing upward
three offense levels, denying the downward variance, and sentencing Herbert to 71
months’ imprisonment. See id. 4
III.
For the foregoing reasons, the judgment of the district court is affirmed.
______________________________
4
Herbert filed a pro se Federal Rule of Appellate Procedure 28(j) letter
requesting that we review his appeal in light of Rehaif v. United States, a case in
which the Supreme Court held that in a prosecution under 18 U.S.C. §§ 922(g) and
924(a)(2), “the Government must prove both that the defendant knew he possessed
a firearm and that he knew he belonged to the relevant category of persons barred
from possessing a firearm.” 588 U.S. ---, 139 S. Ct. 2191, 2200 (2019). Here, the
relevant category of persons is anyone “who has been convicted in any court of[] a
crime punishable by imprisonment for a term exceeding one year.”
18 U.S.C. § 922(g)(1). Assuming but not deciding that Herbert has shown error, we
conclude that any error did not affect his substantial rights. See United States v.
Wroblewski, 816 F.3d 1021, 1025 (8th Cir. 2016) (stating that plain-error review
applies where a defendant does not object in the district court, and that to obtain
relief on plain-error review, the “defendant must show that the district court
committed an error that was plain and that affected his substantial rights”). Because
the plain-error doctrine is intended to “correct only particularly egregious errors,”
United States v. Young, 470 U.S. 1, 15 (1985) (internal quotation marks omitted),
we “may consult the whole record when considering the effect of any error on
substantial rights,” United States v. Vonn, 535 U.S. 55, 59 (2002). Herbert’s
presentence investigation report reveals that he was convicted of at least five crimes
punishable by imprisonment for a term exceeding one year, and in each case he
served more than one year in prison. It is no surprise then that at his sentencing
hearing, Herbert acknowledged that when he was in state prison, he “watched the
prison video about having a gun and what the consequences were if [he] was to get
caught with a gun, be around a gun, or [have] anything to do with a gun.”
Accordingly, he cannot show “a reasonable probability that, but for the error, the
outcome of the proceeding would have been different.” United States v. House, 923
F.3d 512, 515 (8th Cir. 2019).
-13-
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835 F.2d 550
56 USLW 2435
UNITED STATES of America, Plaintiff-Appellee,v.Jack BREWER, Defendant-Appellant.
No. 87-1431.
United States Court of Appeals,Fifth Circuit.
Dec. 24, 1987.Rehearing Denied Jan. 28, 1988.
David Godbey, Timothy A. Duffy (court appointed), Dallas, Tex., for defendant-appellant.
Sidney Powell, Asst. U.S. Atty., Marvin Collins, U.S. Atty., Dallas, Tex., for plaintiff-appellee.
Appeal from the United States District Court for the Northern District of Texas.
Before GOLDBERG, WILLIAMS, and HIGGINBOTHAM, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
1
A defendant appeals from his conviction for illegally possessing and trafficking in counterfeit long distance telephone service access codes, claiming that the statute under which he was convicted is not applicable to misuse of such codes. We are persuaded that the conduct complained of here falls under a practical reading of the statute and affirm.
2
* Texas National Telecommunications is a long distance telephone company. A customer calls TNT's toll free phone number, punches in a personal access code, and if the access code is determined to be valid by the TNT computer, the customer gets a dial tone enabling him to place a long distance call. The call is then billed to the customer through the access number.
3
The government urged that Brewer was "hacking"--placing numerous calls to the TNT toll-free number and trying out various number combinations until he found one that the computer would accept as valid. By this process, it was urged, Brewer gathered a number of personal access codes that could be used to make long distance phone calls without identification of the user.
4
TNT became concerned about a large number of calls being charged to unassigned personal access codes and asked the Secret Service and Southwestern Bell Telephone Co. to investigate. The investigators traced calls placed to the 800 number to three phones--all owned by Brewer. The investigators estimated that Brewer would have thirty access codes at that time, and they cancelled all but five of them. Secret Service Agent Rico contacted Brewer and asked to purchase telephone service for a wide telemarketing research project. Rico met with Brewer on October 27, 1986 and asked him for 15 codes, and Brewer told him the fee would be $200 per code, giving him a list of around 17 codes. Rico used Brewer's phone, tried out each of the codes on the list, and reported that only five were working and that he would need more. The next morning, October 28, in a two hour period the investigators traced 57 phone calls placed from Brewer's phone to the TNT 800 number. That afternoon, Rico returned to Brewer's office and Brewer gave him the same list with new numbers penciled in. He again tested the numbers from Brewer's phone and verified that 17 of the new codes worked. Brewer wrote an invoice to Rico selling him the access codes for 14 days "replacement guaranteed."
5
This evidence was presented to a jury who convicted Brewer of violating 18 U.S.C. Sec. 1029 by trafficking in counterfeit long distance access codes and possessing 15 or more counterfeit and unauthorized access devices on October 27, Counts 1 & 2, and of illegally trafficking in and possessing 15 or more counterfeit and unauthorized access devices on October 28, Counts 3 & 4. The court sentenced Brewer to five years in prison for Count 2 followed by concurrent terms of five years probation for Counts 2, 3, and 4.
6
Brewer appeals his conviction, arguing that Congress did not intend for 18 U.S.C. Sec. 1029 to reach misuse of telephone access codes, and that even if the statute did apply, Brewer's specific conduct does not fall within the statute because (1) an access code cannot be both "unauthorized" and "counterfeit"; (2) a working access code cannot be "counterfeit;" and, (3) a terminated access code cannot be "unauthorized."
II
7
Brewer was indicted under 18 U.S.C. Secs. 1029(a)(1) and (a)(3), which provide:
8
(1) Whoever--
9
(1) knowingly and with intent to defraud produces, uses, or traffics in one or more counterfeit access devices;
10
[or]
11
* * *
12
(3) knowingly and with intent to defraud possesses fifteen or more devices which are counterfeit or unauthorized access devices;
13
* * *
14
shall, if the offense affects interstate or foreign commerce, be punished as provided in subsection (c) of this section.
15
The statute also provides the following definitions:
16
(e) As used in this section--
17
(1) the term "access device" means any card, plate, code, account number, or other means of account access that can be used, alone or in conjunction with another access device, to obtain money, goods, services, or any other thing of value, or that can be used to initiate a transfer of funds (other than a transfer originated solely by paper instrument);
18
(2) the term "counterfeit access device" means any access device that is counterfeit, fictitious, altered, or forged, or an identifiable component of an access device or a counterfeit access device;
19
(3) the term "unauthorized access device" means any access device that is lost, stolen, expired, revoked, canceled, or obtained with intent to defraud;
20
(4) the term "produce" includes design, alter, authenticate, duplicate, or assemble;(5) the term "traffic" means transfer, or otherwise dispose of, to another, or obtain control of with intent to transfer or dispose of; and
21
(6) the term "device-making equipment" means any equipment mechanism, or impression designed or primarily used for making an access device or a counterfeit access device.
22
Although its legislative history suggests that the primary focus of section 1029 was to fill cracks in the criminal law targeted at credit card abuse, we are persuaded that Brewer's conduct is reached by a practical reading of the statute. Both the Senate and House Reports on the statute state that the definition of "access device" was intended to be "broad enough to encompass technological advances."1 Both reports also make specific reference to personal identification codes such as those used to obtain cash from automatic teller machines.2 Thus, although apparently this is the first case to do so, we need not stretch to read long distance access codes into the section 1029 definition of "access device."
23
Our reading denies none of Brewer's rights to due process because the language of the statute gives fair notice that misuse of a long distance access code constitutes a crime under section 1029. The test of whether a statute is unconstitutionally vague so as to deprive fair notice is whether it provides a person of ordinary intelligence a reasonable opportunity to know what is proscribed.3 This test is met. Furthermore, "the requirement that statutes give fair notice cannot be used as a shield by one who is already bent on serious wrongdoing."4 At the very least, Brewer must have known that hacking out long distance access codes to obtain free long distance service was "wrong."
III
24
Brewer argues that even if abuse of long distance codes falls within the statutory language, his conviction is improper, first because a long distance code cannot be both a "counterfeit access device" and an "unauthorized access device"; second, because a working long distance code cannot be a "counterfeit access device"; and third, because a terminated long distance code cannot be an "access device."
25
Brewer argues that his convictions on Counts 1 and 3 (for trafficking in counterfeit access devices) are inconsistent with his convictions on Counts 2 & 4 (for possessing unauthorized access devices) because "counterfeit" and "unauthorized" are mutually exclusive. Brewer contends that an access code is either counterfeit, which is totally forged or altered, or it is unauthorized, which is genuine but possessed without authority, but that it cannot be both. Brewer argues that the separate definitions for each term in section 1029(e) and the use of the disjunctive "or" in section 1029(a)(3), "devices which are counterfeit or unauthorized access devices," mean that Congress intended to create a dichotomy between the terms.
26
The argument is not without some force, but its difficulty is that even if Congress did intend to create a definitional dichotomy between the two terms, it does not necessarily follow that Brewer's conduct cannot fall within the meaning of both, and it did. The codes are both "counterfeit," because they are "fictitious" and "forged," and "unauthorized," since they were "obtained with intent to defraud." Congress need not have anticipated that technological advances would create the opportunity for conduct that meets both definitions.
27
By the same token, we are unpersuaded by Brewer's broader argument that a legitimate access code cannot ever be "counterfeit." Brewer argues that the codes he obtained were genuine code numbers placed in the TNT computer and thus were not "counterfeit." However, an equally plausible interpretation is that Brewer did not "obtain" the codes from the computer but fabricated codes that just happened to be identical to the TNT codes. By analogy, someone who manufactures phony credit cards is no less a "counterfeiter" because he happens to give them numbers that match valid accounts.
28
Finally, Brewer argues that his conviction on Count 2, possessing 15 or more unauthorized access codes on October 27, is invalid because on that day he possessed only five working access codes. He contends that a terminated access code is not an access code that can be used to obtain anything of value as the statutory definition requires. The legislative history of the statute indicates that the requirement of possessing 15 codes was written into the statute to target major fraud operations. We are not persuaded that Congress intended the statute to require that each of those 15 code numbers be active. Such a requirement would serve as a disincentive to credit card or long distance companies immediately to invalidate stolen or lost numbers to protect themselves. More importantly, the argument fails to recognize that the definitional section of the statute contemplates the misuse of revoked or canceled access codes.5
29
Brewer's arguments are clever and are skillfully presented. Ultimately, however, we are persuaded that their adoption would frustrate Congressional purpose--and that purpose controls.
30
We AFFIRM.
1
See, S.Rep. No. 98-368, 98th Cong., 2d Sess., reprinted in 1984 U.S.Code Cong. & Ad.News 3182, 3647, at 3655; H.R.Rep. No. 98-894, 98th Cong., 2d Sess., reprinted in 1984 U.S.Code Cong. & Ad.News 3689, at 3705
2
S.Rep. at 3656; H.Rep. at 3705
3
Home Depot, Inc. v. Guste, 773 F.2d 616 (5th Cir.1985)
4
United States v. Griffin, 589 F.2d 200, 207 (5th Cir.1979); United States v. Ragen, 314 U.S. 513, 524, 62 S.Ct. 374, 379, 86 L.Ed. 383 (1942) (on no construction can the statutory provisions here involved become a trap for those who act in good faith)
5
See 18 U.S.C. Sec. 1029(e)(3)
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FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT July 30, 2019
_________________________________
Elisabeth A. Shumaker
Clerk of Court
FRANK JOSEPH BROWN,
Petitioner - Appellant,
v. No. 19-4028
(D.C. No. 2:17-CV-00826-TS)
STATE OF UTAH, (D. Utah)
Respondent - Appellee.
_________________________________
ORDER DENYING CERTIFICATE OF APPEALABILITY*
_________________________________
Before LUCERO, PHILLIPS, and EID, Circuit Judges.
_________________________________
Frank Brown seeks a certificate of appealability (“COA”) to appeal the district
court’s denial of his 28 U.S.C. § 2254 motion. We deny a COA and dismiss.
I
Brown pled guilty to one count of attempted child kidnapping in Utah state
court. He was sentenced to an indeterminate prison term of three years to life on
February 12, 2016. Brown did not appeal or seek state post-conviction review.
On July 20, 2017, Brown filed his federal habeas petition, alleging a variety of
claims including pre-plea constitutional violations, ineffective assistance of counsel,
*
This order is not binding precedent, except under the doctrines of law of the
case, res judicata, and collateral estoppel. It may be cited, however, for its
persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
and actual innocence. The district court dismissed his petition as untimely and
denied a COA.
II
Brown may not appeal the denial of habeas relief under § 2254 without a
COA. § 2253(c)(1). We will issue a COA “only if the applicant has made a
substantial showing of the denial of a constitutional right.” § 2253(c)(2). Because
the district court dismissed Brown’s petition on procedural grounds, he must show
“that jurists of reason would find it debatable whether the petition states a valid claim
of the denial of a constitutional right, and that jurists of reason would find it
debatable whether the district court was correct in its procedural ruling.” Slack v.
McDaniel, 529 U.S. 473, 478 (2000).
Jurists of reason would not find debatable the district court’s determination
that Brown’s § 2254 motion was untimely. Brown’s conviction became final and the
one-year limitations period began to run at “the expiration of the time for seeking
[direct] review.” § 2244(d)(1)(a). Under Utah law, March 14, 2016, was the date on
which his time to file a direct appeal expired. See Utah R. App. P. 4(a) (“the notice
of appeal . . . shall be filed with the clerk of the trial court within 30 days after the
date of entry of the judgment or order appealed from.”). But Brown filed his habeas
petition on July 20, 2017, more than four months after the limitations period had
expired. Accordingly, the district court correctly concluded Brown’s petition was
untimely.
2
Brown contends his petition is not time-barred because he is actually innocent.
See Lopez v. Trani, 628 F.3d 1228, 1230-31 (10th Cir. 2010) (“[A] sufficiently
supported claim of actual innocence creates an exception to procedural barriers for
bringing constitutional claims, regardless of whether the petitioner demonstrated
cause for the failure to bring these claims forward earlier.”). To establish actual
innocence, Brown must present “new reliable evidence—whether it be exculpatory
scientific evidence, trustworthy eyewitness accounts, or critical physical evidence—
that was not presented at trial.” Schlup v. Delo, 513 U.S. 298, 324 (1995). And in
light of this evidence, Brown “must show that it is more likely than not that no
reasonable juror would have found petitioner guilty beyond a reasonable doubt.” Id.
at 327. Brown fails to adduce evidence meeting this high standard, and he advances
no other arguments suggesting his petition is timely.1
III
We DENY Brown’s request for a COA and DISMISS this matter.
Entered for the Court
Carlos F. Lucero
Circuit Judge
1
To the extent Brown argues in his request for a COA that his petition is
timely because of newly discovered evidence, see § 2244(d)(1)(D), that contention
fails. Brown does not address the district court’s determination that the evidence he
discusses was either available before his plea or is irrelevant, as in the case of the
investigatory evidence refuting assertions that Brown was involved in a sexual
relationship with the kidnap victim.
3
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951 So.2d 857 (2005)
Elisabeth POSEY, Individually and as parent and legal guardian of Justin Posey and Austin Posey, minor children, Appellants,
v.
Lawrence R. GROBMAN, M.D.; Lawrence R. Grobman, M.D., P.A.; SSJ Mercy Health System Inc.; and Mercy Hospital, Inc., Appellees.
No. 4D05-644.
District Court of Appeal of Florida, Fourth District.
November 30, 2005.
Rehearing Denied April 23, 2007.
Edna L. Caruso and Diran V. Seropian of Edna L. Caruso, P.A., West Palm Beach, and Sheldon J. Schlesinger and Scott Newmark of Sheldon J. Schlesinger, P.A., Fort Lauderdale, for appellants.
Helen Ann Hauser of Dittmar & Hauser, P.A., Coconut Grove, for appellees.
STONE, J.
The plaintiffs (Posey) appeal a post-verdict cost order granting a set-off to a defendant, Dr. Grobman, for taxable costs paid by a co-defendant, Mercy Hospital, pursuant to a separate settlement of taxable costs with Posey. The jury had returned a verdict for Posey and apportioned negligence, 90% to Dr. Grobman and 10% to Mercy.
After the Mercy settlement, the trial court, at Dr. Grobman's request, isolated and apportioned those costs that were deemed applicable solely to Posey's case against Dr. Grobman. The cost figure arrived at is not disputed. We conclude that under the circumstances of this case, the responsibility for taxable costs between Dr. Grobman and Mercy should not be treated as joint and several and that Dr. Grobman is not entitled to a set-off.
The total costs involved are extensive, amounting to over $315,000. The initial *858 costs claim exceeded $500,000. Attached to Posey's motion is a 125-page spreadsheet listing expenditures and authority for each itemized cost claimed. Mercy settled its costs for $150,000 and the amount allocated by the court to costs incurred solely on the claim against Dr. Grobman amounts to around $100,000. There were other costs attributable to other defendants.
At the hearing, the trial court and the attorneys went through each of the listed costs, line by line, ferreting out the items that were allowable for proving Dr. Grobman's negligence. The result was that Dr. Grobman was left with less than a third of the revised costs.
Although the trial court expressed its concern about "double-dipping" by giving Dr. Grobman a credit for the larger hospital settlement against his $100,000 share of costs, and notwithstanding that Dr. Grobman sought to separate himself from responsibility for any costs associated with the claim against Mercy, the trial court allowed the full set-off, thereby freeing Dr. Grobman from any cost liability.
Dr. Grobman relies upon the set-off statutes, sections 46.015 and 768.041, Florida Statutes. However, we do not deem it determinative that damages are joint and several, and normally subject to a set-off, where the trial court, at Dr. Grobman's request, was able to separate out those costs incurred in proving the culpability of each defendant. It is, also significant that the combination of costs attributable to Dr. Grobman, and the amount of the Mercy costs settlement, does not exceed the total of Posey's revised costs.
Here, the trial court did not apportion the costs in accordance with percentage of liability, clearly proscribed as explained in Deleuw, Cather & Co. v. Grogis, 655 So.2d 240, 240 (Fla. 4th DCA 1995), or by any other formula. The trial court simply meted out the applicable costs, item by item, at Grobman's behest.
We note that, although we have previously determined that the liability of another defendant in this case, an HMO, was derivative, Grobman v. Posey, 863 So.2d 1230 (Fla. 4th DCA 2003), liability as between Dr. Grobman and Mercy was based on separate causes of action; Posey sued Dr. Grobman for medical malpractice/negligence and Mercy for negligent hiring and negligent supervision. There is no indication that the costs awarded in proving the claim against Dr. Grobman were also incurred in proving the claim against Mercy or other defendants.
We have considered sections 46.015(2), 768.041(2), and 768.81, Florida Statutes, applicable to damage set-offs, but find nothing in those statutes that mandates crediting a cost payment by one defendant against costs owed on independent claims against a joint tort-feasor, where the total award does not result in a windfall to the plaintiff.
Had the dollar amount of the settlement and the costs allowable to Dr. Grobman exceeded total costs claimed and allowed, it would be necessary to address any claim of overlap. However, such is not the case here. Fairness requires that, on these facts, Dr. Grobman not receive a windfall at Posey's expense.
Therefore, the order is reversed and the cause remanded for further proceedings.
GROSS and HAZOURI, JJ., concur.
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381 F.Supp.2d 329 (2005)
Joseph F. LAFAUCI, Plaintiff,
v.
ST. JOHN'S RIVERSIDE HOSPITAL (Park Care Pavilion), Pamela LaFrance, and 1199 National Benefit Fund (Union), Patrick Forde, and Maria Kercado Defendants.
No. 05 CIV.594 CM LMS.
United States District Court, S.D. New York.
August 9, 2005.
*330 Joseph F. LaFauci, Queens, NY, pro se.
Joseph Anthony Saccomano, Jr., Jack Schwartz & Associates, Allyson Leigh Belovin, Levy Ratner, P.C., New York, NY, for Defendants.
MEMORANDUM DECISION AND ORDER GRANTING UNION DEFENDANTS' MOTION TO DISMISS COMPLAINT
MCMAHON, District Judge.
Plaintiff Joseph F. LaFauci sues St. John's Riverside Hospital (Park Care Pavilion); Pamela LaFrance, who is the Hospital's Vice President for Human Resources; an entity he identifies in the caption as "1199 National Benefit Fund (Union);" Patrick Forde, an organizer for the 1199 Service Employees International Union (SEIU) (hereinafter "1199" or "the Union"), and Maria Kercado, a Vice President of 1199. LaFauci, a member of 1199, was employed at St. John's for two years and four months. He was then fired according to LaFauci, because he was disabled; according to the Hospital, because he was repeatedly insubordinate.
Defendants "1199 National Benefit Fund (Union)," Patrick Forde, and Maria Kercado have moved to dismiss the complaint as against them. That motion is granted.
Background
Mr. LaFauci began working for St. John's as a Counselor in the Hospital's in-patient Alcohol and Substance Abuse program on July 16, 2001. (Complaint ("Cplt."), at 3.) On November 14, 2003, LaFauci was terminated. (Cplt., at 19.)
*331 As a result of his termination by St. John's, LaFauci lost his health coverage. LaFauci is distressed about the loss of his health benefits because he has been extremely ill for well over a decade. LaFauci is co-infected with HIV and Hepatitis C and has cirrhosis of the liver. (Cplt., at 11.) In an April 2004 letter, Dr. David Rubin wrote that LaFauci was also suffering from depression and a wasting syndrome, which "contribut[ed] to his poor functional status." (Cplt., at 14.) LaFauci is currently on the waiting list for a liver transplant at New York-Presbyterian Hospital. (Cplt., at 4, 11.)
LaFauci objected to his termination and filed a grievance. Hospital administrative staff, LaFauci, and a representative of 1199, held a grievance meeting on January 14, 2004. (Cplt., at 18.) The Union recommended that St. John's rescind LaFauci's termination and allow him to resign instead. The Union also requested compensation for Mr. LaFauci from the date of termination to the date of his grievance hearing. (Cplt., at 19.)
On January 16, 2004, Pamela LaFrance mailed LaFauci a response to the grievance meeting and indicated that LaFauci's termination would stand. (Id.) She also forwarded a copy of her response to Patrick Forde of Local 1199 Union. (Cplt., at 18, 20.) LaFrance's response indicated:
Mr. LaFauci was terminated for inappropriate behavior/insubordination Nov. 14, 2003, when over a two week period, October 22 to November 8, he repeatedly refused to comply with a new procedure for client pick-up, demonstrating and vocalizing anger. Mr. LaFauci had been repeatedly counseled on the necessity of following departmental procedures in the past. He had also been repeatedly counseled on the impropriety of yelling and cursing in the workplace. Mr. LaFauci further demonstrated his anger during the grievance hearing which was terminated when he threatened his Department Head, Clinical Supervisor and the Vice President for Human Resources.
(Cplt., at 19.)
LaFauci asked the 1199 Chapter Hearing and Appeals Board to arbitrate his claim, but the Board refused. He then appealed to the Hearings and Appeals Board of the Health Systems Division of 1199, which upheld the decision of the lower board. On May 27, 2004, Eustace Jarrett sent a letter to LaFauci indicating that the Board had reviewed the documents he provided and "concluded that there is virtually no likelihood of succeeding at arbitration." (LaFauci Exh. B, at 10.)
The Instant Complaint
Mr. LaFauci is a pro se plaintiff, asserting a number of claims against five defendants. I must, therefore, construe the allegations in his pleading liberally. In trying to make sense of his claims, I have taken into account both LaFauci's written complaint and statements about his claims that he made at the Rule 16 conference held before this Court on May 6, 2005.
LaFauci alleges that the Hospital Defendants (St. John's and LaFrance) violated Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, and the Family Medical Leave Act of 1993, by ending his employment and by failing to accommodate his disability. LaFauci also placed a checkmark next to the word "retaliation" on his form complaint, but he fails to specify a factual basis for such a claim. The Hospital Defendants have denied these allegations.
As against the persons I will call the Union Defendants, La Fauci asserts two claims. First, he maintains that the entity he calls "1199 National Benefit Fund (Union)" was "grossly negligent" in not maintaining *332 his health coverage, because it failed to offer him COBRA benefits after his employment was terminated and failed to pay his health premiums, which he could not afford. Second, he claims that the Union and its named officers breached their duty of fair representation ("DFR") by failing to take his case to arbitration.
At the outset, I note that there is a problem with the identification of one of the Union Defendants. Plaintiff purports to sue an entity called "1199 National Benefit Fund (Union)." But 1199 SEIU (the Union) and The 1199 National Benefit Fund (Fund) are two entirely different entities. The Fund is the Union's non-profit welfare trust fund, but it is a separate organization from the Union. Thus, there really is no "1199 National Benefit Fund (Union)."
At the Rule 16 conference, I was advised that plaintiff has served process on the Union and has not effected service on the National Benefit Fund. It is, therefore, the Union that is moving to dismiss, since the Fund is not yet a party to this action.
Standard of Review
Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for dismissal of a complaint that fails to state a claim upon which relief can be granted. The standard of review on a motion to dismiss is heavily weighted in favor of the plaintiff. The Court is required to read a complaint generously, drawing all reasonable inferences from the complaint's allegations. California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 515, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972). "In ruling on a motion to dismiss for failure to state a claim upon which relief may be granted, the court is required to accept the material facts alleged in the complaint as true." Frasier v. General Electric Co., 930 F.2d 1004, 1007 (2d Cir.1991). The Court must deny the motion "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." Stewart v. Jackson & Nash, 976 F.2d 86, 87 (2d Cir.1992) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). When the plaintiff is pro se, a court must be extremely liberal in its construction of the complaint. See Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972).
In considering a motion to dismiss, this Court may consider the full text of documents that are quoted in the complaint or documents that the plaintiff either possessed or knew about and relied upon in bringing the suit. Rothman v. Gregor, 220 F.3d 81, 88-89 (2d Cir.2000); San Leandro Emergency Medical Group Profit Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 808 (2d Cir.1996); Wolff v. Rare Medium, Inc., 210 F.Supp.2d 490, 494 (S.D.N.Y.2002).
LaFauci Has No Claim Against The Union for Failing to Offer Him COBRA Benefits or for "Gross Negligence" in Not Maintaining LaFauci's Health Benefits.
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), when an employee is laid off, his employer is obligated to notify the health care plan administrator of the termination. 29 U.S.C. § 1166(a)(2) (West 1999). The health care plan administrator is, in turn, required to notify the qualified beneficiaries of their right under COBRA to elect continuation coverage. COBRA coverage lasts for a maximum of 18 months. The employee must pay for the coverage himself. Local 217, Hotel & Restaurant Employees Union v. MHM, 976 F.2d 805, 809 (2d Cir.1992).
In his complaint, LaFauci alleges that "the COBRA benefit was not offered to me by the 1199 Union." (Cplt., at 4.) Under COBRA, however, it is the duty of the health care plan administrator in this *333 case, the aforementioned named-but-not-served National Benefit Fund not the Union, to offer terminated employees the option to continue their coverage. Plaintiff has not served the National Benefit Fund, against which he could assert this claim; but as against the party he has served, the Union, he states no claim. LaFauci's complaint against the Union for failing to undertake a duty of the National Benefit Fund must be dismissed. This is, of course, without prejudice to any claim of this nature that he may assert against the Fund should he ever serve the Fund.
LaFauci also claims that he couldn't afford the COBRA coverage, and contends that the Union was somehow "grossly negligent" in not ensuring that he kept health benefits. (Transcript of Pretrial Conference, at 18:10-20.) No law requires the employer, the plan, or the union to pay for COBRA coverage when employees cannot afford the premium. This claim is dismissed as against the Union and the individual Union Defendants to the extent it is asserted against them. If plaintiff attempts to assert such a claim against the Fund, it will be dismissed.
Plaintiff's Claim that 1199 Breached its Duty of Fair Representation is Dismissed As Against the Union and the Individual Union Defendants.
In an action for fair representation, the six-month statute of limitations under section 10(b) of the National Labor Relations Act governs the claim against the union. King v. New York Tel. Co., 785 F.2d 31, 33 (2d Cir.1986) (citing DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 169-71, 103 S.Ct. 2281, 76 L.Ed.2d 476); Yarde v. Good Samaritan Hosp., 360 F.Supp.2d 552, 562 (S.D.N.Y.2005).[1] The rule in the Second Circuit is that "a cause of action accrues when `the plaintiff could first have successfully maintained a suit based on that cause of action.'" King, supra, 785 F.2d at 33 (quoting Santos v. District Council, 619 F.2d 963, 968-69 (2d Cir.1980)). This claim lies against the Union itself, not the Fund, so the proper defendant has been served with process.
On May 27, 2004, Eustace Jarrett, Executive Vice President of 1199, sent LaFauci a letter indicating that the Hearings and Appeals Board of the Health Systems Division had considered his appeal and decided not to arbitrate his claim with St. John's. (LaFauci Exh. B, at 10.) LaFauci received this letter on or before May 31, 2004. (Id.) Ms. Jarrett indicated that the Board had decided to uphold the decision of the Chapter Hearing and Appeals Board because, "After reviewing all information presented by you [LaFauci], it is concluded that there is virtually no likelihood of succeeding at arbitration." (Id.) Jarrett wrote that the Union's decision not to pursue LaFauci's claim was final. (Id.)
Assuming receipt of the letter on May 31, 2004, the six-month statute of limitations for DFR claims ran on November 30, 2004. When a pro se plaintiff brings an action in the Second Circuit, the date of filing is the date the Court's Pro Se Office receives the plaintiff's complaint. See Toliver v. County of Sullivan, 841 F.2d 41, 42 (2d Cir.1988). The Pro Se office received LaFauci's complaint on December 2, 2004. Thus, LaFauci's DFR claim against the Union is time-barred and must be dismissed.
LaFauci's allegations against Forde and Kercado are similar to those he advances against the Union. LaFauci generally *334 states that Forde and Kercado failed to apprise LaFauci of the laws that were violated by his firing, and that the two Union employees did not take sufficient action to contest his termination. (LaFauci Opposing Facts, at 2.) LaFauci claims that Forde "made no mention of the F.M.L.A. and the Disability act" (LaFauci Exh. D, at 15) and did not arrange for someone other than Pamela LaFrance to oversee LaFauci's grievance hearing after LaFauci told Forde that uncomfortable feelings and hostility existed between LaFrance and LaFauci. (LaFauci May 9 Fax, at 28.) LaFauci further complained that Forde "only said two or three words in my defense" at LaFauci's termination hearing. (LaFauci July 29 Fax, at 4.) LaFauci claimed he believed that the management and the Union "were working hand in hand in having me removed from my position at work." (Id.) Finally, LaFauci asserts that a number of faxes and other communications he sent to Maria Kercado went unanswered. (Id.)
LaFauci appears to be asserting a DFR claim against Forde and Kercado like that he asserted against the Union. Obviously, such a claim, were it legally viable, would be just as time-barred against them as it is against the Union. But no such claim lies as a matter of law. The Supreme Court has held that," `Union agents' are not personally liable to third parties for acts performed on the union's behalf in the collective bargaining process." Morris v. Local 819, Int'l Bhd. of Teamsters, 169 F.3d 782, 784 (2d Cir.1999) (citing Atkinson v. Sinclair Refining Co., 370 U.S. 238, 247-49, 82 S.Ct. 1318, 8 L.Ed.2d 462 (1962), overruled in part on other grounds by Boys Markets, Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 241, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970)). In Morris, the Second Circuit explained that "29 U.S.C. § 185(b) and the caselaw provide a shield of immunity for individual union members in suits for breach of the duty of fair representation." Supra, 169 F.3d at 784. As union agents, Forde and Kercado are immune from LaFauci's DFR claim against the Union. Thus, LaFauci fails to state a claim against Forde and Kercado, and his complaint against them must be dismissed.
Conclusion
This constitutes the decision and order of the Court. A scheduling order relating to the claims against the Hospital Defendants is attached.[*]
NOTES
[1] 29 U.S.C. § 160(b) states: "Provided, That no complaint shall issue based upon any unfair labor practice occurring more than six months prior to the filing of the charge with the Board and the service of a copy thereof upon the person against whom such charge is made..."
[*] [Editor's Note: Scheduling order omitted for publication purposes.]
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16 Md. App. 675 (1973)
299 A.2d 460
JAMES RANDOLPH MAGROGAN
v.
WARDEN, MARYLAND HOUSE OF CORRECTION.
App. No. 95, September Term, 1972.
Court of Special Appeals of Maryland.
Decided January 29, 1973.
Before ORTH, C.J., and MORTON and POWERS, JJ.
*676 Petition by Floyd L. Parks for applicant.
Francis B. Burch, Attorney General, and J. Thomas Clark, State's Attorney for Queen Anne's County, for respondent.
POWERS, J., delivered the opinion of the Court.
James Randolph Magrogan applies for leave to appeal from an order of Judge James A. Wise in the Circuit Court for Queen Anne's County denying post conviction relief.
Applicant pleaded guilty to two charges of grand larceny on 4 March 1971. On the same day the court imposed two concurrent sentences of four years each, but suspended the execution of the sentences and placed applicant on probation.
At a hearing held on 20 January 1972 the probation was revoked, the suspension stricken, and execution of the sentences placed in effect. Applicant did not appeal from the revocation order, and he does not contest it now. He employed the post conviction procedure to raise the single issue of credit for "street time" upon revocation of probation.
Applicant contends that he was illegally and unconstitutionally denied credit against his sentence for the time he spent on probation in the community, because during that time he was subject to certain restraints upon his freedom. He cites no authority for this position except one decision by the Supreme Court of New Mexico,[1] but we find that decision to have been based upon a statute of that State. The question has not been referred to in any reported appellate decision in Maryland.
Suspension of imposition or of execution of sentence and the grant of probation are authorized by Code, Art. 27, §§ 639 to 642. Probation is defined in Code, Art. 41, § 107 (f), but there is no general law governing the revocation *677 of probation. A person alleged to have violated his probation is entitled to notice and a hearing at which he must be afforded a reasonable opportunity to defend himself. Edwardsen v. State, 220 Md. 82, 151 A.2d 132, Brown v. State, 4 Md. App. 623, 244 A.2d 471, Wilson v. State, 6 Md. App. 397, 251 A.2d 379, and Knight v. State, 7 Md. App. 313, 255 A.2d 441, in which the subject is thoroughly discussed. He has the right to appeal from a revocation of probation. Coleman v. State, 231 Md. 220, 189 A.2d 616.
The Court of Appeals, in Coleman v. State, supra, observed:
"When the sentence in a criminal case is imposed and execution of the imposed sentence is conditionally suspended, as distinguished from the suspension of the imposition of sentence, and the defendant placed on probation, and thereafter the probation is stricken out, the defendant should not be re-sentenced. His original sentence is effective with the probationary provisions stricken out." (Emphasis supplied)
It is clear from what was said in Coleman that when probation is revoked and the suspension of a previously imposed sentence is stricken, then that sentence goes into effect, exactly as it was originally imposed.
It follows from what we have said that when such a sentence goes into effect as originally imposed the judge need not, and indeed may not, modify that sentence by allowing credit for time the defendant spent in the community on probation.
Application denied.
NOTES
[1] State v. Reinhart, 439 P.2d 554 (1968).
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266 F.Supp. 671 (1967)
Gene Owens HALL, Sr., Josephine Hall, his wife, and Richard Hall, Kathleen Hall and Gene Owens Hall, Jr., by their Guardian Ad Litem, Gene Owens Hall, Sr., Plaintiffs,
v.
The UNITED STATES of America, Defendant.
Civ. No. 1057.
United States District Court D. Montana, Missoula Division.
April 5, 1967.
Goldman & McChesney, Missoula, Mont., for plaintiffs.
Moody Brickett, U. S. Atty., Robert T. O'Leary, Asst. U. S. Atty., Donald Douglas, Asst. U. S. Atty., Butte, Mont., for defendant.
RUSSELL E. SMITH, District Judge.
Gene Owens Hall was seriously injured by reason of the negligence of the United States, but was denied recovery because of his own contributory negligence. His wife, Josephine Hall, was denied recovery for loss of consortium. Now Josephine Hall moves for a new trial or in the alternative to amend the findings and conclusions heretofore entered to permit her to recover for loss of consortium. May a wife sue a negligent third person for loss of consortium where the husband was himself contributorily negligent? The question has not been specifically answered by the Montana Supreme Court.
The loss of consortium law in Montana is stated in the cases of Duffy v. Lipsman-Fulkerson & Co., D.Mont. 1961, 200 F.Supp. 71, and Dutton v. Hightower and Lubrecht Construction Co., D.Mont.1963, 214 F.Supp. 298. These cases recognized the common law right of the husband to sue for loss of consortium and held that the wife under the common law and statutes of the state had the equivalent right.
*672 At common law the contributory negligence of the wife defeated the husband's right, and in those jurisdictions recognizing the wife's right to sue for loss of consortium the contributory negligence of the husband defeated that right.[1]
Although the rule is supported by many decisions, it has been severely criticized by the scholars.[2] Apparently the criticism has had little impact on the courts. So far as Montana is concerned, what signposts there are point in the direction taken by the courts rather than the scholars. The same criticisms made of the rule that contributory negligence is a bar in a loss of consortium action can be and are leveled at the rule making contributory negligence a bar in a wrongful death action,[3] and yet in Montana contributory negligence is a bar in the wrongful death action.[4]
The court is of the opinion that the Montana Supreme Court, called upon to decide this problem, would decide it in conformity with the case law.
Plaintiffs' motions are denied.
NOTES
[1] Restatement, Torts Sec. 693, Comment C, (1938 ed.) This section refers only to the husband's action since at that time the American Law Institute did not recognize a right in the wife; Prosser, The Law of Torts. (3rd ed. 1964), p. 915; Sove v. Smith, 6 Cir. 1966, 355 F.2d 264; 41 C.J.S. Husband and Wife, Sec. 401c; Harper and James, The Law of Torts, Section 8.9 (1956 ed.)
[2] Prosser, Torts, supra, n. 2 at p. 915.
[3] Harper and James, The Law of Torts, Sec. 23.8 (1956 ed.)
[4] Section 93-2810, R.C.M.1947. Melville v. Butte-Balaklava Copper Co., 47 Mont. 1, 130 P. 441 (1913); Maronen et al. v. Anaconda Copper Mining Co., 48 Mont. 249, 136 P. 968 (1913).
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949 F.2d 399
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.David Arnold FELDMAN, Defendant-Appellant.
No. 90-50470.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted Sept. 9, 1991.Decided Dec. 5, 1991.
Before BEEZER, CYNTHIA HOLCOMB HALL and WIGGINS, Circuit Judges.
1
MEMORANDUM*
2
David Arnold Feldman appeals his conviction by a jury on three counts of mail fraud in violation of 18 U.S.C. § 1341. He also appeals the district court's order that he pay $70,700,000 in restitution for losses caused by the fraud, as well as the court's appointment of a receiver to manage the payment of that restitution. The district court had jurisdiction pursuant to 18 U.S.C. § 3231. We have jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742. We affirm appellant's conviction on all three counts. But we vacate the order of restitution and remand to the district court for resentencing consistent with our opinion in United States v. Sharp, 941 F.2d 811 (9th Cir. August 5, 1991).
3
* Appellant's convictions for mail fraud were based on three mailings in furtherance of a scheme to defraud institutions that invested in mortgage loan pools set up by appellant's company, National Mortgage Equity Corporation (NMEC). Investors purchased certificates that entitled them to interest and principal paid on each loan made from their pool. Most of the loans were made to benefit NMEC, appellant, and other participants in the fraud. A large portion of the loans were never repaid. Consequently, investors lost millions of dollars, most or all of which they recovered in civil litigation against Bank of America, which had served as escrow agent on all the certificate purchases.
II
4
Appellant first challenges the sufficiency of the evidence to support his conviction on each of the mail fraud counts. We will reverse a conviction for insufficient evidence only if we determine, "viewing the evidence in the light most favorable to the Government, that no rational trier of fact could have found the essential elements of the crime charged beyond a reasonable doubt." United States v. Martinez, 806 F.2d 945, 946 (9th Cir.1986), cert. denied, 481 U.S. 1056 (1987). Applying this standard, we uphold appellant's conviction on each count.
5
* The mailing upon which Count 4 was based was a June 12, 1984 letter from Robert Meceda, acting president of NMEC during appellant's incarceration at Boron Federal Prison, to Kent Rogers, appellant's co-defendant and head of Westpac, a borrower from the mortgage pool. According to the government's indictment, appellant initially agreed to lend Westpac over 24 million dollars for construction work. Although Westpac never made its loan payments, appellant continued to lend Rogers money in excess of the value of the properties securing the loans and did not place controls on the use of the money. In the end, NMEC lent Westpac a total of almost 45 million dollars, none of which was ever repaid.
6
Meceda, who was not implicated in the fraud, testified that when he was acting president of NMEC, he came to suspect that Rogers had never obtained reinsurance on the Westpac loans. He further testified that he informed Rogers that NMEC would make no more loans to Westpac until Rogers obtained reinsurance from an "A" rated company and that Rogers responded that if he received no more loans he would default on his outstanding loans. These developments culminated in the June 12 letter, informing Rogers that Westpac was seriously delinquent in its loan payments and demanding repayment.
7
Appellant argues that the letter to Rogers could not have been "in furtherance" of the fraud "as a matter of law" because it thwarted, rather than aided the NMEC scheme. If the purpose of the scheme was to divert the money of innocent investors into the hands of Rogers and the other perpetrators of the fraud, appellant argues, then it is illogical for the government to suggest that a letter demanding that Rogers pay back his loans was in furtherance of the fraud. Far from furthering the fraud, such a demand would throw a wrench into the scheme by demanding that Rogers return the money.
8
Relying on Schmuck v. United States, 489 U.S. 705 (1989), the government argues that the letter was in furtherance of the fraud because repayment of the loans was necessary to keep the NMEC program afloat. The fraud "depended on the goodwill of prior investors to allow expansion of the program and the postponement of complaints to authorities." The government's theory finds support in the record. The innocent Meceda was not the only person who sought repayment from Rogers. Appellant himself had instructed co-defendant Mary Brown to seek repayment of certain Westpac loans. And when that repayment was not forthcoming, appellant instructed Brown to withhold certain amounts from future loans to Westpac. A jury that heard this evidence could reasonably conclude that the Meceda letter was not inconsistent with the fraudulent scheme. It could conclude that unlimited extensions of credit to Westpac were detrimental to the scheme, and that if appellant himself had once sought to recover some of the Westpac loans in furtherance of the fraud, Meceda's letter could have served the same function. Under Schmuck, such a conclusion would be sufficient to support a finding that Meceda's letter was in furtherance of the scheme to defraud. See 489 U.S. at 711-712 (innocent mailings necessary to sustain fraud satisfy "in furtherance" element of mail fraud charge.)
B
9
The letter that formed the basis for Count 6 was from Mr. Edie of Irving Savings in New Jersey, an investor in the mortgage pools, to Carol Sutor of NMEC. The letter was dated July 27, 1984, but records show that a check contained in that letter was deposited in an NMEC bank account in Inglewood, California on that very same day. The parties agree, as do we, that remarkable efficiency on the part of the Post Office is not the most likely explanation for this circumstance. Appellant contends that the facts indicate the letter was delivered by means other than the mail--though appellant offers no alternative scenario under which the check was likely to have traveled across the continent and been processed and deposited in NMEC's bank account all in a single day. The government responds that in light of Mr. Edie's testimony that it was his practice to place such letters in the mail, the jury probably concluded that the letter was indeed mailed but misdated. We agree with the government that a rational jury could have made such a finding.
10
Use of the mails is an essential element of the crime of mail fraud. See 18 U.S.C. § 1341. But we have not required direct proof that an item was sent through the mail, and instead have held that testimony regarding routine custom and practice can provide sufficient evidence to support an inference that the item was sent through the mail. See United States v. Green, 745 F.2d 1205, 1208 (9th Cir.1984), cert denied, 474 U.S. 925 (1985). Mr. Edie testified that it was his practice to send letters such as the one at issue here through the mail, and this testimony was sufficient evidence to support the jury's finding.
11
Appellant cites several cases for the proposition that a legal "presumption" that an event occurred falls away in light of actual evidence that the event did not occur. Based on these cases, he argues that the "presumption" created by Mr. Edie's testimony must fall away in the face of the evidence of the bank deposit. Appellant confuses a legal presumption, which is created by statute and which may be rebutted by the evidence, with an inference, which is not created by law but arises from the evidence itself. The cases to which appellant cites involve the former. See Del Vecchio v. Bowers, 296 U.S. 280 (1935); Panduit Corp. v. All States Plastic Mfg. Co., 744 F.2d 1564, 1579 (Fed.Cir.1984); Sperberg v. Goodyear Tire & Rubber Co., 519 F.2d 708, 713 (6th Cir.), cert. denied, 423 U.S. 987 (1975). This case involves the latter. Mr. Edie testified to his practice, and the jury was free to infer from this testimony that the letter was sent through the mail, just as they were free to infer from the evidence of the bank deposit that it was not. They chose to infer that the letter was sent through the mail and we cannot say that the evidence was insufficient to support that finding.
12
Appellant also claims that the Edie letter cannot serve as the basis for a mail fraud charge because Irving Trust, having lost no money, was not a "victim" of the fraud. This argument, which appellant appears to abandon in his reply brief, is patently frivolous. First, the fact that as a result of the settlement with Bank of America Irving Trust lost no money is irrelevant to its status as a victim of the fraud. See United States v. Telink, Inc., 910 F.2d 598, 599-600 (9th Cir.1990). Second, even if we were to accept appellant's cramped definition of "victim," appellant has offered no basis for us to conclude that a mailing supporting a mail fraud charge must emanate from either a victim or perpetrator of the crime. And indeed the law is to the contrary. See Schmuck, 489 U.S. 705. (mailings made by innocent used car dealers who lost no money as a result of defendant's scheme to defraud the customers of those dealers).
C
13
The mailing that was the basis for Count 8 was a letter from Carol Sutor of NMEC to Riverhead Savings Bank in New York, another investor, indicating that a particular mortgage pool had been filled. Appellant maintains that the evidence was insufficient to base a mail fraud charge on this letter, because the government never offered testimony from anyone at Riverside to the effect that the letter influenced Riverside to part with its money. We need not address appellant's claim that the government's evidence was insufficient. For the premise of that claim--that the government had to prove that the Sutor letter could have reasonably influenced a person to part with his money--is itself faulty.
14
Appellant cites no law to support his point that the government was required to show that the Sutor letter could have reasonably duped Riverside, but concocts his argument by fabricating an additional element for the crime of mail fraud. Quoting rather disingenuously from the jury instructions, appellant claims that the government was required to prove that the Sutor letter would "reasonably influence a person to part with money." But to support a mail fraud count, a mailing need not contain promises that would "reasonably influence a person to part with money." It need not contain any promises at all--indeed it may be entirely innocent. Schmuck, 489 U.S. at 715.
15
The jury instructions, which appellant quotes out of context, are in accord. They indicate that the promises or statements that comprise the scheme to defraud must be such that "they would reasonably influence a person to part with money or property." Nowhere do they suggest that those promises must be contained in the mailings upon which the mail fraud charges are based. For these reasons, we reject appellant's claim that the evidence was insufficient to support his conviction on Count 8.
III
16
Appellant claims that the district court abused its discretion by failing to sanction the government for violating its discovery obligations under Rule 16 of the Federal Rules of Criminal Procedure and that we should therefore overturn his conviction on Count 4. It seems that there were two versions of the June 12, 1984 letter, which was the basis of that count; one was sent via Federal Express, the other via certified mail. The government included in the discovery materials provided to appellant a version of the letter with the caption "VIA FEDERAL EXPRESS." At trial, however, the government introduced into evidence a version with the caption "CERTIFIED MAIL RETURN RECEIPT REQUESTED," which had not been included with the discovery materials. This court has held that the government's failure to produce documents that are intended for use by the government as evidence in chief at trial may require reversal if the defendant can show prejudice to his defense from their use at trial. United States v. Gee, 695 F.2d 1165, 1167 (9th Cir.1983). We conclude that even if the government's conduct did violate Rule 16, appellant's conviction on Count 4 must stand because he was not prejudiced by that conduct.
17
Upon request, the government must permit a defendant to examine any documents it intends to use as evidence at trial. Fed.R.Crim.P. 16(a)(1)(C). Furthermore, the government's obligation to turn over evidence continues throughout the course of the litigation. It must "promptly notify the other party or that other party's attorney of the existence of the additional evidence or material." Fed.R.Crim.P. 16(c). But the government's obligations under the statute are limited. Rule 16(a)(1)(C) requires only that upon request by the defendant, the government "permit the defendant to inspect and copy or photograph" documents "which are within the possession, custody or control of the government, and which are ... intended for use by the government as evidence in chief at the trial."
18
The government claims that it fulfilled its obligations under Rule 16 because it had an open file discovery policy for a year prior to trial. Appellant responds that the policy was insufficient to satisfy Rule 16 in this case. He suffered prejudice because by providing him with the "Federal Express" letter but not the "certified mail" letter, the government led appellant to believe it had no case on the Count 4 mailing. "[F]or nearly a year prior to trial, the defense legitimately believed that the government had no case as to Count 4 because the letter underlying that count had not been sent by the United States mail, and instead was sent by Federal Express. The defense therefore had no incentive to investigate further." We reject appellant's argument.
19
Appellant has not demonstrated that the prejudice he suffered was caused by anything other than his own lack of diligence. Appellant knew from the time the Grand Jury Indictment was issued in June of 1988 that the government intended to base a mail fraud count on this letter which, according to the indictment was "sent and delivered by the Postal Service according to the directions thereon." Yet appellant failed to investigate the discrepancy between the indictment and the document it had, which it could easily have done under the open file policy. While there may well have been, as appellant asserts, almost 100,000 pages of exhibits, appellant went to trial on only ten counts of mail fraud. It would have been no great burden on appellant's attorney to examine the ten exhibits that were the actual mailings upon which each count was based. Under these circumstances, we cannot say that the government's conduct caused appellant the prejudice that we require to be shown before we will overturn a conviction for a violation of Rule 16.
IV
20
Appellant asserts that the district court erred by refusing to dismiss the indictment against him on the grounds that his right to due process was violated by the government's four year delay in bringing this indictment. The government began its investigation of appellant's activities in 1985, after being apprised of civil proceedings arising out of those activities. Four years later, in May of 1989, the government indicted appellant on twenty counts of mail fraud, fifteen of which were dropped prior to and during trial. Appellant claims that because evidence that could have exonerated him was lost between 1985 and 1989, he suffered prejudice as a result of the delay. Appellant also claims that the government acted "in at least questionable faith by delaying the indictment in order to gain a tactical advantage from developments in the pending civil proceedings." We review for clear error a district court's determination about whether due process has been violated by a pre-indictment delay. United States v. Moran, 759 F.2d 777, 782 (9th Cir.1985), cert. denied, 474 U.S. 1102 (1986).
21
* The Supreme Court addressed the consequences of pre-indictment delay in United States v. Marion, 404 U.S. 307 (1971) and United States v. Lovasco, 431 U.S. 783 (1977). In Marion the Court held that under certain circumstances, the Due Process Clause may be violated if a defendant suffers substantial prejudice as a result of a pre-indictment delay. 404 U.S. at 324. The Court refined that holding in Lovasco when it ruled that while the Due Process Clause does place some limits on the government's ability to delay an indictment, a defendant's constitutional rights are not violated solely because he suffers prejudice as a consequence of the delay. 431 U.S. at 795-96. The Court expressed deep concern about a rule that would require prosecutors to bring hasty indictments based on insufficient evidence and insufficient thought. See id. at 792-95.
22
In Moran, this court elaborated on the meaning of Marion and Lovasco. We set out a two part test for determining when a pre-indictment delay violates due process. Consistent with the Court's opinions, we held that a showing that the defendant suffered actual prejudice because of the delay is a prerequisite to making out a due process violation. Id. at 780. And we concluded that a "defendant has a heavy burden to prove that a pre-indictment delay caused actual prejudice: the proof must be definite and not speculative, and the defendant must demonstrate how the loss of a witness and/or evidence is prejudicial to his case." Id. at 782.
23
But we went further, and following Lovasco held that even a showing of prejudice is, by itself, insufficient to demonstrate that due process has been violated. Even if a defendant is able to show prejudice, a court must balance that prejudice against the length of the delay and the reasons for it, to determine whether it violates "fundamental conceptions of justice." Id. "If mere negligent conduct by the prosecutors is asserted, then obviously the delay and/or prejudice suffered by the defendant will have to be greater than that in cases where recklessness or intentional governmental conduct is alleged." Id.
B
24
Appellant alleges that he was prejudiced by the pre-indictment delay because evidence that would have exonerated him was lost during the four years between the commencement of the investigation and the indictment. At the time of each of the mailings for which appellant was convicted, he was incarcerated at Boron Federal Prison Camp. He claims that records of his telephone conversations while at Boron would have refuted the government's allegation that he was active in the affairs of NMEC during the period of his incarceration.1 He also claims that the delay prejudiced him by preventing him from obtaining fresh evidence, in the form of Federal Express receipts, that the letters that formed the basis of his convictions were delivered by means other than the mails.2
25
Appellant has failed to make the showing of prejudice required by Moran. It will be the rare case in which a defendant can make a definite showing of actual prejudice based on lost documents or testimony. The statute of limitations provides the primary protection against such loss. United States v. Pallan, 571 F.2d 497, 501 (9th Cir.), cert. denied, 436 U.S. 911 (1978); see also United States v. Sherlock, 865 F.2d 1069, 1073 (9th Cir.1989); United States v. Wallace, 848 F.2d 1464, 1470 (9th Cir.1988); United States v. Loud Hawk, 816 F.2d 1323, 1325 (9th Cir.1987); Moran, 759 F.2d at 782. Indeed, appellant cites no case in which this court found that a claim of prejudice due to lost evidence made out a due process violation.
26
Appellant's own claims are entirely too speculative to make such a showing. First, it is sheer speculation that tapes were ever made of appellant's telephone conversations; prison officials stated that prisoners' calls were recorded " 'for security reasons when criminal activity is suspected.' " Appellant makes no claim that prison officials suspected that he was engaged in criminal activity and therefore were likely to have taped his conversations. Furthermore, even if such records did exist, it seems unlikely that they would be exculpatory; NMEC telephone records indicate that appellant made daily collect calls to NMEC and several witnesses testified that appellant stayed active in NMEC's affairs while he was in prison.
27
Likewise, the existence of Federal Express receipts that would show that the three mailings for which appellant was convicted were not sent through the Post Office is entirely speculative. And even if appellant were able to demonstrate that such receipts did exist at one time, demonstrating prejudice would require showing the receipts were destroyed some time after the investigation began. Because of the highly speculative nature of appellant's claims of prejudice, we do not find that the district court's refusal to dismiss the indictment was clear error.3
V
28
Appellant also argues that the district court erred both by allowing appellant's co-defendants to testify to their guilty pleas and by refusing to admit evidence that the victims of appellant's scheme lost no money. We review a district court's evidentiary rulings for abuse of discretion. United States v. Soulard, 730 F.2d 1292, 1296 (9th Cir.1984). We find no abuse here.
29
* Among the witnesses who testified for the government at trial were three individuals who were part of the NMEC fraud and who had pled guilty to charges arising out of that fraud. These witnesses testified to their guilty pleas in response to the government's questions on direct examination. Appellant argues that the court abused its discretion by allowing this testimony because the testimony "vouched" for the witnesses' credibility and because it "tended to show" that appellant was guilty of the charges against him. Neither the facts nor the law support appellant's claim.
30
In United States v. Halbert, 640 F.2d 1000, 1004 (9th Cir.1981) we held that "under proper instruction, evidence of a guilty plea may be elicited by the prosecutor on direct examination so that the jury may assess the credibility of the witnesses the government asks them to believe." The purpose of such evidence is to "support the reasonableness of the witness's claim to firsthand knowledge." Id. at 1005. The rule in Halbert is distinct from the rule that prohibits a party from offering evidence to vouch for the truthfulness of a witness. See United States v. Brooklier, 685 F.2d 1208, 1218-19 (9th Cir.1982), cert. denied, 459 U.S. 1206 (1983). Halbert plainly supports the court's decision to allow the testimony.
31
There is ample evidence in the record that the testimony at issue was offered for the proper purpose and that the court painstakingly instructed the jury on how to consider the testimony. At a pre-trial hearing outside the presence of the jury, the prosecutor indicated that he wanted to offer the evidence on the question of credibility, pursuant to Halbert, and the court agreed to admit the evidence based on that representation. The record shows that in his examination, the prosecutor inquired no further than the fact of the guilty plea. And the judge gave the jury a cautionary instruction each time a witness testified to his or her guilty plea and then again at the end of the trial. Thus it was perfectly proper for the judge to admit the pleas.
32
The prosecutor's comment outside the presence of the jury, that the statements were also necessary to dispel the impression "that Mr. Feldman is the only malfeasor in this whole scheme who has been prosecuted[,] [t]hat he's been singled out," was harmless. Because the jury never heard the comment, it could not have affected its consideration of the evidence. And in any case, the remark in no way suggests that the evidence was introduced to prove appellant's guilt.
B
33
Appellant also argues that the court erred by excluding evidence that the victims of appellant's scheme suffered no monetary loss. He claims to have been prejudiced by the absence of this evidence because "it is hard to believe" that any jury that was not aware that the investors recouped their money "would not be motivated to find the defendant guilty of 'something,' in light of the enormity of the alleged scheme." [Blue Brief at 33]. Appellant cites to no cases, and neither the facts nor the law support his position.
34
In the first place, appellant fails to cite to any place in the record in which the court excluded evidence of the Bank of America settlement--the reason the investors lost no money. Instead, he cites to the court's rejection of his argument that the indictment should be dismissed on the grounds that the mail fraud statute does not apply to schemes that result in no monetary loss.4 Though the prosecutor did move to exclude evidence of the Bank America settlement, appellant's attorney informed the court that he had no intention of introducing that evidence and the court refused to rule on that motion.
35
But even if it had excluded the evidence, it would not have violated its discretion. Under Federal Rule of Evidence 402, evidence that is not relevant is not admissible. And a district court has broad discretion to evaluate the relevancy of any piece of evidence. United States v. Lopez, 803 F.2d 969, 972 (9th Cir.1986), cert. denied, 481 U.S. 1030 (1987). Evidence that the victims of this fraud suffered no monetary loss is simply irrelevant to a mail fraud prosecution because monetary loss is not an element of the crime. Telink, 910 F.2d at 598-600. On the other hand, the prejudice appellant claims to have suffered because of the exclusion of this evidence is so speculative as to be absurd.
VI
36
Finally, we address the court's restitution order. The court ordered appellant to pay restitution to Bank of America for the full $70,700,000 that it paid to the victims of the fraud. There is no dispute between the parties that the order requires appellant to pay restitution for losses arising from the entire scheme to defraud, rather than just those losses attributable to each count for which appellant was convicted. It consequently violates the Supreme Court's decision in Hughey v. United States, 495 U.S. 411 (1990), and our most recent decision in Sharp, 941 F.2d 811.5
37
For the reasons set forth above, appellant's conviction is AFFIRMED and his sentence is
38
VACATED and REMANDED for resentencing consistent with our opinion in Sharp.
*
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
In his Opening Brief, appellant also argues, for the same reasons, that he was prejudiced by the loss of logs of the visitors he received while at Boran. The government responds that in fact the visitor logs have never been destroyed and are available at a storage facility. Appellant concedes the point in his Reply Brief
2
The government alleges that the latter of these two arguments has been raised for the first time on appeal and is thus waived. It seems that the government is correct that appellant's argument about the receipts is new. But it is nevertheless within our discretion to review appellant's claim. It matters not that appellant failed to argue that the loss of the receipts is one of the reasons he suffered prejudice. It only matters that appellant raised the "ultimate" issue of prejudice from loss of evidence caused by government delay. See Schoenberg v. Exportadora de Sal, S.A., 930 F.2d 777 (9th Cir.1991). In any case, it is within our discretion to review matters raised for the first time on appeal where, as here, the issue is one that does not require us to rely on the record. See In re Wind Power Systems, Inc., 841 F.2d 288, 290 n. 1 (9th Cir.1988). In this instance we feel competent to exercise our discretion
3
Because appellant has failed to show prejudice, we need not consider the reasons for the delay. But we note that even had we found prejudice, appellant's bald assertion that the government delayed "in order to gain a tactical advantage from developments in the civil proceedings" would not suffice to demonstrate a due process violation. Appellant offers no facts to support his allegation that the government's reasons for delay were unjust. That appellant is engaging in pure conjecture is demonstrated by the fact that his reply brief abandons the theory of delay offered in his opening brief in favor of new theories, once again without factual support
4
Appellant based his argument--that the lack of monetary loss precludes application of the mail fraud statute--on an interpretation of McNally v. United States, 483 U.S. 350 (1987), which held that the mail fraud statute does not apply to "intangible rights." This circuit has previously rejected that interpretation of McNally and appellant does not raise it here. See Telink, 910 F.2d at 599-600
5
Appellant also challenges the district court's appointment of a receiver to manage the payment of restitution. Because the district court's reconsideration of its restitution order may cause it to reevaluate its appointment of a receiver, we decline to rule at this time on appellant's claim that the appointment of the receiver was improper; that claim is not yet ripe for review
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453 F.2d 783
79 L.R.R.M. (BNA) 2145, 23 A.L.R.Fed. 428,67 Lab.Cas. P 12,337
NEW YORK DISTRICT COUNCIL NO. 9, INTERNATIONAL BROTHERHOODOF PAINTERS & ALLIED TRADES, AFL-CIO, Petitioner,v.NATIONAL LABOR RELATIONS BOARD, Respondent, and Associationof Master Painters and Decorators of the City ofNew York, Inc., Intervenor.
Nos. 228, 229, Dockets 71-1272, 71-1560.
United States Court of Appeals,Second Circuit.
Argued Nov. 16, 1971.Decided Dec. 27, 1971.
Henry J. Easton, New York City (Easton & Echtman, New York City), for petitioner.
Eugene B. Granof, Atty., N. L. R. B. (Peter G. Nash, Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, and Frank Vogl, Atty., N. L. R. B.), for respondent.
Fred P. Ellison, New York City (French, Fink, Markle & McCallion, New York City), for intervenor.
Before MOORE, HAYS, and MULLIGAN, Circuit Judges.
MOORE, Circuit Judge:
1
New York District Council Number 9 of the International Brotherhood of Painters and Allied Trades, AFL-CIO (Union) petitions this court to review an order of the NLRB;1 the Board cross-petitions for enforcement.2 The Board's order provides, in relevant part, that the Union cease and desist from enforcing, unilaterally and without notice to or consultation with the charging parties herein,3 any production quota against employees of the charging parties performing work on New York City Housing Authority projects.4 The order also requires the Union to, on request, bargain collectively in good faith with the charging parties prior to enforcement of any production quota.5 We deny the Union's petition to review; we grant the Board's petition for enforcement.
I.
2
On March 5, 1968, the Union unanimously adopted at a special meeting a resolution, effective April 1, 1968, stipulating that no journeyman member employed on New York City Housing Repaint work paint more than 10 rooms per week. According to the Union, the purpose of the rule is to relieve the pressure on painters to work quickly so as to reduce the number of violations of trade rules, increase the health and safety of union members, and improve the quality of their work. The Union sought to enforce the rule by requiring members to carry cards setting forth the rule and the penalties for violation, and by instructing Union stewards to submit daily reports on production.
3
Prior to the announcement of this resolution, journeymen painted on average 11.5 rooms per week. The then existing collective bargaining contract made no reference to production quotas, but it did provide that Union members would work a seven-hour day, five-day work week.
4
On March 13, after receiving protests from members about the 10-room rule, Louis Elkins, secretary of the Association, informed the Union that the rule was contrary to a long-established trade principle, and that it violated Article XXII of the existing trade agreement, which provided that neither party to the agreement shall make any rule conflicting with the terms of the agreement. Elkins requested that the Union rescind the rule or refrain from taking action to implement it.
5
In reply Frank Schonfeld, the Union's secretary-treasurer, contended that the rule did not violate any term of the agreement, and therefore refused to accede to Elkins' request. Schonfeld similarly rejected a later request by Elkins that the matter be submitted to the Joint Trade Board6 for resolution and submission to arbitration if necessary. While Elkins threatened court action, no such action was taken, apparently in the belief that the issue would be settled in the forthcoming negotiations on the new trade agreement.
6
Negotiations relating to a new agreement commenced in June of 1968. On July 31, the date on which the existing agreement expired, the Union called a strike, which was to last until September 9, the date on which the new contract was executed. During negotiations both sides submitted demands with respect to production quotas.7 The Association abandoned its demand early in the negotiations, but consistently refused to accept the Union's demand. Unable to reach an accord on this issue, the parties signed the new agreement adhering to the positions they held prior to negotiations-the Association believing that the rule violated the terms of the agreement, the Union believing that the rule did not and that it was a proper means of internal union management.
7
As did the old agreement, the new agreement provided for a seven-hour day, five-day work week, with journeymen to be paid by the hour.
8
After the strike ended, the Union intensified its efforts to enforce the 10-room rule. It threatened to fine those members who did not comply with the rule. Some members, at Union urging, stopped work after painting 10 rooms even though they had not yet worked the full 35 hour week. As a result of the Union's efforts, average production fell below the 11.5 room average.
9
In response, some employers discharged painters who reduced their output in observance of the rule, or docked employees for time not worked when they left the job after having met the 10-room quota.
10
Finally, on December 27, 1968, the five Association members and several independents filed section 8(b) (3) charges against the Union with the Board. After extensive hearings, the Trial Examiner recommended dismissal of the complaint as time-barred. The Board, one member dissenting, disregarded this recommendation, holding that the complaint was not time-barred, and that the Union had committed an unfair labor practice.8
II. The Effect of the 10-Room Rule
11
It is important to the resolution of the legal issues in this case to understand the effect of the 10-room rule. First, under the trade agreement between the Association and the Union, journeymen painters are required to work five seven-hour days a week. Second, prior to the announcement of the 10-room rule, journeymen painted on average 11.5 rooms per week. Moreover, the evidence reviewed above gives rise to the inference that but for the Union's enforcement of the 10-room rule, journeymen painters would continue to paint on average at least more than 10 rooms per week. It is thus apparent that effective enforcement of the 10-room rule would permit those painters who can paint more than 10 rooms per week to work less than 35 hours a week.
III. Whether This Complaint Is Time-Barred
12
The Union first announced the 10-room rule in March of 1968; the charges giving rise to this complaint were filed in December of 1968, more than six months later. Petitioner thus contends that the complaint is time-barred by section 10(b) of the Act.9 We disagree.
13
The substance of the unfair labor practice charged against the Union is that it promulgated and sought to enforce a rule that violates the terms of the collective bargaining agreement between the parties. The 10-room rule is "unfair" only by reference to the terms of the collective bargaining agreement with which it allegedly conflicts. Thus, regardless of whether the announcement of the 10-room rule in March of 1968 constituted an unfair labor practice under the old collective bargaining agreement, a distinct violation occurred in September of 1968 if the 10-room rule conflicts with the terms of the new collective bargaining agreement.10 In short, even had the parties "agreed" under the old agreement that journeymen would paint 10 and only 10 rooms per week, if the terms of the new agreement are inconsistent with the 10-room rule, then by enforcing the rule the Union committed an unfair labor practice in September of 1968. If the Union committed a distinct unfair labor practice in September, then the complaint is not time-barred.
14
IV. Whether Enforcement of the 10-Room Rule Constitutes An
Unfair Labor Practice
15
Section 8(b) (3) of the Act provides that it is an unfair labor practice for a labor organization to refuse to bargain collectively with an employer.11 Section 8(d), in defining the nature of the collective bargaining obligation, provides that:
16
. . . where there is in effect a collective-bargaining contract covering employees in an industry affecting commerce, the duty to bargain collectively shall also mean that no party to such contract shall terminate or modify such contract, unless the party desiring such termination or modification-
17
(1) serves a written notice upon the other party to the contract of the proposed termination or modification sixty days prior to the expiration date thereof . . .;
18
(2) offers to meet and confer with the other party for the purpose of negotiating a new contract or a contract containing the proposed modifications;
19
(3) notifies the Federal Mediation and Conciliation Service within thirty days after such notice of the existence of a dispute, and simultaneously therewith notifies any State or Territorial agency established to mediate and conciliate disputes within the State or Territory where the dispute occurred, provided no agreement has been reached by that time; and
20
(4) continues in full force and effect, without resorting to strike or lock-out, all the terms and conditions of the existing contract for a period of sixty days after such notice is given or until the expiration date of such contract, whichever occurs later . . . .12
21
In our opinion the Union's enforcement of the 10-room rule violates the term of the September 9th collective bargaining agreement that stipulates that the standard work week for journeymen painters shall consist of five seven-hour days.13 By enforcing the rule the Union is in substance modifying this term to stipulate that journeymen are not to work a five day, seven-hour per day work week, but are to work only so long as it takes them to paint 10 rooms. We therefore agree with the Board that before the Union can enforce this modification of the collective bargaining agreement, it must bargain collectively with the Association over the issue. This obligation includes, of course, compliance with the four clauses of section 8(d).
22
The dissenting board member and the petitioner place heavy reliance upon Scofield v. NLRB14 in support of their position. We believe that this reliance is misplaced. Scofield involved charges by union members that fines imposed by their union for violation of a production quota violated their section 7 rights and therefore constituted an unfair labor practice. In holding that the imposition of the fines as a means of enforcing the production quota did not constitute an unfair labor practice, the Court was careful to point out that the imposition of the fines in no way violated the terms of the collective bargaining agreement.15 In Scofield the production quota was at a level above the production level of the average efficient worker.
23
We are aware that the National Labor Relations Act does not grant to the Board or to the courts the power to impose substantive contract terms upon the parties to a collective bargaining agreement.16 But the Board and the courts clearly have the power pursuant to section 8(d) to compel the parties to a collective bargaining agreement to abide by the terms of their agreement, and to amend those terms only through the process of collective bargaining.17 If the Union wishes to define the work week of its members in terms of their output rather than in terms of hours, then it can insist on such a provision through the process of collective bargaining.
24
The petition for review is denied; the cross-petition for enforcement is granted.
HAYS, Circuit Judge (dissenting):
25
I dissent on the ground (1) that the rule promulgated by the union constituted no violation of the collective agreement, (2) that, assuming arguendo that the rule did violate the collective agreement, the remedy, a finding that the action of the union constituted an unfair labor practice, is an inappropriate remedy for such a violation, (3) that, if the majority were right in holding that the union's rule violates a provision of the collective agreement (or, indeed, even if the majority is wrong, since the subject was admittedly discussed during negotiations, see National Labor Relations Board v. Jacobs Manufacturing Company, 196 F.2d 680 (2d Cir. 1952)), the Board's order to the union to bargain, involving as it does a corresponding duty on the part of the employer, would be in violation of the terms of Section 8(d). It also seems to me that the majority has incorrectly applied the rule set forth in Local Lodge No. 1424, International Association of Machinists v. NLRB [Bryan Mfg. Co.], 362 U.S. 411, 80 S.Ct. 822, 4 L.Ed.2d 832 (1960) and that the complaint was barred by the six-month statute of limitations of Sec. 10(b) of the National Labor Relations Act, 29 U.S.C. Sec. 160(b) (1970).
26
What the majority actually holds, in effect, is that the union's conduct in promulgating and seeking to enforce its work limitation rule violated the provisions of the collective agreement, specifically the provision stipulating a five day, seven-hour per day work week. However the ordinary and usual wages and hours provisions contained in a collective agreement cannot be magically transformed into provisions specifying the rate of speed at which employees are to work or the amount they are to produce. There was no provision whatever in the agreement requiring the union members to paint 11.5, or for that matter any particular number, of rooms per week. Under Scofield v. NLRB, 394 U.S. 423, 89 S.Ct. 1154, 22 L.Ed.2d 385 (1969), the union could properly adopt and enforce on its members a rule such as the one here involved. Since the employer had no right under the collective agreement to demand that employees paint any specific number of rooms per day, the union retained the power to act unilaterally with respect to that issue. The employers' recourse was either to discharge those painters who did not paint the number of rooms per day the employer considered satisfactory, or to secure from the union an agreement not to promulgate a work limitation rule.
27
But, assuming arguendo, that the union did violate the collective agreement by the promulgation and enforcement of its rule, the Board's finding that this violation constituted an unfair labor practice is wholly unjustified. It is not a part of the Board's function to police the enforcement of collective agreements. See NLRB v. C & C Plywood Co., 385 U.S. 421, 427-428, 87 S.Ct. 559, 17 L.Ed.2d 486 (1967); Charles Dowd Box Co. v. Courtney, 368 U.S. 502, 510-511, 82 S.Ct. 519, 7 L.Ed.2d 483 (1962). If the union violated the agreement, it would subject itself to an action for breach of contract under Section 301 of the Act, 29 U.S.C. Sec. 185. The Board cannot take over enforcement of collective agreements by the device of holding that any violation constitutes a unilateral change in the agreement and therefore the unfair labor practice of refusal to bargain.
28
Moreover if the union's adoption of the work-limitation rule amounted to a change in the terms and conditions of employment, the Board is prevented by Section 8(d), 29 U.S.C. Sec. 158(d) (1970) from ordering the parties to bargain about it. Section 8(d) provides that the duty to bargain collectively "shall not be construed as requiring either party to discuss or agree to any modification of the terms and conditions contained in a contract for a fixed period, if such modification is to become effective before such terms and conditions can be reopened under the provisions of the contract." The Board's order requiring the union and, therefore, the employer, to bargain is inconsistent with the determination that the promulgation of the rule changed a term or condition of employment contained in the collective bargaining agreement. The Board, in effect, holds that the union has refused to bargain concerning a term over which the union and the employer have already bargained and which they have included in the contract, and about which, under Sec. 8(d), they not only have no duty to bargain further but they have no right to bargain. This inconsistency is itself sufficient ground for denying the Board's cross-petition for enforcement.
29
In addition I would hold the complaint barred by the six-month statute of limitations provision of Section 10(b).
30
The union promulgated the work limitation rule on March 5, 1968. Charges that the rule violated Sec. 8(b) (3) were not filed until December 27, 1968, almost eight months after promulgation. The only conduct alleged to violate Sec. 8 (b) (3) that occurred during the sixmonth period preceding the filing of charges was the alleged union effort to enforce the previously adopted rule. Bryan established that charges can be filed and a complaint issued against such enforcement efforts as those involved in the instant case only if charges could still be filed against the act of adopting the rule being enforced. The Court in Bryan rejected the Board's argument that the enforcement of a union security clause within the statutory period could be the basis of a timely complaint, even though the original execution of the agreement containing the clause occurred more than six months prior to the filing of charges. 362 U.S. at 415, 80 S.Ct. 822. The Court pointed out that "the Board's position would mean that the statute of limitations would never run in a case of this kind." Id. at 416, 80 S.Ct. at 826. In the instant case, the work limitation rule was "perfectly lawful on the face of things," and was held to be unlawful only on the ground that it was said to conflict with a provision of the original and of the second agreement. To paraphrase the Supreme Court's language in Bryan, if an unfair labor practice can be established only by reference to the promulgation of the rule, a timebarred event, the policies underlying Sec. 10(b) would be vitiated by allowing a complaint to be issued against the union's attempt to enforce that rule. Id. at 419, 80 S.Ct. 822. The union's effort to enforce the work limitation rule is "a suable unfair labor practice only for six months following the" promulgation of the rule. Id. at 423, 80 S.Ct. at 830.
31
The majority reasons that, "regardless of whether the announcement of the 10-room rule in March of 1968 constituted an unfair labor practice under the old collective bargaining agreement, a distinct violation occurred in September of 1968 if the 10-room rule conflicts with the terms of the new collective bargaining agreement." However where the enforcement of a rule is involved Bryan rejected the "continuing violation" theory. The majority's reliance on the "distinct act" cases is misplaced. In those cases the acts constituting unfair labor practices were qualitatively different, NLRB v. Local 210, International Brotherhood of Teamsters, 330 F.2d 46 (2d Cir. 1964), or were repeated instances of specific acts which in and of themselves constituted unfair labor practices, compare NLRB v. Electric Furnace Co., 327 F.2d 373, 376 (6th Cir. 1964), and American Federation of Grain Millers v. NLRB, 197 F.2d 451 (5th Cir. 1952) with Cone Mills Corp. v. NLRB, 413 F.2d 445, 448 (4th Cir. 1969); Melville Confections, Inc. v. NLRB, 327 F.2d 689 (7th Cir.), cert. denied, 377 U.S. 933, 84 S.Ct. 1337, 12 L.Ed.2d 297 (1964); NLRB v. White Const. & Eng'r Co., 204 F.2d 950 (5th Cir. 1953); International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, AFL-CIO v. NLRB, 124 U.S.App.D.C. 215, 363 F.2d 702, cert. denied, 385 U.S. 973, 87 S.Ct. 510, 17 L.Ed.2d 436 (1966). In Bryan the Court explicitly rejected the contention that the execution of a new agreement and the attempt to enforce a previously promulgated rule constituted a new unfair labor practice for purposes of Sec. 10(b).
32
"It is apparently not disputed that the Board's position would withdraw virtually all limitations protection from collective bargaining agreements attacked on the ground asserted here. For, once the principle on which the decision below rests is accepted, so long as the contract-or any renewal thereof-is still in effect, the sixmonth period does not even begin to run."
33
362 U.S. at 425, 80 S.Ct. at 831 (emphasis added). See NLRB v. Lundy Mfg. Corp., 286 F.2d 424 (2d Cir. 1960).
34
For these reasons it appears that neither the promulgation nor the enforcement of the union's work limitation rule violated Sec. 8(b) (3). I would grant the application to set aside the order of the Board and deny the cross-petition for enforcement.
1
Pursuant to section 10(f) of the National Labor Relations Act (Act), 29 U.S.C. Sec. 160(f) (1970). The trade agreement between the parties terminated on July 31, 1971. We do not know whether a new agreement has been negotiated, or whether the new agreement, if any, contains a provision dealing with production quotas. However, in view of the continuing character of the obligation imposed by the Board's order, we will examine the merits regardless of whether the case is moot. See J. I. Case Co. v. NLRB, 321 U.S. 332, 334, 64 S.Ct. 576, 88 L.Ed. 762 (1944)
2
Pursuant to section 10(e) of the Act, 29 U.S.C. Sec. 160(e) (1970)
3
The eight charging parties are painting and decorating contractors. Five of the eight belong to the Association of Master Painters and Decorators of the City of New York, Inc. (Association), which represents its members in bargaining with the Union. The historical bargaining practice has been for the Union and the Association to negotiate a contract and, thereafter, for the independents to enter into substantially identical agreements with the Union
4
Painters District Council (Westgate Painting & Decorating Corp.), 186 N.L.R.B. No. 140, 75 L.R.R.M. 1465, 1467 (1970)
5
Id
6
A board established by the trade agreement between the Union and the Association to hear complaints against either based on violations of the agreement. The board is composed of three members from each party to the agreement
7
The Union demand was that "[t]he Union shall have the right to establish a maximum standard of production." The Association demand was a proposal to amend Article XXII to read "[d]uring the life of this Trade Agreement neither party to it shall promulgate any rules establishing a standard of production, or continue in force, or make any rules or by-laws conflicting with its provisions." Because the Union demand was not limited to New York Housing Authority Re-paint work, it was broader than the 10-room rule
8
See Painters District Council (Westgate Painting & Decorating Corp.), 186 N.L.R.B. No. 140, 75 L.R.R.M. 1465 (1970)
9
". . . no complaint shall issue based upon any unfair labor practice occurring more than six months prior to the filing of the charge with the Board . . .." Act Sec. 10(b), 29 U.S.C. Sec. 160(b) (1970)
10
See Local Lodge No. 1424, International Assn. of Machinists' (Bryan Mfg. Co.) v. NLRB, 362 U.S. 411, 416-417, 80 S.Ct. 822, 4 L.Ed.2d 832 (1960); Cone Mills Corp. v. NLRB, 413 F.2d 445, 448-449 (4th Cir. 1969); International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, AFL-CIO v. NLRB, 124 U.S.App.D.C. 215, 363 F.2d 702, 706-707 cert. denied, 385 U.S. 973, 87 S.Ct. 510, 17 L.Ed.2d 436 (1966)
11
Act Sec. 8(b) (3), 29 U.S.C. Sec. 158(b) (3) (1970)
12
Id. Sec. 8(d), Sec. 158(d)
13
See Associated Home Builders of the Greater East Bay, Inc. v. NLRB, 352 F.2d 745 (9th Cir. 1965). In Associated an association of builders claimed that a union's imposition of fines upon its members for exceeding a unilaterally imposed production quota violated the union members' section 7 rights and was therefore a section 8(b) (1) (A) unfair labor practice. The production quota imposed was at a level lower than the average production of the union members. The court found it unnecessary to decide this issue because it considered that the union's action probably constituted a section 8(b) (3) violation. It therefore remanded the case to the Board for further findings on the 8(b) (3) issue. On remand the Board adopted the Trial Examiner's finding that the 8(b) (3) issue was moot because the parties had subsequently executed a collective bargaining agreement that prohibited the imposition of production quotas
14
394 U.S. 423, 89 S.Ct. 1154, 22 L.Ed.2d 385 (1969)
15
"Nor does the union ceiling itself or compliance with it by union members violate the collective contract. The company and the union have agreed to an incentive pay scale, but they have also established a guaranteed minimum or machine rate considerably below the union ceiling and defined in the contract as the rate of production of an average, efficient worker. The contract therefore leaves in the hands of the employee the option of taking full advantage of his allowances, performing only as an average employee and not reaching even the ceiling rate." 394 U.S. at 433, 89 S.Ct. at 1160
16
H. K. Porter Co. v. NLRB, 397 U.S. 99, 90 S.Ct. 821, 25 L.Ed.2d 146 (1970); Burns International Detective Agency, Inc. v. NLRB, 441 F.2d 911, 915-916 (2d Cir. 1971), cert. granted, 404 U.S. 822, 92 S.Ct. 99, 30 L.Ed.2d 49 (1971)
17
We agree with the dissent that it is not a part of the Board's function to police the enforcement of collective agreements. But as the Court said in C & C Plywood:
. . . in this case the Board has not construed a labor agreement to determine the extent of the contractual rights which were given the union by the employer. It has not imposed its own view of what the terms and conditions of the labor agreement should be. It has done no more than merely enforce a statutory right which Congress considered necessary to allow labor and management to get on with the process of reaching fair terms and conditions of employment-"to provide a means by which agreement may be reached." The Board's interpretation went only so far as was necessary to determine that the union did not agree to give up these statutory safeguards. Thus, the Board, in necessarily construing a labor agreement to decide this unfair labor practice case, has not exceeded the jurisdiction laid out for it by Congress.
NLRB v. C & C Plywood Corp., 385 U.S. 421, 428, 87 S.Ct. 559, 564, 17 L.Ed.2d 486 (1967). In C & C Plywood the Court held that the NLRB did have jurisdiction to issue a cease and desist order to an employer who neither by custom nor by the terms of the collective bargaining agreement had the power to unilaterally change the wage system. See NLRB v. Strong, 393 U.S. 357, 360-361, 89 S.Ct. 541, 21 L.Ed.2d 546 (1969); NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 30, 30 n. 7, 87 S.Ct. 1792, 18 L.Ed.2d 1027 (1967); id. at 37, 87 S.Ct. 1792 (dissenting opinion of Justice Harlan); Smith v. Evening News Ass'n, 371 U.S. 195, 197-198, 83 S.Ct. 267, 9 L.Ed.2d 246 (1962); United Aircraft Corp. v. Canel Lodge No. 700, International Assn. of Machinists' and Aerospace Workers, AFL-CIO, 436 F.2d 1, 3-4 (2d Cir. 1970), cert. denied, 402 U.S. 908, 91 S.Ct. 1381, 28 L.Ed.2d 649 (1971); NLRB v. M & M Oldsmobile, Inc., 377 F.2d 712, 715-716 (2d Cir. 1967).
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68 F.3d 467
Alejo-Mendezv.I.N.S.*
NO. 94-41360
United States Court of Appeals,Fifth Circuit.
Aug 30, 1995
Appeal From: D.Tex., No. Adu-fod-gpr
1
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
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23 F.Supp.2d 196 (1998)
FLEET BANK, NATIONAL ASSOCIATION, Plaintiff,
v.
The Honorable John P. BURKE, Banking Commissioner and Connecticut Department of Banking, A State Agency, Defendants.
No. 3:97CV133 (JBA).
United States District Court, D. Connecticut.
September 30, 1998.
*197 Daniel L. Fitzmaurice, Day, Berry & Howard, Hartford, CT, for Plaintiff.
William J. Prensky, Attorney General's Office, Finance & Public Utilities, Hartford, *198 John G. Haines, Attorney General's Office, Hartford, CT, for Defendants.
RULING ON CROSS SUMMARY JUDGMENT MOTIONS [DOCS. # 24 & # 28]
ARTERTON, District Judge.
INTRODUCTION
Fleet Bank ("Fleet") seeks by way of declaratory judgment a determination that John P. Burke, the State Banking Commissioner ("Commissioner") acting on behalf of the Connecticut Department of Banking is incorrect in his interpretation of Connecticut statutes, specifically C.G.S. § 36a-156, as precluding Fleet from imposing a transaction fee ("surcharge fee") on non-depositors who access their bank accounts via Fleet's Automatic Teller Machines ("ATMs").
Pending before the Court are the parties cross-motions for summary judgment. The Court has previously determined that Pullman abstention was not appropriate. See Ruling on Defendant's Motion to Dismiss dated Aug. 10, 1997 (doc. # 21).
BACKGROUND
Fleet is a nationally-chartered bank that operates branches and ATMs in the State of Connecticut and in other states. (Joint Stipl. ¶ 2). The defendants are the Commissioner and the Connecticut Department of Banking, ("Banking Department") who are responsible for the general administration and implementation of the banking laws of the State of Connecticut pursuant to C.G.S. §§ 36a-1 to 36a-810.
Currently, Fleet owns and operates approximately 365 ATMs throughout the state of Connecticut as well as over 2,000 ATMs throughout Massachusetts, Maine, New Hampshire, Rhode Island, New York, New Jersey. (See Def. Memorandum of Law in support of Motion for Summary Judgment, App. A). Fleet is also a member of three ATM networks: CIRRUS, NYCE and PLUS. (Joint Stipl. ¶ 4) Through these networks, member banks like Fleet enable their depositors to access their accounts and transact business using another network bank's ATM. (Joint Stipl. ¶ 4). The advantage of these arrangements to the banks and to their depositors is that they increase the number of potential outlets where banking transactions may be conducted. As part of these networks, Fleet permits non-depositors who hold ATM cards issued by other network banks access to its ATMs. In return, Fleet depositors may access their accounts via ATMs maintained by any other bank within the network. Under these network arrangements, the member banks agree to uniform policies and rights including the type of charges permitted for using and accessing another member bank's ATM. (Joint Stipl. ¶ 4).
Under the current network arrangements, a host member bank potentially has three methods for defraying or recovering its costs of installing and operating its ATMs and of sharing them with other banks and their depositors. First, the host bank could impose an "interchange fee" on the network bank whose depositor accesses the host bank's ATM. (Joint Stipl. ¶ 6). Second, the host bank could impose a direct charge or "surcharge fee" on the non-depositor that accesses its ATM. (Id.) Finally, any network bank could impose a "transaction fee" on its own depositor for his or her use of any ATM in the network, including its own. Therefore, a single ATM transaction at a network bank could result in imposition of at least two different charges on the ATM user and one "interchange fee" on the user's bank. It is the second host bank fee, the "surcharge fee" on non-depositor users that is in dispute in this case.
On September 14, 1995, Fleet sought an opinion from the Commissioner "seeking confirmation ... that a state chartered bank permissively may charge a direct transaction fee for the use of such bank's ATM by a person who does not otherwise maintain a banking relationship with the bank ... to recoup a portion of the expenses incurred by the bank to establish and maintain the ATM" and "that the Connecticut statutes governing the use of ATMs in Connecticut would not place any restriction on the ability of a federally chartered bank in Connecticut to impose similar fees ...." (Joint Stipl. Ex. B) In his September 14, 1995 letter in response, the Commissioner reiterated his predecessor's *199 position adopted in 1988 (Joint Stipl. Ex. A) that "surcharge fees" were not permissible under Connecticut state banking laws. (Joint Stipl. Ex. B). The Commissioner, rejecting Fleet's position, opined as follows:
The Connecticut statutes governing the establishment and use of ATMs do not authorize banks to impose the transaction fees described [...]. Moreover, Section 36a-156 of the Connecticut General Statutes specifically authorizes a bank that has established an ATM to impose a usage fee on other banks whose customers use the ATM to cover a reasonably proportionate share of all acquisition, installation and operating costs. It is an established rule of statutory construction that a statute which provides that a thing done in a certain way carries with it an implied prohibition against doing that thing in another way. See State ex rel. Barlow v. Kaminsky, 144 Conn. 612, 136 A.2d 792 (1957). Therefore, Section 36a-156, which provides a bank may charge another bank that uses its ATM a fee for its use, carries with it an implied prohibition against the bank imposing a fee on the customers of the other bank for such use.... A state-chartered or federally-chartered bank in Connecticut that wishes to recoup the expenses incurred in establishing and maintaining an ATM may do so by imposing the usage fee permitted under Section 36a-156 on other banks whose customers use the ATM.
(Joint Stipl. Ex. B).
The Commissioner interprets Connecticut's ATM statute as containing an implicit prohibition on Fleet's ability to charge non-depositors a surcharge fee for their use of Fleets ATMs. (Id.) It is the propriety of this interpretation of the Connecticut banking laws that is challenged by Fleet.
Connecticut banking laws include several provisions specifically related to the establishment and operation of ATMs in the state, C.G.S. §§ 36a-155 et seq. ("ATM statute"). These statutes address the following areas: 1) banks' and credit unions' establishment of ATMs and the banking commissioner authority to adopt regulations (C.G.S. § 36a-155(a)); 2) banks' access to others' ATMs for a fee (C.G.S. § 36a-156); 3) satellite devices and point of sale terminals not branch offices (C.G.S. § 36a-157); 4) use of ATMs by out of state banks and credit unions (C.G.S. § 36a-158); and 5) rights of banks and credit unions to establish and use point of sale terminals vis-a-vis national banks (C.G.S. § 36a-159).
The Commissioner has also applied the Depositor's Account Contract Act or ("DACA"), C.G.S. § 36a-316 through 329, to the use of ATMs by depositors. Although DACA does not explicitly refer to ATMs, it regulates the information and manner in which a bank must disclose to its depositors the amount of charges relating to their deposit accounts. Under the Commissioner's interpretation of DACA's definition section, C.G.S. § 36a-316(6)(D), a bank is permitted to charge its own depositors an ATM transaction fee, based on his construction that an ATM is "a device or method that may be used to withdraw money from a deposit account." (Joint Stipl. Ex. A). However, under the Commissioner's interpretation, DACA is inapplicable if the ATM user is not a depositor and thus, in the Commissioner's view, DACA provides no authority for the disputed "surcharge fee" for nondepositors' use of Fleet's ATMs.
SUMMARY JUDGMENT STANDARD
When faced with cross-motions for summary judgment, a district court is not required to grant judgment as a matter of law for one side or the other. "Rather the court must evaluate each party's motion on its merits, taking care in each instance to draw all inferences against the party whose motion is under consideration." Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993).
In this case, the parties have filed a joint stipulation of facts and neither side has identified any unresolved factual issues. (See Joint Stipl.) Furthermore, the Court has independently reviewed the record and concluded that there are no disputed facts and the dispositive issue is purely a question of statutory interpretation particularly appropriate for resolution by summary judgment. Heublein, Inc., 996 F.2d at 1461.
*200 DISCUSSION
I. Relation of state banking laws to federally chartered banks
In Connecticut, there exist two types of banks, state-chartered and federally-chartered banks. Both types lack inherent power beyond those powers enumerated or incidentally conferred under the relevant federal (12 U.S.C. § 24) or state (C.G.S. § 36a-250) banking law. Fleet contends its authority to impose a "surcharge" fee on non-depositors who access its ATMs is found in the "incidental" powers granted under the National Banking Act, 12 U.S.C. § 24 (Seventh). (Complaint ¶¶ 10, 19). This provision of the National Banking Act authorizes a bank to:
Exercise by its board of directors or duly authorized officers or agents, subject to the law all such incidental powers as shall be necessary to carry on the business of banking.
12 U.S.C. § 24(Seventh).
Furthermore, under 12 C.F.R. § 7.4002, Fleet claims that a national bank is expressly permitted to charge its customers non-interest charges and fees for the services the bank performs. Fleet claims that non-depositor ATM users qualify as "customers" and therefore may be assessed a surcharge fee.
A national bank's enumerated and incidental powers are not normally limited by, but rather ordinarily pre-empt contrary state law. Barnett Bank of Marion County, N.A. v. Nelson, 517 U.S. 25, 116 S.Ct. 1103, 134 L.Ed.2d 237 (1996) (finding that federal law preempted Florida law which would have prohibited national banks from selling insurance). Nonetheless, federal banks are subject to state regulations provided they do not prevent or significantly interfere with the national bank's exercise of its powers. See Anderson National Bank v. Luckett, 321 U.S. 233, 248, 64 S.Ct. 599, 88 L.Ed. 692 (1944) ("national banks are subject to state laws, unless those laws infringe upon the rights and privileges of national banks"). However, not all differences between federal and state banking laws are deemed substantial conflicts implicating the doctrine of preemption and the issue of preemption would not arise unless the Court finds significant conflict between the Connecticut ATM statute and Fleet's claimed right under federal law. However, the relief sought by Fleet is not confirmation that it does indeed have the authority to impose a surcharge under federal banking law, but rather only that the Connecticut ATM statutes do not prohibit such a fee. Only if the Court affirms the Commissioner's interpretation of C.G.S. § 36a-156 does it become necessary to determine what federal banking laws and regulations permit in order to assess the existence of conflict thus triggering a preemption analysis. Given the staged analysis required, the parties have agreed that determination of the plaintiff's pre-emption claims should be deferred.
II. Standard of review of Commissioner's statutory interpretation
In determining the correctness of the Banking Commissioner's interpretation of C.G.S. § 36a-156, the Court follows Connecticut's own rules of deference to its agency's statutory interpretation under circumstances where there has been no prior state judicial interpretation of the statute at issue. In general, federal courts give great deference to the judgment of administrative agencies that are in charge of enforcing the statute at issue. Chevron, U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Similarly, Connecticut courts defer to the statutory interpretation of Connecticut administrative agencies with such enforcement powers. Nichols v. Warren, 209 Conn. 191, 202, 550 A.2d 309, (1988). However, the Connecticut Supreme Court has clarified that where a state statute is interpreted by a state administrative agency in the first instance, and has not previously been subjected to judicial scrutiny, such statutory construction is a question of law and the agency interpretation is not entitled to any special deference. Id. at 203, 550 A.2d 309; Burinskas v. Dept. of Social Services, 240 Conn. 141, 147, 691 A.2d 586 (1997). In this case, the Commissioner's statutory interpretation is not embodied in any enforcement regulation, guideline, policy statement, or administrative adjudication but is instead, the Commissioner's statutory interpretation in response to a private inquiry. Accordingly, under these circumstances, the *201 Court will construe the ATM statute at issue de novo.
III. Statutory Construction
The Commissioner asserts that this statute's silence regarding other types of permissible ATM fees implies a legislative intent to restrict banks from collecting any other type of ATM fee, including one directly imposed by banks upon users of their ATMs. The Commissioner contends that the explicit creation of one form of charge for ATM use the interchange fee permitted to be charged to other member banksnecessarily implies that all other types of ATM charges are precluded. Therefore, the Commissioner reasons that the grant of an express right to impose an interchange fee necessarily precludes the right of any bank to levy any additional fee, such as the disputed direct "surcharge fee."
As stated in its two opinion letters and reiterated throughout this litigation, the Commissioner bases its interpretation on the concept of expressio unius est exclusio alterius "[t]he statutory interpretation meaning that the expression of one thing is the exclusion of another." Black's Law Dictionary 581 (6th ed.1990). In Barlow v. Kaminsky, 144 Conn. 612, 136 A.2d 792 (1957), the Connecticut Supreme Court, interpreting the governor's statutory power of appointment, found that "a statute which provides that a thing shall be done in a certain way carries with it an implied prohibition against doing that thing in any other way. An enumeration of powers in a statute is uniformly held to forbid things not enumerated." In relying upon Barlow and its progeny, the Commissioner contends that when the legislature authorized banks to charge an "interchange fee" for making their ATMs available to other banks, it implicitly limited the bank's ability to impose any other type of fee on the individual user.
However, application of exclusio unius is most appropriate when a statute demonstrates this intent by its enumeration of an exhaustive listing of specific powers. Barlow, 144 Conn. at 620, 136 A.2d 792. In contrast, C.G.S. § 36a-156 and the related ATM statutes do not purport to enumerate specific powers of banks with respect to their ability to directly impose individual ATM transaction fees and charges. The focus and purpose of C.G.S. § 36a-156(a), by its language is to ensure that banks share their ATMs nondiscriminatorily for which they are entitled to be compensated:
(a) One or more banks, Connecticut credit unions or federal credit unions which have established a satellite device or point of sale terminal shall make the satellite device or point of sale terminal available on a nondiscriminatory basis for use by any other bank, Connecticut credit union or federal credit union, upon payment by each such other bank or credit union of a reasonably proportionate share of all acquisition, installation and operating costs of the satellite device or point of sale terminal. The satellite device or point of sale terminal shall identify with equal prominence all of the banks, credit unions or network systems which use the satellite device or point of sale terminal.
Unlike the pertinent federal and state statutes which enumerate the powers of national and state banks, the ATM statute does not purport to provide an exhaustive list of permitted ATM fees, thus undermining the Commissioner's theory of preclusion by silence. See C.G.S. § 36a-250 (enumerating the specific powers of Connecticut banks); 12 U.S.C. § 24 (1997) (enumerating the powers of national banks).
In addition, Connecticut courts have stated that "if the statutory language is clear and unambiguous... courts cannot, by construction read into statutes provisions which are not clearly stated." Frazier v. Manson, 176 Conn. 638, 642, 410 A.2d 475 (1979). Since the clear language of the statute only relates to the non-discriminatory access among ATMs, inferring the specific preclusive intent urged by the Commissioner is not justified. As one commentator has observed, the canon of expressio unius est exclusio alterius in the context of statutory interpretation "is a questionable one in light of the dubious reliability of inferring specific intent from silence." Cass R. Sunstein, Law and Administration After Chevron, 90 Colum. L.Rev.2071, 2109 n. 182 (1990).
*202 Next, the Commissioner supports its statutory interpretation by reference to the legislative history, intended policy and surrounding circumstances of C.G.S. § 36a-156(a)'s passage. Although resort to legislative history is only necessary where a statute's language is ambiguous, which this statutory language is not, a review of the proffered legislative history results in the conclusion that it does not support the Commissioner's interpretation. The purpose and policy behind the ATM legislation when it was enacted in 1976 was to permit Connecticut state chartered banks the ability to compete with national chartered banks that were already permitted the ability to operate ATMs based on the Office of Comptroller of Currency's (OCC) interpretation of federal law. 18 Conn. H.R. Proc. pt. 10, 1975 Sess. 4868-4869. The legislative intent of § 36a-156(a) was to ensure that ATM machines, devices and terminals remained available to state banks and credit unions. Id.
The Commissioner references from the legislative history a single colloquy between Representatives Webber and Lyddy during General Assembly consideration of C.G.S. § 36a-156. Even though such floor debates on a statute under consideration are not controlling on statutory interpretation, the Court may take judicial notice of such legislative debate. Iovieno v. Comm'r, 222 Conn. 254, 608 A.2d 1174 (1992), Tax Comm'r v. Estate of Bissell, 173 Conn. 232, 377 A.2d 305 (1977).
REP. WEBBER (92nd): "Thank you. If one were to use this service at a supermarket, [sic] at the check-out counter, would that individual be charged a fee for the use of that service?"
THE DEPUTY SPEAKER: The gentlemen from the 126th if he cares to respond.
REP. LYDDY (126th): Through you Mr. Speaker. No.
THE DEPUTY SPEAKER: The gentleman from the 92nd.
REP WEBBER: (92nd): If I understand the answer correctly, if a bank installs this very sophisticated piece of equipment in a super market [sic] for the convenience or at least to alleviate the problems at a check-out counter and the equipment, from what Mr. Lyddy tells us is costly, there shall be no charge, and I ask the question again, to the customer who uses it?
THE DEPUTY SPEAKER: The gentleman from the 126th if you care to respond.
REP. LYDDY (126th): Through you Mr. Speaker. No.
18 Conn. H.R. Proc. pt. 10, 1975 Sess. 4870-4871.
Commissioner suggests that this exchange between two legislators indicates a generalized legislative intent of Section 36a-156. Although "statements made on the house floor of the legislature are strong indications of legislative intent," Winchester Woods Assoc. v. Planning & Zoning Comm'n, 219 Conn. 303, 310-11, 592 A.2d 953 (1991), these predictive opinions offered while the bill was under consideration are not demonstrably traceable to the statutory language and cannot otherwise be imputed as the intent of the other 127 members of the legislature who voted for its passage. Pettigrew v. Thompson, 135 Conn. 228, 233, 63 A.2d 154 (1948) ("[I]t is impossible to tell how far proceedings before a committee or the views if an individual member actually entered into the determination by the legislature to pass a certain law.") The Court thus concludes that the legislative history does not support the Commissioner's statutory interpretation.
IV. Conclusion
Even though the Commissioner identifies some potentially anti-competitive and/or anti-consumer consequences of banks levying such "surcharge fees" in addition to other ATM transaction and interchange fees, the Court finds no Connecticut statute that prohibits their imposition. Given that the Connecticut ATM statute was enacted in 1976, long before many of the issues presented in this case could have been foreseen, the Court will leave to the state legislature and/or Congress any reexamination of the extent to which ATM fees should be regulated in light of the significant evolution in the use of electronic banking. As the Second Circuit observed with respect to issues under federal bank's use of ATMS under federal banking law: "...a perfect solution may not be within the power of the judiciary and may be better left to the legislative branch." Independent Bankers Association of New York *203 State, Inc. v. Marine Midland Bank, N.A., 757 F.2d 453, 462 (2d Cir.1985).
Finally, since the Court does not find that C.G.S. § 36a-156(a) prohibits the imposition of surcharge fees, there is no need to address: 1) whether a national bank's authority to impose a surcharge fee falls within the "incidental powers" granted by the National Banking statute;[1] 2) whether a substantial conflict exists between the state and federal law, and 3) whether state law would be preempted by national banking law in this regard.
For the foregoing reasons, plaintiff Fleet's Motion for Summary Judgment [doc. # 24] is GRANTED and the defendant Commissioner and the Banking Department's cross motion for Summary Judgment [doc. # 28] is DENIED.
IT IS SO ORDERED.
NOTES
[1] Based on the amicus curiae brief submitted by the Office of Comptroller of Currency ("OCC"), the federal agency responsible for administering the federal banking policies, the Court notes the OCC's position that a federal bank such as Fleet does have such an "incidental power" to operate ATMs under 12 U.S.C. § 24 (Seventh), and corresponding permission to impose fees on services provide to any "customer" under 12 C.F.R. § 7.4002. Although "customer" is not currently defined under 12 C.F.R. § 7.4002, OCC's current plain language interpretation of "customer" is anyone who voluntarily uses a bank's ATM regardless of whether that user is a depositor. (See Brief of the Office of the Comptroller of Currency, p. 7).
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88 F.3d 482
65 USLW 2122
Howard M. ADDIS, M.D., Howard M. Addis, M.D., Surgeon,Incorporated, and TJB Partnership, Plaintiffs-Appellees,v.HOLY CROSS HEALTH SYSTEM CORPORATION, St. Joseph's CareGroup, Incorporated, St. Joseph's Medical Center,Incorporated, St. Joseph's Horizon Corporation,Incorporation, George B. Friend, GVS Management,Incorporated, George B. Friend, M.D., Incorporated, ThomasR. Gruszynski, Thomas R. Gruszynski, M.D., Incorporated,Patrick J. O'Dea, and Michiana Gastroenterology,Incorporated, Defendants-Appellants.
No. 95-3139.
United States Court of Appeals,Seventh Circuit.
Argued Feb. 21, 1996.Decided July 8, 1996.
Jay Lauer, South Bend IN, Michael J. Howlett, Jr., Jack Hagerty (argued), Shefsky, Froelich & Devine, Chicago, IL, for Howard M. Addis.
Thomas Campbell, Daniel D. McDevitt, Alan R. Dial, Gardner, Carton & Douglas, Chicago, IL, Timothy W. Woods (argued), Thomas F. Lewis, Jr., Jones, Obenchain, Ford, Pankow, Lewis & Woods, South Bend, IN, David C. Jensen, Frederick F. Eichhorn, Jr., Judith I. Snare, Alyssa D. Forman, Eichhorn & Eichhorn, Hammond, IN, Robert J. Konopa, Margot F. Reagan, Konopa & Murphy, South Bend, IN, Gregory G. Wrobel, James A. Morsch, Vedder, Price, Kaufman & Kammholz, Chicago, IL, Edward A. Chapleau, Chapleau & Kuehl, South Bend, IN, Gary J. Rickner, Barrett & McNagny, Fort Wayne, IN, for defendants-appellants.
Before BAUER, KANNE, and ROVNER, Circuit Judges.
KANNE, Circuit Judge.
1
Howard M. Addis, M.D., and other plaintiffs sued multiple defendants on claims for relief under federal antitrust and racketeering laws and on supplemental state law claims. The district court awarded the defendants summary judgment on the claims for relief under federal law and dismissed without prejudice the plaintiffs' state law claims, but the district court declined to determine whether the defendants were entitled to immunity from damages under the Health Care Quality Improvement Act of 1986, 42 U.S.C. §§ 11111-12.
2
In this appeal, we must decide whether the defendants' postjudgment motion required the district court to determine the propriety of awarding them attorney fees under the fee-shifting provision of the Health Care Act, 42 U.S.C. § 11113. We emphasize at the outset the district court's Herculean labors in its handling of this multifaceted dispute, which gives meaningful expression to the concerns that animated Congress in its creation and approval of the Health Care Act. However, we are forced to conclude that while the district court was not required to address the issue of the defendants' immunity under § 11111 in ruling on their motion for summary judgment, it was obligated by § 11113 to resolve the defendants' request for attorney fees, and we remand this matter for further proceedings.
3
* This case has a long and involved history, but the events pertaining to this appeal are fairly straightforward. The defendants moved for partial summary judgment on the plaintiffs' claims for relief under federal law, and the plaintiffs chose not to oppose that motion. The district court did not base its ruling on this tactical decision by the plaintiffs but instead addressed the merits of the plaintiffs' federal claims. The district court accepted those facts asserted by the defendants that were supported by the record because the plaintiffs chose not to controvert any of those facts. We accordingly take the facts as found by the district court in its order granting partial summary judgment in favor of the defendants.
4
During the time relevant to this lawsuit, Howard M. Addis was a medical doctor licensed to practice medicine in the state of Indiana and served on the staff at Saint Joseph's Medical Center in South Bend.1 In August of 1993, the Medical Center's professional review board-known as the Staff Credentials Committee--began an inquiry into the care provided Mrs. Jean Riley by Dr. Addis. Dr. Addis had performed invasive surgery upon Mrs. Riley after failing to diagnose and treat with appropriate antibiotics an infection in her prosthetic heart valve. Dr. George Friend, chair of the Medical Center's surgery department, initiated the inquiry (after consulting with two other doctors) by requesting corrective action from Dr. Paul Howard, chief of staff at the Medical Center.
5
The credentials committee held meetings on September 9 and September 20, 1993, and Dr. Addis appeared at the latter meeting. The credentials committee then prepared a report and forwarded it to the Medical Center's executive committee. The executive committee conducted a hearing on September 21 at which both Dr. Addis and Dr. Randolph Szlabick, vice-chair of the surgery department, testified. The executive committee voted to suspend Dr. Addis's privileges for thirty days and so informed Dr. Addis by telephone that evening. The Medical Center reinstated Dr. Addis's privileges on October 21 with certain proctoring requirements.
6
Dr. Addis and his related business entities filed this lawsuit in February of 1994, alleging violations of the Racketeer-Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq., and the Sherman Antitrust Act, 15 U.S.C. § 2 et seq., as well as claims for relief under Indiana law, and they filed an amended complaint on November 16. The district court summarized the plaintiffs' allegations as follows:
7
The primary thrust of both the original and amended complaint is that three physicians, Dr. Friend, chairman of the Med Center Surgery Department, Dr. Gruszynski, chairman of the Med Center Obstetrics/Gynecology Department, and Dr. O'Dea, chairman of the Med Center Medical Department (specializing in gastroenterology), conspired with the Med Center, and its corporate family, to drive Dr. Addis out of the surgery-provider market in the South Bend geographic area. Dr. Addis alleged that his use of laproscopic (laser) surgery had drawn patients away from the three physicians and thus the three attempted to remove him from the market with the complicity of the Med Center. It is relevant to note that all three sit on the Executive Committee, but they are only three of the fifteen members of that committee. No other Executive Committee members are in direct economic competition with Dr. Addis.
8
The parties moved through discovery, and the defendants filed their motion for partial summary judgment under FED.R.CIV.P. 56(b) on February 23, 1995.
9
In their Rule 56 motion, the defendants offered alternative bases for summary judgment. They first argued that they were immune from damages liability pursuant to the Health Care Act, 42 U.S.C. §§ 11111-12. In the alternative, they argued that the facts demonstrated their entitlement to judgment as a matter of law on the plaintiffs' claims for relief under federal law. On July 6, the district court granted the defendants' motion on the basis of the inadequacy of the plaintiffs' federal claims and dismissed the plaintiffs' state law claims without prejudice. In its memorandum opinion and order, the district court opted to venture no opinion on the question of immunity under the Health Care Act. The court entered final judgment on July 7.
10
On July 20, the defendants filed a motion for attorney fees and costs pursuant to the fee-shifting provision of the Health Care Act, 42 U.S.C. § 11113. The district court styled this motion as arising under 28 U.S.C. § 1920, which empowers a district court to tax as costs certain litigation-related fees and expenses. It declined to address the merits of the defendants' claim for fees under § 11113 and offered the following explanation:
11
Defendants' motion for summary judgment also requested a ruling on the issue of immunity under the Health Care Quality Improvement Act, 42 U.S.C. § 11101 et seq. ("HCQIA"). The omission of the HCQIA from this court's decision granting summary judgment in favor of the defendants and against the plaintiff was entirely intentional. The issue is a complicated one, and was not necessary as a basis for granting summary judgment to these defendants. This court has no intention of reopening this case to wade through a difficult and complex issue regarding HCQIA unnecessarily. There is a sound legal basis for the grant of summary judgment in favor of these defendants. That basis does not include HCQIA, and this court will not further elongate these proceedings to provide an advisory opinion on that subject.
12
The district court did award costs under § 1920 to defense counsel totalling $51,384.03.
II
13
Congress passed the Health Care Act, Pub.L. No. 99-660, 100 Stat. 3784 (codified at 42 U.S.C. § 11101 et seq.), to "provide incentive and protection for physicians engaging in effective professional peer review." 42 U.S.C. § 11101(5). These incentives were designed to encourage doctors to engage in meaningful peer review in light of the Health Care Act's imposition of intensified reporting requirements. It was Congress's hope that doctors would comply with the reporting requirements installed by the Health Care Act and thereby decrease the number of occurrences of medical malpractice.
14
Important elements of this package of incentives were the creation of statutory immunity for those persons and entities engaged in qualified professional peer review, 42 U.S.C. §§ 11111(a), 11112(a), and a fee-shifting provision designed to deter plaintiffs from filing meritless lawsuits against those persons and entities, 42 U.S.C. § 11113. Thus, "[d]octors and hospitals who have acted in accordance with the reasonable belief, due process, and other requirements of the bill are protected from damages sought by a disciplined doctor." H.R.REP. No. 99-903, 99th Cong., 2d Sess., at 3 (1986), reprinted in 1986 U.S.C.C.A.N. 6384, 6385.
15
The question presented in this appeal is whether the district court committed reversible error when it denied the defendants' postjudgment motion for fees under the Health Care Act by refusing to address the merits of that motion. The district court explained that it based its decision upon its previous ruling on the motion for summary judgment. It correctly stated that the Health Care Act's immunity provision was an alternative basis on which it could have granted summary judgment. Having granted the defendants summary judgment on alternative theories argued in their Rule 56 motion, the district court reasoned that it was not appropriate to venture an "advisory opinion" on whether the alternative ground of immunity was viable. This demonstrates that the district court viewed a finding of immunity as a statutory prerequisite to an award of fees.
16
In our view, this was a misapprehension of the interaction between the fee-shifting section and immunity provision of the Health Care Act. The fee-shifting provision reads as follows:
17
In any suit brought against a defendant, to the extent that a defendant has met the standards set forth under [42 U.S.C. § 11112(a) ] and the defendant substantially prevails, the court shall, at the conclusion of the action, award to a substantially prevailing party defending against any such claim the cost of the suit attributable to such claim, including a reasonable attorney's fee, if the claim, or the claimant's conduct during the litigation of the claim, was frivolous, unreasonable, without foundation, or in bad faith. For the purposes of this section, a defendant shall not be considered to have substantially prevailed when the plaintiff obtains an award for damages or permanent injunctive or declaratory relief.
18
42 U.S.C. § 11113. The section referred to, § 11112(a), identifies the standards governing professional peer review actions. By internal cross-reference, these standards are prerequisites for a review action--and its participants-to qualify for the immunity conferred by § 11111(a) and for an award of attorney fees. See 42 U.S.C. §§ 11111(a), 11113.
19
The fee-shifting provision requires two things: that a defendant meet the standards of § 11112(a) and substantially prevail. We reach two deductions from this conjunctive requirement. First, Congress envisioned cases where a defendant might meet the requirements of § 11112(a) but not prevail. This is confirmed by the statutory exception to immunity set forth at § 11111(b) and by the language of § 11111(a) denying immunity in cases arising under the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and the Civil Rights Acts, 42 U.S.C. § 1981 et seq. Second, there may be cases where a defendant prevails on an entirely different defense but may still move for a fee award under § 11113 because the review action satisfied the requirements of § 11112. See, e.g., Johnson v. Nyack Hosp., 964 F.2d 116, 123 (2d Cir.1992).
20
In the latter case, where the final disposition is not related to immunity, defendants may still file postjudgment motions for attorney fees under the Health Care Act. The text of § 11113 explicitly states that an award of fees may be appropriate "to the extent that a defendant has met the standards set forth under [sec. 11112(a) ]." It does not link an award of fees to immunity, as might be the case were § 11113 written along the lines of, "to the extent that a defendant has acquired immunity from damages liability as provided for in § 11111(a)."
21
Nothing in § 11112 confers immunity; that section only describes the criteria for a qualifying review action. The plain meaning of § 11113 demonstrates that Congress did not intend immunity to be a prerequisite to an award of attorney fees. The fact that § 11113 is not part of the section conferring immunity reinforces the conclusion that they are indeed independent questions.
22
We also note that the legislative history, to whatever extent it may be probative of the statute's meaning, is also supportive of this interpretation. In its section-by-section analysis of Public Law 99-660, the House Committee on Energy and Commerce stated that § 11113 "permitted [a district court] to award attorneys' fees to defendant who prevails and whose professional review action met standards of this bill." H.R.REP. No. 99-903, reprinted in 1986 U.S.C.C.A.N. 6384, 6389. This statement echoes the point made above about the distinct requirements of prevailing and meeting the standards of § 11112(a). Throughout this report, the members of the Energy and Commerce Committee used the word "standards" with specific reference to the requirements for a review action set out at § 11112(a); they did not use that word when referring to § 11111 and its preclusion of damages liability. See generally id. at 6392-95.
III
23
The question of awarding fees is separate from the question of immunity. The district court was correct that it might have awarded the defendants partial summary judgment on their immunity defense, but Congress clearly did not envision that as the end of the game. The text of § 11113 contemplates an award of fees if, in addition to other factors, a plaintiff's claims are frivolous or otherwise without merit, and this determination is committed to the discretion of the district court. See Hughes v. Rowe, 449 U.S. 5, 14, 101 S.Ct. 173, 178, 66 L.Ed.2d 163 (1980) (stating that district court has discretion to award fees in cases of frivolous claims under 42 U.S.C. § 1988); Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421, 98 S.Ct. 694, 700, 54 L.Ed.2d 648 (1978) (same with respect to frivolous claims under Title VII). We would thus review an award of fees under the Health Care Act for an abuse of discretion. See Muzquiz v. W.A. Foote Memorial Hosp., Inc., 70 F.3d 422, 431-32 (6th Cir.1995); Smith v. Ricks, 31 F.3d 1478, 1487 (9th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1400, 131 L.Ed.2d 287 (1995); Johnson, 964 F.2d at 123. We will apply this same standard to a decision not to award fees under § 11113.
24
The Health Care Act's explicit decoupling of the issues of immunity and fee awards leads to the conclusion that the district court's summary denial of the defendants' motion was not an appropriate exercise of discretion. The fee-shifting provision of the Health Care Act is an independent element in a package of incentives and disincentives that are designed to further the medical profession's efforts at self-regulation. As such, it represents a commitment to the idea that government has a role in promoting responsible self-regulation by the private sector. While we recognize the substantial additional burden being placed upon the district court in this contentious case, the judiciary must see to the implementation of the legitimate and explicit legislative directives set forth in the Health Care Act.
25
One final point. Although the district court denied the defendants' motion for fees under § 11113, it did award costs under 28 U.S.C. § 1920. Neither party has exhibited any quarrel with this portion of the district court's decision, and we have no reason to suppose that the calculations leading to the awards of costs are anything but correct. Although we are remanding this entire matter to the district court for further proceedings, the award of costs should stand even if the district court determines that an award of attorney fees is not appropriate pursuant to § 11113 of the Health Care Act.
26
The district court's order denying attorney fees under 42 U.S.C. § 11113 is VACATED and this matter is REMANDED for further proceedings.
1
The record does not disclose whether Dr. Addis is still practicing medicine or remains affiliated with Saint Joseph's, but neither question is material to this appeal
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868 N.E.2d 1076 (2007)
In re JOSEPH V.D., a Minor (Carisa E., Petitioner-Appellee,
v.
Jacob V.D., Respondent-Appellant.
No. 2-06-0988.
Appellate Court of Illinois, Second District.
May 16, 2007.
Phyllis J. Perko, Law Offices of Harlovic & Perko, West Dundee, for Jacob E.V.D.
Kevin Thomas, Law Offices of Benedict Schwarz, II, P.C., West Dundee, for Carisa E.
Justice O'MALLEY delivered the opinion of the court:
Respondent Jacob V.D. appeals the circuit court's order requiring him to pay temporary child support, as well as all other orders related to child custody, entered pursuant to petitioner Carisa E.'s petition for temporary custody of the parties' minor child, Joseph V.D. He also appeals the trial court's order holding him in indirect civil contempt for failure to pay child support as ordered. On appeal, respondent argues that the trial court lacked jurisdiction over the petition for temporary custody and thus that the trial court's judgment should be vacated. He likewise argues that the trial court lacked jurisdiction over child support issues and thus we should vacate its judgments directing him to pay child support and finding him in contempt for failing to pay child support. For the reasons that follow, we vacate and remand.
On July 1, 2005, petitioner filed in Kane County, Illinois, a petition for temporary custody. After the trial court denied respondent's motion to quash service of process, respondent filed a motion to dismiss the petition for lack of subject matter jurisdiction on the basis that, under the Uniform Child-Custody Jurisdiction and Enforcement *1077 Act (Act) (750 ILCS 36/101 et seq. (West 2004)), jurisdiction over the matter belonged in Nevada and not in Illinois, because custody proceedings in the matter had been pending in Nevada since 1999. On November 22, 2005, the trial court entered an order denying the motion to dismiss. The order stated as follows, in pertinent part:
"This matter coming before the Court on hearing on pending motions, both parties appearing through counsel and the Court being fully advised, THE COURT HEREBY FINDS:
(1) That the State of Illinois, County of Kane is the more convenient forum to make a child-custody determination for the reasons stated in open court, wherefore,
IT IS HEREBY ORDERED:
(1) That this court shall assume custody jurisdiction of the minor child * * *."
No reports of proceedings or substitutes appear in the record.
On January 24, 2006, the trial court entered an order requiring respondent to pay petitioner $100 per week as temporary child support. On March 7, 2006, petitioner filed a rule to show cause against respondent for his failure to pay the $100 per week pursuant to the court's January 24 order, and, after a hearing, the trial court found respondent in indirect civil contempt for his failure to pay child support.
Though it is not apparent who filed it, a document appearing in the record purports to be an order from a Nevada state court. The order states, in pertinent part:
"On December 1, 2005, the State of Nevada entered a child support order in the above-entitled matter which is entitled to Full Faith and Credit. On January 24, 2006, the [Kane County circuit court here] disregarded Nevada's order and entered a child support order * * * purporting to order [respondent] to pay [petitioner] the sum of $100.00 per week. Illinois' order is void in that: 1) Nevada's 12-1-05 order is entitled to full faith and credit; and 2) Illinois lacks personal jurisdiction over [respondent] * * *. The State of Nevada has continuing exclusive jurisdiction over all child support issues."
The record contains no indication of any conference between the trial court and the Nevada court regarding this case. After a trial, the trial court granted joint custody of Joseph to the parties. Respondent timely appeals.
Respondent's primary argument on appeal is that all of the trial court's orders are void because, pursuant to the Act, subject matter jurisdiction of this cause lies in Nevada, and not in Illinois. The Act, which became effective January 1, 2004, was promulgated to end custody jurisdictional disputes between states, to promote cooperation between states in determining custody issues, and to enhance the ability of states to enforce custody orders expeditiously. C. Gamrath, UCCJEA: A New Approach to Custody Jurisdiction and Interstate Custody and Visitation, 92 Ill. B.J. 204 (2004). As relevant to respondent's argument, the Act provides:
"[A] court of this State may not exercise its jurisdiction under this Article if, at the time of the commencement of the proceeding, a proceeding concerning the custody of the child has been commenced in a court of another state having jurisdiction substantially in conformity with this Act * * *." 750 ILCS 36/206(a) (West 2004).
Respondent urges that, under this section of the Act, because he had commenced a custody proceeding in Nevada prior to *1078 the date petitioner filed her petition in Illinois, the trial court lacked jurisdiction over this cause. However, as petitioner points out, the trial court's January 24 order refers to the court's statements in open court as explanation for the ruling, and the record contains no report of proceedings for such a hearing. Normally, because "an appellant has the burden to present a sufficiently complete record of the proceedings [before the trial court] to support a claim of error," and "[a]ny doubts which may arise from the incompleteness of the record will be resolved against the appellant" (Foutch v. O'Bryant, 99 Ill.2d 389, 391-92, 76 Ill.Dec. 823, 459 N.E.2d 958 (1984)), we would presume in the absence of a full record of proceedings below that the trial court had a valid legal reason to exercise jurisdiction under the Act and that its judgment should be affirmed.
However, here, even the incomplete record of proceedings below demonstrates reversible error. Section 206(b) of the Act provides that, "[i]f the court determines that a child-custody proceeding has been commenced in a court in another state having jurisdiction substantially in accordance with this Act, the court of this State shall stay its proceeding and communicate with the court of the other state." 750 ILCS 36/206(b) (West 2004). Because the parties do not dispute, and the record establishes, that there was a custody action pending in Nevada at the time petitioner filed the petition for temporary custody at issue here, the trial court was required to communicate with the Nevada court to determine each court's jurisdiction. Indeed, at oral argument to this court, both parties stipulated that the trial judge made such a communication.
Section 110 of the Act, which governs the communication required under section 206(b), states as follows, in pertinent part:
"(d) Except [for communication on schedules, calendars, court records, and similar matters], a record must be made of a communication under this Section. The parties must be informed promptly of the communication and granted access to the record.
(e) For the purposes of this section, `record' means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form." 750 ILCS 36/110(d), (e) (West 2004).
Here, we see no record of the communication between the trial court and the Nevada court, either in the form of a transcript of an open-court description of the communication or in the form of some separate document or other medium retrievable in perceivable form. Accordingly, even without a complete record of proceedings below, we may ascertain that the trial court failed to comply with its statutory duty to provide a record of any communication under the Act, and we must vacate its judgment on the petition for custody and remand the cause for proceedings consistent with the Act.
Respondent also argues that the trial court lacked jurisdiction to enter the support order. Though respondent argues that the trial court lacked both personal jurisdiction over him and subject matter jurisdiction over the action, petitioner responded in her appellate brief only to the argument regarding personal jurisdiction. We granted respondent's petition for rehearing, which urged that we consider his arguments relating to the support order, but petitioner declined to file a response. Accordingly, petitioner has waived opposition to respondent's subject matter jurisdiction argument, and we also vacate that portion of the trial court's order and remand *1079 for further proceedings. See 210 Ill.2d R. 341(h)(7) ("Points not argued are waived"); 210 Ill.2d R. 341(i) (Rule 341(h)(7) applies to appellees' briefs). Nothing in this opinion should be read as indicating that the trial court is precluded from finding on remand, after compliance with the Act, that it has obtained subject matter jurisdiction over this cause.
On remand, we encourage the parties to make a complete record of the trial court proceedings, by report of proceedings or by substitute, so that, in the event of a subsequent appeal on this jurisdictional issue or any other issues, this court may be fully informed of the basis of the trial court's rulings, as is required for meaningful appellate review.
For the foregoing reasons, we vacate the judgment of the trial court and remand the cause for further proceedings.
Vacated and remanded.
GROMETER, P.J., and HUTCHINSON, J., concur.
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 14a0825n.06
No. 14-5132
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
JOSHUA HUGO, ) Oct 31, 2014
) DEBORAH S. HUNT, Clerk
Plaintiff-Appellant, )
)
v. ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
MILLENNIUM LABORATORIES, INC., ) COURT FOR THE EASTERN
) DISTRICT OF TENNESSEE
Defendant-Appellee. )
)
)
BEFORE: BOGGS, SUTTON and STRANCH, Circuit Judges.
BOGGS, Circuit Judge. Plaintiff-Appellant Joshua Hugo appeals from the district court’s
grant of summary judgment to his former employer on his claims of retaliatory discharge under
the Tennessee Public Protection Act (TPPA) and Tennessee common law. The district court
granted summary judgment to Hugo’s employer, Millennium Laboratories, Inc. (Millennium),
after determining that Hugo did not engage in protected activity for purposes of the TPPA or
common law. The court also determined that Millennium articulated legitimate, non-pretextual
reasons for Hugo’s termination. Because the record does not provide sufficient evidence that
Hugo was terminated because of protected activity, Hugo is unable to demonstrate a genuine
dispute with regard to the required causation elements of his TPPA and common-law claims.
We therefore affirm the decision of the district court.
I
Defendant-Appellee Millennium is a health-services company that provides medical
monitoring, pharmacogenetic testing, advanced analytics, and other services to healthcare
professionals. In September 2010, Hugo was hired by Millennium as a Senior Sales Specialist
responsible for managing existing customer accounts and developing new accounts in his
assigned territory. In his role as a Senior Sales Specialist, Hugo reported to Regional Sales
Manager Jarett Smith, and was supported by Brian Arnold, a Customer Support Specialist (CSS).
Hugo also had direct supervisory authority over several Laboratory Service Assistants (LSAs),
who are Millennium employees assigned to work at customer locations to assist with laboratory
testing services. As recognized in state and federal anti-kickback laws, provision of services by
LSAs that do not relate to laboratory testing can raise issues of illegal inducement. Thus,
Millennium’s policies prohibit LSAs from performing tasks unrelated to laboratory services and
require all customers provided with an LSA to sign an agreement acknowledging the proper
scope of an LSA’s duties. As a Senior Sales Specialist, Hugo was responsible for monitoring the
compliance of LSAs in his territory with Millennium’s policies.
While on a vacation in August 2011, Hugo received a phone call from an LSA under his
supervision who said that he had been asked by a customer to perform tasks, such as cleaning
bathrooms and picking up cigarette butts, that were in violation of Millennium’s policies. Days
later, a second LSA contacted Hugo and stated that she had been asked by a customer to file
medical records, which also would have violated Millennium’s policies. After returning from
vacation, Hugo discussed the matter with his CSS, Arnold, and mentioned to his supervisor,
Smith, that he heard about one of the LSA’s complaints. After Hugo was later discharged from
Millennium, he received a call from another LSA who said that he was asked by a customer to
-2-
file medical records and allegedly had been told by Arnold to “just do whatever [the customers]
want you to, but when [Hugo] comes by, follow the rules.”
Separately, during the course of Hugo’s employment, his boss, Smith, received several
complaints from customers and Millennium employees regarding Hugo’s job performance,
including issues with his work habits, professionalism, timeliness, and customer service. When
Smith and Hugo met in August 2011 to discuss one particular incident involving a customer
account, Smith believed that Hugo lied in his explanation of events.1 On August 25, 2011, Smith
made the decision to recommend Hugo’s termination, citing the multiple complaints regarding
Hugo’s job performance, as well as his alleged dishonesty. Hugo was terminated on September
2, 2011. He did not receive advance warning or documentation from Millennium regarding the
cause for his termination.
On February 24, 2012, Hugo filed a complaint against Millennium in the Circuit Court
for Knox County, Tennessee, in which he raised age-discrimination, public-policy, and
retaliatory-discharge claims. In his retaliation claims, Hugo asserted that he was discharged for
refusing to participate in the improper conduct involving the LSAs described above. Pursuant to
28 U.S.C. § 1441 and § 1332, Millennium removed the case on the basis of diversity of
citizenship to the United States District Court for the Eastern District of Tennessee. On January
6, 2014, the district court granted Millennium’s motion for summary judgment in full and
dismissed the case. Hugo timely appealed from that decision, raising only his retaliatory-
discharge claims on appeal.2
1
Hugo denies lying to Smith in this meeting.
2
Hugo chose to abandon his other claims.
-3-
II
We review a district court’s grant of summary judgment de novo. Singleton v. Select
Specialty Hosp.-Lexington, Inc., 391 F. App’x 395, 399 (6th Cir. 2010). Summary judgment is
proper if the “materials in the record” “show[] that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56 (c), (a). The
central inquiry is “whether the evidence presents a sufficient disagreement to require submission
to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986).
In considering the motion, we view the inferences drawn from the underlying facts in the
light most favorable to the non-moving party—in this case, the plaintiff. See Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, “[t]he mere existence of
a scintilla of evidence in support of the plaintiff’s position will be insufficient; there must be
evidence on which the jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252.
Moreover, it is relevant in this context that “[m]ere personal beliefs, conjecture and speculation
are insufficient to support an inference of [ ] discrimination.” Grizzell v. City of Columbus Div.
of Police, 461 F.3d 711, 724 (6th Cir. 2006) (quotations omitted) (alterations in original).
III
A
Hugo asserted claims of retaliatory discharge under both the TPPA and the common law.
The TPPA, also known as the Whistleblower Act, provides that “[n]o employee shall be
discharged or terminated solely for refusing to participate in, or for refusing to remain silent
about, illegal activities.” Tenn. Code Ann. § 50-1-304(b). In order to establish a prima facie
case under the TPPA, a plaintiff must demonstrate four elements: (1) he “was an employee of
-4-
the defendant”; (2) he “refused to participate in or remain silent about illegal activity”; (3) the
employer discharged him or terminated his employment; and (4) the defendant discharged him
“solely for . . . [his] refusal to participate in or remain silent about the illegal activity.” Sykes v.
Chattanooga Hous. Auth., 343 S.W.3d 18, 27 (Tenn. 2011) (emphasis added). Under common
law, a plaintiff must demonstrate: “(1) that an employment-at-will relationship existed; (2) that
the employee was discharged, (3) that the reason for the discharge was that the employee
attempted to exercise a statutory or constitutional right, or for any other reason which violates a
clear public policy evidenced by an unambiguous constitutional, statutory, or regulatory
provision; and (4) that a substantial factor in the employer’s decision to discharge the employee
was the employee’s exercise of protected rights or compliance with clear public policy.” Crews
v. Buckman Labs. Int’l, Inc., 78 S.W.3d 852, 862 (Tenn. 2002) (emphasis added).3
The key distinction between the TPPA and common-law claims concerns the causation
requirement: Under the TPPA, a plaintiff must demonstrate that his protected activity—here, the
refusal to participate in illegal activities—“was the sole reason for his termination,” rather than
only a “substantial factor” as is required under common law. Guy v. Mut. of Omaha Ins. Co., 79
S.W.3d 528, 537 (Tenn. 2002).
If a plaintiff is able to make a prima facie showing of retaliatory discharge, the burden
shifts to the employer to articulate a legitimate, non-pretextual reason for termination. See Tenn.
Code Ann. § 50-1-304(g). If a legitimate reason is articulated, “the burden shifts to the plaintiff
to demonstrate that the reason given by the defendant was not the true reason for the plaintiff’s
3
The Tennessee Supreme Court has stressed that “the exception to the employment-at-will
doctrine” represented by this cause of action “must be narrowly applied and not be permitted to
consume the general rule . . . that employers need freedom to make their own business judgments
without interference from the courts.” Stein v. Davidson Hotel Co., 945 S.W.2d 714, 717 & n.3
(Tenn. 1997).
-5-
discharge and that the stated reason was a pretext for unlawful retaliation.” Id. “To meet this
burden, plaintiff must show by admissible evidence either (1) that the proffered reason[s] ha[ve]
no basis in fact, (2) that the proffered reasons did not actually motivate his discharge, or (3) that
they were insufficient to motivate the discharge.” Provonsha v. Students Taking a Right Stand,
Inc., 2007 WL 4232918, at *4 (Tenn. Ct. App. Dec. 3, 2007) (internal quotations and citation
omitted).
B
Hugo claims that he was terminated by Millennium “solely for refusing to participate in
improper and/or illegal business activities” involving the LSAs. He asserts that he “simply did
not want to be a player” in Millennium’s alleged game, and was fired because of this refusal “to
play ball.” Even after drawing all inferences in his favor, the record fails to establish that Hugo
was “terminated solely for refusing to participate in . . . illegal activities,” Tenn. Code Ann. § 50-
1-304(b), nor does it show that Hugo’s “exercise of protected rights or compliance with clear
public policy” was “a substantial factor in [Millennium’s] decision to discharge” him. Crews, 78
S.W.3d at 862. Hugo points to no facts suggesting that his alleged refusal to participate in illegal
activities was even considered by Millennium in making its decision to terminate him, let alone
that it served as a motivating factor to the extent required under the TPPA and common law. In
this context, “[t]he subjective interpretation by the employee of the actions of the employer will
not create an issue of fact to defeat summary judgment.” Riddle v. First Tennessee Bank, Nat.
Ass’n, 497 F. App’x 588, 599 (6th Cir. 2012) (quoting Hill v. Perrigo of Tennessee, 2001 WL
694479, at *7 (Tenn. Ct. App. June 21, 2001)). Thus, Hugo’s mere speculation that Millennium
“did not want [him] around” to interfere with the alleged illegal activities is insufficient to
establish the causation elements of either the TPPA or common-law claims.
-6-
Hugo failed to depose Smith, who was the individual responsible for Millennium’s initial
termination decision. Thus, the only facts before us regarding the relevant decisional process are
those offered by Millennium, which detail the various complaints raised by customers and co-
workers regarding Hugo’s job performance and include a sworn declaration by Smith asserting
that he made the decision to terminate Hugo based on the multiple complaints Smith had
received from customers and other employees as well as Hugo’s alleged dishonesty. Hugo
makes no effort to dispute the veracity of this evidence, claiming only that “it is hard to imagine”
that the complaints “actually motivated [his] immediate dismissal” in light of his positive sales
numbers and the lack of any warnings regarding his performance. As this court has previously
stressed, however, it is not enough to merely “cast doubt” on the employer’s reasons for
termination without presenting “evidence establishing a causal connection” between the
employee’s termination and protected activity. Mehr v. Starwood Hotels & Resorts Worldwide,
Inc., 72 F. App’x 276, 284 (6th Cir. 2003). Such evidence is entirely lacking here. Rather,
“[t]he undisputed evidence in the record establishes valid and legitimate reasons” for Hugo’s
termination, Todd v. Shelby Cnty., 407 S.W.3d 212, 226 (Tenn. Ct. App. 2012), and there is no
basis to conclude that Hugo was fired because of any refusal to participate in illegal activities.
Therefore, summary judgment is appropriate. See ibid. (affirming summary judgment where
employee failed to “produce[] or identif[y] sufficient evidence to show an issue of material fact
on . . . causation”); see also Riddle, 497 F. App’x at 598-99 (affirming summary judgment where
plaintiff “failed to meet his burden of demonstrating causation under the common law and the
TPPA”); Hill, 2001 WL 694479, at *7 (no genuine issue of material fact where there “is nothing
more than employee’s conclusory allegations” regarding causation).
-7-
Even if Hugo were able to make out a prima facie case of retaliation under the TPPA or
common law, Millennium “would still be entitled to summary judgment because it had a
legitimate, non-retaliatory reason for terminating” him, and because Hugo “cannot point to any
evidence suggesting that [Millennium’s] explanation for his discharge” was pretextual. Riddle,
497 F. App’x at 598-99. To show pretext, Hugo must establish that Millennium’s stated reasons
had no factual basis, did not actually motivate Millennium’s decision to terminate him, or were
insufficient to support Millennium’s decision. See Provonsha, 2007 WL 4232918, at *4. As
noted above, Hugo does not dispute the factual basis of the several complaints raised by
Millennium’s customers and employees regarding Hugo’s job performance, and he cannot point
to any evidence showing that these complaints were not relied upon by Millennium in deciding
to terminate him. Nor can Hugo demonstrate that Millennium’s justification was insufficient
given the content and nature of the complaints regarding his job performance, and especially
considering Hugo’s role as a sales specialist responsible for managing customer accounts. Cf.
Anderson v. Stauffer Chem. Co., 965 F.2d 397, 402 (7th Cir. 1992). In light of the evidence
offered by Millennium, Hugo’s positive sales record and Millennium’s failure to provide a
warning or documentation regarding the cause of Hugo’s termination are not sufficient to
establish pretext in this case. See, e.g., Gantt v. Wilson Sporting Goods Co., 143 F.3d 1042,
1049 (6th Cir. 1998) (employee’s good work record and lack of warning that she was about to be
terminated did not establish pretext); Cosby v. Hoffman-La Roche, Inc., 2011 WL 6752426, at *6
(S.D. Ohio Dec. 22, 2011) (“[H]igh sales numbers do not necessarily connect to overall
satisfactory performance,” and do not necessarily undermine non-pretextual reasons for
termination.).4
4
Because we resolve the matter based solely on the causation issue, we do not reach the other
-8-
IV
For the foregoing reasons, we AFFIRM the district court’s grant of summary judgment.
elements of Hugo’s TPPA and common-law claims.
-9-
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IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
NOS. WR-61,939-01 and WR-61,939-02
IN RE DAVID DOW AND JEFFREY R. NEWBERRY, Respondents
ON RESPONDENTS’ MOTION FOR REHEARING ON ORDER ON SHOW CAUSE
AND CONTEMPT HEARING FOR UNTIMELY
FILED DOCUMENTS IN APPLICANT PAREDES’S CASE
FROM CAUSE NO. 2000-CR-6067B
IN THE 399th JUDICIAL DISTRICT COURT
BEXAR COUNTY
N EWELL, J., filed a dissenting statement to the denial of Respondents’
Motion for Rehearing.
This Court entered a show cause order for Respondents David Dow and Jeffrey
Newberry to appear before this Court to explain their untimely pleadings in Ex parte
Paredes, No. WR-61,939-01. At the hearing, both respondents appeared without
independent counsel; they did not provide sufficient detail explaining the delay between their
conversation with their client and their subsequent work on his case. Based upon the
information provided, this Court held both respondents in contempt. This Court sanctioned
Respondent Dow by suspending his practice before this Court regarding any new clients for
a period of one year based upon a previous warning from this Court that any further
Dow Dissenting Statement - Page 2
violations of Miscellaneous Rule 11-003 could result in up to a one-year suspension of
practice before this Court. This Court ordered Respondent Newberry to pay a fine in the
amount of $250.00, but probated the fine for one year such that the Court would dismiss the
fine if Respondent Newberry did not violate Rule 11-003 within that period.1
Through his newly retained counsel, Respondent Dow urges this Court to grant
rehearing to reconsider our decision to hold him in contempt, as well as the sanction
imposed, due to its impact upon his representation of existing clients in federal court. I
would grant rehearing and withdraw this Court’s sanction pending a thorough consideration
of the issues Respondent Dow’s counsel raises in his motion for rehearing. I would also
order an affidavit from Paredes’s original state habeas counsel, Michael Gross, to provide
information regarding his communications with Respondent Dow concerning the post
conviction filings in this case, as well as attorney Gross’s explanation for why his client
affirmatively requested that Gross forgo what Respondent Dow claims was a “compelling”
Wiggins claim. Consequently, I dissent to this Court’s denial of the motion for rehearing.
Filed: February 25, 2015
Publish
1
Respondent Newberry does not appear to take issue with this Court’s order.
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938 F.2d 188
U.S.v.Anderson (Jeffrey)
NO. 90-3021
United States Court of Appeals,Eighth Circuit.
MAY 23, 1991
1
Appeal From: E.D.Mo.
2
AFFIRMED.
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FILED
NOT FOR PUBLICATION OCT 04 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
DAVID PAUL RUFF, No. 12-17340
Plaintiff - Appellant, D.C. No. 2:10-cv-02789-KJM-
CKD
v.
D. VANLEER; et al., MEMORANDUM *
Defendants - Appellees.
Appeal from the United States District Court
for the Eastern District of California
Kimberly J. Mueller, District Judge, Presiding
Submitted September 24, 2013 **
Before: RAWLINSON, N.R. SMITH, and CHRISTEN, Circuit Judges.
California state prisoner David Paul Ruff appeals pro se from the district
court’s judgment dismissing his 42 U.S.C. § 1983 action alleging excessive force
and inadequate medical care. We have jurisdiction under 28 U.S.C. § 1291. We
review de novo a dismissal for failure to exhaust, Sapp v. Kimbrell, 623 F.3d 813,
*
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).
821 (9th Cir. 2010), and we affirm.
The district court properly dismissed Ruff’s action because Ruff failed to
exhaust his administrative remedies, and to establish either that administrative
remedies were effectively unavailable or that he should have otherwise been
excused from having to exhaust. See Woodford v. Ngo, 548 U.S. 81, 88, 93 (2006)
(proper and timely exhaustion of administrative remedies is a prerequisite to filing
suit in federal court); Sapp, 623 F.3d at 818 (discussing administrative exhaustion
requirements under California regulations); Nunez v. Duncan, 591 F.3d 1217,
1224, 1226 (9th Cir. 2010) (describing limited circumstances under which
administrative remedies may be rendered effectively unavailable or an inmate may
be excused from exhausting them).
AFFIRMED.
2 12-17340
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920 F.2d 933
Unpublished DispositionNOTICE: Sixth Circuit Rule 24(c) states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Sixth Circuit.Floyd SPRUYTTE, Jr., Plaintiff-Appellant,v.Perry JOHNSON, et al., Defendants,Theodore Koehler, Robert Mallette, John Hawley, AudreyLindstrom, Defendants-Appellees.
No. 89-2095.
United States Court of Appeals, Sixth Circuit.
Dec. 11, 1990.
1
Before BOYCE F. MARTIN, Jr. and NATHANIEL R. JONES, Circuit Judges, and EDGAR, District Judge.*
ORDER
2
Floyd J. Spruytte, Jr., through counsel, appeals from the district court's order dismissing his complaint which he filed pursuant to 42 U.S.C. Sec. 1983. The case has been referred to a panel of the court pursuant to Rule 9(a), Rules of the Sixth Circuit. Upon examination of the record and briefs, this panel unanimously agrees that oral argument is not needed. Fed.R.App.P. 34(a).
3
Spruytte's complaint arose from a series of events which followed wide-spread rioting and destruction within three separate state prison facilities in Michigan, in May of 1981. Spruyette was found guilty of participating in the riots at the Marquette Branch Prison and possessing illegal contraband at that time. As a result, he was placed in administrative segregation. Spruyette charges that the defendants, various officials at the Marquette facility, unconstitutionally denied him a sufficient amount of time for outdoor exercise. He also alleged that he was forced to walk naked to the showers during the period he was housed in a segregation cell, in violation of his constitutional rights. The district court determined that the defendants were entitled to qualified immunity in regard to these allegations, because there was, at the time of the alleged wrongdoing, no "clearly established right" to a certain amount of exercise time or to be free from being forced to walk naked to the showers. See Anderson v. Creighton, 483 U.S. 635, 639-40 (1987); Poe v. Haydon, 853 F.2d 418, 425 (6th Cir.1988), cert. denied, 488 U.S. 1007 (1989).
4
Upon review, we conclude that the district court properly determined that the defendants were entitled to protection from personal liability under the doctrine of qualified immunity, for the reasons stated by that court. The cases from other circuits, cited by Spruytte, do not support his argument that a clearly established right to the items in question existed at the time he was in administrative segregation. These cases are distinguishable in that only one involves restrictions implemented in a post-riot and emergency lock-down situation. These cases do not point unmistakably to the unconstitutionality of the conduct complained of and did not clearly foreshadow direct authority in this circuit, as to leave no doubt in the defendants' minds that their conduct would be found wanting. Ohio Civil Service Employees Ass'n v. Seiter, 858 F.2d 1171, 1177 (6th Cir.1988).
5
Accordingly, the district court's grant of summary judgment is affirmed. Rule 9(b)(5), Rules of the Sixth Circuit.
*
The Honorable R. Allan Edgar, U.S. District Judge for the Eastern District of Tennessee, sitting by designation
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COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-17-00278-CV
RODNEY ROWLETT APPELLANT
V.
LOCATION PROPERTIES, LTD. APPELLEE
------------
FROM COUNTY COURT AT LAW NO. 1 OF TARRANT COUNTY
TRIAL COURT NO. 2017-003575-1
------------
MEMORANDUM OPINION1 AND JUDGMENT
------------
Appellant, who is proceeding pro se, was notified by e-mail on January 9,
2018, that his brief was due on or before February 8, 2018. On March 8, 2018,
we notified appellant by e-mail and regular mail2 that his brief had not been filed
as required by Texas Rule of Appellate Procedure 38.6(a). See Tex. R. App. P.
38.6(a). We stated that we could dismiss the appeal for want of prosecution
unless appellant filed with the court within ten days an appellant’s brief and a
1
See Tex. R. App. P. 47.4.
The notice sent by regular mail was returned with the label “VACANT
2
UNABLE TO FORWARD.”
motion reasonably explaining the failure to file an appellant’s brief and the need
for an extension. See Tex. R. App. P. 10.5(b), 38.8(a)(1), 42.3(b). We have not
received any response.
Because appellant has failed to file a brief after having been given an
opportunity to provide a reasonable explanation for the failure, we dismiss the
appeal for want of prosecution. See Tex. R. App. P. 38.8(a)(1), 42.3(b), 43.2(f).
PER CURIAM
PANEL: WALKER, MEIER, and GABRIEL, JJ.
DELIVERED: April 12, 2018
2
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United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT February 15, 2006
Charles R. Fulbruge III
Clerk
No. 04-11370
Summary Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JOSE ANGEL HERNANDEZ-LAZARO,
Defendant-Appellant.
--------------------
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:04-CR-176-ALL-R
--------------------
Before HIGGINBOTHAM, BENAVIDES, and DENNIS, Circuit Judges.
PER CURIAM:*
Jose Angel Hernandez-Lazaro was convicted of illegal reentry
into the United States and sentenced to serve 42 months in prison
and a two-year term of supervised release. He first argues on
appeal that 8 U.S.C. § 1326(b) is unconstitutional. Hernandez-
Lazaro’s constitutional challenge is foreclosed by Almendarez-
Torres v. United States, 523 U.S. 224, 235 (1998). Although
Hernandez-Lazaro contends that Almendarez-Torres was incorrectly
decided and that a majority of the Supreme Court would overrule
Almendarez-Torres in light of Apprendi v. New Jersey, 530 U.S.
*
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. 04-11370
-2-
466 (2000), we have repeatedly rejected such arguments on the
basis that Almendarez-Torres remains binding. See United States
v. Garza-Lopez, 410 F.3d 268, 276 (5th Cir.), cert. denied,
126 S. Ct. 298 (2005). Hernandez-Lazaro properly concedes that
his argument is foreclosed in light of Almendarez-Torres and
circuit precedent, but he raises it here to preserve it for
further review.
Hernandez-Lazaro’s argument that the Due Process and Ex Post
Facto Clauses bar the application of Justice Breyer’s remedy
opinion in United States v. Booker, 125 S. Ct. 738 (2005), when
resentencing defendants in light of Booker is foreclosed by our
prior caselaw. See United States v. Scroggins, 411 F.3d 572,
576-77 (5th Cir. 2005).
Hernandez-Lazaro contends that his sentence should be
vacated and remanded because the district court sentenced him
under the mandatory guidelines scheme held unconstitutional in
United States v. Booker, 125 S. Ct. 738 (2005). Because the
district court sentenced Hernandez-Lazaro under a mandatory
guidelines regime, it committed Fanfan error. See United States
v. Walters, 418 F.3d 461, 463 (5th Cir. 2005). When a Fanfan
error “is preserved in the district court by an objection, we
will ordinarily vacate the sentence and remand, unless we can say
the error is harmless.” United States v. Mares, 402 F.3d 511,
520 n.9 (5th Cir.), cert. denied, 126 S. Ct. 43 (2005). The
Government concedes that this claim was preserved and that it
No. 04-11370
-3-
cannot show that the Fanfan error that occurred in the instant
case was harmless.
We agree that the Government cannot meet its burden of
showing beyond a reasonable doubt that the district court would
have imposed the same sentence absent the error. See United
States v. Garza, 429 F.3d 165, 170-71 (5th Cir. 2005). We
therefore vacate Hernandez-Lazaro’s sentence and remand for re-
sentencing.
CONVICTION AFFIRMED; SENTENCE VACATED; CASE REMANDED.
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447 F.2d 152
71-1 USTC P 9427
Lucille HOWARD, Petitioner-Appellant,v.COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
No. 30475.
United States Court of Appeals, Fifth Circuit.
May 21, 1971.
Robert O. Rogers, Palm Beach, Fla., for petitioner-appellant.
Johnnie M. Walters, Asst. Atty. Gen., Meyer Rothwacks, Bennett N. Hollanders, and William K. Hogan, Attys., Tax Division, U.S. Dept. of Justice, Martin K. Worthy, Chief Counsel, Daniel J. Boyer, Internal Revenue Service, Washington, D.C., for respondent-appellee.
Before WISDOM, Circuit Judge DAVIS,* Judge, and GOLDBERG, Circuit judge.
WISDOM, Circuit Judge.
1
This case involves the application of Lyeth v. Hoey, 1938, 305 U.S. 188, 59 S.Ct. 155, 83 L.Ed. 119, and its progeny. The question is whether money received by the taxpayer in a compromise settlement in return for joining in a sale of real estate by her one-time husband is to be treated as payment for dower rights, and thus not taxable, or whether it is to be treated as ordinary income.
2
In May 1942 Lucille Howard, the taxpayer, married Vince Nelson, a resident of Jupiter, Palm Beach County, Florida. In October 1943 Nelson, then on active duty in the Military Service, filed suit for divorce in Martin County, Florida. He alleged her address to be c/o The 19th Hole, Lake Park, Palm Beach County, Florida. Palm Beach County adjoins Martin County on the south. The Sheriff of Palm Beach personally served Lucille. In her answer in this action, filed in January 1944, the taxpayer admitted that her address as alleged was correct. However, when called as a witness in the May 1969 Tax Court hearing she testified that her permanent place of residence was Juna Plantation, Juno, Palm Beach County, Florida. The parties dismissed the 1943 Martin County divorce proceedings before the court took any action.
3
Barely two months later, Nelson instituted suit for divorce in St. Lucie County, Florida. St. Lucie County adjoins Martin County on the north. At this time Nelson was in the Army. Rather than seeking personal service, Nelson alleged that after diligent search and inquiry he was unable to discover Lucille's place of residence. Therefore he sought service by mail to Lucille's birthplace in Lockport, New York, and by publication in St. Lucie County. Lucille, who still resided in Palm Beach County, Florida, received no actual notice of the proceedings. On her default, the court awarded Nelson a divorce September 22, 1944.
4
Lucille received her first notice of the divorce by a form sent to her by the army notifying her that her family allotment had been discontinued. This notice was addressed to her in Jupiter, Palm Beach County, Florida. She testified that she actually received the notice at the Lake Port, Florida, post office. The reason stated on the form for termination of the allotment was 'Soldier Divorced.' Lucille thereupon went to the Army camp in an attempt to obtain information about the divorce. She could obtain no information there, but she testified that she believed that the Army would not have discontinued her allotment unless it had investigated the matter and determined that the divorce was valid. From this point on the taxpayer and Nelson travelled different paths for twenty years.
5
In November 1947 Lucille married Edgar Charles Kingsbury in Folkston, Georgia. Two years leter they were divorced. Later, she lived with a Mr. Howard and became pregnant. Howard, an attorney, advised Lucille that they could not marry because she was still married to Nelson. Lucille consulted several attorneys to obtain an opinion on this issue. They advised her that it would be necessary to conduct an extensive investigation since she did not know where the divorce had been granted. Not having the funds to pursue such an investigation, Lucille did nothing further.
6
On his own path Nelson, who never remarried, acquired several large tracts of land in Florida, some of which was mortgaged. In 1964 Nelson entered into a contract to sell a portion of his property to Bessemer Properties, Inc., for $322,350 in order to settle his debts and to avoid a forced sale of all his property.
7
At this point the former spouses' paths recrossed. R. C. Alley, the attorney for the purchaser of the property, learned that Nelson had been married and examined the divorce proceedings. He concluded that there was a strong possibility that Nelson's divorce was invalid because the service by publication instead of personal service appeared to have resulted from fraudulent statements by Nelson.1 Bessemer then requested a release of dower as a condition of closing the sale.
8
When Lucille was asked to sign a release of dower, she agreed to join in the deed of sale in return for $30,000 cash and real estate worth $10,000. The agreement was carried out by all parties. Bessemer paid the $322,350 in return for the lots deeded by Nelson and Lucille. She received the agreed upon value. And Nelson, after paying off his indebtedness retained a net of about $63,000. He died in 1968 and his testimony was not available at the Tax Court hearing.
9
Lucille did not include the $40,000 in her income for 1965. The Commissioner of Internal Revenue determined a deficiency in her income tax on the ground that the amount should have been included in her income. Lucille petitioned the Tax Court for a redetermination of the deficiency. The Tax Court upheld the position of the Commissioner and Lucille Howard appealed to this Court.
10
The Tax Court based its decision on alternative reasoning. 54 T.C. 855 (1970). First, it concluded that Lucille had no dower rights under Florida law because there was no fraud and because she waited so long to raise the issue of her rights. Second, it held that even if Lyeth v. Hoey applies to this case there was no bona fide compromise because there was no color of merit to Lucille's claim, no litigation was threatened, and the only reason that Nelson agreed to pay her $40,000 was that he was forced by the threat of a mortgage foreclosure to sell his property quickly.
11
We reverse.
12
* The Tax Court concluded, first, that the proceeds were taxable to Lucille because as a matter of state law she had no dower rights to release. The court found her claim for a redetermination without merit because, she 'has not established to our satisfaction that she would be successful in her contention that she was the wife of Nelson in April 1965 under Florida law.' In relying on a finding as to whether Lucille had a successful claim for dower under Florida law, the Tax Court necessarily rejected the applicability of Lyeth v. Hoey.
13
In Lyeth v. Hoey, heirs attacked the decedent's will, which gave the bulk of her estate to a trust for religious purposes, on the ground of the decedent's testamentary capacity. If the will had been voided by the courts, the heirs would have taken the entire estate by intestacy. The heirs and those named in the will reached a compromise. The Commissioner of Internal Revenue asserted that the proceeds received by the heirs was not within the exception from income for proceeds received by bequest. The Court ruled that the proceeds were not taxable as income to the heirs because they did fall within this exception. The Court said.
14
Petitioner was concededly an heir of his grandmother under the Massachusetts statute. * * *
15
There is no question that petitioner obtained that portion, upon the value of which he is sought to be taxed, because of his standing as an heir and of his claim in that capacity.
16
305 U.S. at 195-196, 59 S.Ct. at 159, 83 L.Ed. 125.
17
The Tax Court and the Commissioner on appeal find Lyeth inapplicable because there the taxpayers' standing as heirs was not challenged while here petitioner's status as wife has been contested. With deference, we think that such reasoning misses the point of Lyeth. In Lyeth the Court established the doctrine that in tax matters the characterization of proceeds received in compromise should be determined according to the nature of the claims in settlement of which the proceeds were received. It is artificial to say that any particular aspect of the basis for the claim (e.g. status) must be conceded. Thus in Ridge Realization Corp. v. C.I.R., 1966, 45 T.C. 508 what was compromised was a claim by stockholders against former corporate officers alleging wrongful injury to the corporation. There was no talismanic 'status' involved in that case, yet the Tax Court held that the rule of Lyeth v. Hoey applied so that 'the character of the amount recovered is determined by the nature of the claims actually pressed and settled in the litigation.' See Raytheon Production Corp. v. C.I.R., 1 Cir. 1944, 144 F.2d 110.
18
We conclude that this case is controlled by Lyeth v. Hoey and its progeny. The question that determines whether the proceeds received by Lucille are to be treated for tax purposes as property received for release of dower rights is not whether in fact Florida would recognize dower rights in Lucille but rather whether there was a good faith compromise concerning her claim to dower rights.
II
19
The next question is whether the Tax Court erred in holding that there was no bona fide compromise of claims regarding dower rights. The court came to this conclusion after determining that there was no color of merit to Lucille's claim, that no litigation was threatened in support of the claim, and that Lucille received payment only because Nelson was in financial distress and had no time to pursue any other course of action.
20
We think the Tax Court erred in two respects: (a) there was color of merit to Lucille's claim; and (b) the proper standard for judging the bona fides of a compromise for tax purposes is not whether the court might decide that the claim is meritorious but whether the the taxpayer in good faith thinks that the claim is meritorious.
21
As to the merit of the claim, there were two issues as to the validity of Lucille's claim. The first was whether Nelson had obtained the divorce by fraud. This was a question of fact. The parties did not dispute the applicable law; they disputed whether Nelson had obtained constructive service in the good faith belief that Lucille could not be found or whether he committed perjury and fraud in seeking constructive service. This was a live issue. Considering the fact that Nelson just two months previously, after negotiations with an attorney hired by Lucille, had dismissed a divorce suit it was reasonable that Alley, the purchaser's attorney, should conclude that Nelson had acted fraudulently and that the divorce was invalid because of lack of service. The Tax Court's finding that there was no fraud does not speak to the point whether there was a legitimate dispute over the issue.
22
The second issue is whether Lucille was barred from attacking the divorce decree by laches. The trial court cited several Florida cases to show that, even were the divorce decree originally procured by fraud, a delay of twenty years would bar Lucille from litigating. Those cases do not establish that her claim had no color of merit. The two cited cases most closely related to the instant case do not conclusively establish whether laches would bar Lucille's claim. In both cases the courts found laches because the party seeking to upset the divorce had unreasonably delayed litigating the issue, in the interim innocent third parties had relied on the divorce decree, and allowing a late challenge to the validity of the divorce would unfairly injure these third parties. Thus in Carpenter v. Carpenter, S.D.Fla.1950, 93 F.Supp. 225, the court held that the first wife could not contest the validity of the divorce because she delayed contesting it despite her knowledge that the former husband had later married, and the successor spouse had relied on the validity of the divorce decree. In Johnson v. Hayes, Fla.1951, 52 So.2d 109, the wife waited until after the deceased ex-husband's estate was closed to seek dower rights in real property that he had sold to bona fide purchasers. The court held that since it was too late for these third parties to seek reimbursement from the husband's estate, the claim by the wife was barred by laches.
23
The doctrine of laches requires not only an unreasonable delay but also that the delay result in injury. In this case it appears that no injury was caused by the delay in asserting the claim. No other parties have relied on the divorce decree to their detriment. Additonally, a court of equity might consider as decisive Lucille's ignorance of the law and her financial inability to pursue the matter in determining whether she was barred by laches.
24
We are not suggesting that a court of equity would necessarily find Lucille's claim not to be barred by laches. We hold simply that, since equity courts do justice by applying very general maxims to particular facts in each case, it is difficult if not impossible to be certain what the outcome of litigation would be in this case. Lucille's claim cannot be said to be wholly without merit.
25
Moreover, we are of the view that the tax character of the proceeds received under a compromise of a claim should not necessarily be determined by the strength of the merits of the party's claim. Rather, it should be determined on the basis of the party's good faith belief as to the merits.
26
The decided cases do not stand for the government's position. Several related cases do discuss the merits of the applicable law and find that there was no substantial question as to the legal rights of the parties. But the opinions make clear that the lack of merit of the claims was not conclusive, but rather evidence supporting some inference about the true intentions of the parties. In Grossman v. Campbell, 5 Cir. 1966, 368 F.2d 206, this Court looked to the law of Texas to determine whether there could have been a bona fide dispute over the validity of a will. In light of the clear rights under state law, the court concluded that 'it stretche(d) credibility to ask this Court to believe that anyone really thought that the holographic will could have prevented the later codicil and the (contested) written 1949 will from being probated . . ..'
27
Also in Housman v. Commissioner of Internal Revenue, 2 Cir. 1939, 105 F.2d 973, the court looked to the clear rights of the parties in finding that a threatened contest of a will was not the real reason that the taxpayer, a widow, agreed to increase her annual donations to her son. The court said 'The son's threats * * * could not have caused serious alarm to the petitioner. * * * We are not impressed by the petitioner's argument that the parties were hostile, were dealing at arm's length, and were compromising a bona fide will contest. The more reasonable inference is that the petitioner's expression of a willingness to pay $100,000 a year, with annual birthday and Christmas presents in addition, was motivated by the kinship between the payor and the receiver. It was essentially donative in character, a promise or agreement to make gifts in the future.' 105 F.2d at 975.
28
Typically in cases involving compromises where the courts find the agreements made in good faith as a result of arm's length bargaining, this conclusion is based on various evidence of the seriousness of the dispute. Rarely does the court investigate the merits of the dispute to determine whether it is a close case or whether it is even arguable in fact. Thus in Ridge Realization Corp. v. Commissioner, 1966, 45 T.C. 508, the court found a compromise valid because there was a 'substantial claim that was being seriously pressed'. And in Estate of Sedgwick Minot v. Commissioner, 1966, 45 T.C. 578, the court relied on the fact that the party's counsel considered the claims as 'serious threats with substantial basis in fact and law.' 45 T.C. at 584.
29
The question of the standard for determining the validity of compromises arises in other areas of the law. For instance, the question arises in contract law whether a forbearance to press a meritless claim is sufficient consideration if the party believes in good faith that the claim is meritorious. The Tentative Draft No. 2 of the Restatement Second of Contracts (1965) favors a standard based on subjective good faith. The black letter of 76B makes the surrender of an invalid claim sufficient consideration where 'the forbearing or surrendering party honestly believes that his claim or defense is just and may be determined to be valid.' The comments to the section restate the point: 'Even though the invalidity should have been clear at the time the settlement of an honest dispute is upheld.'
30
There are strong policy reasons for taking at face value compromises based on claims made in good faith. As Corbin says:
31
The main reason for sustaining such a compromise agreement is one of social policy. The peaceful settlement of disputes without litigation (or war) is in the interest of the community. It is not the less so even though one of the parties may have been in the right, or more nearly so than the other. It is not often, if ever, that subsequent events clearly demonstrate the 'merits' of the dispute. There are 'two sides' to most disputes. Even if the dispute had been submitted to 'wager of battle' or to 'trial by ordeal,' or to 'wager of law,' or to a modern court and jury, the dispute may be finally adjudicated; but we know well enough that the solution may have serious flaws. In any case, the voluntary compromise may be equally just; and how much less expensive and troublesome to the parties and to the community.
32
Corbin on Contracts 620 (1960).
33
Such considerations have a proper bearing on the tax treatment of proceeds received under compromises. Two factors stand out. First, compromises may reach just results even though a party would not win in court. And second, reliance on good faith avoids the necessity for federal courts to determine sometimes-complex issues of state law, where on occasion they may err in determining what a state court would do.
34
Having concluded that the standard for judging compromises should be the good faith of the parties, it remains to determine whether Lucille Howard asserted her claim to compensation for her dower rights in good faith. As we read the record, she did. The validity of the divorce was first raised by Alley, the attorney for Bessemer, the purchaser of Nelson's land. He was acting in the interest of his client in having a clear title. Though he may have been mistaken, the objectivity of his determination that Lucille Howard should participate in the conveyance cannot be questioned. His action strongly suggested that Lucille was in good faith. Others approached her and sought her participation in the conveyance. The obvious implication is that the purchaser was concerned about her rights. That she threatened no litigation does not affect the good faith of her claim: She did not have to do so in the factual context of this case. It was the lawyer for the purchaser who made a substantial issue of her dower rights.
35
Arguing further that the compromise recognized not a good faith claim but simply a 'naked threat', the government asserts that the only reason that Nelson agreed to pay Lucille was that he was in financial distress and had no time to pursue any other course of action. That this may have been his motivation does not undercut the validity of the compromise. In response to a similar contention by the government in Ridge Realization Corporation v. Commissioner, 1966, 45 T.C. 508, the court said:
36
The theory that the nature of the amount received in a lawsuit settlement is governed by the nature of the claims asserted is not undermined by the fact that the Countess Bismarck may have been under the impression that the claims in the Marco action were without merit, and that she may have been impelled to initiate the settlement negotiations only by her desire to induce petitioner to release its claims against her husband's estate and thus make his funds available to her. The facts that her need for the funds stimulated her to settle and that she is said to have believed the Marco action to be baseless no more alter the character of her payment to petitioner than other labels attached to settlement payments or the typical statements by defendants that they do not admit any liability whatever but are settling in order to rid themselves of nuisance claims.
37
Id. at 519. The language in Bailey v. Ratterre, N.D.N.Y.1956, 144 F.Supp. 449, that a claim must be more than 'a naked threat' refers, we think, not to the view of the obligor but rather to the view of the claimant. If he makes his claim as a naked threat, then the tax character of the proceeds should not be determined according to the nature of the claim.
38
We hold that in the circumstances of this case the proceeds Lucille Howard received from the compromise should be treated as a substitution for dower rights and that they are not taxable as income. The judgment of the Tax Court is reversed.
*
Honorable Oscar H. Davis, United States Court of Claims, sitting by designation
1
In his deposition, which was admitted into evidence in the Tax Court, Mr. Alley made the following statements
At the time the contract was signed, I asked Mr. Nelson whether he was married and he advised that he was not, that he had been married but had been divorced. I asked him where the divorce had been obtained and he told me it had been obtained in Ft. Pierce, Florida.
I thought that was a little peculiar, being up in Ft. Pierce when he was known to be around Jupiter all the time, so I went to Ft. Pierce and found that there had been divorce proceedings begun in St. Lucie County by Nelson against his wife. Lucille Gee Howard is now the name, but it was Lucille Nelson.
I examined the file and found that process against Mrs. Nelson had been obtained by publication and not by personal service. The affidavit or the allegations of the complaint were to the effect that she had deserted him and he had made a diligent search for her and had been unable to locate her, but to the best of his knowledge (6) her then address was in a small town in New York, Lockport, or something like that. In the file was an envelope which the clerk had mailed to her at that address and which had been returned unclaimed.
There was an affidavit of publication showing that publication had been made at Ft. Pierce.
One of the elements of constructive service-- that is service by publication-- is that not only is there a possibility of the party being served seeing the notice but also her friends and acquaintances, they see it and notify her of the publication. Of course, that would have been completely impossible with the publication being clear up at Ft. Pierce when their previous domicile had been in the neighborhood of Jupiter.
I decided we had better find out more about the allegations of being unable to find out where she was. There is a long series of cases in Florida to the effect that even though there is an allegation of diligent attempt to locate the party, if it appears that any sort of diligent search would have found the location of the party the service by publication is void. I don't recall the citations of those various (7) cases, but there are a great many of them, not only in divorce cases but in other kinds of proceedings.
My next step in investigating the divorce was to go to the Jupiter area where I was sure people would have known about Vincent and his wife. Of course, the reason I was doing all this, if she was still married to Nelson, if there hadn't been a valid divorce, any title we obtained from him-- I say 'we,' meaning Bessemer Properties-- would have been a poor title because of the lack of elimination of the inchoate right of dower.
I went to Jupiter and made an investigation there, talking with various people, and it was generally known there that Nelson and his wife had separated sometime before but that she had remained in the vicinity right along and had recently gone down to Lake Park, but was nearby.
Another feature that led me to making this investigation was the fact that the only witness that Nelson had was an associate of his in the military service located at Camp .murphy. In a divorce suit in which desertion was alleged, and (8) everybody in Jupiter knew Vince Nelson, or I imagine just about everybody, from the age of four on up. It seemed very peculiar to me that he hadn't had some witnesses from there.
So I reached the conclusion that the divorce was for lack of jurisdiction of the court. It would have been very simple for the wife to have it set aside.
After this first investigation, I learned-- I don't recall just how-- that not very long before the proceedings were filed in Ft. Pierce, Vince Nelson had brought divorce proceedings against her at Stuart in Martin County and that those proceedings had been dismissed. I did not examine that file. I just learned they had been dismissed. Q Did you learn that she was represented by counsel in Martin County? A Yes, I did, also that Ted Oughterson, who is a very respectable attorney, had represented Nelson and had joined in a dismissal of the case. The case had been dropped. Q Mr. Alley, was it your conclusion as a result of your investigation that there was a potential justiciable controversy as to the validity of (9) the divorce? A I would almost make it stronger than that. I thought it was a cinch. Q What was a cinch, sir? A A cinch that the divorce could be set aside, that there wasn't any jurisdiction in the court to enter a decree, and that therefore she was still his wife. It certainly was justiciable but it was, I would say, a foregoing conclusion that that could have been accomplished.
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J-S06035-17
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA IN THE SUPERIOR COURT OF
PENNSYLVANIA
v.
CODY ROBERT MILLER
Appellant No. 398 EDA 2016
Appeal from the Judgment of Sentence December 29, 2015
in the Court of Common Pleas of Monroe County Criminal Division
at No(s): CP-45-CR-0001172-2015
CP-45-CR-0001177-2015
BEFORE: MOULTON, RANSOM, and FITZGERALD,* JJ.
MEMORANDUM BY FITZGERALD, J.: FILED FEBRUARY 28, 2017
Appellant Cody Robert Miller appeals from a judgment of sentence of
twelve to forty-eight months’ imprisonment imposed in the Monroe County
Court of Common Pleas (“Monroe County court”) for retail theft 1 and driving
under the influence (“DUI”).2 Appellant argues that the Monroe County
court erred by failing to award him credit for three of the seven months he
was incarcerated prior to sentencing. The Commonwealth agrees that relief
is due. We vacate and remand for resentencing.
*
Former Justice specially assigned to the Superior Court.
1
18 Pa.C.S. § 3929(a)(1).
2
75 Pa.C.S. § 3802(d)(1)(i).
J-S06035-17
On November 25, 2014, Appellant was sentenced in the Northampton
County Court of Common Pleas to twelve months’ probation for possession
of drug paraphernalia.
On May 20, 2015, Appellant was arrested in Monroe County in the
cases presently on appeal, which the Monroe County court docketed at Nos.
1172-2015 and 1177-2015. Because Appellant was unable to post bail, he
was incarcerated in Monroe County. On August 26, 2015, Appellant pleaded
guilty to retail theft at No. 1172-2015 and DUI at No. 1177-2015.
On August 27, 2015, law enforcement officials transported Appellant to
Northampton County on a probation detainer issued in the Northampton
County case. Appellant remained incarcerated in Northampton County until
December 29, 2015, when he returned to the Monroe County court for
sentencing.
On December 29, 2015, the Monroe County court ordered Appellant to
serve an aggregate state sentence of twelve to forty-eight months’
imprisonment.3 The court gave Appellant credit for his period of
incarceration in Monroe County—May 20, 2015 to August 27, 2015—but did
not award credit for his period of incarceration in Northampton County.
3
In No. 1172-2015, the court sentenced Appellant to nine to forty-two
months’ imprisonment for retail theft. In No. 1177-2015, the court
sentenced Appellant to a consecutive term of three to six months’
imprisonment for DUI.
-2-
J-S06035-17
On January 6, 2016, Appellant filed post-sentence motions asserting
that his sentence was excessive. He did not object to the lack of credit for
time served in Northampton County. On January 7, 2016, the Monroe
County court denied Appellant’s post-sentence motions.
Appellant’s probation violation hearing in Northampton County
apparently took place on January 8, 2016.4 It appears that Appellant’s
probation officer informed the court about Appellant’s Monroe County
sentence and asked that “we close this case out so [Appellant] can serve his
state sentence.” N.T., Probation Violation Hr’g, 1/8/16, at 3. It further
appears that the Northampton County court agreed to “close this case”
because Appellant “has other issues in SCI to deal with.” Id. at 4.
On February 3, 2016, Appellant filed timely appeals in both Monroe
County cases. This Court docketed both appeals at the same caption
number. Both Appellant and the Monroe County court complied with
Pa.R.A.P. 1925.
Appellant raises one issue on appeal:
Where upon review of the record from another county it is
learned that [A]ppellant received no time credit for time
spent in that county on a probation violation, is not
[Appellant] entitled to credit on the sentence served in the
home county that formed the basis for the probation
violation?
4
The certified record from Monroe County does not include the transcript of
the Northampton County hearing. An alleged hearing transcript is appended
to Appellant’s brief.
-3-
J-S06035-17
Appellant’s Brief, at 6. In response to Appellant’s brief, the Commonwealth
filed a letter stating that it agreed with Appellant’s position.
Appellant challenges the Monroe County court’s refusal to award credit
for time served in Northampton County. This is a question of law, because it
implicates the legality of Appellant’s sentence. Commonwealth v. Aikens,
139 A.3d 244, 245 (Pa. Super. 2016). Our standard of review over such
questions is de novo, and our scope of review is plenary. Id. Although
Appellant did not raise this argument in his post-sentence motions, we will
review this issue because challenges to the legality of sentence are non-
waivable. Commonwealth v. Dinoia, 801 A.2d 1254, 1257 (Pa. Super.
2002).
Section 9760 of the Pennsylvania Judicial Code governs credit for time
served and provides in pertinent part:
After reviewing the information . . . the court shall give
credit as follows:
(1) Credit against the maximum term and any minimum
term shall be given to the defendant for all time spent in
custody as a result of the criminal charge for which a
prison sentence is imposed or as a result of the conduct on
which such a charge is based. Credit shall include credit
for time spent in custody prior to trial, during trial, pending
sentence, and pending the resolution of an appeal.
42 Pa.C.S. § 9760(1).
Our analysis of section 9760(1) in Commonwealth v. Smith, 853
A.2d 1020 (Pa. Super. 2004), is controlling. The defendant in Smith was
sentenced to probation on a firearms charge. Id. at 1023. Three years
-4-
J-S06035-17
later, he was arrested in a second case. Id. He was released on bail in the
second case but was incarcerated on a probation detainer issued in the first
case. Id. He remained in jail on the detainer for approximately one year
and then proceeded to trial in the second case. Id. The jury found him
guilty, and the trial court sentenced him to a term of imprisonment. Id. at
1022. Subsequently, the court closed the probation violation in the first
case without imposing further penalty, but it refused to credit the time
served on the probation detainer against the defendant’s sentence in the
second case. Id. at 1022-23.
On appeal, applying section 9760(1), this Court held that the
defendant was entitled to credit in the second case for time served on the
detainer issued in the first case. Id. at 1025. We further reasoned that the
principle of “equitable crediting of pre-trial incarceration,” which our
Supreme Court delineated with respect to parole in Martin v. Pa. Bd. of
Prob. and Parole, 840 A.2d 299, 308–09 (Pa. 2003), applies with equal
force to probation. Smith, 853 A.2d at 1026. We stated that where
“pretrial incarceration is attributable to both [a] probation detainer and . . .
new criminal charges, it must be attributed to either [the] sentence under
the new criminal charges or to [the] sentence imposed for violation of
probation.” Id. Because the court closed the defendant’s probation
violation proceedings without imposing penalty, the time he served in
-5-
J-S06035-17
pretrial detention on the probation detainer in the first case had to be
credited against the sentence imposed in the second case. Id.
Pursuant to Smith, if the Northampton County case was closed
without further penalty, the Monroe County court is required to award
Appellant credit for time served on the Northampton County detainer.
Appellant was on probation in Northampton County at the time of his arrest
in Monroe County. Following this arrest, Appellant was incarcerated both for
failing to post bail in Monroe County and as a result of the Northampton
County detainer. Thus, his pretrial incarceration was attributable to both his
Monroe County arrest and his Northampton County detainer. The Monroe
County court sentenced him to imprisonment but only awarded him credit
for three of his seven months of pretrial incarceration.
It appears, however, that the Northampton County court later closed
Appellant’s probation case without penalty. If so, he would be entitled to
receive credit in Monroe County for all pretrial incarceration, including time
served in Northampton County, because Appellant’s lone prison sentence
was in Monroe County. See Smith, 853 A.2d at 1022-23, 1026.
Conceivably, the Monroe County court declined to credit Appellant for
time served in Northampton County because it assumed that the
Northampton County court would sentence Appellant to imprisonment for his
probation violation and credit Appellant’s incarceration in Northampton
County against his Northampton County sentence. Although this assumption
-6-
J-S06035-17
was reasonable, it now appears that the Northampton County court took a
different course of action.
To confirm what action the Northampton County court took, we direct
the Monroe County court to hold a hearing to determine the disposition of
the Northampton County case. If the Northampton County case was closed
without further penalty, we direct the Monroe County court to award
Appellant credit for all time served between the date of arrest in Monroe
County, May 20, 2015, and the date of sentencing, December 29, 2015.
Judgment of sentence vacated. Case remanded for sentencing
proceedings in accordance with this memorandum. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/28/2017
-7-
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554 F.3d 1319 (2009)
WERNER ENTERPRISES, INC., Plaintiff Counter Defendant, Third Party Plaintiff, Appellee,
Ace Seguros SA, Consol. Plaintiff Appellant,
v.
WESTWIND MARITIME INTERNATIONAL, INC., Westwind International, Inc., Defendants Counter Defendants Third Party Defendants Appellees,
Transpro Logistics, Inc., Defendant Counter Claimant Third Party Defendant Appellee.
No. 07-15488.
United States Court of Appeals, Eleventh Circuit.
January 12, 2009.
*1321 Dana K. Martin, Houston, TX, Michael Charles Black, Cassidy & Black, P.A., Miami, FL, Keith Bruce Dalen, Hill Rivkins & Hayden, LLP, New York, NY, for Appellant.
Jerry D. Haynes, Edward R. Nicklaus, Nicklaus & Associates, PA, Coral Gables, FL, David K. Monroe, Galland, Kharasch, Greenerg, Fellman & Swirsky PC, Washington, DC, Lawrence J. Roberts, Lawrence J. Roberts & Associates, P.A., Coral Gables, FL, for Appellee.
Before EDMONDSON, Chief Judge, ANDERSON, Circuit Judge, and COHILL,[*] District Judge.
ANDERSON, Circuit Judge:
In this case, Ace Seguros, S.A. ("Ace") sued Werner Enterprises, Inc. ("Werner") to recover the full value of a shipment of lost cell phones under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706 ("Carmack Amendment"). The district court, in a summary judgment ruling in favor of Werner, sustained Werner's limitation of its liability. Ace appeals.
Communicaciones Nextel de Mexico, S.A. de C.V. ("Nextel") had the cell phones manufactured, and arranged through intermediaries to have Werner, a common carrier, transport them. Nextel insured the full value of its shipments through Ace, its insurance company. The cell phones were stolen during transit. Ace paid Nextel's claim for the loss, and was subrogated to the interests of Nextel.
*1322 The primary issue in this case involves the validity of Werner's limitation of its liability (to $200,000). That issue in turn depends on whether this case is distinguishable from the Supreme Court's decision in Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004). We determine that Kirby is not distinguishable. Ace also argues that Werner did not take the steps necessary under the Carmack Amendment to limit its liability. We conclude that the contractual limitation of liability here complied with the applicable statutory requirements. Finally, Ace argues that the district court applied an incorrect rate of prejudgment interest. We find no error. Accordingly, for the reasons set forth in greater detail below, we affirm.
I. BACKGROUND
In 1999 or 2000, Nextel began using Westwind Maritime International, Inc. and Westwind International, Inc. (collectively "Westwind") to arrange for the transportation of cell phones from a Motorola plant in Plantation, Florida to a customs broker in Texas. Westwind brokered approximately one shipment a week of Motorola cell phones for Nextel from Florida to Texas.
The invoice for Westwind's services ("Invoice"), the only contract between Nextel and Westwind, notified Nextel that third party carriers might limit their liability for loss. Paragraph 7 of the Invoice stated:
Declaring Higher Value to Third Parties. Third parties to whom the goods are entrusted may limit liability for loss or damage; the Company will request excess valuation coverage only upon specific written instructions from the Customer, which must agree to pay any charges therefore; in the absence of written instructions or the refusal of the third party to agree to a higher declared value, at Company's discretion, the goods may be tendered to the third party, subject to the terms of the third party's limitations of liability and/or terms and conditions of service.
Nextel received this standard shipping invoice approximately 250 times prior to the loss at issue.
Beginning around 2000, Westwind periodically arranged for carriage of the Motorola cell phones through Transpro Logistics ("Transpro"). In November of 2000, Transpro entered into a Broker Transportation Agreement ("BTA") with Werner. The BTA governed the general business relationship between the parties. Paragraph 6 contained the following limitation of liability clause:
Carrier's liability for loss, damage or injury to cargo occurring while in the possession or under the control of Carrier hereunder, and resulting from Carrier's performance of the services provided for in this Agreement, shall be the same standard of liability imposed by 49 U.S.C. Section 14706 and applicable common law. Provided, that the Carrier's maximum liability for loss or damage to cargo shall not in any event exceed Two Hundred Thousand Dollars ($200,000) per truckload shipment unless a higher degree of liability is specifically assumed in writing by an authorized representative of Carrier.
Paragraph 3 of the BTA also incorporated Werner's tariff, and item 380 of the tariff includes the following provision:
On domestic shipments within the United States of America and Canada, shippers may, at their option, select liability coverage for loss or damage to cargo as set forth in 49 U.S.C. § 14706 ("Carmack Liability") as provided in item 385. If Carmack Liability is not selected, Carrier's liability for loss or *1323 damages to shipments within the United States and Canada is limited to the lesser of (1) the actual value of the cargo so lost or damaged, or (2) a maximum of Two Hundred Thousand Dollars ($200,000) per truckload shipment.
Item 385 of the tariff states:
Title 49 U.S.C. § 14706 provides for full value liability and other liability terms for the carrier and shipper regarding loss and damage to cargo. In order for the full liability terms of the provision to apply to any shipment transported by Carrier the shipper must comply with all of the following requirements:
1. The shipper must notify Carrier no less than seventy-two (72) hours prior to pickup of the shipment for transportation that the shipper chooses Carmack Liability protection.
2. The shipper must have prepaid the Carmack Liability rate which is computed as (a) the rate quoted to shipper in writing, or in the absence of a specific written quotation, the rate contained in Carrier's standard rate matrix, plus (b) two hundred fifty percent (250%) of said rate.
3. The shipping instructions on the bill of lading or shipping document must specifically note: (a) that the shipment is moving under 49 U.S.C. § 14706 full liability terms, and (b) that the shipment is subject to Carmack Liability rates.
(emphasis in original). Nextel never requested full liability coverage from Westwind for any shipment. Thus, Westwind never requested full liability coverage from Transpro, which never invoked the provisions of item 385 in Werner's tariff. Nextel insured the full value of all its shipments through Ace.
On October 8, 2004, a shipment of 7,958 cell phones valued at approximately $1,251,673.30 was stolen from one of Werner's trucks. At Nextel's request, the lost shipment was carried under a Motorola manifest signed by the Werner driver. The district court granted summary judgment in favor of Ace as to liability for the lost shipment. However, the district court also granted Werner's motion for summary judgment as to limitation of liability and entered a judgment in the amount of $200,000.[1] Ace appeals the latter ruling.
II. DISCUSSION
Two Supreme Court precedents go a long way toward resolving this dispute. First, we will discuss these decisions and the manner in which they foreclose many of Ace's arguments. We then turn to the requirements under the Carmack Amendment to limit liability. Finally, we discuss the appropriate rate of prejudgment interest.[2]
A. Cargo Owners (i.e.Shippers) are Bound by Liability Limitations Negotiated Between an Intermediary and a Carrier
In Norfolk Southern Railway Co. v. Kirby, the Supreme Court set an efficient default rule for liability limitations in carriage contracts: "When an intermediary contracts with a carrier to transport goods, the cargo owner's recovery against the carrier is limited by the liability limitation *1324 to which the intermediary and carrier agreed." 543 U.S. 14, 33, 125 S.Ct. 385, 398, 160 L.Ed.2d 283 (2004). Kirby hired International Cargo Control ("ICC") to arrange for the shipment of machinery from Australia to Huntsville, Alabama. Kirby accepted a contractual liability limitation in ICC's bill of lading. Id. at 19, 125 S.Ct. at 390. Then, ICC hired Hamburg Sud to transport the cargo from Australia to Savannah and on to Huntsville, and accepted an even greater limitation of liability in Hamburg Sud's bill of lading. Next, Hamburg Sud hired Norfolk Railway to transport the machinery from Savannah to Huntsville. A "Himalaya Clause" extended the limited liability in Hamburg Sud's bill of lading to Norfolk.[3] Maritime law governed all the contracts. The Norfolk train derailed causing extensive damage to the cargo. Kirby sued Norfolk for the full value of its loss. Norfolk invoked the limitation of liability in Hamburg Sud's bill of lading. Id. at 21, 125 S.Ct. at 391-92. Applying its default rule, the Court held that the limitation of liability in Hamburg Sud's bill of lading bound Kirby. Id. at 34-36, 125 S.Ct. at 399-400. In doing so, the Court sought to eliminate the need for carriers to commit time and effort investigating long chains of parties and agreements, thereby potentially causing higher shipping rates. Id. at 34-35, 125 S.Ct. at 399. Furthermore, the Court found the rule equitable. Id. at 35, 125 S.Ct. at 399. Kirby retained the option to sue ICC under the terms it negotiated in ICC's bill of lading. Id.
The Supreme Court expressly derived its holding from Great Northern Railway Co. v. O'Connor, 232 U.S. 508, 34 S.Ct. 380, 58 L.Ed. 703 (1914). See Kirby, 543 U.S. at 33, 125 S.Ct. at 398. O'Connor employed the Boyd Transfer Company to arrange for the shipment of some of her personal effects from Minnesota to Oregon. The Boyd Company used Great Northern to transport the cargo. Great Northern's tariff stated that household goods with a value not to exceed $10 per hundredweight were shipped at a rate of $1 per hundredweight. The railroad's bill of lading, signed by the Boyd Company, indicated that O'Connor's cargo was shipped on the $1 rate and released at a value of $10 per hundredweight. The goods were lost en route and O'Connor sued Great Northern to recover their full value. Great Northern invoked the limitation of liability in its tariff and bill of lading. Great Northern, 232 U.S. at 509-10, 34 S.Ct. at 381. The Court held that "the carrier had the right to assume that the transfer company could agree upon the terms of the shipment." Id. at 514, 34 S.Ct. at 383. The plaintiff's remedy for loss beyond the amount of the limitation was against the Boyd Company. Id.
These cases guide us to dispose of and foreclose several of Ace's arguments, as follows. First, Kirby's teaching is not limited to maritime law. Kirby expressly derived its holding from Great Northern, a non-maritime case.[4] Furthermore, the *1325 principles of fairness and efficiency animating the Kirby rule are not unique to the maritime context. As evidenced by the circumstances of this case, contracts for carriage on land as well as sea may involve extended chains of parties and agreements. Thus, the benefits of allowing carriers to rely on limitations of liability negotiated by intermediaries are equally as great here as under maritime law.
Second, Westwind's failure to negotiate a liability limitation with Transpro does not affect the application of the Kirby rule. In Kirby, each intermediary negotiated a limitation of liability with the party immediately downstream. See Kirby, 543 U.S. at 18-21, 125 S.Ct. at 390-91. Here, Transpro and Westwind did not negotiate a limitation of liability. As a consequence, Ace argues that contracts downstream from this "gap" cannot be imputed back to Nextel. However, the holding in Kirby did not depend on each party's negotiation of a liability limitation. In fact, the rule expressly made such interactions irrelevant. Carriers do not need to investigate upstream contracts. They are entitled to assume that the party entrusted with goods may negotiate a limitation of liability. To hold otherwise would defeat the principle of efficiency that motivated the Kirby holding. Moreover, this again produces an equitable result. The cargo owner retains the option to sue the intermediary who failed to protect itself by negotiating a liability limitation.
Ace relies heavily on Atkins Machinery v. CH Powell Co., Inc., 455 F.Supp.2d 461 (D.S.C.2006), to bolster its argument. However, Atkins provides no support for Ace's position.[5] In Atkins, the plaintiff contracted with a freight forwarder to make arrangements for the transportation of some of its machinery. The freight forwarder contracted with D.M. Consol Line ("DML") to charter space on an American President Lines ("APL") vessel. APL hired Cooper, L.L.C. ("Cooper") to perform stevedore services. Cooper negligently damaged the machinery. The plaintiff sued Cooper to recover damages. Cooper sought to limit its liability under the terms of APL's standard bill of lading. Id. at 463. The district court rejected this argument because Cooper failed to show that DML and APL intended APL's standard bill of lading to apply to the handling of the particular machinery that was damaged. Id. at 469-70. In fact, the district court found that there was no evidence DML and APL negotiated any limitation of liability with respect to this particular machinery. Thus, Atkins stands for the unremarkable proposition that Cooper could not limit its liability under a contract none of the parties ever agreed would govern the handling of the cargo at issue. In other words, Cooper was entitled to no limitation of liability where Cooper had no contract (nor was a beneficiary of any contract) entitling it to do so.
*1326 Ace makes a strained attempt to argue that this opinion, decided after Kirby, supports the assertion that each intermediary must negotiate a limitation of liability. Just as DML and APL failed to negotiate a limitation of liability, Ace argues that Westwind and Transpro also failed to negotiate for a limitation. According to Ace, because Transpro failed to negotiate a limitation of liability with Westwind, Transpro was no longer "empowered" under traditional agency principles to negotiate a limitation of liability with Werner. Atkins does not stand for such a sweeping proposition, which, as discussed above, would be squarely inconsistent with the holding and rationale of Kirby. Atkins merely states the common sense rule that in order to limit a cargo owner's recovery the intermediary and the carrier must agree to some limitation of liability.
B. A Carrier Must Give a Cargo Owner or Its Intermediary a Reasonable Opportunity to Choose Between Two or More Levels of Liability
Under the Carmack Amendment, a carrier of property in interstate commerce is liable for "the actual loss or injury to the property caused by" the carrier. 49 U.S.C. § 14706(a)(1). However, a carrier may limit its liability "to a value established by written or electronic declaration of the shipper or by written agreement between the carrier and shipper if that value would be reasonable under the circumstances surrounding the transportation." Id. § 14706(c)(1)(A). The Eleventh Circuit uses a four-step inquiry to determine whether a carrier has effectively limited its liability under the Carmack Amendment. A carrier must: (1) maintain a tariff within the prescribed guidelines of the Interstate Commerce Commission, (2) give the shipper a reasonable opportunity to choose between two or more levels of liability, (3) obtain the shipper's agreement as to the choice of liability, and (4) issue a receipt or bill of lading prior to moving the shipment. Sassy Doll Creations, Inc. v. Watkins Motor Lines, 331 F.3d 834, 838-39, 841 (11th Cir.2003).[6] Ace claims that Werner did not meet the second element of this test. We disagree.
In Sassy Doll, the reasonable opportunity to choose was also in dispute.[7]*1327 There, the shipper brought an action against the carrier to recover damages for the full value of a lost shipment of perfume. Id. at 836. The carrier's tariff required the shipper to indicate in writing on the bill of lading the total dollar amount of excess liability coverage requested. The bill of lading contained a declared value box, where the shipper filled in the actual value of the perfume.[8] However, the bill of lading did not contain a section for the shipper to insert a request for additional coverage. Id. at 837-38. Accordingly, this Court found: "Forcing the shipper to express a choice where there is no proper place to do so is not providing the shipper with a reasonable opportunity to choose." Id. at 843.
Relying on this authority, Ace argues thatcontrary to the requirement of Sassy Doll that the shipper must have an opportunity to choose a higher level of liabilitythe BTA gave the carrier, rather than the shipper, the power to assume a higher amount of coverage. According to Ace, this is the same type of illusory choice seen in Sassy Doll. Ace relies on Paragraph 6 of the BTA, which states: "Carrier's maximum liability for loss or damage to cargo shall not in any event exceed Two Hundred Thousand Dollars ($200,000) per truckload shipment unless a higher degree of liability is specifically assumed in writing by an authorized representative of Carrier." However, we do not read the BTA as Ace urges. Paragraph 6 must be read in conjunction with Paragraph 3, which incorporates the terms of Werner's tariff. The tariff states that "shippers may, at their option, select liability coverage for loss or damage to cargo as set forth in 49 U.S.C. § 14706 (`Carmack Liability') as provided in item 385." These terms can be readily reconciled. Thus, under the BTA, the shipper is given the opportunity to elect full liability coverage by completing the steps listed in item 385 of the tariff, paying the increased freight rate and obtaining the carrier's authorization in writing. Contrary to Ace's argument, in this case it is the shipper (or Transpro, the shipper's agent to select limited liability pursuant to Kirby) who ultimately has the power to elect higher coverage.[9] The carrier simply has the right to approve the request and charge a correspondingly higher rate.
We also disagree with Ace's assertion that the shipping document itself must include the choice of rates in order for the shipper to have a reasonable opportunity to choose between them. Our decision in Siren, Inc. v. Estes Express Lines, 249 F.3d 1268 (11th Cir.2001), forecloses this argument. In Siren, the shipper sued the carrier for the full value of a lost shipment of razor blades. The shipper prepared the bill of lading. It indicated that the shipment would travel under "Class 85," a *1328 designation commonly understood throughout the trucking industry to limit a carrier's liability to $11.87 per pound. Furthermore, the carrier's tariff stated that Class 85 shipments included a liability limitation of $11.87 per pound. Id. at 1269. The question before this Court was whether the bill of lading could limit the carrier's liability if it did not incorporate by reference the carrier's tariff and choice of liability limitations. Id. at 1270. We referred to the statute itself that allowed a carrier to limit its liability, by "written agreement between the carrier and the shipper." Id. at 1270 (quoting 49 U.S.C. § 14706(c)(1)(A)). We held:
The statute merely requires that the carrier and shipper agree in writing to a reasonable value, above which the carrier will not be liable. In other words, the statute requires nothing more than a valid written contract between the parties establishing a reasonable value for the purpose of limiting the liability of the carrier.
Id. at 1271 (citation omitted).
We were particularly persuaded by the fact that the shipper drafted the bill of lading. Id. In fact, we have consistently been reluctant to protect a sophisticated shipper from itself when it drafts a shipping document. See Sassy Doll, 331 F.3d at 843 ("Our sympathy does not go out to the drafter of a bill of lading who blames another party for the results that flow from defects in that document"); Swift Textiles, Inc., v. Watkins Motor Lines, Inc., 799 F.2d 697, 704 (11th Cir.1986) (holding that the shipper could not complain that it did not have actual notice of a tariff provision incorporated by reference in a shipping document prepared by the shipper's own agent).
The facts of this case are analogous. Nextel requested the use of the Motorola manifest rather than a bill of lading as the shipping document. We are not persuaded by the allegations of defect in that document. Werner and Transpro entered into the BTA, a valid written contract, which incorporated Werner's tariff and provided that each shipment was "deemed to move on a uniform straight bill of lading" as contained in Werner's tariff. The tariff limited Werner's liability to $200,000 per truckload unless Transpro selected higher liability. Moreover, the tariff, in item 385, gave precise instructions to the shipper (or in this case to Transpro, the shipper's agent to select limited liability pursuant to Kirby) as to how to select a higher level of liability coverage. Therefore, we conclude that Werner and Transpro entered into a written contract providing the shipper with a reasonable opportunity to choose between two or more levels of liability. As we held in Siren, this is all that is required under the Carmack Amendment. The manifest itself did not need to include the choice of levels of liability and rates; that choice was provided in a separate written contract, and Transpro chose not to increase the liability for this shipment or any of its shipments on behalf of Nextel. Thus, the requirements of the Carmack Amendment, as laid out in Sassy Doll, are satisfied.
C. The Rate of Prejudgment Interest
The district court's decision to award prejudgment interest is reviewed for abuse of discretion. In re Int'l Admin. Serv., Inc. v. Northern, 408 F.3d 689, 709 (11th Cir.2005). "In the absence of a controlling statute, the choice of a rate at which to set the amount of prejudgment interest is also within the discretion of a federal court." Id. at 710; see also Indus. Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434, 1447 (11th Cir.1998). "That decision is `guided by principles of reasonableness and fairness, by relevant state law, and by the relevant fifty-two week United States Treasury *1329 bond rate, which is the rate that federal courts must use in awarding post-judgment interest.'" In re Int'l Admin. Serv., Inc., 408 F.3d at 710 (quoting Indus. Risk Insurers, 141 F.3d at 1447 (citing 28 U.S.C. § 1961)).[10] The district court used as guidance the rate that federal courts use in awarding post-judgment interest. Ace presented no evidence to show that this was unfair or an abuse of discretion. Accordingly, we find no error.
III. CONCLUSION
For the foregoing reasons, we affirm the district court's entry of summary judgment as to limitation of liability in favor of Werner.
AFFIRMED.
NOTES
[*] Honorable Maurice B. Cohill, Jr., United States District Judge for the Western District of Pennsylvania, sitting by designation.
[1] We review the entry of summary judgment de novo. See Whatley v. CNA Ins. Co., 189 F.3d 1310, 1313 (11th Cir.1999). Summary judgment is appropriate when the evidence, viewed in the light most favorable to the nonmoving party, presents no genuine issue of fact and compels judgment as a matter of law. Id.; Fed.R.Civ.P. 56(c).
[2] Ace's remaining arguments are dismissed without need for further discussion.
[3] Himalaya Clauses extend liability limitations to downstream parties, in this case to "all agents ... (including inland) carriers ... and all independent contractors whatsoever." Kirby, 543 U.S. at 20-21, 125 S.Ct. at 391.
[4] Ace's attempt to distinguish Great Northern fails. When the Supreme Court decided Great Northern, the law required carriers to file tariffs for household goods with the Interstate Commerce Commission. Interstate Commerce Act, ch. 104 § 6, 24 Stat. 379, 381 (1887); see also Great Northern, 232 U.S. at 511, 34 S.Ct. at 382. Ace contends that the act of filing the tariff gave cargo owners notice of its liability limitations. However, the ICC Termination Act of 1995 eliminated the tariff filing requirement for household good carriers. See Pub.L. No. 104-88, 109 Stat. 803, 868-69 (codified at 49 U.S.C. § 13702). As a result, Ace argues that the Supreme Court's reliance on Great Northern no longer justifies the expansion of Kirby into non-maritime law because cargo owners no longer have notice of liability limitations in carriers' tariffs. This argument cannot succeed. Merely filing a tariff does not give a cargo owner notice of liability limitations because the cargo owner remains unaware if its intermediary actually selects the limited liability rate. In fact, this was the exact factual circumstance in Great Northern, 232 U.S. at 510, 34 S.Ct. at 381. Furthermore, Kirby was decided in 2004, long after the tariff filing requirements were altered in 1995. In relying on Great Northern, the Supreme Court gave no indication that its holding was affected by the change in tariff filing requirements. Thus, Ace asserted no persuasive reason to decline to extend Kirby beyond maritime cases.
[5] Moreover, Atkins is a federal district court decision from another circuit, and would not be binding in any event.
[6] The Trucking Industry Regulatory Reform Act of 1994, Pub.L. No. 103-311, 108 Stat. 1673, and the ICC Termination Act of 1995 ("ICCTA"), Pub.L. No. 104-88, 109 Stat. 803, made several statutory changes that alter the first prong of this test. First, ICCTA abolished the Interstate Commerce Commission and replaced it with the Surface Transportation Board. Second, these Acts eliminated the requirement that certain carriers file tariffs with the Interstate Commerce Commission, and substituted the requirement that a carrier provide a shipper, on request, with "a written or electronic copy of the rate, classification, rules, and practices, upon which any rate applicable to its shipment or agreed to between the shipper and carrier is based." 49 U.S.C. § 13710(a); see Sassy Doll, 331 F.3d at 841. In other circumstances carriers are now required to file tariffs with the Surface Transportation Board. See 49 U.S.C. § 13702.
[7] Sassy Doll, decided in 2003, resolved a direct dispute between a carrier and a cargo owner. By virtue of Kirby, decided in 2004, the second element is now satisfied if the carrier gives the cargo owner or its intermediary notice and a reasonable opportunity to choose between two or more levels of liability. Ace's insistence that the second element of Sassy Doll requires that the carrier not only give such notice of liability limitations to the intermediary with whom the carrier deals, but also requires the carrier to give such notice to each intervening intermediary (and ultimately to the owner or shipper) is inconsistent with the Supreme Court's ruling in Kirby. "[W]hen it comes to liability limitations for negligence resulting in damage, an intermediary can negotiate reliable and enforceable agreements with the carriers it engages." Kirby, 543 U.S. at 33, 125 S.Ct. at 398. Contrary to Ace's argument, Kirby eliminated the need for carriers to investigate the long chain of intermediaries. Id. at 34-35, 125 S.Ct. at 399. Moreover, although not necessary under Kirby, Nextel did have notice of the liability limitation. Paragraph 7 of Westwind's Invoice expressly stated that downstream intermediaries might limit liability.
[8] As noted in the text, in Sassy Doll, the shipper indicated on the bill of lading the full value of the shipped goods, thus fulfilling a major portion of the process to select full liability coverage under the carrier's tariff. Unlike Sassy Doll, in the instant case no one on behalf of Nextel ever indicated to Werner what the full value of the goods was or that full liability coverage was sought. Transpro did not do so in its written agreement with Werner. Neither Nextel nor its manufacturer, Motorola, so indicated. The manifest under which the goods were carried was silent in this regard.
[9] Transpro of course was party to the BTA and also possessed a copy of Werner's tariff, which was incorporated.
[10] In Sunderland Marine Mutual Insurance Co. v. Weeks Marine Construction Co., 338 F.3d 1276, 1280 (11th Cir.2003), we held, in that admiralty case, that the rate of prejudgment interest that should be awarded is the prime rate during the relevant period. As evidenced by the pre-Sunderland case cited in the text, and other binding pre-Sunderland cases, district courts have long had discretion in this Circuit to set the rate of prejudgment interest in both maritime and non-maritime contexts. See also Kilpatrick Marine Piling v. Fireman's Fund Ins. Co., 795 F.2d 940, 947 (11th Cir.1986) (holding that admiralty courts have discretion in setting the rate of prejudgment interest). Because panels prior to the decision in Sunderland had held that the choice of a rate for prejudgment interest is within the discretion of the district court, we need not address the binding effect of Sunderland, even in a maritime case. We hold only that in this non-maritime case, Sunderland is not binding, and the district court did not abuse its discretion.
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Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
7-10-2007
Li v. Atty Gen USA
Precedential or Non-Precedential: Non-Precedential
Docket No. 06-1945
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 06-1945
SHI XIONG LI a/k/a Zhong Min Chen;
ZHOU JIANG CHEN,
Petitioners
v.
ATTORNEY GENERAL OF THE UNITED STATES,
Respondent
On Petition for Review of a Decision
of the Board of Immigration Appeals
(BIA Nos. A72-483-967, A72-483-969)
Immigration Judge: R.K. Malloy
Submitted under Third Circuit LAR 34.1(a)
May 22, 2007
BEFORE: BARRY, CHAGARES, and TASHIMA,* Circuit Judges
(Filed: July 10, 2007)
OPINION
*
The Honorable A. Wallace Tashima, Senior Circuit Judge, United States Court of
Appeals for the Ninth Circuit, sitting by designation.
CHAGARES, Circuit Judge.
Shi Xiong Li and Zhou Jiang Chen are a married couple from China. They
petition for review of a final order of the Board of Immigration Appeals (“BIA”)
affirming the decision of an Immigration Judge (“IJ”) denying them asylum, withholding
of removal, and relief under the Convention Against Torture (“CAT”). Because we
conclude that the IJ’s decision is supported by substantial evidence, we will deny the
petition for review.
I.
We write only for the parties and we assume their familiarity with the record.
Petitioners testified to the IJ that they left China after Chen was forced by Chinese
officials to abort her second pregnancy in compliance with that country’s family planning
policies. Since their arrival in the United States, petitioners have had their second child,
and they testified that they plan to have more children. They both stated that they fear
sterilization if they return to China.
The IJ denied petitioners’ applications for asylum, withholding of removal, and
relief under CAT for two reasons. First, in an airport interview upon entry into this
country, petitioners mentioned neither their fear of sterilization nor the past abortion, and
therefore, the IJ found petitioners not credible. Second, petitioners could not corroborate
that Chen had had an abortion. The IJ would have accepted records noting the medical
-2-
history Chen provided when she went to a Pennsylvania hospital for prenatal care in
connection with her third pregnancy. The IJ explained that “when a pregnant woman
presents herself to a hospital, a reputable hospital certainly takes a gynecological history,
specifically noting previous pregnancies.” AR 53. Petitioners failed to provide
satisfactory records, which presumably were reasonably available, and the IJ denied
relief.
The BIA issued a brief order in which it described the IJ’s adverse credibility
finding, and then stated that the BIA affirmed for the reasons set forth by the IJ.1
II.
Our review of a BIA order is deferential. “If a reasonable fact finder could make a
particular finding on the administrative record, then the finding is supported by
substantial evidence” and we will affirm. See Dia v. Ashcroft, 353 F.3d 228, 249 (3d Cir.
2003). We will reverse only if we conclude that the record “compels” that we do so. INS
v. Elias-Zacarias, 502 U.S. 478, 481 n.1 (1992) (emphasis removed). Finally, we review
the IJ’s opinion to the extent the BIA adopted it. See Miah v. Ashcroft, 346 F.3d 434,
1
The BIA order provided:
The Immigration Judge denied the applicants’ asylum application on the
basis of an adverse credibility finding. The Immigration Judge found the
applicants’ testimony to be inconsistent with the statements they had made
upon arrival in the United States. We are not persuaded by the applicants’
explanations.
Accordingly, the Immigration Judge’s decision is affirmed for the reasons
stated therein and the appeal is dismissed.
AR 2 (internal citations omitted).
-3-
439 (3d Cir. 2003); Abdulai v. Ashcroft, 239 F.3d 542, 549 (3d Cir. 2001).
Here, the IJ analyzed credibility separately from the failure to corroborate and
denied petitioners’ applications for both reasons. See Toure v. Attorney Gen. of U.S.,
443 F.3d 310, 323 (3d Cir. 2006) (“Corroboration and credibility, although intuitively
related, are distinct concepts that should be analyzed independently.”). Because the
BIA’s affirmance relied only on the adverse credibility finding, that finding should be the
focus of our review on appeal. But petitioners do not challenge it. Instead, they argue
that the IJ improperly rested her decision on the lack of evidence corroborating
petitioners’ claim that Chen had had an abortion. Pet. Br. 12. Although the BIA did not
specifically mention this aspect of the IJ’s opinion in its affirming order, we address this
argument out of an abundance of caution as it is possible that the lack of corroboration
influenced the BIA’s decision to affirm the IJ’s credibility determination.
The BIA has determined that “where it is reasonable to expect corroborating
evidence for certain alleged facts pertaining to the specifics of an applicant’s claim, such
evidence should be provided.” In re S-M-J-, 21 I. & N. Dec. 722, 725 (BIA 1997). We
have described this rule as requiring three tasks of the IJ:
(1) an identification of the facts for which “it is reasonable to expect
corroboration;” (2) an inquiry as to whether the applicant has provided
information corroborating the relevant facts; and, if he or she has not, (3)
an analysis of whether the applicant has adequately explained his or her
failure to do so.
Abdulai, 239 F.3d at 554.
-4-
In this case, the IJ satisfied her obligation. The IJ explained to petitioners (and
their counsel) that, because their claim for asylum was based on a forced abortion in
China, and because petitioners could not provide authenticated Chinese records of the
abortion, the IJ would accept medical records from a Philadelphia hospital that included
Chen’s gynecological history. At a hearing on August 27, 2002, petitioners’ counsel
informed the IJ that she was attempting to obtain the medical records. The IJ indicated
the significance of these records to petitioners’ claims. She then continued the hearing
multiple times to allow petitioners’ counsel time to obtain the records.
After much delay, petitioners’ counsel obtained a copy of a record that was
supposed to contain notes from Chen’s prenatal-care visit at a Philadelphia hospital and
submitted it to the court in September of 2004. The IJ observed that the word “abortion”
and a date appeared on the record, as did notations regarding two births by cesarean
section. Chen had her second cesarean section when she gave birth in the United States
and therefore the notation regarding two cesarean sections could not have been created
contemporaneously with Chen’s first arrival at the hospital weeks prior to delivery. In
addition, the record appeared to be altered, with some text looking like it was
“overwritten.” AR 172. Petitioners’ counsel conceded that the key information in the
record appeared to be written after the record was initially created.
Petitioners do not dispute that the IJ was entitled to conclude that the submitted
record was altered and unreliable. Rather, they seem to argue only that it was
-5-
unreasonable for the IJ to request corroboration for the abortion because their testimony
was otherwise credible and corroborated.
We have previously held “that the BIA may sometimes require otherwise-credible
applicants to supply corroborating evidence in order to meet their burden of proof.” See
Abdulai, 239 F.3d at 554. Even when an IJ fails “to make a valid credibility
determination,” we will not reverse or remand the BIA’s order affirming the IJ if
“reasonable requests for corroboration were inexplicably unmet.” See Obale v. Attorney
Gen. of the U.S., 453 F.3d 151, 163 (3d Cir. 2006). Thus, even assuming petitioners were
otherwise credible, it could be proper for the IJ to request corroboration. It does no good
for petitioners to argue, as they do, that because petitioners “corroborate[d] several
aspects of [Chen’s] testimony, including the circumstances surrounding her early
marriage and pregnancy,” the IJ incorrectly requested corroboration of the abortion. Br.
12. Corroboration of these facts is irrelevant. The IJ identified the fact of the abortion to
be crucial to the asylum application. Despite having numerous opportunities, petitioners
did not explain why that fact could not be corroborated through a local hospital’s
preexisting records of medical history as a general matter or what special circumstances
prevented petitioners from providing such corroboration as a specific matter.
Accordingly, the IJ’s request for corroboration and reliance on the lack thereof was not
inappropriate.
More importantly, substantial evidence supports the IJ’s adverse credibility
-6-
finding, and the BIA’s affirmance on that ground. Petitioners’ testimony before the IJ
differed dramatically from statements they made in airport interviews. Although “we
have counseled against placing too much weight on an airport interview,” we have also
acknowledged that “where the discrepancies between an airport interview and the alien’s
testimony ‘go to the heart of the claim,’ they certainly support an adverse credibility
determination.” Chen v. Ashcroft, 376 F.3d 215, 223-24 (3d Cir. 2004). In this case,
petitioners said at the airport that they came to the United States for economic and
quality-of-life reasons. They failed to tell the asylum officer about two events that were
key parts of their testimony before the IJ: Chen’s forced abortion and Li’s altercation
with child planning officials. These failures go to the heart of petitioners’ claims.
Moreover, petitioners do not claim the airport interview was conducted in a frightening or
confusing way, or that the statements made then were inherently unreliable for other
reasons. Accordingly, we conclude substantial evidence supports the IJ’s adverse
credibility finding.
III.
For the foregoing reasons, we will deny the petition.
-7-
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368 F.2d 475
AMERICAN SURETY COMPANY OF NEW YORK, a corporation, and J. L. McBride dba Mac Exploration Company, Defendants/Appellants,v.UNITED STATES of America FOR the Use and Benefit of B & B DRILLING COMPANY, a corporation, Plaintiff/Appellee.
No. 20710.
United States Court of Appeals Ninth Circuit.
November 3, 1966.
Morton Galane, Las Vegas, Nev., for appellants.
Singleton, DeLanoy & Jemison, Rex Jemison, Las Vegas, Nev., for appellee.
Before POPE, MERRILL and KOELSCH, Circuit Judges.
POPE, Circuit Judge.
1
This was an action brought under the Miller Act, 40 U.S.C. §§ 270a and 270b, to recover sums owing to the use plaintiff B & B Drilling Company, for equipment, labor and supplies furnished to the defendant McBride.
2
On March 15, 1960, United States, acting through the Atomic Energy Commission, entered into a written contract with McBride whereby the latter agreed to furnish all necessary materials, equipment and labor to drill seven well holes at the atomic test site at Camp Mercury, Nevada. On May 9, thereafter, McBride subcontracted a portion of the work under a written contract to the use plaintiff. The contract provided that the use plaintiff would drill holes to an estimated 6150 linear feet in depth and would furnish all equipment, labor and supplies necessary in connection therewith and in accordance with specifications and accepted drilling practices. It was provided that the work should be covered by a performance bond but the amount thereof was not specified. Payments for the work were to be made on or about the 15th day following the end of the month in which the work was performed, at stated amounts per lineal feet.
3
The use plaintiff entered the test site on May 18, 1960, and after several days spent in obtaining security clearance and setting up drilling equipment it began drilling on May 24 with McBride's approval although a performance bond had not been posted. On June 23, approximately one month after work commenced, an addendum was made to the original subcontract to the effect that the use plaintiff would obtain a performance and payment bond in the amount of $25,000. On July 28, thereafter, use plaintiff learned that it could not secure such a bond and communicated the information to McBride. The reason for this inability was that surety companies will not issue such bonds on work that is already in progress. Use plaintiff continued to drill until August 10, 1960, on which date it had not received payments for drilling previously done. On August 15, use plaintiff again demanded payment of the amount then due on the contract. This payment was refused because of the failure of use plaintiff to post the payment bond. McBride ordered the use plaintiff off the test site.
4
Upon trial to the court sitting without a jury, the court found that the failure of use plaintiff to obtain the bond was not a material breach of the contract but only a partial breach of such character that McBride was not validly excused from performing; that such failure did not give McBride the right to rescind the contract; that McBride was not justified in refusing to make the payments due for the work performed; that McBride had suffered no loss in consequence of the failure to furnish the bond; that he had not been required to pay for any of the use plaintiff's materials or labor and suffered no damages in consequence thereof. It found that the use plaintiff had substantially complied with the requirements of the contract. The court found that the amount due from the defendant to the use plaintiff under the written contract for two holes drilled was $22,149. After allowing two items of set-off against this sum1 it entered judgment for use plaintiff for the balance of $16,065 plus interest.
5
The defendants then took this appeal. Their first and principal contention is that the failure of the use plaintiff to obtain the bond was a material and substantial breach of contract on its part which operated to excuse McBride from any performance on his part and to render him not liable for the payment of the sums here awarded.
6
If we assume, as has been held, that the materiality of a breach of contract is primarily a factual question, Associated Lathing and Plastering Co. v. Louis C. Dunn, Inc., 135 Cal.App.2d 40, 286 P.2d 825, 830, and if the court's finding that the failure of the use plaintiff to obtain the bond was not a material breach, going to the essence of the contract, but was only a partial breach of contract, then authorities may be cited which hold that a slight breach will not necessarily end further duties of the injured person for the performance of the contract.2
7
Although the trial court's decision supporting a suit upon the contract was based upon the court's finding of substantial performance on the part of the use plaintiff, it is plain that recovery upon the contract might also have been allowed on the ground that since the performance of the condition relating to a payment bond was impossible from the beginning the non-performance of that condition could not be a defense for McBride.3
8
We think, however, that this case may be disposed of upon grounds which do not require us to inquire into the materiality or substantiality of the use plaintiff's failure to furnish the bond — grounds which disclose that in any event the use plaintiff was entitled to recover the judgment which was here awarded to him. We now refer to the rule set forth in Restatement of the Law of Contracts, § 357, which in material part reads as follows: "§ 357. Restitution in Favor of a Plaintiff Who Is Himself In Default. (1) Where the defendant fails or refuses to perform his contract and is justified therein by the plaintiff's own breach of duty or non-performance of a condition, but the plaintiff has rendered a part performance under the contract that is a net benefit to the defendant, the plaintiff can get judgment, except as stated in Subsection (2), for the amount of such benefit in excess of the harm that he has caused to the defendant by his own breach, in no case exceeding a ratable proportion of the agreed compensation, if
9
(a) the plaintiff's breach or non-per-performance is not wilful and deliberate; or
10
(b) the defendant, with knowledge that the plaintiff's breach of duty or non-performance of condition has occurred or will thereafter occur, assents to the rendition of the part performance, or accepts the benefit of it, or retains property received although its return in specie is still not unreasonably difficult or injurious.
11
(2) (Not material here) * * *
12
(3) The measure of the defendant's benefit from the plaintiff's part performance is the amount by which he has been enriched as a result of such performance unless the facts are those stated in Sub-section (1b), in which case it is the price fixed by the contract for such part performance, or, if no price is so fixed, a ratable proportion of the total contract price."
13
Appellant asserts and we assume that the law here applicable would be the law of Nevada. See Continental Casualty Company v. Schaefer, 9 cir., 173 F.2d 5, 7 to 8. While we find no Nevada cases dealing with problems of this kind, the rule stated in the last quotation from § 357 of the Restatement has been so universally approved that we take it for granted that the Supreme Court of Nevada would follow it.4 Particularly significant here is the fact that McBride knew of the use plaintiff's inability to procure the payment bond and yet he permitted the work to proceed. It is obvious that the use plaintiff's failure to supply the bond was not wilful or deliberate. Because McBride assented to the performance of the work by the use plaintiff notwithstanding his knowledge that the bond had not been supplied, he would be liable here even if the use plaintiff's breach had been wilful and without semblance of excuse.5
14
It is plain that if use plaintiff is permitted to recover under the rules set forth in Restatement § 357, supra, his recovery would be essentially one based on unjust enrichment of the defendant. If it be assumed that use plaintiff in failing to furnish the payment bond was guilty of a substantial default in the performance of the contract, then the recovery by the plaintiff would be upon the theory that he has rendered a part performance of value; or, as stated by Corbin on Contracts, § 1124, Vol. 5A, upon the theory "that he has done more good than harm to the defendant, and that the defendant will be unjustly enriched and the plaintiff unjustly penalized if the defendant is allowed to retain the beneficial part performance without paying anything in return."6
15
Since the trial court based its judgment upon the contract itself and not upon any theory of quasi-contractual liability, it of course based its award of damages upon the prices and rates of payment stated in the contract itself. The question arises whether, if we affirm the judgment for use plaintiff upon grounds stated in § 357 of the Restatement, supra, the measure of defendant's benefit is the price fixed by the contract for the part performance.
16
One answer to this question is to be found in the section of the Restatement quoted above. There it is stated, where, as here, defendant assents to, or receives the benefit of part performance, the measure of defendant's benefit is "the price fixed by the contract for such part performance." In short, since defendant with knowledge of the failure to furnish the payment bond, assented to the continuance of the drilling by the use plaintiff, it is fair to conclude that in doing so defendant contemplated payment according to the contract prices. The authorities generally agree that under these circumstances, where there has been a voluntary acceptance of an imperfect performance the court may adopt as a proper measure of liability the contract price less the damages sustained by the defendant in consequence of lack of perfect performance. Roseleaf Corp. v. Radis, supra, footnote 4.7
17
It seems plain therefore that it was proper, under any theory, to award the use plaintiff the damages fixed by the trial court.8
18
Appellants assert that the court improperly allowed recovery of interest for a period prior to the entry of the judgment. Under the terms of the contract plaintiff should have received a payment on August 15, 1960, and it was this payment which McBride refused. As against McBride the court awarded interest at the legal rate from August 15, 1960. As against American Surety Company interest was awarded from the date of service of summons upon it. Liability for interest in a suit under the Miller Act is covered by the law of the state where the contract and bond were performed. Illinois Surety Company v. John Davis Co., 244 U.S. 376, 37 S.Ct. 614, 61 L.Ed. 1206. In Nevada the award of interest is governed by Nevada Revised Statutes § 99.040 which provides in part as follows: "When there is no express contract in writing fixing a different rate of interest, interest shall be allowed at the rate of 7 percent per annum upon all money from the time it becomes due, in the following cases: 1. Upon contracts, express or implied, other than book accounts. * * * 4. Upon money received to the use and benefit of another and detained without his consent."
19
In Sierra Pacific Power Co. v. Nye, 80 Nev. 88, 389 P.2d 387, 391, the Supreme Court of Nevada held that a purchaser of electric power who recovered over-payments for electric power from the power company was entitled to interest on the amount overpaid between the time the overpayments were made and the time the judgment was rendered. The court based its decision upon the language quoted above from the Nevada statute. It will be noted that that action was also one in which recovery was based upon a contract implied from the unjust enrichment of the defendant. The court held that that recovery was proper because the amount owing was "definitely ascertainable by mere mathematical calculation." We have a like situation here.
20
Of course the set-offs which were allowed to McBride were for amounts which were unliquidated. That, however, does not alter or diminish the plaintiff's right to recover the interest which was here allowed. It is a general rule that where the amount of a claim is certain, as here, but is reduced by reason of an unliquidated set-off or counterclaim thereto, interest is properly allowed on the amount found to be due from the time it became due and was demanded.9
21
We hold that interest was properly awarded and added to the amount of the judgment.
22
The judgment is affirmed.
Notes:
1
A hole drilled by use plaintiff had not been in proper alignment and had to be reconditioned so as to meet the requirements of the contract. This reconditioning was accomplished by the defendant at a cost of $2088. One item of set off was this $2088. Another was the sum of $3996 for additional wages which McBride was required to pay because of the provisions in the contract with which use plaintiff had not complied
2
See Williston on Contracts, Rev.Ed., Vol. V, § 1290, p. 3675: "Though breach to any extent of any promise in a contract gives rise to a cause of action, it has already appeared that a slight breach will not necessarily end further duties of the injured person for the performance of the contract. In spite of a slight breach a promisor may be able so nearly to fulfill the terms of his promise that the just way to deal with the situation is to hold the promisor liable merely for the defect in the performance and not to regard the contract as terminated and as being transformed into a right of action entitling the injured party to recover damages equal in value to the whole performance of the contract." See also Restatement Law of Contracts, § 313; and 17A C.J.S. Contracts § 509, p. 816
3
See 17A C.J.S. Contracts §§ 461 and 463(1)c, pp. 605 and 613
4
See cases cited 5 Williston on Contracts § 1475, notes 2, 5, (Rev. Ed.); and 17A C.J.S. Contracts § 511; Roseleaf Corp. v. Radis, 122 Cal.App.2d 196, 264 P.2d 964, 969, 971; Jones & Laughlin Steel Co. v. Abner Doble Co., 162 Cal. 497, 123 P. 290, 294; Burke v. McKee, Okl., 304 P.2d 307, 310; Leoffler v. Wilcox, 132 Colo. 449, 289 P.2d 902, 904; Mallory v. City of Olympia, 83 Wash. 499, 145 P. 627, 630; Miles Homes, Inc. of Wisconsin v. Starrett, 23 Wis.2d 356, 127 N.W.2d 243, 246; Amtorg Trading Corp. v. Miehle Printing Press & Mfg. Co., 2d cir., 206 F.2d 103; Michigan Yacht & Power Co. v. Busch, 6 cir., 143 F. 929, 934
5
See Comment "f" to Restatement § 357, supra, as follows: "Even though the plaintiff's breach is wilful and without semblance of excuse, the defendant must restore the excess of benefit over harm if, with knowledge that the breach has occurred or is impending, he assents to the part performance, or retains it or accepts the benefit of it unreasonably. If the part performance is received without such knowledge and is of such a character that it cannot be returned in specie without unreasonable difficulty or sacrifice, it may be retained without making restitution, even though it exceeds the injury. Such is sometimes the case when the part performance has been incorporated with the defendant's land or goods. Doubts in cases of this kind are resolved in favor of the plaintiff, in order to avoid a forfeiture in excess of harm suffered."
6
Dermott v. Jones, 64 U.S. 220, 233, 16 L.Ed. 442; "Still, if the other party has derived any benefit from the labor done, it would be unjust to allow him to retain that without paying anything. The law, therefore, implies a promise on his part to pay such a remuneration as the benefit conferred is really worth; and to recover it, an action of indebitatus assumpsit is maintainable."
7
See cases cited in 5A Corbin on Contracts § 1124, footnote 17, and in Williston on Contracts, Rev. Ed., § 1480, footnote 8; Katz v. Bedford, 77 Cal. 319, 19 P. 523, 1 L.R.A. 826; Lowe v. Rosenlof, 12 Utah 2d 190, 364 P.2d 418, 421; and Valentine v. Patrick Warren Const. Co., 263 Wis. 143, 56 N.W.2d 860
8
There can be no doubt that McBride actually received benefits equal to the $9 per linear foot fixed by the contract. McBride was receiving $12.50 a foot for the same work from the Government
9
See annotations on "Reduction of claim under contract as affecting right to interest," 3 A.L.R. 809, 89 A.L.R. 678. Hansen v. Covell, 218 Cal. 622, 24 P.2d 772, 775, 89 A.L.R. 670. Upon the general right to recover interest upon an amount owing which is ascertainable by computation, see Mall Tool Co. v. Far West Equipment Co., 45 Wash.2d 158, 273 P. 2d 652
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3 Cal.2d 345 (1935)
CAROLINE H. LEWIS, Appellant,
v.
C. MORTON BOOTH, Respondent.
L. A. No. 15015.
Supreme Court of California. In Bank.
April 24, 1935.
ChaS.E. McGinnis and W. Frank Shelley for Appellant.
C. Morton Booth, in pro. per., and Albert J. Signer for Respondent.
SEAWELL, J.
Plaintiff appeals from a judgment that she take nothing by her complaint. By the allegations of said complaint, plaintiff, Caroline H. Lewis, claiming to be the assignee of a deed of trust, alleged that a prior assignment of said deed of trust held by defendant, C. Morton Booth, was a false, forged and simulated assignment. She prayed that the assignment held by defendant be canceled, and that the record thereof be expunged from the Torrens title record.
The deed of trust in question was executed on August 23, 1932, by Leroy O. Schultz to secure payment of a promissory note for $2,500. S. J. McElroy was named as payee of the note and beneficiary of the deed of trust. Said Mrs. McElroy was secretary to defendant C. Morton Booth, a practicing attorney. He testified that the note and deed of trust were executed in payment for legal services rendered and costs advanced by him for Schultz, and that Mrs. McElroy was named as payee and beneficiary to suit the joint convenience of Schultz and defendant. Mrs. McElroy testified that Booth promised her $500 of the proceeds to augment the salary which he was able to pay her, but beyond that she had no beneficial interest in the note and deed of trust, which at all times remained in the possession of Booth. In June, 1933, Mrs. McElroy was ill and planning to go to the hospital. At the request of Booth she indorsed the note and signed her name to a printed form of assignment of deed of trust in which the blanks had not been filled in. She also procured a notary to sign a blank acknowledgment attached thereto. The blanks were subsequently filled in to assign the deed of trust to Booth as of July 3, 1933. Mrs. McElroy testified that she herself did not complete the assignment because she was too ill at the time, but that she had executed it in blank with the understanding that it was to be used to assign said deed of trust to Booth.
Subsequently, while Mrs. McElroy was seriously ill and in desperate need of funds, she executed the assignment dated *348 July 26, 1933, to plaintiff Caroline H. Lewis, sister of Leroy O. Schultz, maker of the note and deed of trust. All negotiations for this assignment were conducted by Schultz. According to Schultz, he procured Mrs. McElroy to execute this assignment upon promising to pay her $440, of which he then gave her $30 and since has paid her about $100. He testified that he procured the assignment to be made to his sister, plaintiff Caroline H. Lewis, because he was indebted to her in the sum of $3,000 for money advanced to him. His testimony as to his indebtedness to his sister is not convincing, nor is her testimony on this point satisfying. Mrs. McElroy testified that she signed this assignment to Caroline H. Lewis, together with other papers presented to her by Schultz, when she was very ill. Included among the other papers which she signed, was a purported dismissal of an action brought in her name against Schultz to obtain delivery of the Torrens title certificate covering the property. This prior action resulted in a judgment for plaintiff McElroy, from which Schultz appealed. Upon motion of plaintiff, the appeal was dismissed by this court for failure of appellant to appear. It is doubtful whether Mrs. McElroy fully understood the nature of her acts at this time. The note and deed of trust, which at all times remained in the possession and under the control of defendant Booth, were not, of course, delivered to Schultz or to plaintiff Lewis. The assignment to plaintiff Lewis purported to also assign the note secured by said deed of trust and the money due and to become due thereon.
[1] Plaintiff failed utterly upon the trial to establish the allegations of her complaint that the assignment from Mrs. McElroy to Booth was a false, forged, simulated and fraudulent assignment. Mrs. McElroy testified that before the complaint was filed she informed plaintiff's attorney that her signature on the assignment to Booth was genuine. Nevertheless the allegations charging that the assignment to defendant Booth, a practicing attorney, was a forgery were embodied in the complaint and in the amended complaint. Failing to show a forgery, plaintiff advanced the contention that Mrs. McElroy was the beneficial owner of the deed of trust, and that the blanks in the assignment were wrongfully filled in by defendant Booth, or by his procurement, without the knowledge of Mrs. McElroy. There is not a scintilla of *349 evidence to support this charge, which is directly contrary to the testimony of Mrs. McElroy and Booth that the assignment form, signed by Mrs. McElroy, was to be filled in to assign the deed of trust to Booth.
[2] Counsel for plaintiff on this appeal make much of the fact that the notary signed her name to a blank acknowledgment of a printed form of assignment, to which Mrs. McElroy had signed her name, but in which the blanks were not filled in, and the further fact that the impress of the notarial seal on said acknowledgment did not bear the name of said notary and was not in fact made with a seal owned by her, but with a seal bearing no name. It is not required that a notary's seal bear a name. (Sec. 794, Pol. Code.) [3] Irrespective of the question of the propriety of the notary's conduct, an acknowledgment was not essential to a valid assignment of the deed of trust. The assignment form was completed when the blanks were filled in as intended by Booth and Mrs. McElroy. [4] Furthermore, the indorsement of the note by Mrs. McElroy, named as payee, transferred the deed of trust without other assignment. A lien is but an incident of the debt secured, and cannot be transferred apart therefrom. A transfer of the debt carries with it the lien. (Union Supply Co. v. Morris, 220 Cal. 331, 338 [30 PaCal.2d 394], and cases there cited.)
[5] Neither the note nor deed of trust were delivered to Schultz or plaintiff Lewis upon the subsequent assignment to said plaintiff, but said instruments at all times remained in the possession of defendant Booth. Under such circumstances, plaintiff could not claim to be a holder in due course. (Secs. 3097, 3111, 3133, Civ. Code.) Schultz, who acted for his sister, the plaintiff herein, in procuring the assignment to her, was the maker of the note and deed of trust, and knew that the note had been given to pay for legal services rendered for him by Booth, and that Mrs. McElroy had been named as payee for their joint convenience.
The judgment is affirmed.
Shenk, J., Curtis, J., Preston, J., and Waste, C.J., concurred.
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184 Conn. 594 (1981)
SILAS T. JOHNSON
v.
CATELLO PAGANO
Supreme Court of Connecticut.
Argued May 7, 1981.
Decision released July 14, 1981.
BOGDANSKI, C. J., PETERS, HEALEY, PARSKEY and ARMENTANO, JS.
Herbert Watstein, with whom, on the brief, was Julius Watstein, for the appellant (plaintiff).
Jon S. Berk, with whom, on the brief, was Thomas P. Barrett, for the appellee (defendant).
PER CURIAM.
This is an appeal from an action brought by the plaintiff seeking to recover damages for personal injuries. The jury returned a verdict for the defendant. From that judgment, the plaintiff has appealed.
The jury had the following evidence before it. On July 4, 1971, the plaintiff and his wife were guests of Bud and Theresa Lawrence. Mr. Lawrence arranged for the defendant to take them and their guests by boat from Westbrook to Clinton Beach for some bathing. It was a hot, sunny and calm day at the shoreline. Westbrook and Clinton are adjacent towns on the Connecticut shore. Long Island Sound is a navigable body of water.
Along the way, and when about 300 feet from the shore, the boat suddenly stopped, striking a sandbar. *595 The defendant asked Mr. Lawrence to assist him in getting the outboard motor out of the sand. They entered the water, lifted the engine out of the sand, and pulled the boat closer to shore. The water at this point was about twelve inches deep. The plaintiff's wife entered the water and said to Mr. Lawrence, "there's no water here.... It's only up to my ankles. I can't go swimming."
Meanwhile, the plaintiff, who was sitting in the bow of the boat next to Mr. Lawrence, stood up and said he was going to dive into the water. Both Mrs. Lawrence and the plaintiff's wife, who was standing in the water, tried to stop him. Nevertheless, the plaintiff dove in and in so doing injured his cervical spine.
At oral argument the plaintiff withdrew the
second count sounding in nuisance. We thus concern ourselves with the first count only, dealing with a cause of action in negligence. The allegations of negligence raised the issue concerning the duty of the defendant to warn the plaintiff not to dive into shallow water.
In answer to the complaint, the defendant denied being negligent and, by way of special defense, alleged that the plaintiff was negligent and assumed the risk of diving into shallow water when he dove from the defendant's boat.
The plaintiff takes issue with the adequacy of the court's charge as to negligence, contributory negligence[1] and assumption of risk. The jury returned *596 a general verdict for the defendant. No interrogatories were requested. There is therefore a presumption that the jury found every issue in favor of the defendant. Burcaw v. Sykora, 173 Conn. 229, 230, 377 A.2d 298 (1977). One of the defenses raised by the defendant's answer was a denial of any negligence. Thus, if any of the court's instructions are shown to be proper and adequate as to any one of the defenses raised, the general verdict will stand irrespective of any error in the charge as to the others. Kelly v. Bliss, 160 Conn. 128, 132, 273 A.2d 873 (1970); Meglio v. Comeau, 137 Conn. 551, 553, 79 A.2d 187 (1951).
The plaintiff maintains that the charge on reasonable care did not provide the jury with sufficient guidance. Practice Book § 3060F (c) (2) provides, in part: "When error is claimed in the charge to the jury, the brief shall include a verbatim statement of all relevant portions of the charge." A comparison of the charge as reprinted in the plaintiff's brief and the charge as actually given by the court shows that the plaintiff omitted relevant portions of the charge.[2] We cannot condone this practice. *597 Nevertheless, we have examined the court's charge as to reasonable care and find that it was adequate and sufficient for the guidance of the jury. See Messina v. Iannucci, 174 Conn. 275, 278, 386 A.2d 241 (1978). Since, under the general verdict doctrine, the jury could reasonably have found the issue of liability in favor of the defendant, the remaining claims of error warrant no discussion.
There is no error.
NOTES
[1] The court charged the jury in accordance with General Statutes § 52-572h (a). Under this statute, if the plaintiff's contributory negligence is greater than the combined negligence of the person or persons against whom recovery is sought, it bars the plaintiff from recovery. The plaintiff claims that the court erred in failing to charge on the admiralty law of comparative negligence, despite the fact that the accident occurred in navigable waters. He claims that under admiralty law, contributory negligence is not a bar to recovery, but may be shown in mitigation of damages.
Practice Book § 3060F (c) (1) provides in part that, when error is claimed in the trial court's refusal to charge as requested, the party claiming such error "shall print in his brief a verbatim statement of the relevant portions of the charge as requested." This was not done. For this reason, and because of our disposition of the general verdict issue, we do not consider this claim of error. See Savarese v. Hart, 183 Conn. 416, 417-18, 439 A.2d 386 (1981).
[2] The plaintiff in his brief reprints the following portion of the charge: "The defendant, Catello Pagano, as the boat owner, owed plaintiff a duty of reasonable care. That is the care which a reasonably prudent person would have exercised under similar circumstances including a duty to warn plaintiff of any danger reasonably to be expected by the plaintiff." These sentences, as actually stated by the court, were: "The defendant, Catello Pagano, as the boat owner, owed plaintiff a duty of reasonable care. That is the care which a reasonably prudent person would have exercised under similar circumstances including a duty to warn plaintiff of any danger not already obvious to the plaintiff or not reasonably to be expected by the plaintiff." (Emphasis added.)
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340 U.S. 42 (1950)
UNITED STATES
v.
SANCHEZ ET AL.
No. 81.
Supreme Court of United States.
Argued October 20, 1950.
Decided November 13, 1950.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS.
*43 Philip Elman argued the cause for the United States. With him on the brief were Solicitor General Perlman, Assistant Attorney General Caudle, Ellis N. Slack and Melva M. Graney.
No appearance for appellees.
MR. JUSTICE CLARK delivered the opinion of the Court.
This is a direct appeal, 28 U. S. C. § 1252, from dismissal by the District Court of a suit for recovery of $8,701.65 in taxes and interest alleged to be due under § 7 (a) (2) of the Marihuana Tax Act, 50 Stat. 551, now § 2590 (a) (2) of the Internal Revenue Code. 26 U. S. C. § 2590 (a) (2). In their motion to dismiss, which was granted without opinion, defendants attacked the constitutionality of this subsection on the ground that it levied a penalty, not a tax. The validity of this levy is the issue here.
In enacting the Marihuana Tax Act, the Congress had two objectives: "First, the development of a plan of taxation which will raise revenue and at the same time render extremely difficult the acquisition of marihuana by persons who desire it for illicit uses and, second, the development of an adequate means of publicizing dealings in marihuana in order to tax and control the traffic effectively." S. Rep. No. 900, 75th Cong., 1st Sess. 3. To the same effect, see H. R. Rep. No. 792, 75th Cong., 1st Sess. 2.
Pursuant to these objectives, § 3230 of the Code imposes a special tax ranging from $1 to $24 on "every person who imports, manufactures, produces, compounds, sells, deals in, dispenses, prescribes, administers, or gives away marihuana." For purposes of administration, § 3231 requires such persons to register at the time of the payment of the tax with the Collector of the District in which their *44 businesses are located. The Code then makes it unlawful with certain exceptions not pertinent herefor any person to transfer marihuana except in pursuance of a written order of the transferee on a blank form issued by the Secretary of the Treasury. § 2591. Section 2590 requires the transferee at the time he applies for the order form to pay a tax on such transfer of $1 per ounce or fraction thereof if he has paid the special tax and registered, § 2590 (a) (1), or $100 per ounce or fraction thereof if he has not paid the special tax and registered. § 2590 (a) (2). The transferor is also made liable for the tax so imposed, in the event the transfer is made without an order form and without the payment of the tax by the transferee. § 2590 (b). Defendants in this case are transferors.
It is obvious that § 2590, by imposing a severe burden on transfers to unregistered persons, implements the congressional purpose of restricting traffic in marihuana to accepted industrial and medicinal channels. Hence the attack here rests on the regulatory character and prohibitive burden of the section as well as the penal nature of the imposition. But despite the regulatory effect and the close resemblance to a penalty, it does not follow that the levy is invalid.
First. It is beyond serious question that a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed. Sonzinsky v. United States, 300 U. S. 506, 513-514 (1937). The principle applies even though the revenue obtained is obviously negligible, Sonzinsky v. United States, supra, or the revenue purpose of the tax may be secondary, Hampton & Co. v. United States, 276 U. S. 394 (1928). Nor does a tax statute necessarily fall because it touches on activities which Congress might not otherwise regulate. As was pointed out in Magnano Co. v. Hamilton, 292 U. S. 40, 47 (1934):
*45 "From the beginning of our government, the courts have sustained taxes although imposed with the collateral intent of effecting ulterior ends which, considered apart, were beyond the constitutional power of the lawmakers to realize by legislation directly addressed to their accomplishment."
These principles are controlling here. The tax in question is a legitimate exercise of the taxing power despite its collateral regulatory purpose and effect.
Second. The tax levied by § 2590 (a) (2) is not conditioned upon the commission of a crime. The tax is on the transfer of marihuana to a person who has not paid the special tax and registered. Such a transfer is not made an unlawful act under the statute. Liability for the payment of the tax rests primarily with the transferee; but if he fails to pay, then the transferor, as here, becomes liable. It is thus the failure of the transferee to pay the tax that gives rise to the liability of the transferor. Since his tax liability does not in effect rest on criminal conduct, the tax can be properly called a civil rather than a criminal sanction. The fact Congress provided civil procedure for collection indicates its intention that the tax be treated as such. Helvering v. Mitchell, 303 U. S. 391 (1938). Moreover, the Government is seeking to collect the levy by a judicial proceeding with its attendant safeguards. Compare Lipke v. Lederer, 259 U. S. 557 (1922); Tovar v. Jarecki, 173 F. 2d 449 (C. A. 7th Cir. 1949).
Nor is the civil character of the tax imposed by § 2590 (a) (2) altered by its severity in relation to that assessed by § 2590 (a) (1). The difference has a rational foundation. Unregistered persons are not likely to procure the required order form prior to transfer or pay the required tax. Free of sanctions, dealers would be prone to accommodate such persons in their unlawful activity. The imposition of equally severe tax burdens on such *46 transferors is reasonably adapted to secure payment of the tax by transferees or stop transfers to unregistered persons, as well as to provide an additional source from which the expense of unearthing clandestine transfers can be recovered. Cf. Helvering v. Mitchell, supra.
The judgment below must be reversed and the cause remanded for further proceedings in conformity with this opinion.
Reversed.
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Fourth Court of Appeals
San Antonio, Texas
October 24, 2017
No. 04-17-00529-CR & 04-17-00530-CR
Zachary SCHULTZ,
Appellant
v.
The STATE of Texas,
Appellee
From the 25th Judicial District Court, Guadalupe County, Texas
Trial Court No. 16-1592-CR-C & 16-1593-CR-C
Honorable William Old, Judge Presiding
ORDER
These appeals were consolidated by order. Pursuant to that order, all documents filed in
this court – except for the clerk’s records and reporter’s records – are to be filed in a single
document that reference both appellate numbers. On October 23, 2017, the court reporter filed
separate notifications of late record – one in each appellate cause number. This does not
comport with this court’s prior consolidation order. Accordingly, we ORDER the court reporter,
with regard to any future documents filed in this court, to file such documents in accordance with
the court’s prior order of consolidation. In her notifications, she asks for an additional thirty
days in which to file the reporter’s records. After review we GRANT the reporter’s requested
extension and ORDER her to file the reporter’s records in this court on or before November 20,
2017. The reporter is reminded that with regard to the reporter’s record, a separate
record must be filed in each appellate cause number.
We order the clerk of this court to serve a copy of this order on all counsel and the
court reporter.
_________________________________
Marialyn Barnard, Justice
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said
court on this 24th day of October, 2017.
___________________________________
KEITH E. HOTTLE,
Clerk of Court
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363 N.W.2d 871 (1985)
In the Matter of the WELFARE OF Shirley HILLSTROM.
No. C9-84-1270.
Court of Appeals of Minnesota.
March 12, 1985.
R. Lawrence Harris, Melchert, Hubert, Sjodin & Willemssen, Waconia, for S. Hillstrom.
Diane M. Carlson, Spencer G. Kluegel Law Firm, Minnetonka, guardian ad litem.
Hubert H. Humphrey, III, Atty. Gen., Mary Stanislav, Sp. Asst. Atty. Gen., St. Paul, intervenor.
Marcia Rowland, Carver County Atty., Virginia D. Palmer, Asst. County Atty., Chaska.
*872 Heard, considered and decided by FOLEY, P.J., and LANSING and NIERENGARTEN, JJ.
OPINION
LANSING, Judge.
The attorney and guardian ad litem for Shirley Hillstrom, a mentally retarded woman, appeal from a judgment of the district court determining that surgical sterilization is in Hillstrom's best interest under Minn.Stat. § 252A.13, subd. 4 (1982). They contend the statute as applied violates her right to due process and equal protection of the law by invading her fundamental right to privacy. We reverse.
FACTS
Shirley Hillstrom is a 41-year-old mentally retarded woman who was adjudicated mentally deficient and became a ward of the State in 1956 at the age of 12. She lived at the state hospital in Faribault from 1956 through 1968 and at the Minnesota Valley Social Adaptation Center in St. Peter from 1968 through 1976. From 1976 to the present she has resided at Community Living, a residential facility for mentally retarded men and women in Victoria, Minnesota. She attends the Carver County Developmental Achievement Center in St. Bonifacius and does part-time cleaning work at a car dealership in Victoria. Although allowed some freedom of movement, Hillstrom is closely supervised most of the day and is not allowed to leave the Community Living grounds without supervision.
According to her most recent psychological evaluation, performed in June 1983, Hillstrom functions in the mild range of mental retardation, although her adaptive functioning is in the mild to moderate range. Her age equivalent is eight years, ten months, and her full scale score on the Wechsler Adult Intelligence Test (Revised) was 56. She cannot read, write, or count above three.
The only substantiated incident of sexual intercourse in her life occurred at the age of 12 when she became pregnant as the result of incest with either her father or brother. Shortly after she became pregnant, she was committed to the state hospital. The child was born there when she was 13. According to her present physician, the child died of congenital heart disease; according to the psychologist who most recently evaluated her, the child was adopted but Hillstrom was led to believe it had died.
Hillstrom began taking oral contraceptives in 1971. She stopped using them in 1981 because she developed fibrocystic breast disease. Despite her physician's opinion that oral contraceptives were no longer a suitable method of birth control because of her age and health, they were prescribed for her again in 1983 when she attended a summer camp that was less closely supervised than Community Living. She did not become pregnant during the two-year interval she was not using contraceptives.
In November 1982 staff members at Community Living asked Carver County Social Services to seek approval for Hillstrom's sterilization from the Department of Public Welfare. In November 1983 that approval was granted. The County then petitioned the court for an adjudication that sterilization would be in Hillstrom's best interest under Minn.Stat. § 252A.13, subd. 4, which governs sterilization of wards of the State.
There is no indication in the record that Hillstrom has had sexual intercourse since her child was conceived in 1956. The concern about birth control apparently derives from the impression of the staff and others that Hillstrom is friendly, flirtatious, and "vulnerable to sexual exploitation."
The director of Community Living testified, in response to questioning about why he felt the surgery was necessary:
I guess basically * * * there is opportunity for sexual activity. Shirley has demonstrated an interest in sexual activity. She never has been observed at intercourse, nor will she be observed at intercourse. Privacy will be allowed. *873 We will never be able to document that. There's probably a good deal of doubt whether intercourse is happening.
Hillstrom's physician testified:
Shirley came to talk to me [in February] about her possible tubal. * * * I asked her about how she felt about having an operation. She said she didn't really feel too good about it because she had to keep talking to people about it. We discussed the question of whether she would ever be sexually active. She didn't think she would. I said if we know that you will not be playing with a man's body you will not need that operation. She said [she] didn't think she ever * * * would. Then I asked her what she thought she should do. She said she thought she should have the operation. I asked her if this is because she might be sexually active in the future. She told me she couldn't really be sure she wouldn't. Shirley is a very affectionate girl who touches constantly and likes to hug. It would be my opinion it would be very easy for her to be seduced unless she were attended to on a constant basis.
Hillstrom told her guardian ad litem that she does not have sexual intercourse and does not intend to in the future because she "doesn't want any more babies." The guardian ad litem also testified that Hillstrom said she believed she should have the operation because "everyone said she should have it."
The physician testified that Hillstrom would have to use some form of birth control through age 54 and that he did not seriously consider alternatives to sterilization because he did not think other forms of birth control were appropriate. He testified that she does not have the capacity to use a diaphragm properly. He said an intrauterine device (IUD) would pose few health risks because Hillstrom is "under good medical supervision." However, he prefers surgical sterilization over an IUD:
[b]ecause of the [IUD's] five percent failure rate; because of the fact it has to be removed periodically and re-inserted; because of the fact that insertion is a blind procedure and you can't tell when you put it in for sure that it is in the right position, so you don't know for sure that it will work, and I guess my feeling is that you got a gal here who is 41, she shouldn't be having babies, retarded or not. She is retarded, there is big problems involved there with the child should she have it, with adopting it. So I am looking at it on an economic basis too. I really believe that Shirley wants to have a tubal. I would not force it on her.
The nursing director at Community Living prefers surgical sterilization over an IUD because Hillstrom becomes tense during pelvic examinations and would probably require medication or anesthetic during insertion of an IUD. She also expressed concern that the spotting between menstrual periods, which is not a "terribly uncommon" side effect of the IUD, would mask signs of cancer or infection. However, the nursing director also testified that Hillstrom's personal hygiene is good and that Hillstrom has promptly reported all medical problems in the past.
At trial the County presented reports of a physician, a psychologist, and a social worker as required under Minn.Stat. § 252A.13, subd. 4 (1982). They and several other witnesses testified for the county. The guardian ad litem testified for Shirley Hillstrom. The trial court found that:
XI.
Ms. Hillstrom is friendly and affectionate, solicits attention from men, and has "boyfriends" at Community Living.
XII.
Ms. Hillstrom is vulnerable to being seduced, because of her affectionate nature and freedom from constant supervision.
* * * * * *
XV.
Other forms of contraception are not appropriate for Ms. Hillstrom; she cannot properly monitor and otherwise use the diaphragm, IUD or cervical cap.
*874 XVI.
Tubal fulguration is the least invasive method of sterilization for Ms. Hillstrom.
The trial court concluded that sterilization is in Hillstrom's best interest and granted consent for the procedure.
ISSUE
Does Minn.Stat. § 252A.13, subd. 4 (1982), as applied, deny Shirley Hillstrom due process of law?
ANALYSIS
In 1975 the Minnesota Legislature enacted legislation to provide a coordinated approach to the supervision, protection, and habilitation of mentally retarded persons. See Minnesota Mental Retardation Protection Act, 1975 Minn.Laws, ch. 208, §§ 1-21. This legislation included a provision empowering the State to consent to a ward's sterilization and a judicial procedure for determining whether the sterilization is in the best interest of the ward. See id. § 13 (codified at Minn.Stat. § 252A.13). Shirley Hillstrom's attorney and her guardian ad litem challenge the constitutionality of this legislation, contending that Minn.Stat. § 252A.13, subd. 4 (1982), as applied, denies Hillstrom due process and equal protection of the law under the United States Constitution.
The constitutionality of this statute has not previously been decided. The statute provides:
[N]o person committed to the guardianship or conservatorship of the commissioner may be sterilized unless the commissioner consents to such operation * *. In every case a probate or county court shall determine if such operation is in the best interest of the ward. In making its determination the court shall require the commissioner to provide written reports from a licensed physician, a psychologist who is qualified in the diagnosis and treatment of mental retardation and a social worker who is familiar with the ward's social history and adjustment. The reports shall consider whether sterilization is in the best interest of the ward and the medical report shall specifically consider the medical risks of sterilization and whether alternative methods of contraception would be as effective in protecting the best interest of the ward.
Minn.Stat. § 252A.13, subd. 4 (1982).
The statute does not specify a standard of proof or any criterion other than "the best interest of the ward." The trial court did not address the standard of proof question; it issued an order in the terms of the statutory language. Appellants contend that clear and convincing proof is constitutionally mandated before a retarded person may be sterilized.
Determination of the proper standard of evidentiary proof requires an analysis of the affected rights. The United States Supreme Court first recognized a societal right to approve sterilization in 1927, when it upheld the constitutionality of the Virginia compulsory sterilization statute in Buck v. Bell, 274 U.S. 200, 47 S.Ct. 584, 71 L.Ed. 1000 (1927). Compulsory sterilization laws were motivated by society's interest in preventing the birth of more incompetents.[1] Medical and scientific advances, together with society's view of the legal rights and the humanity of the mentally retarded, have changed since that time, and eugenics as a basis for sterilization is now largely discredited. See The Clear and Convincing Evidence Standard, supra note 1, at 419.
This change was reflected in the Court's opinions as early as 1942. In Skinner v. Oklahoma, 316 U.S. 535, 62 S.Ct. 1110, 86 *875 L.Ed. 1655 (1942), the Supreme Court struck down an Oklahoma statute that authorized the sterilization of persons convicted of certain crimes. The Court, finding that the law violated equal protection, stated, "Marriage and procreation are fundamental to the very existence and survival of the race." 316 U.S. at 541, 62 S.Ct. at 1113.
The Supreme Court has continued to expand the cluster of rights protecting the physical integrity of the human body in other decisions relating to marriage, sexual relations, and childbearing. In Griswold v. Connecticut, 381 U.S. 479, 85 S.Ct. 1678, 14 L.Ed.2d 510 (1965), the Court held that a state statute which criminalized the use of contraceptives infringed the fundamental right of marital privacy. In Eisenstadt v. Baird, 405 U.S. 438, 92 S.Ct. 1029, 31 L.Ed.2d 349 (1972), the Court extended the rationale of Griswold to unmarried individuals:
If the right of privacy means anything, it is the right of the individual, married or single, to be free from unwarranted governmental intrusion into matters so fundamentally affecting a person as the decision whether to bear or beget a child.
Id. at 453, 92 S.Ct. at 1038 (emphasis in original). The fundamental nature of this right was further expanded in Roe v. Wade, 410 U.S. 113, 93 S.Ct. 705, 35 L.Ed.2d 147 (1973), and Planned Parenthood v. Danforth, 428 U.S. 52, 96 S.Ct. 2831, 49 L.Ed.2d 788 (1976).
Although the Court has not specifically addressed the issue of voluntary sterilization as a fundamental right, the cases involving contraception presage this recognition. Other courts have recognized both the right to procreate and the right to be sterilized. See Hathaway v. Worcester City Hospital, 475 F.2d 701, 706 (1st Cir. 1973); Ruby v. Massey, 452 F.Supp. 361, 368 (D.Conn.1978); Voe v. Califano, 434 F.Supp. 1058, 1061 (D.Conn.1977); Peck v. Califano, 454 F.Supp. 484, 486-87 (D.Utah 1977); In re Moe, 385 Mass. 555, 565, 432 N.E.2d 712, 719 (1982); In re Grady, 85 N.J. 235, 247-48, 426 A.2d 467, 473 (1981); In re Moore, 289 N.C. 95, 103-04, 221 S.E.2d 307, 312-13 (1976).
Our present sterilization laws provide for neither the discredited compulsory sterilizations of the past nor the voluntary contraceptive sterilizations that fall under the right to privacy articulated in Griswold. They provide for sterilization when the mentally retarded person cannot make a personal procreative choice, and the exercise of the personal procreative right must come from the court. Although this distinction is intellectually clear, the difficulty arises in applying the protections for the private fundamental right to be free of governmental intrusion while at the same time recognizing the rights of individuals who are incapable of making such choices alone.
Several compelling interests have been advanced to justify this type of court-ordered sterilization: the perceived harm caused to society by the presumed inability of a retarded person to serve as a parent, the burden on families that are willing to care for their retarded children at home but are unable to care for grandchildren that may result without reproductive control,[2] and the recognition that a decision not to procreate is a valuable incident of the right to privacy and should not be discarded solely because the incompetent condition prevents the conscious exercise of free choice. See In re Grady, 85 N.J. at 250, 426 A.2d at 474. In addition, we note that all decisions relating to the administration of birth control affect a ward's fundamental right of privacy and that popular birth control methods (including those rejected for Shirley Hillstrom) can have troublesome side effects. The State has a compelling interest in ensuring that those in its care do not use birth control methods that are injurious to their health.
*876 Carver County and the State of Minnesota argue that the government interest under this type of statute is identical to the private interest, and therefore there is no governmental intrusion. We do not consider the interests of the State and the ward to be so congruent. Diminished worry, convenience, a desire to be relieved of responsibility for close supervision, and inability to deal with a difficult problem may cause even the most well-intentioned guardian to act against the retarded person's best interest. See In re Eberhardy, 102 Wis.2d 539, 573-74, 307 N.W.2d 881, 897 (1981). The fundamental right involved must be safeguarded to assure that sterilization is not a subterfuge for convenience and relief from the responsibility of supervision.
The United States Supreme Court has required an elevated standard of proof when the interest at stake is more than a property right. See Santosky v. Kramer, 455 U.S. 745, 758-59, 102 S.Ct. 1388, 1397, 71 L.Ed.2d 599 (1982); Addington v. Texas, 441 U.S. 418, 424, 99 S.Ct. 1804, 1808, 60 L.Ed.2d 323 (1979). In Santosky the Court held that the State must provide clear and convincing evidence in a proceeding to terminate parental rights; in Addington the same standard was required for civil commitment to a mental institution. The factors to be considered are (1) the nature of the private fundamental rights; (2) the intrusion on those rights by government interests; (3) the balancing of these interests; and (4) the allocation of the risk of an erroneous decision. The higher standard of proof in those cases was triggered by the great degree of government intrusion, the need to protect the private interest, and the great injury that would follow from an erroneous decision.
Carver County and the State argue that imposing a standard of clear and convincing proof on the sterilization decision diminishes the protection of Hillstrom's fundamental right to choose not to procreate. The conceptual construct they offer places the choice to have children at one end of a continuum and the choice not to have children at the other. They argue that imposing an evidentiary standard that is not in the center necessarily encroaches on one of the protected choices. If this were true, the clear and convincing standard would burden the choice to prevent procreation by sterilization. However, the statutory standard of "best interest of the ward" is properly located in the middle of that continuum, and a requirement that its elements be proved by clear and convincing evidence does not burden either choice; it only ensures that the decision is carefully made.
Courts addressing this issue have almost uniformly required an evidentiary standard of clear and convincing evidence. See, e.g., Wentzel v. Montgomery General Hospital, Inc., 293 Md. 685, 703, 447 A.2d 1244, 1253-54 (1982), cert. denied, 459 U.S. 1147, 103 S.Ct. 790, 74 L.Ed.2d 995 (1983); In re Grady, 85 N.J. at 265, 426 A.2d at 483 (1981); In re Hayes, 93 Wash.2d 228, 238, 608 P.2d 635, 641 (1980).
In Motes v. Hall County Department of Family and Children Services, 251 Ga. 373, 306 S.E.2d 260 (1983), a Georgia statute provided for a preponderance of the evidence standard in sterilization proceedings. The court found that the sterilization statute was akin to the termination of parental rights in Santosky and held that due process requires clear and convincing evidence to sterilize an individual. Id. at 374, 306 S.E.2d at 262. The court reversed the trial court's judgment authorizing sterilization but did not reach the equal protection issues. See id. at 374-75, 306 S.E.2d at 262.
The State argues that because the Minnesota statute contains no burden of proof, Motes is inapplicable. However, the absence of a standard of proof does not cure the statute of constitutional defects or eliminate the standard of proof question. Some standard must be applied, and statutes are to be construed to avoid an unconstitutional result. See Minn.Stat. § 645.17(3) (1982).
Under our application of the Santosky-Addington tests, we conclude that the *877 higher degree of proof is constitutionally required. The governmental imposition of a surgical procedure that terminates the capacity to bear or beget children is a substantial intrusion in the area of a fundamental right. There are important societal as well as important personal interests on both sides of the equation, and the decision must be carefully made because it is irreversible. In order to assure that abuses do not occur, and to screen out those individuals who should not be sterilized, clear and convincing evidence is required.
On the record before us, the State has failed to meet its burden of showing by clear and convincing evidence that sterilization is in Shirley Hillstrom's best interest. The statute requires consideration of the medical risks of sterilization and alternative methods of contraception. Hence sterilization is a "last resort" means of contraception. The best interest standard therefore requires, at minimum, a showing that Shirley Hillstrom is likely to engage in sexual intercourse. Because she requires 24-hour supervision, her "vulnerability to being seduced" is not a valid factor in making that determination.
DECISION
The State has failed to show by clear and convincing evidence that sterilization is in Shirley Hillstrom's best interest.
We do not reach the question whether the statute violates the equal protection clause because it was raised only tangentially by the parties and because of our decision that the State has failed to meet its burden on the due process issue.
Reversed.
NOTES
[1] The eugenics movement was begun in 1904 on the assumption that certain types of individuals were more socially desirable than others, and the less desirable should be prohibited from increasing their kind. Eugenicists argued that mental illness, retardation, epilepsy, criminality, and various social defects were hereditary and could be eliminated through sterilization. Comment, Protection of the Mentally Retarded Individual's Right to Choose Sterilization: The Effect of the Clear and Convincing Evidence Standard, 12 Cap.U.L.Rev. 413, 419 n. 37 (citing Comment, Sterilization of the Developmentally Disabled: Shedding Some Myth Conceptions, 9 Fla.St.U.L. Rev. 599, 603 (1981)) [hereinafter cited as The Clear and Convincing Evidence Standard].
[2] Sherlock & Sherlock, Sterilizing the Retarded: Constitutional, Statutory and Policy Alternatives, 60 N.C.L.Rev. 943, 953 (1982).
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524 F.2d 1013
16 Fair Empl.Prac.Cas. 917,10 Empl. Prac. Dec. P 10,466,1 Fed. R. Evid. Serv. 158Gwynn H. GILLIAM, Appellant,v.CITY OF OMAHA, a Municipal Corporation, et al., Appellees.
No. 75-1179.
United States Court of Appeals,Eighth Circuit.
Submitted Sept. 11, 1975.Decided Oct. 28, 1975.
Benjamin M. Wall, Wall & Wintroub, Omaha, Neb., for appellant.
James E. Fellows, Deputy City Atty., Omaha, Neb., for appellees.
Before MATTHES, Senior Circuit Judge, and HEANEY and STEPHENSON, Circuit Judges.
STEPHENSON, Circuit Judge.
1
Appellant Gwynn Gilliam instituted this action in the United States District Court1 under Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d (1974)2 against the city of Omaha, the former mayor, Eugene Leahy, and the Neighborhood Youth Corporation program director, Sam Boniauto. Plaintiff is a black female who contends that her civil rights have been violated because of the discriminatory manner in which the defendants conducted their offices. Plaintiff was employed as a Neighborhood Youth Corporation Counselor from December 1967 through April 1970 when she voluntarily submitted her resignation.
2
In a prior appeal, this court held that plaintiff was not precluded from bringing her action in Federal District Court because of her failure to exhaust state administrative remedies. Gilliam v. City of Omaha, 459 F.2d 63 (8th Cir. 1972). On remand the district court found for the defendants. After trial to the court without a jury, judgment was entered in favor of the city of Omaha on the basis of immunity from suit provided by the Eleventh Amendment to the United States Constitution. Judgment was also entered for the individual defendants since the district court determined that plaintiff had not established her claim of racial or sexual discrimination. The district court's opinion is reported at 388 F.Supp. 842 (D.Neb.1975). We affirm for the reason that we fail to find on this record that the district court's findings, that the claim of racial or sexual discrimination has not been established, are clearly erroneous. Neither do we find errors of law that were prejudicial.
3
On appeal plaintiff contends that the district court erred by (1) finding that a municipality has immunity under the Eleventh Amendment; (2) failing to admit the prior testimony of Ellen Osborne as substantive evidence which was prejudicial; and (3) refusing to award attorneys' fees for plaintiff's successful first appeal.
4
As previously stated the district court dismissed the defendant city of Omaha from this action on the ground that it is immune from suit under the Eleventh Amendment. However, the Eleventh Amendment limits the jurisdiction of federal courts only as to suits against a state. U.S.Const. Amend. XI; Lincoln County v. Luning, 133 U.S. 529, 10 S.Ct. 363, 33 L.Ed.2d 766 (1890). It is settled that a suit against a county, a municipality, or other lesser governmental unit is not regarded as a suit against a state within the meaning of the Eleventh Amendment. Fay v. Fitzgerald, 478 F.2d 181, 184 n. 3 (2d Cir. 1973); C. Wright, Law of Federal Courts § 46, at 175 (2d ed. 1970). Unless a political subdivision of a state is simply "the arm or alter ego of the state," State Highway Comm'n of Wyoming v. Utah Construction Co., 278 U.S. 194, 199, 49 S.Ct. 104, 106, 73 L.Ed. 262 (1929), it may sue or be sued pursuant to the same rules as any other corporation. See Moor v. County of Alameda, 411 U.S. 693, 717-19, 93 S.Ct. 1785, 36 L.Ed.2d 596 (1973); Illinois v. City of Milwaukee, 406 U.S. 91, 97, 92 S.Ct. 1385, 31 L.Ed.2d 712 (1972).
5
Under Nebraska law the city of Omaha is a body corporate and politic and may sue or be sued. Neb.Rev.Stat. § 14-101 (1969). Included in its powers is the authority to make a levy to pay outstanding judgments against it. Benner v. County Board of Douglas County, 121 Neb. 773, 238 N.W. 735 (1931). Thus the city of Omaha would clearly be liable for any judgment rendered against it and therefore, the state cannot be considered the real party of interest for purposes of determining Eleventh Amendment immunity. See Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974).
6
Although the trial court erred in dismissing the city of Omaha from this action, we find the error harmless. To constitute reversible error, it must be established that the error complained of affected the substantial rights of the objecting party. Palmer v. Hoffman, 318 U.S. 109, 116, 63 S.Ct. 477, 87 L.Ed. 645 (1943); 28 U.S.C. § 2111; Fed.R.Civ.P. 61. In the present case the trial court considered all of the evidence, and in no way limited the plaintiff's right to introduce evidence concerning the alleged wrongs committed by any of the defendants, including the city of Omaha. Since the trial court did not find the acts of any of the defendants to be discriminatory the final result for the city of Omaha would not have been altered by their inclusion in this action. The substantial rights of the plaintiff were not affected by the ruling. Accordingly, we cannot say that the ruling was prejudicial even though it was erroneous.
7
Plaintiff's next assertion is that the trial court erred in not admitting the prior testimony of Ellen Osborne as substantive evidence. In 1970 and 1971 Mrs. Osborne, a former employee of the Neighborhood Youth Corporation program and a co-worker of plaintiff, testified before the Nebraska Equal Opportunity Commission in the case of Trujillo v. Neighborhood Youth Corp., Neb. EOC 9 -12-196(D).3 When sworn as a witness in the present case, Mrs. Osborne professed to have no recollection of the events upon which she had previously testified. At that point plaintiff offered the prior testimony of Mrs. Osborne into evidence both as prior testimony and past recollection recorded. Both offers were rejected, although the court did say it would admit the testimony for impeachment purposes.
8
Plaintiff contends that Mrs. Osborne's testimony should have been admitted under the prior testimony exception to the hearsay rule because the requirements of an oath and an opportunity to cross-examine were satisfied at the time of Mrs. Osborne's previous testimony and the testimony of the witness was presently unavailable at the time of trial in this action. Plaintiff claims that as long as these requirements are met the character of the tribunal before which the former trial was held is immaterial. C. McCormick, Evidence § 258 (2d ed. 1972); see also California v. Green, 399 U.S. 149, 90 S.Ct. 1930, 26 L.Ed.2d 489 (1970). However, we do not reach the merits of this contention because it is our view that the testimony excluded as substantive evidence would have had no substantial effect on the result in this case and that if any error was committed by the trial judge, defendant has failed to demonstrate that such error was prejudicial.4 A trial court will not be reversed on an evidentiary ruling unless the error is shown to be prejudicial. White v. United States, 399 F.2d 813, 819 (8th Cir. 1968); Fed.R.Civ.P. 61.
9
The memorandum opinion of the district court shows a careful analysis of all the evidence presented by the plaintiff including the testimony before the Nebraska Equal Opportunity Commission in the Trujillo case. Gilliam, supra, 388 F.Supp. at 854 n. 22. The record indicates that the prior testimony of Ellen Osborne with respect to the question of whether blacks were subjected to more abusive treatment from the program director than other employees consisted of conclusionary allegations supported by little or no foundation or clarification. We are satisfied that if Mrs. Osborne's prior testimony had been admitted as substantive evidence plaintiff still would have failed to establish discriminatory conduct on the part of any of the defendants. She alleged that she was denied appropriate salary increases because of her race and gender and that others were promoted ahead of her without just cause. However, even with the addition of Ellen Osborne's prior testimony neither of these charges was substantiated by evidence admissible in a court of law. What plaintiff's evidence did establish was that the program director was a very tough administrator and that he used insulting language in his day-to-day contact with his employees. He may well have offended the sensibilities of the plaintiff and other employees. Although we do not condone the actions of the program director we are unable to say that they were discriminatory; he apparently subjected all of his employees, at one time or another, to abusive language and discipline. The plaintiff's evidence including the prior testimony of Ellen Osborne does not establish that blacks or females were treated substantially different from non-black males.
10
The final allegation of error raised by the appellant is that the district court erred in refusing to award attorneys' fees for plaintiff's successful first appeal to this court.
11
The so-called "American rule" governing the award of attorneys' fees in litigation in the federal courts is that attorneys' fees are not ordinarily recoverable in the absence of a statute or enforceable contract providing therefor. F. D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116, 126, 94 S.Ct. 2157, 40 L.Ed.2d 703 (1974); Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 717, 87 S.Ct. 1404, 18 L.Ed.2d 475 (1967).
12
In the present case jurisdiction of the district court was claimed under 28 U.S.C. §§ 1331, 1343, as well as 42 U.S.C. §§ 1981, 1983 and 2000d. Courts have previously held that despite the fact that neither section 1981 nor 1983 contained specific provisions authorizing the award of attorney fees they were nevertheless allowable under the "private attorney general" rationale. Fowler v. Schwarzwalder, 498 F.2d 143 (8th Cir. 1974); Cooper v. Allen, Jr., 467 F.2d 836 (5th Cir. 1972) (Section 1981); Sims v. Amos, 340 F.Supp. 691 (M.D.Ala.1972) (Section 1983). See also F. D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116, 130, 94 S.Ct. 2157, 40 L.Ed.2d 703 (1974).
13
This court ruled in Doe v. Poelker, 515 F.2d 541, 547 (8th Cir. 1975), that the Alyeska Pipeline opinion has now conclusively established that the "private attorney general" exception to the "American rule" exists only where provided by a specific congressional act. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). Since no statutory authority provides therefor, appellant's request for the award of attorneys' fees must be denied.5
14
The judgment of the trial court is affirmed.
1
The Honorable Richard E. Robinson, Senior District Judge, United States District Court for the District of Nebraska, presiding
2
42 U.S.C. § 2000d (1974) provides in pertinent part that:
No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.
Redress was also sought under 42 U.S.C. §§ 1981, 1983 and jurisdiction of the district court was invoked under 28 U.S.C. §§ 1331, 1343.
3
Although the plaintiff in Trujillo was different from the present case, the defendants and the attorneys were the same. The issue of whether there were discriminatory employment practices in the Omaha offices of the Neighborhood Youth Corporation was also the same
4
We note that although arguably it would have been better to admit Mrs. Osborne's prior testimony as substantive evidence, the trial court is traditionally vested with wide discretion in the admission of evidence. Tugwell v. A. F. Klaveness and Co., 320 F.2d 866 (5th Cir. 1963), cert. denied, 376 U.S. 951, 84 S.Ct. 967, 11 L.Ed.2d 970 (1964). Mrs. Osborne's testimony would clearly have been admissible under the Fed. Rules Evid. Rules 804(a)(3) and 804(b)(1), 28 U.S.C.A. These rules were not in effect at the time of trial
5
Appellant asks us to confine the ruling in Alyeska to environmental cases and reject its application to civil rights cases. This would be contrary to the thrust of the opinion. See Alyeska, supra, 421 U.S. at 270 n. 46, 95 S.Ct. 1612
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466 F.Supp. 120 (1979)
Johnnie DEE SWAIN, Jr., Plaintiff,
v.
BOARD OF TRUSTEES et al., Defendants.
No. C78-419.
United States District Court, N. D. Ohio, E. D.
January 15, 1979.
*121 Straughton Lynd, Green, Schiavoni, Murphy & Haines, Youngstown, Ohio, for plaintiff.
Stephen T. Parisi, Anthony J. DiVenere, Cleveland, Ohio, for defendants.
MEMORANDUM OF OPINION
MANOS, District Judge.
This is a suit brought under 42 U.S.C. § 1983. The plaintiff claims that he was denied his constitutional right to due process of law by various officials of Kent State University. The defendants have moved for summary judgment under Rule 56 of the Federal Rules of Civil Procedure and the court hereby grants the defendants' motion.
I. FACTUAL BACKGROUND
On July 28, 1977, the Director of the Kent State University Graduate School of Business Administration offered the plaintiff, Johnnie dee Swain, Jr., a position as an Assistant Professor of Public Administration for the 1977-78 academic year. Dee Swain accepted and the nine-month appointment began on September 12, 1977. On December 1, 1977, dee Swain was informed of a departmental committee recommendation not to reappoint him for the 1978-79 academic year. Dee Swain was not reappointed to the nontenured position and filed this suit on April 10, 1978.
II. CONCLUSIONS OF LAW
There can be no deprivation of the right to due process unless the plaintiff had a protected property or liberty interest. Board of Regents v. Roth, 408 U.S. 564, 569, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972); Lake Michigan College Federation of Teachers v. Lake Michigan Community College, 518 F.2d 1091 (6th Cir. 1975), cert. denied, 427 U.S. 904, 96 S.Ct. 3189, 49 L.Ed.2d 1197 (1976). The court holds that dee Swain has neither a property or liberty interest which would entitle him to due process protections.
A. THE LIBERTY INTEREST
The Supreme Court considered the question of what constitutes a liberty interest in Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). In that *122 case the Court held that a state college's refusal to renew a nontenured teacher's employment contract did not implicate a liberty interest. The Court stated:
The State, in declining to rehire the respondent, did not make any charge against him that might seriously damage his standing and associations in his community. It did not base the nonrenewal of his contract on a charge, for example, that he had been guilty of dishonesty, or immorality. Had it done so, this would be a different case. For "[w]here a person's good name, reputation, honor, or integrity is at stake because of what the government is doing to him, notice and an opportunity to be heard are essential."
. . . . .
Similarly, there is no suggestion that the State, in declining to re-employ the respondent, imposed on him a stigma or other disability that foreclosed his freedom to take advantage of other employment opportunities. . . . Had it done so, this, again, would be a different case.
408 U.S. at 573-74, 92 S.Ct. at 2707.
Therefore, an employee claiming an infringement of a liberty interest must meet one of two tests: (1) that the denial of future employment was likely to seriously harm the employee's standing in the community, or (2) that the government action would foreclose the employee's future opportunities for employment.[1] The action of the Kent State officials does not seriously harm dee Swain's community standing or foreclose his future employment opportunities.
1. Community Standing
In Wisconsin v. Constantineau, 400 U.S. 433, 437, 91 S.Ct. 507, 510, 27 L.Ed.2d 515 (1971), the Supreme Court held that:
[w]here a person's good name, reputation, honor, or integrity is at stake because of what the government is doing to him, notice and an opportunity to be heard are essential.
However, allegations of inadequate job performance or incompetence do not impune one's good name, reputation, honor, or integrity to the extent that one's community standing is seriously harmed. As the Sixth Circuit Court of Appeals stated:
[A]llegations of improper or inadequate performance do not constitute a deprivation of liberty within the meaning of the fourteenth amendment. Abeyta v. Town of Taos, 499 F.2d 323 (10th Cir. 1974); Shirck v. Thomas, 486 F.2d 691 (7th Cir. 1973). It has been held that in certain circumstances even the charge of "incompetence, neglect of duty, and malfeasance in office" does not amount to deprivation of liberty under Roth. Adams v. Walker, 492 F.2d 1003, 1008-09 (7th Cir. 1974).
Lake Michigan College Federation of Teachers v. Lake Michigan Community College, 518 F.2d 1091, 1097 (6th Cir. 1975), cert. denied, 427 U.S. 904, 96 S.Ct. 3189, 49 L.Ed.2d 1197 (1976). See also Dennis v. S & S Consolidated Rural High School District, 577 F.2d 338, 340-41 (5th Cir. 1978).
There is nothing in any of the material filed with the court indicating that dee Swain was nonrenewed for any reasons other than an inadequate teaching performance during his first year at Kent State. Accordingly, the court holds that plaintiff's liberty interest in his "good name, reputation, honor, or integrity" was not impaired.
2. Future Employment Opportunities
An individual has a protected liberty interest if the action of the state forecloses that person's freedom to take advantage of other employment opportunities. Board of Regents v. Roth, supra. Dee Swain claims that this doctrine entitles him to a due process hearing because he has submitted evidence indicating that he will have difficulty *123 finding a job as a university teacher. Specifically, dee Swain has submitted letters from his former professors in which the professors indicate that they have heard of dee Swain's inadequate teaching performance at Kent State University and that, on that basis, they recommend that dee Swain should seek a nonteaching job. Dee Swain argues, therefore, that summary judgment must be denied so that dee Swain can proceed to prove that the bad reports of dee Swain's teaching capabilities foreclose the possibility that he will succeed in finding a university teaching job.
However, the court holds that proof of such job foreclosure would not sustain dee Swain's claim of a constitutional deprivation. The Supreme Court in Roth, explaining what kind of foreclosure of future employment opportunities would implicate a liberty interest, stated:
The State, for example, did not invoke any regulations to bar the respondent from all other public employment in state universities. Had it done so, this, again, would be a different case. For "[t]o be deprived not only of present government employment but of future opportunity for it certainly is no small injury . . . ."
Id. 408 U.S. at 573-74, 92 S.Ct. at 2707. All of the cases cited by the Supreme Court in Roth as examples of job foreclosure entitling the deprived individuals to a due process hearing involved state actions which formally and completely deprived a person of any possibility of pursuing his chosen profession.[2]
Other courts, however, have not limited the applicability of the Roth protection from job foreclosure to situations where the state formally and completely deprived a person of future employment. When the state has published allegations that are so serious and derogatory in nature that future employment is effectively foreclosed because of those allegations, courts have mandated procedural due process protections. For example, if an employee is terminated for dishonesty, moral unfitness, manifest racism, serious mental illness, lack of intellectual ability, or for committing a serious felony and if the termination for such a reason means that future employment will be foreclosed, the employee must have an opportunity to challenge the allegation. McGhee v. Draper, 564 F.2d 902 (10th Cir. 1977) (nontenured teacher dismissed because of allegations of moral unfitness, distribution of pornography, and unfitness to teach students may foreclose future employment opportunities); Cox v. Northern Virginia Transportation Commission, 551 F.2d 555, 558 (4th Cir. 1976) (discharged employee charged with dishonesty or immorality is entitled to hearing); Velger v. Cawley, 525 F.2d 334, 336 (2d Cir. 1975), rev'd on other grounds sub nom. Codd v. Velger, 429 U.S. 624, 97 S.Ct. 882, 51 L.Ed.2d 92 (1977) (allegation of a suicide attempt by a probationary police officer will foreclose employment as a policeman and, thus, hearing is required); Greenhill v. Bailey, 519 F.2d 5 (8th Cir. 1975) (allegations of lack of "intellectual ability" against dismissed medical student stigmatizes the student and entitles the student to informal due process hearing); United States v. Briggs, 514 F.2d 794, 798 (5th Cir. 1975) (accusation that one has committed a serious felony may impinge upon employment opportunities); Lombard v. Board of Education, *124 502 F.2d 631, 637 (2d Cir. 1974), cert. denied, 420 U.S. 976, 95 S.Ct. 1400, 43 L.Ed.2d 656 (1975) (charge that employee has serious mental disorder does grievous harm to employee's chances of further employment and entitles employee to full hearing); Wellner v. Minnesota State Junior College Board, 487 F.2d 153, 155-56 (8th Cir. 1973) (allegation of manifest racism diminishes the employee's chances for future employment as a teacher and entitles the employee to a hearing); McNeill v. Butz, 480 F.2d 314, 319-20 (4th Cir. 1973) (charges of deliberate fraud foreclose future employment opportunity and may call for due process hearing) (dicta).
However, courts generally have not demanded due process hearings when employers were terminating employees because of the employee's inability to adequately perform his or her job. Paige v. Harris, 584 F.2d 178, 183-84 (7th Cir. 1978); Mazaleski v. Treusdell, 183 U.S.App.D.C. 182, 562 F.2d 701 (1977); Norbeck v. Davenport Community School District, 545 F.2d 63, 69 (8th Cir. 1976); Powers v. Mancos School District Re-6, 539 F.2d 38 (10th Cir. 1976); Gray v. Union County Intermediate Education District, 520 F.2d 803, 806 (9th Cir. 1975); Blair v. Board of Regents, 496 F.2d 322, 324 (6th Cir. 1974); Shirck v. Thomas, 486 F.2d 691 (7th Cir. 1973); Jablon v. Trustees of California State Colleges, 482 F.2d 997, 1000 (9th Cir. 1973), cert. denied, 414 U.S. 1163, 94 S.Ct. 926, 39 L.Ed.2d 116 (1974); Scheelhaase v. Woodbury Central Community School District, 488 F.2d 237, 242 (8th Cir. 1973); Russell v. Hodges, 470 F.2d 212, 217 (2d Cir. 1972); Owen v. City of Independence, 421 F.Supp. 1110, 1121 (W.D.Mo.1976); Connealy v. Walsh, 412 F.Supp. 146, 159 (W.D.Mo.1976); Haron v. Board of Education, 411 F.Supp. 68, 72-73 (E.D.N.Y.1976). But see Staton v. Mayes, 552 F.2d 908, 911 (10th Cir. 1977); Huntley v. Community School Board, 543 F.2d 979 (2d Cir. 1976); Stevens v. Joint School District No. 1, 429 F.Supp. 477 (W.D.Wis.1977). Consequently, even if dee Swain could prove that the allegations of his teaching incompetence have foreclosed his teaching employment prospects, it would not prove that his liberty interests have been infringed. Dee Swain, therefore, has no protected liberty interest.
B. PROPERTY INTEREST
Dee Swain was a nontenured faculty member. As such, he had no property interest in continued employment at Kent State University. Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972); Morse v. Wozniak, 565 F.2d 959 (6th Cir. 1977); Parham v. Hardaway, 555 F.2d 139 (6th Cir. 1977). The Supreme Court stated in Roth that:
To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.
Roth, 408 U.S. at 577, 92 S.Ct. at 2709. Dee Swain had no right to reappointment at Kent State; he therefore had no property interest in reappointment.
An additional "claim of entitlement" made by dee Swain is his claim to one week's pay which the University deducted from his salary because dee Swain allegedly took an unauthorized trip to a professional conference in Colorado. Complaint ¶ 23. However, the complaint fails to allege that dee Swain was not given notice of the reason for the deduction and the complaint fails to allege that dee Swain was denied a hearing. Indeed, the complaint states that dee Swain was notified of the reason for the pay deduction and that dee Swain appealed the decision. Due process in this context requires that individuals must be given notice and an opportunity to be heard. Board of Curators v. Horowitz, 435 U.S. 78, 98 S.Ct. 948, 952-53, 55 L.Ed.2d 124 (1978); Goss v. Lopez, 419 U.S. 565, 95 S.Ct. 729, 42 L.Ed.2d 725 (1975). Because the complaint fails to allege that dee Swain was denied notice and an opportunity to be heard in regard to the deprivation of one week's pay, this part of the complaint fails to state a cause of action.
*125 Moreover, dee Swain has not alleged that the charge of taking an unauthorized absence was false. The Supreme Court case of Codd v. Velgar, 429 U.S. 624, 97 S.Ct. 882, 51 L.Ed.2d 92 (1977), held that a complaint must indicate that there is a factual dispute as to the charges against the deprived individual. In Codd, the Supreme Court stated:
[I]f the hearing mandated by the Due Process Clause is to serve any useful purpose, there must be some factual dispute between an employer and a discharged employee which has some significant bearing on the employee's reputation. Nowhere in his pleadings or elsewhere has respondent affirmatively asserted that the report of the apparent suicide attempt was substantially false. Neither the District Court nor the Court of Appeals made any such finding. When we consider the nature of the interest sought to be protected, we believe the absence of any such allegation or finding is fatal to respondent's claim under the Due Process Clause that he should have been given a hearing.
429 U.S. at 627, 97 S.Ct. at 884.
Because dee Swain fails to allege in his complaint that he did not take an unexcused absence, there does not appear to be a disputed fact which a hearing could have resolved. Accordingly, that part of the complaint is dismissed.
III. CONCLUSION
Because dee Swain has no liberty or property interest, the defendants' motion for summary judgment is granted.
IT IS SO ORDERED.
NOTES
[1] See Mazaleski v. Treusdell, 183 U.S.App.D.C. 182, 562 F.2d 701, 712 (1977); Weathers v. West Yuma County School District, 530 F.2d 1335, 1338-39 (10th Cir. 1976); Sims v. Fox, 505 F.2d 857, 863 (5th Cir. 1974), cert. denied, 421 U.S. 1011, 95 S.Ct. 2415, 44 L.Ed.2d 678 (1975); Blair v. Board of Regents, 496 F.2d 322 (6th Cir. 1974); Lipp v. Board of Education, 470 F.2d 802, 805 (7th Cir. 1972).
[2] The Supreme Court cited Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 71 S.Ct. 624, 95 L.Ed. 817 (1951); Truax v. Raich, 239 U.S. 33, 36 S.Ct. 7, 60 L.Ed. 131 (1915); Schware v. Board of Bar Examiners, 353 U.S. 232, 77 S.Ct. 752, 1 L.Ed.2d 796 (1957); and Willner v. Committee on Character, 373 U.S. 96, 83 S.Ct. 1175, 10 L.Ed.2d 224 (1963). In Joint Anti-Fascist Refugee Committee, certain groups were placed on a list of subversive organizations, thereby automatically blacklisting the groups' members from any government employment. In Truax, the state of Arizona passed an anti-alien labor law barring employers from employing non-elector aliens for any more than 20 per cent of their jobs. In Schware and Willner, the plaintiffs' applications to the state bar were denied, thereby legally depriving them of the opportunity to practice law. The defendants have argued, therefore, that dee Swain has no liberty interest because the state has not formally and completely barred dee Swain from future employment.
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179 F.2d 400
Otis SPENCER, Petitioner,v.Honorable Albert A. RIDGE, United States District Judge,Western District of Missouri.
No. 14091.
United States Court of Appeals Eighth Circuit.
Jan. 11, 1950.
Otis Spencer, pro se.
PER CURIAM.
1
Motion of petitioner to issue mandate to Honorable Albert A. Ridge, United States District Judge, etc., denied.
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IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
NO. AP-75,130
EX PARTE MARCELLUS TEMEL ARTERBERRY, Applicant
ON APPLICATION FOR A WRIT OF HABEAS CORPUS
CAUSE NO. 31,549 IN THE 240th JUDICIAL DISTRICT COURT
FORT BEND COUNTY
Per Curiam.
O P I N I O N
This is a post-conviction application for a writ of habeas corpus filed pursuant to tex.
code crim. proc. art. 11.07. Applicant was convicted of aggravated robbery and his punishment
was assessed at confinement for thirty years. No appeal was taken from this conviction.
Applicant contends that his plea was rendered involuntary because the plea agreement
cannot be followed, and counsel was ineffective for advising him to accept this plea agreement.
Pursuant to a remand order, the trial court has entered findings of fact verifying that applicant
pled guilty pursuant to an agreement that this sentence would run concurrently with a federal
sentence. The trial court has also entered findings of fact that Applicant's federal judgment
requires that sentence to commence after this one expires, and the plea agreement cannot be
followed. Applicant is entitled to relief. Ex parte Moody, 991 S.W.2d 856 (Tex.Cr.App. 1999).
Relief is granted. The judgment in cause number 31,549 in the 240th Judicial District
Court of Fort Bend County is set aside and Applicant remanded to the trial court to answer the
charge against him.
Copies of this opinion shall be sent to the Texas Department of Criminal Justice,
correctional institutions and parole divisions.
DELIVERED: April 6, 2005
DO NOT PUBLISH
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218 F.Supp. 354 (1963)
FLONA CORPORATION, Plaintiff,
v.
UNITED STATES of America, Defendant.
No. 95-62-M-Civil-EC.
United States District Court S. D. Florida, Miami Division.
April 29, 1963.
*355 Cyrus A. Neuman, Miami, Fla., for plaintiff.
Lavinia L. Redd, Asst. U. S. Atty., Miami, Fla., Louis F. Oberdorfer, Asst. Atty. Gen., Edward S. Smith, George A. Hrdlicka, John F. Murray, Attys., Department of Justice, Washington, D. C., for defendant.
STEPHENSON, District Judge, sitting by assignment.
This is an action brought under 28 U. S.C. § 1346(a) to recover income taxes allegedly overpaid. The government has denied the claim of the plaintiff and has filed a counterclaim alleging that additional taxes are due. The case was tried to the Court without a jury.
There are three issues for determination by the Court: 1. Has the taxpayer carried his burden of proving an ascertainable basis at the time of the purchase of the cost of goods sold, the "goods" being sod which was purchased in a lump sum payment for the sod and the land on which it was growing? 2. Is the taxpayer entitled to a deduction for depletion of top soil under Section 611 of the Internal Revenue Code of 1954? 3. Has the taxpayer sustained a deductible casualty loss as a result of the destruction by frost of growing sod?
Plaintiff, the taxpayer, is a Florida Corporation that owns land from which sod is taken. The specific product is Saint Augustine grass which is produced and sold to homeowners. Plaintiff in July 1957 purchased a tract of 180 acres in Palm Beach County, known as the Gilbert tract, for the price of $28,742.68. The parties have stipulated that at the time of the purchase two million square feet of sod was growing on the land. During the next two fiscal years[1] following this purchase, plaintiff sold the entire two million square feet of growing sod. On its tax returns for these years plaintiff claimed a total of $10,000 as a deduction for depletion resulting from the sale of the sod. Plaintiff now claims that the $10,000 is properly allowable as a cost of goods sold and not as a depletion. The government contends that no deduction is allowable regardless of what it is called. However, the government does concede that plaintiff would be entitled to a cost of goods sold if the growing sod which was sold had an ascertainable basis.
The plaintiff has shown that the land in an unimproved condition had a fair market value of approximately $100 per acre, or $18,000 for the entire tract, and from this it has estimated that the value of the sod growing on this tract at the time of purchase was $10,000. Since there were approximately 66 acres of growing sod this results in an allowable value of $150 per acre for sod. Testimony offered indicates the prevailing price of St. Augustine sod at that time was at least $150 per acre. It is the opinion of the Court that the taxpayer has proved that the allocation was substantially ascertainable and was appropriate and should be allowed in the sum of $10,000. The amount allowed for 1958 is $7,838.50 based on the sale of 1,567,700 square feet of the sod and the amount allowed in 1959 is $2,161.50 based on the sale of the remaining 432,300 square feet of the aforementioned sod.
The second question raised requires the Court to determine whether or not a cost depletion allowance should be granted to persons engaged in the business of holding land which is used for sod farming of Saint Augustine grass. The harvesting of Saint Augustine grass sod requires the removal of one and one-half to one and three-quarter inches of top soil. It is the plaintiffs contention that *356 this sod which is a combination of soil and plant life, is a "natural deposit" and therefore a depletion allowance should be allowed under Section 611 of the Internal Revenue Code. Apparently this is a case of first impression. The plaintiff relies upon Revenue Ruling 78, 1953-1 Cum.Bull. 18, which states that "Soil in place is a natural deposit within the meaning of Section 23 (m) of the Internal Revenue Code (Section 611 of the 1954 Code). If such soil is severed and sold by the landowner, the proceeds are ordinary income subject to a depletion allowance * * *." The government contests the fact that this soil being removed is a "natural deposit" as that term is used in Section 611 and notes that soil, sod, dirt and turf are specifically excluded from the term "all other minerals" as that term is used in Section 613(b) (6), referring to percentage depletion. As such, this Section is not applicable to the controversy now before the Court except to the extent that it may shed some light on the legislative intent. Regulation 1.611-1 (d) contains definitions of certain words but nowhere does it define "natural deposits." It does tell us at subparagraph (5) that "Minerals * * * includes but is not limited to all of the minerals and other natural deposits subject to depletion based upon a percentage of gross income from the property under section 613 and the regulations thereunder."
The government has urged that a depletion allowance was never intended for this type of operation as is indicated by Revenue Ruling 54-241, 1954-1 Cum. Bull. 63, wherein it is stated that "a deduction is not permitted for the `depletion' of soil incident to farming operations; but the farmer is permitted to deduct as a business expense the cost of maintaining the productivity of the land. * * * Revenue Ruling 78, C.B. 1953-1, 18, is not applicable to this situation." The plaintiff urges that this regulation is not applicable because this ruling assumes that it is possible to restore the productivity of the land by the addition of other soil which the evidence in this case shows would not be economically feasible in this type of a sod farming operation.
One further Revenue Ruling should be mentioned. Rev.Rul. 55-730, 1955-2 Cum.Bull. 53 provides that "the cost of farm land with peat soils which by reliable estimate will subside to the extent of wide-scale abandonment within the next half century may not be recovered by depreciation or depletion allowances." This subsidence "is not a mining operation in which minerals are extracted from the lands, and the depletion provisions are not applicable."
It is the opinion of the Court that Saint Augustine sod is a "natural deposit" as that term is used in Section 611, and that Revenue Ruling 54-241 is not applicable to this case of the removal of Saint Augustine grass because, although the productivity of the land can be restored by fertilization, there has been an actual loss of soil and hence loss of the length of production, which cannot be restored except at costs which are totally prohibitory. This probably should not be categorized as a "mining operation" but nevertheless is distinct from subsidence which is the subject of Revenue Ruling 55-730. This Court is therefore of the opinion that a depletion allowance is within the purview of 611 and should be granted under the facts now before the Court.
The amount of the depletion is another question. The plaintiff has shown that the process of harvesting this type of sod requires the removal of approximately one and one-half to one and three-quarters inches of soil. The plaintiff also claims that the Schawno Drainage District maintains the water level at 12-18 inches below the surface of the land and therefore, in an attempt to be conservative, estimates that the number of one and one-half to one and three-quarter inch cuttings that could be taken off the land would be eight since when you get too close to the water level the ground becomes too soggy to work. The evidence shows that when this level is reached the land would be practically valueless. Again attempting to be conservative, the *357 plaintiff concedes a residual value of $2775 or about $15 per acre.
Assuming these claims of the plaintiff to be true, there are still two other factors to be taken into consideration. First, there is an average of five to six feet of this black muck above the rock which may be reclaimed should the water level in this drainage district be lowered. Since this is land that was once under water and the purpose of the drainage district is to make the land useful, it is more than a theoretical possibility that the water level could be lowered in the future. There is also evidence that the land is useful until the depth of the black muck is reduced to two feet. Secondly, there is no evidence as to the value which the land may have after less than five or six of these cuttings. Presumably the value would not be substantially decreased as it appears that vegetable crops or sugar cane grows quite satisfactorily under these or similar conditions. In fact the Gilbert tract is presently used for growing sugar cane rather than for sod farming.
In light of these facts the Court is of the opinion that the amount of the available muck is between three and four feet. Assuming the average, that is three and one-half feet, then the depletion computation should be on the basis of three and one-half times the 63,350,000 units of topsoil claimed by the plaintiff, or 221,725,000 units.[2] Consequently the cost per unit would be $.XXXXXXXXXX.[3] Thus the depletion value of 1,567,700 units harvested in 1958 would be $112.90. The depletion value of the 1,319,516 units harvested in 1959 would be $95.03.
This brings us to the last issue for determination by the Court which involves the deductibility of a casualty loss as a result of frost. On September 30, 1959, plaintiff purchased 800 acres of land known as the "Adams Tract" for a total purchase price of $129,350.[4] At the time of the purchase Saint Augustine grass was growing on the entire tract, however it was too tall for harvesting as sod so an effort was immediately made to mow the top of the grass down to a height suitable for removal as sod. This mowing plus the lack of fertilizer, which was intentionally left off because growth was not being encouraged, put the grass in a weakened condition. During the month of January in 1960 while the grass was in this condition the temperature dropped below freezing for several hours a day for three days. As a result of this cold weather the grass on 560 acres was killed. All attempts to revive the grass failed and as a consequence the fields have grown up with foreign grasses unsuitable for sod and thereafter attempts to take sod from the 560 acres were abandoned. It is on these 560 acres which the plaintiff claimed a casualty loss. The claim was originally allowed but is now the basis of the government's counterclaim.
Regulation 1.165-6(c) states:
"The total loss by frost, storm, flood or fire of a prospective crop being grown in the business of farming shall not be allowed as a deduction under Section 165(a)."
This regulation should be followed unless a compelling reason to the contrary is found to exist. Commissioner v. South Texas Lumber Co., 333 U.S. 496, 501, 68 S.Ct. 695, 92 L.Ed. 831 (1947). There does exist here, however, a serious question as to the applicability of the regulation. The first reason advanced by the plaintiff for its inapplicability is that it only applies to crops "being grown" and *358 here the grass was fully grown before the grass was killed by the cold weather. To put such a construction on the term would be unnatural. "Being grown" would better be interpreted to also include the final processes necessary to put the crop in a marketable condition. The fact that this crop was being cut down to a height suitable for harvesting rather than being allowed to "grow" does not alter the principle of the regulation. The evidence shows that the point of finality of reaching a marketable condition had not been reached at the time of the freeze.
"Being grown" could also be interpreted in this regulation to include all acts of growing the crop. That is, to give it the broad meaning of requiring that the person seeking the deduction be the person who was a part of the entire growing operation. This would limit the effect of this regulation and hence would make it inapplicable to this plaintiff. A better approach to the same result has been argued by the plaintiff. That is, instead of stretching the term "being grown", exclude the situation where the taxpayer has not incurred any expenses of growing the crop from the coverage of the regulations for the reason that the regulation was only intended to prevent a taxpayer from getting a double deduction.
In the ordinary case the farmer that raised the crop would have a deduction for his costs of planting the crop. Here, however, no such costs have been incurred by this party. Instead the costs of raising the crop were those of the person from whom the plaintiff purchased the land, which costs were reflected in the purchase price. The cost of another company in preparing the grass for removal is a separate matter. The plaintiff here is only the landholder. It bought the land with a growing crop. To deny plaintiff's claim here would be inconsistant with the granting of a cost of goods sold deduction to which the plaintiff would have been entitled had the crop not been destroyed. Regulation 1.165-6(c) must be interpreted to apply only to the situation where the person seeking the casualty loss deduction also has costs of production which are properly deductible. This principle is pointed out by comparing Regulations 1.165-6(d) (1) and (2). By means of these two regulations a distinction is properly drawn between animals that are purchased and animals which are raised on the farm and for which the owner has other proper provisions under which to deduct the equivalent of the purchase price of the animals. To deny the casualty loss deduction in the case now before the Court would be to ignore the distinction between "purchased" crops and crops grown completely by a farmer; a distinction that the regulations recognize in Sections 1.165-6(d) (1) and (2). See also, Hadaway v. Commissioner, 13 B.T. A. 986 (1928) (allowed casualty loss for flood damage to land planted with cranberries); Wilson v. Commissioner, 12 B.T.A. 403 (1928) (allowed casualty loss for destruction by disease of grapevines).
The casualty loss will be allowed and the defendant's counterclaim is therefore denied.
It is ordered:
1. The $7,838.50 and $2,161.50 deductions, plus interest, claimed for 1958 and 1959, respectively, as cost of goods sold from the Gilbert tract are allowed.
2. The claim of the plaintiff for depletion allowance for 1958 and 1959 reduced to the amount of $112.90 and $95.03, respectively, plus interest, is allowed.
3. The $2,702.05 plus interest claim of the defendant is denied.
It is further ordered:
The plaintiff will prepare an appropriate decree which will be submitted to the Court after the form thereof is approved by the defendant.
NOTES
[1] Fiscal years ending March 31, 1958 and March 31, 1959.
[2] The 63,350,000 figure was determined by multiplying 7,918,750 (the number of square feet on the farm) by 8 (the number of cuttings proposed by the plaintiff).
[3] This figure is arrived at by dividing the purchase price of the topsoil ($15,967.68) by the number of units to get the cost per unit. The purchase price of the topsoil ($15,967.68) is the cost of the land without the then existing crop ($18,742.68) less the residual value of the land ($2775.00).
[4] Of this, $100 per acre or $80,000 was allocated to the cost of the land and the balance, $49,350, was allocated to the cost of the grass.
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780 F.2d 1358
Karen A. SWIFT, Appellant,v.R.H. MACY'S & CO., INC., Appellee.
No. 84-2662.
United States Court of Appeals,Eighth Circuit.
Submitted Nov. 12, 1985.Decided Dec. 30, 1985.
1
Basil L. North, Jr., Kansas City, Mo., for appellant.
2
John P. Polan, Kansas City, Mo., for appellee.
3
Before ARNOLD and WOLLMAN, Circuit Judges, and REGAN, Senior District Judge.*
4
REGAN, Senior District Judge.
5
Karen A. Swift appeals from a jury verdict in favor of appellee, R.H. Macy's & Co. Inc. ("Macy's").1 The case was submitted to the jury on a false imprisonment theory. The verdict director substantially followed Missouri Approved Instruction (MAI) 23.04. Defendant asserted an affirmative defense that tracked the statutory language of Sec. 537.125 RSMo. and which substantially followed MAI 32.13.2 Swift contends the district court erred in denying her motion for a new trial on the grounds that the Court committed reversible error by making the following comments during the court's supplemental charge to the jury:
6
THE COURT: Members of the jury, I have five separate questions in writing, and in some cases the Court is able to write a short note back to the jury and answers the questions. These five questions, however, after discussion with counsel for both sides, everyone is agreed that it would be most helpful for the Court to bring the jury back and put these questions in perspective and to read two instructions which I gave you which you are to make the finding of fact and apply the principles of law that are stated in those two instructions....
7
There isn't a single word in these instructions that relates to Macy's training procedures, and that isn't the issue of fact in this case. Had it been, an instruction would have been directed to a training program.
8
So I think you can understand that discussion of a training program does not assist the jury in following the instructions and making findings of fact and applying the law as given you by the Court.
9
The Court then repeated plaintiff's verdict director and defendant's affirmative defense instruction. After which the Court asked:
10
THE COURT: Now, does any member of the jury need any additional instruction in regard to the incorporation of the statutory language in the instruction and the lack of need of having a copy of the statute?
11
A JUROR: We are having a problem in agreeing what is reasonable.
12
THE COURT: That is a question of fact, what is reasonable, and this is what you must center on you must determine whether in the second element defendant had reasonable cause to believe that the plaintiff wrongfully had taken or was taking merchandise. You have heard the testimony as to what the witnesses testified as to what they saw and why Mr. Kevin Barnes went out and asked the plaintiff to come back in the security office, and you've got to determine whether the defendant had reasonable cause under the circumstances to take that action.
13
You must also find, thirdly, whether the restraint was made in a reasonable manner and for a reasonable length of time, and for the purpose of investigation, and you have heard the testimony of the witnesses in that regard, and you must determine unanimously the answer to those questions in fact.
14
Plaintiff failed to object to the court's supplemental instruction before the jury retired to consider its verdict as Rule 51 of the Federal Rules of Civil Procedure requires. Coleman v. City of Omaha, 714 F.2d 804, 807 (8th Cir.1983). Error in the instructions not properly objected to is waived unless the error is plain error in the sense that a miscarriage of justice would otherwise result. Federal Crop Insurance Corporation v. Hester, 765 F.2d 723, 727 (8th Cir.1985), Rowe International, Inc. v. J-B Enterprises, Inc., 647 F.2d 830, 835 (8th Cir.1981); Cone v. Beneficial Standard Life Insurance Co., 388 F.2d 456, 459-60 (8th Cir.1968). The plain error exception to Rule 51 is narrow and is confined to the exceptional case where the error has seriously affected the fairness, integrity or public reputation of judicial proceedings. R.W. Murray Company v. Shatterproof Glass Company, 758 F.2d 266, 174-5 (8th Cir.1985). Wright v. Farmers Co-op of Arkansas and Oklahoma, 620 F.2d 694, 699 (8th Cir.1980); Rowe International, Inc., supra, 647 F.2d at 835; Johnson v. Houser, 704 F.2d 1049, 1051-2 (8th Cir.1983). When a portion of a jury instruction is assigned as error, the reviewing court must look to the instruction as a whole to determine whether the charge, taken as a whole and viewed in light of the evidence, fairly and adequately submits the issues in the case to the jury. Chohlis v. Cessna Aircraft Co., 760 F.2d 901, 905 (8th Cir.1985); Monahan v. Flannery, 755 F.2d 678, 681 (8th Cir.1985); Ayoub v. Spencer, 550 F.2d 164, 167 (ed. Cir.), cert. denied, 432 U.S. 907, 97 S.Ct. 2952, 53 L.Ed.2d 1079 (1977); Des Moines Board of Water Works Trustees v. Alvord, Burdick and Howson, 706 F.2d 820, 823 (8th Cir.1983). It is not necessary for the district court to recite a requested instruction verbatim in order to avoid error, so long as the instructions given are accurate and fair to both parties. Villanueva v. Leininger, 707 F.2d 1007, 1009 (8th Cir.1983). "A party is not entitled 'to have the jury instructed in any particular language, so long as the jurors understand the issues and are not misled.' (citations omitted). A district judge has broad discretion in the choice of form and language...." Keltner v. Ford Motor Company, 748 F.2d 1265, 1267 (8th Cir.1984). Where a jury "makes known its difficulty and requests further instructions on the law applicable to an important issue, the trial judge is required to give such supplemental instructions as may be necessary to guide it in the determination of the issue. (citations omitted). A perfunctory re-reading of the very instruction which may have led to the difficulty does not fulfill the requirement." Walsh v. Miehle-Goss-Dexter, Inc., 378 F.2d 409, 415 (3d Cir.1967).
15
Reviewing the charge as a whole, and in light of the evidence and applicable law, we find that the issues in the case were fairly and adequately submitted to the jury. We note that Swift not only failed to object to the Court's supplemental charge, but also failed to tender or request a supplemental instruction which defined the term "reasonable" for the jury. Given these circumstances, we feel that the judge's comments on the evidence during the supplemental charge were reasonable and permissible.
16
In charging the jury, the trial judge is not limited to instruction of an abstract sort. It is within his province, whenever he thinks it necessary to assist the jury in arriving at a just conclusion by explaining and commenting upon the evidence, by drawing their attention to the parts of it, which he thinks important, and he may express his opinion upon the facts provided he makes it clear to the jury that all matters of fact are submitted to their determination.
17
Quercia v. U.S., 289 U.S. 466, 469, 53 S.Ct. 698, 699, 77 L.Ed. 1321 (1933). The trial court's supplemental charge was not "plainly erroneous." Mid-America Food Service v. ARA Services Inc., 578 F.2d 691, 696 (8th Cir.1978). The reasonableness of the procedures used by Macy's to train security personnel was not an issue in the case. The reasonableness of Swift's restraint was to be judged an objective standard. Ransom v. Adams Dairy Co., 684 S.W.2d 915, 921 (Mo.App.1985); Prosser, Law of Torts (4th Ed.1971) at 150. Therefore, we hold that the instructions, when viewed as a whole, fairly and adequately submitted the case to the jury. Furthermore any alleged error made in delivering the supplement charge was neither plain error nor properly preserved for review.
18
Accordingly, we affirm.
*
The HONORABLE JOHN K. REGAN, Senior United States District Judge for the Eastern District of Missouri, sitting by designation
1
The Hon. John W. Oliver, Senior Judge, presiding
2
The case was not submitted on a negligent hiring/negligent training, or assault and battery theory. It is the duty of the court, in submitting a case to the jury, to confine its instructions to the issues raised by pleading and proof. State of Arkansas v. Godbehere, 261 F.2d 623, 625 (8th Cir.1958)
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418 F.Supp. 639 (1976)
UNITED STATES of America, Plaintiff,
v.
SCHOOL BOARD OF the CITY OF SUFFOLK et al., Defendants.
Syvalius WALSTON, Jr., et al., Plaintiffs,
v.
SCHOOL BOARD OF the CITY OF SUFFOLK et al., Defendants.
Civ. A. Nos. 392-70-N, 472-71-N.
United States District Court, E. D. Virginia, Norfolk Division.
August 20, 1976.
*640 *641 Teresa T. Milton, Civil Rights Div., Ed. Sec., Dept. of Justice, Washington, D. C., *642 James W. Benton, Jr., Hill, Tucker & Marsh, Richmond, Va., for plaintiffs.
William W. Jones, City Atty., Suffolk, Va., Frederick T. Gray, Chesterfield C. H., Va., for defendants.
MEMORANDUM
WALTER E. HOFFMAN, District Judge.
Following a reversal and remand of this Court's prior opinion, 351 F.Supp. 196 (1972), denying injunctive relief, reinstatement and back pay to certain black teachers formerly employed by the County School Board of Nansemond County, Virginia, the proceedings were somewhat delayed because, as of January 1, 1974, the County of Nansemond ceased to exist, it having been merged with the City of Suffolk effective on the stated date. The School Board of the City of Suffolk, as successor to the County School Board of Nansemond County, has been substituted as a party defendant in the consolidated actions, and has acknowledged its responsibility for the past acts of its predecessor.
In Walston v. County School Board of Nansemond County, 492 F.2d 919 (4 Cir. 1974), the issue involved the use of the National Teachers Examinations (NTE) to ascertain whether teachers, employed for the first time during the 1970-71 school year and pertinent to all subsequent applicants, should be given renewal contracts (or original contracts) for the 1971-72 school year and thereafter. In reversing the district court, the opinion states in part:
For the reasons hereafter set out, we reverse the judgment and direct that the teachers terminated solely upon the basis of NTE scores be reinstated with full back pay; that the cases of the teachers terminated "for cause" be re-examined at a hearing to be held by the District Court at the earliest practicable date to consider the validity of such dismissals and the appropriateness of reinstatement; that appropriate injunctive relief be issued and that the damages, if appropriate, be awarded.
* * * * * *
We hold that the NTE, as applied here, was discriminatory and that the teachers terminated because of their failure to make a 500 score on the test must be reinstated with back pay and their damages, if any, settled. The facts surrounding the dismissal of certain teachers "for cause" must be re-examined by the District Court with a view to making certain that their dismissal was not linked to discriminatory action with the burden of proof on the School Board; and if it was, then appropriate relief should be afforded them. Injunctive relief must be granted in such terms as will insure that further discrimination in the employment and retention of teachers in the School District will not recur. Finally, the District Court, in the exercise of its sound discretion, may grant such other and further relief as it deems necessary and appropriate.
At the outset it is contended by the United States that the "law of the case" applies and wherever the teacher was not notified that he or she would not be considered for reemployment because of failure to achieve a score of 500 on the NTE, the defendants are estopped from showing that the real cause for nonreemployment was otherwise. At the first trial of these actions, no effort was made to go beyond the failure to achieve the required score although, in several instances, the defendants stated there were other reasons for not renewing the contract. We decline to apply the doctrines of the "law of the case" and "estoppel" to the facts presented, especially in light of the language of Mr. Justice Clark's opinion which, in one place, uses the words "solely upon the basis of NTE scores." To hold otherwise would be to afford relief to one teacher who failed to make the required score but whose principal said that he knew the teacher had not achieved the score and he did not want to reflect upon the teacher's record by stating the details of incompetency.
Counsel for Walston, et al, have requested an allowance of attorney's fees, costs *643 and expenses. This issue will be discussed infra.
INJUNCTIVE RELIEF
While awaiting the transcripts and briefs, the Court was requested to enter an injunctive order. In substance, the injunction prohibited the defendants, their officers, agents, employees and all others in active concert or participation from
(D)iscriminating on the basis of race or color in the employment of teachers and other personnel in the City of Suffolk School System. The defendants are further enjoined from making use of the National Teachers Examination as a sole basis for employment, re-employment or termination of services of any teacher of other personnel in the school system.
Plaintiffs argue that the language of the order is insufficient in that the Court should require that, before the use of NTE or any written examination, constitutionally required validation studies must be completed.
It is conceded that, upon receipt of the opinion by the Court of Appeals, the requirement of a score of 500 in the NTE Weighted Common was abolished. Indeed, no NTE is now required. To broaden the language of the injunctive order would negate the opinion where it states that NTE could be considered as a factor (but not solely) in determining whether a teacher should be employed, retained, or services terminated.
ALLEGED JURISDICTION OF ACTIONS
During the course of original proceedings and on remand the Court raised the jurisdictional question of whether the Attorney General has authority under 42 U.S.C. § 2000c-6 to make a supplemental motion for relief on behalf of individual schoolteachers dismissed for allegedly racially discriminatory reasons. That is, although the United States properly instituted suit on behalf of schoolchildren to desegregate the Nansemond County schools, is the United States the proper party plaintiff to act on behalf of the schoolteachers in a separate request for relief in the form of reinstatement and back pay? The Court suggested at the outset that, to avoid this problem, the teachers might want to obtain private counsel and subsequently all but a few did so. Faced now with this question, and for the reasons explained below, we think the United States does not have such authority.
The statute, 42 U.S.C. § 2000c-6, reads in part as follows:
(a) Whenever the Attorney General receives a complaint in writing
(1) signed by a parent or group of parents to the effect that his or their minor children, as members of a class of persons similarly situated, are being deprived by a school board of the equal protection of the laws, or
(2) signed by an individual, or his parent, to the effect that he has been denied admission to or not permitted to continue in attendance at a public college by reason of race, color, religion, sex or national origin,
and the Attorney General believes the complaint is meritorious and certifies that the signer or signers of such complaint are unable, in his judgment, to initiate and maintain appropriate legal proceedings for relief and that the institution of an action will materially further the orderly achievement of desegregation in public education, the Attorney General is authorized, after giving notice of such complaint to the appropriate school board or college authority and after certifying that he is satisfied that such board or authority has had a reasonable time to adjust the conditions alleged in such complaint, to institute for or in the name of the United States a civil action in any appropriate district court of the United States against such parties and for such relief as may be appropriate . . ..
Clearly the statute was intended for the benefit of schoolchildren (or individuals in college) who were adversely affected by discrimination. The legislative history of § 2000c-6 amply supports this conclusion. *644 A House report of December 2, 1963, from the Committee on the Judiciary, states:
The committee . . . has adopted a provision authorizing the Attorney General, upon receipt of a signed complaint, to institute legal action in behalf of schoolchildren or to intervene in a legal action already commenced in behalf of schoolchildren in order to desegregate public schools and colleges. This proposal has received bipartisan support for many years. (Emphasis added.)
H.R.Rep. No. 914, Part 2, 88th Cong., 1st Sess. (1963), p. 22.
Senator Hubert Humphrey, who was floor manager of the bill which later became the Civil Rights Act of 1964, explained in the course of debate the purpose of Title IV (The Public Education Subchapter which includes § 2000c-6):
Children who were entering segregated primary schools when the Supreme Court decided the Brown case are now attending segregated high schools. We can never make up the loss to their education; but the Federal Government can help to see to it that children who will enter segregated kindergarten next fall will not be graduating from a segregated high school in 1978.
Bernard Schwartz, Statutory History of the United States, Civil Rights, p. 1205.[1]
That the resources of the Attorney General's office are to be utilized to aid schoolchildren in the process of desegregating a public school system does not mean, however, that they are also to be utilized to further the claims of individual teachers who were allegedly dismissed because of racial discrimination. Although a schoolchild's right to integrated education can be said to depend in part on an integrated faculty, it does not depend on the outcome of individual suits by teachers for reinstatement and back pay.
That the authority given the Attorney General does not encompass every aspect of racial discrimination in the schools is further indicated by the definition of desegregation. As appears above, § 2000c-6 authorizes suits in order to "materially further the orderly achievement of desegregation in public education." "Desegregation", as defined in § 2000c-6, "means the assignment of students to public schools" in a nondiscriminatory manner. If the statute were intended to give the broad authority advocated by the United States it is unlikely that the definition of desegregation would have been limited to the "assignment of students."
Additionally it is clear that suits on behalf of students are to be instituted only where they do not have and cannot secure the necessary means to bring the suit themselves. Certification by the Attorney General to this effect is required. As explained by Senator Humphrey:
The purpose of the requirement that the Attorney General first find that the injured party is unable to bring suit is to assure that the Federal Government is not involved when private parties are able to undertake necessary legal action.
* * * * * *
In short, we are still relying on private litigation as the first line of action to make constitutional rights effective. Schwartz, p. 1210.
If the United States can also act on behalf of teachers, it is peculiar that no such certification is required as to them. The explanation of this inconsistency, we believe, is that the authority of the Attorney General was not intended to encompass the claims of individual teachers.
It is true that courts in equity have been held to have the power to grant all necessary relief. The remedies traditionally available to a court in equity are not to be restricted unless, of course, a statute mandates it. See, Mitchell v. Demario Jewelry, 361 U.S. 288, 80 S.Ct. 332, 4 L.Ed.2d 323 (1960), and Porter v. Warner Co., 328 *645 U.S. 395, 66 S.Ct. 1086, 90 L.Ed. 1332 (1946). But it is of course implicit in such cases that the matter at issue be properly before the court. In other words, before the question of what is the proper relief to be granted is reached, it must appear that there is no jurisdictional bar to the action. Yet it is exactly this latter question that is here at issue. If the United States is properly before the Court with its supplemental motion for relief, we have no doubt that the remedies of reinstatement and back pay are available. However, as explained above, the Court finds that the United States is not authorized under § 2000c-6 to act on behalf of the teachers, and therefore it is not necessary to determine what relief would be appropriate if there was that authority.
The United States in its brief cites United States v. Chesterfield County School Dist., S.C., 484 F.2d 70 (4 Cir. 1973), in support of its argument that it does have proper authority. Chesterfield was a desegregation case under Titles IV and VI of the Civil Rights Act. The United States made a motion for supplemental relief seeking reinstatement, back pay, and damages for ten black teachers allegedly dismissed for racial reasons. The district court denied relief but the Court of Appeals reversed as to nine of the ten teachers and ordered that they be reinstated with back pay. However, an examination of the briefs on appeal shows that the issue of whether the United States had authority to proceed on behalf of the teachers was never raised, nor was this question dealt with by either the district court or the Court of Appeals. Therefore Chesterfield cannot be held to have decided this question.
STATUS OF CLASS ACTION
The question of whether this case should be certified as a class action is also before the Court. Certain language in the opinion of the Court of Appeals suggests that it considered to be a class action.[2] However, before remand no attempt was made either to certify the class as contemplated by FRCP 23(c)(1) or to identify the members of the class as required by 23(c)(3). Therefore when this case went up on appeal, it could not properly be considered a class action. Bd. of School Commissioners of City of Indianapolis v. Jacobs, 420 U.S. 128, 95 S.Ct. 848, 43 L.Ed.2d 74 (1975).
Upon remand to this Court from the Court of Appeals counsel for plaintiffs Syvalius Walston, et al., filed, on January 15, 1975, a motion to have the Court "determine that the action is maintainable as a class action under Rule 23(b)(2) of the Federal Rules of Civil Procedure, and to certify the class as being all black teachers terminated or refused reemployment for reason of the National Teachers Examination and all black teachers who are now employed or may in the future be employed or be eligible for employment." After a hearing on February 14, 1975, the motion was denied with the order being entered on March 28, 1975.
The possible members of a class suit would be (1) those teachers whose employment was terminated solely because of the NTE, (2) those teachers whose employment was terminated for cause and (3) applicants seeking positions as teachers. At the February 14 hearing counsel for plaintiffs explained that "[Mr. Benton] We are not raising the issue of teachers who were terminated for cause, because we don't think that the requirement of typicality would cover those people in certifying it as a class action." (p. 15) Therefore only teachers dismissed because of the NTE and applicants are sought to be made members of the class. The Court does not agree, however, that a class action is properly maintainable even if restricted to those two groups.
The Court first of all believes the motion for certification was not timely. Plaintiffs commenced this suit on August 20, 1971, and it was not until January 15, *646 1975, and after an appeal on the merits had been taken that the motion was filed. Rule 23(c)(1) provides in part: "As soon as practicable after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained." Clearly no attempt was made by the plaintiffs to bring this matter "as soon as practicable" before the Court for a determination. The responsibility for this, as well as the burden of proving the prerequisites of a class action, rests upon the plaintiffs. "Not only is the burden of proof on the plaintiff, it is the duty of the plaintiff to bring the matter before the court for a determination in accordance with Rule 23(c)(1). Adise v. Mather, 56 F.R.D. 492 (D.Colo.1972)."[3]Carracter v. Morgan, 491 F.2d 458, 459 (4 Cir. 1973); Nance v. Union Carbide Corp., 540 F.2d 718 (4 Cir. 1976), decided July 28, 1976.
More important in this case than the fact of a delay of some four years and five months is the fact that a ruling on the merits by the Court of Appeals has intervened. Having won a favorable ruling from the Court of Appeals, the plaintiffs now wish to broaden the class of plaintiffs. To do so, the Court believes, would be improper. The language of Rule 23(c)(1) itself would seem to preclude such action. The second sentence of Rule 23(c)(1) states: "An order under this subdivision may be conditional, and may be altered or amended before the decision on the merits." As the Court of Appeals for the Seventh Circuit has noted:
. . . [T]he text certainly implies, even if it does not state expressly, that such a decision should be made in advance of the ruling on the merits. For the explicit permission to alter or amend a certification order before decision on the merits plainly implies disapproval of such alteration or amendment thereafter.
Jimenez v. Weinberger, 523 F.2d 689, 697 (7 Cir. 1975)[4]
Secondly, the policy behind Rule 23 is to avoid
. . . [T]he problem of "one-way intervention" whereby a potential class member could await a resolution of the merits of the claim before deciding whether or not to join the lawsuit. American Pipe & Construction Co. v. Utah, 414 U.S. 538, 545-49, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974). The Court in that case specifically pointed out that:
[T]he 1966 amendments were designed, in part, specifically to amend this perceived defect in the former Rule and to assure that members of the class would be identified before trial on the merits and would be bound by all subsequent orders and judgments. 414 U.S. at 547, 94 S.Ct. at 763 (footnote omitted).
The obvious import of this language is that the amended Rule 23 requires class certification prior to a determination on the merits.
Peritz v. Liberty Loan Corp., 523 F.2d 349 (7 Cir. 1975)[5]
*647 For these reasons the Court finds the plaintiffs' motion for class action certification to be untimely.
Moreover the Court finds this suit is not properly maintainable as a class action because the prerequisites set forth in Rule 23(a) have not been met. As stated above, plaintiffs wish to include as members those teachers, other than named plaintiffs, who were dismissed because of the NTE, plus those who applied for teacher positions. As to the former category, there has been no showing that "the class is so numerous that joinder of all members is impracticable." Rule 23(a)(1). As to how many individuals would be involved, counsel for plaintiffs stated at a December 27, 1974 hearing that "[Mr. Benton] I think, secondly, that the number of people we are talking about is not a large number. It may be somewhere in the neighborhood of three to eight people." At the February 14, 1975 hearing on the class action issue counsel stated in addition that "[Mr. Benton] First, those three to eight people were those terminated in '71 along with these plaintiffs, but there are others after '71. [The Court] How many are there in the group? [Mr. Benton] I don't know." The burden is upon the plaintiffs to show that the case meets the prerequisites of a class action. Carracter v. Morgan, 491 F.2d 458 (4 Cir. 1973), Poindexter v. Teubert, 462 F.2d 1096 (4 Cir. 1972). As to the numerosity requirement for teachers dismissed because of the NTE, that burden has not been met.
Plaintiffs also wish to include as class members those individuals who applied for teacher positions. Since as stated above the requirement of an NTE score was abolished as a result of the Court of Appeals' decision, the possible class members would be those applicants who were unsuccessful in gaining employment before the date of the decision. However, individuals who were seeking employment but who were not successful and those who were already employed but whose employment was terminated are in substantially different positions. The requirement of Rule 23(a)(3) is that "the claims or defenses of the representative parties are typical of the claims or defenses of the class." The claim of an applicant would be that he or she would have been hired but for the use of the NTE. Plaintiffs, on the other hand, are individuals who already held teaching positions but were among those who lost their jobs when the black faculty was disproportionately reduced. The burden of proof for the two groups might well be different. Chambers v. Hendersonville City Board of Education, 364 F.2d 189 (4 Cir. 1966), relied upon in the Court of Appeals' opinion, went no further than to shift the burden for those employed teachers who lost their jobs when the number of black teachers was drastically reduced as a result of desegregation.
Furthermore the class relief to be afforded applicants whose claims eventually proved meritorious would in all probability be different from the relief to be afforded successful plaintiffs. While reinstatement is a proper remedy for certain plaintiffs, the Court could not automatically order the school board to hire previous applicants regardless of such factors as the number of vacancies available and the qualifications of the individuals involved. Because of these differences, we find that the claims of plaintiffs are not typical of the claims of the class of applicants.
To conclude, the Court finds that the motion for class certification is not timely, nor have the prerequisites of Rule 23(a) been met. The motion must therefore be denied.
ATTORNEYS' FEES
Plaintiffs in No. 472-71-N request that an award of attorneys' fees be made. In accordance with Alyeska Pipeline Service Co. v. Wilderness Soc., 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975), the plaintiffs to *648 be awarded attorneys' fees must find statutory authority (unless they can fall within the court created exceptions such as bad faith or willful disobedience of a court order, which are inapplicable here). The plaintiffs are suing under 42 U.S.C. § 1983 which does not provide for attorneys' fees. However, they rely on 20 U.S.C. § 1617 which states:
§ 1617. Attorney fees
Upon the entry of a final order by a court of the United States against a local educational agency, a State (or any agency thereof), or the United States (or any agency thereof), for failure to comply with any provision of this chapter or for discrimination on the basis of race, color, or national origin in violation of title VI of the Civil Rights Act of 1964, or the fourteenth amendment to the Constitution of the United States as they pertain to elementary and secondary education, the court, in its discretion, upon a finding that the proceedings were necessary to bring about compliance, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs.
(Emphasis added)
A teacher's dismissal because of racially discriminatory criteria violates the Fourteenth Amendment and pertains to elementary or secondary education. Moreover the suit was necessary for the individual teachers to obtain relief. An award is therefore proper in this case. See Ward v. Kelly, 515 F.2d 908 (5 Cir. 1975).
The Supreme Court in discussing 20 U.S.C. § 1617 stated that the successful plaintiff "should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust." Northcross v. Board of Educ. of Memphis City Schools, 412 U.S. 427, 428, 93 S.Ct. 2201, 2202, 37 L.Ed.2d 48 (1973). Although the effective date of 20 U.S.C. § 1617 was July 1, 1972, the statute applies retroactively to legal proceedings before that date. Bradley v. School Bd. of City of Richmond, 416 U.S. 696, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974).
During the course of the remand proceedings certain settlements were effected as follows:
Queen H. Malone $6500.00
Dorothy D. Mozelle 4270.00
Celestine E. Whitehead 1837.00
Darline C. Boone 8000.00
Evelyn J. Jones 1650.00
Josephine A. Gatling 2205.00
Thelma L. Corprew 200.00
Eula Y. Baker 1500.00
The foregoing are eight of the named thirteen plaintiffs in No. 472-71-N. One other, Brenda S. Williams, offered no proof of damages and her case is dismissed. In addition, Clara E. Lee, on her own motion, was dismissed as a party plaintiff on March 13, 1972. The remaining three plaintiffs' cases are the subject of further discussion.
Two Government claimants (not parties in No. 472-71-N) settled their claims. Amanda Robinson settled for $750.00 with no claim for attorney's fee. After the case had been fully submitted, the Court received a letter from a Government attorney stating that the claim of Flora Ricks had been settled for an amount not designated. The Ricks settlement is not subject to a claim for attorneys' fees.
When the settlements were announced in open court, the Court raised the question of attorneys' fees. After some consideration the school board agreed that, if allowable by law, the board would pay a reasonable fee in addition to the settlement amounts. Bearing in mind the appeal heretofore successfully pressed, the Court is of the opinion that attorneys' fees in the sum of twenty (20) percent of the stated settlements should now be paid to counsel for the named plaintiffs in No. 472-71-N. With respect to Howell, who is a named plaintiff deemed entitled to recover as hereinafter stated, the Court allows twenty-five (25) percent in addition to the damage recovery.[6]
*649 As indicated above, no fees are allowed for the settlement of the Robinson and Ricks claims. Presumably all settlements previously stated have been paid to the named plaintiffs and two Government claimants. And, with the exception of Howell whose case was not settled, we assume further that the settling plaintiffs have waived any right to reinstatement although the terms of the settlements as stated in open court make no reference to reinstatement.
INDIVIDUAL CLAIMS
The Court now turns to the merits of the individual claims of the remaining plaintiffs. Although recovery for the two remaining Government plaintiffs, Wallace Dickerson and Elizabeth Pegram, is precluded by the Court's ruling on the lack of authority of the United States to proceed on their behalf, the facts of their claims will also be discussed.
Syvalius Walston
Walston was first employed as a teacher in 1961 in Nansemond County and, except for the 1962-63 school year when he was unemployed, continued to teach in various schools until his employment was terminated at the end of the 1970-71 school year. During the 1970-71 school year he was assigned to the Southwestern Elementary School where he taught health and physical education for seven weeks before being assigned by the principal, David Fulton who is also black, to teach seventh grade English.
Difficulties developed between Walston and Fulton over what the latter viewed as Walston's lack of "professional dedication."[7] In support of this view Fulton cited certain incidents in which he felt Walston improperly opposed the administration for reasons with racial implications.[8] It should be noted that Southwestern Elementary School was in its first year of racially integrated operation. Other incidents involved rather petty administrative disagreements.
In a letter to Robert Wood, Superintendent of the Nansemond County Schools, dated April 5, 1971, Fulton recommended Walston for reappointment for the next school year. At a principals' meeting on April 8 Wood cautioned the principals against recommending a teacher and then requesting that the teacher be transferred. Wood felt principals sometimes did this as an easy method of getting rid of unwanted teachers, so he told them that if they made a recommendation they should not expect a transfer. In a letter to Wood dated April 9 Fulton changed his position and recommended that Walston not be reappointed. As a result Walston was not reemployed for the next school year.
In evaluating these happenings we first note that it is not the duty of the Court to pass on the merit or nonmerit of Fulton's recommendation. Rather the Court must determine whether Walston's race was the cause of his dismissal. We do not find this *650 to be the case. The NTE was not involved in respect to Walston.
Walston's dismissal was essentially due to a personality clash with his principal, Fulton. At the proceedings on April 3, 1972 the following exchange took place:
Q As a result, Mr. Fulton, of all the experience that you had with Mr. Walston, your observations of him, confrontations you had with him about various of these issues, what was your final judgment as to whether or not you and Mr. Walston could successfully work together in the proper administration of your school for another year?
A In my final judgment, Mr. Gray, I deemed that an almost impossible task; that we could not work together for the betterment of the school.
Q That was the basis for your recommendation of nonreemployment?
A Yes, sir.
On April 4 Walston testified as follows:
Q Do you agree that the two of you could not work together for the betterment of that school?
A Yes, I agree with that.
Q You agree with that?
A Yes.
Q And did you think that one or the other of you would have to change if you were to work together for the betterment of that school?
A I agree with that.
Q And did you think that it was you that should change or did you think that it was Mr. Fulton that should change?
A I thought that he should change.
Q And you regarded Mr. Fulton as unreasonable?
A Yes, I did.
Q Inflexible?
A True.
Q Untrustworthy?
A Right.
Q And somewhat dictatorial?
A Very much so.
As before stated, Fulton's race is black, as is true of the teacher who replaced Walston. The fact that some of the incidents cited by Fulton in support of his refusal to recommend Walston had racial implications does not show that it was the race of Walston, rather than the incidents themselves, which caused Walston's employment to be terminated. We find that the school board has met its burden of showing that Walston was not dismissed because of his race.
George Crocker
Crocker taught continuously in Nansemond County from 1959 until the end of the 1969-71 school year at which time his employment was terminated, but not because of the NTE. James Harris, who is also black, was Crocker's principal at East Suffolk Elementary School where Crocker taught from 1966 until his employment ended.
Harris testified that Crocker had problems with student discipline; in particular he sent too many students to the principal's office for punishment. The two differed in their philosophies of discipline and Crocker felt he was not getting the proper support from Harris because the latter too often would not punish the students sent to him. Crocker also had personal difficulties with Harris and because of this he had requested a transfer in 1969.
At the proceedings on April 24, 1975 Crocker was questioned about the reasons why his teaching contract was not renewed.
Q Do you have any reason to believe, of your own knowledge, that you were discharged from a renewal of your contract because of any reason other than the fact that you were not able to get along with your Principal, and that you were having disciplinary problems?
A Do I know of any other reason?
Q Yes.
A No, I don't know of any other reason.
We believe the record shows that race played no part in the termination of Crocker's employment and the school board *651 has sufficiently established a valid reason for termination.
Roumaine Howell
Defendants in their brief acknowledge liability for Mrs. Howell who seeks both reinstatement and back pay. She last taught during the 1970-71 school year at John Yeates High School where her salary was $7,808.00. The pretrial order contains the stipulation that her salary would have been as follows:
1971-72 $ 8,308.00
1972-73 $ 8,765.00
1973-74 $ 9,291.00
1974-75 $10,350.00
After her employment was terminated she obtained a $7,000.00 loan at 7% interest for house repairs mostly, and thus she seeks an additional $490.00 for her interest payments.
Her earnings for those years were as follows:
1971 $ 50.00
1972 $ 25.00
1973 $ 891.00
1974 $1,566.00
She commuted 64 miles per day to get to and from work. Hence defendants argue that any recovery should be reduced by 64 miles per day × 180 days × 12 cents per mile = $1,382.40 per year.
Defendants also point to her testimony on April 3, 1972 where she stated she had not applied anywhere to teach for the 1971-72 school year. However, on April 24, 1975, she mentioned about half a dozen job applications she had made in 1971. Her testimony was that she failed to mention them in 1972 because she could not recall the dates of the applications.
We think that there must be some reasonable limitation to claims for damages by reason of back pay where a supposedly competent school teacher is not reemployed for succeeding years. We are convinced that Mrs. Howell did not exercise proper efforts to secure employment during the years beginning 1971-72. Taking her highest rate of pay ($10,350.00 for 1974-75), we have commuted her loss at $20,700 for which judgment will be entered in her favor. She is, according to the ruling of the Court of Appeals, entitled to reinstatement conditioned that she makes immediate application for same. The request should come from Mrs. Howell as neither the school board nor the Court is advised as to her present wishes along these lines.
The attorneys' fees allowed are in addition to the aforesaid $20,700.00.
Wallace Dickerson
Dickerson was employed by the Nansemond County School Board during the 1969-70 and 1970-71 school years. During his first year Dickerson taught biology at Southwestern High School and during his second year he taught physical education at three different schools, one of which was Southwestern. His principal at Southwestern was David Fulton who, as previously noted, is black. As a result of Fulton's decision not to recommend reappointment, Dickerson's employment was terminated at the end of the 1970-71 school year, the NTE not being involved.
Fulton testified that there were several reasons for his decision. Dickerson failed to ever turn in weekly lesson plans which were requested of all teachers. He failed to follow through with requests by Fulton to reorganize his physical education classes, to take measures to prevent theft during classes, to refrain from entertaining visitors during the school day, and to improve in the area of student discipline. Dickerson was also unwilling to stay after school to try and correct certain teaching weaknesses which Fulton observed.
As was the case with Syvalius Walston, Fulton at first recommended Dickerson for reappointment; then, after the April 8, 1971 principals' meeting, changed his mind and recommended that he not be reappointed. As discussed above, at that meeting the principals were advised by Superintendent Wood to give honest recommendations because if they recommended that a teacher be retained, they could not later get rid of the teacher by means of requesting a transfer. *652 This meeting, rather than racial discrimination, was the reason Fulton changed his recommendations as to both Dickerson and Walston.
The record shows that Dickerson's race was not a factor in the decision not to reemploy him. As noted, Dickerson was a "Government claimant" and not a named plaintiff in the Walston, et al. case.
Elizabeth Pegram
Ms. Pegram was employed by the Nansemond County School Board as a mathematics teacher during the 1970-71 school year. She did not return for the 1971-72 school year because of pregnancy, her child being born in October of 1971, although she testified that she could have returned to teach by March of 1972.
An "Evaluation of Personnel" form filled out by her principal, William Boone, on March 15, 1971, shows her marked "outstanding" in no categories, "above average" in five categories, "average" in eight categories, "below average" in one category (student discipline) and "unsatisfactory" in no categories. In the same form Boone checked the "recommend reappointment" option at the bottom of the page.
At the proceedings on April 25, 1975 Boone, who is also black, testified that he recommended her for reappointment only because he was reasonably certain that, because of her pregnancy, she would not be able to return for the 1971-72 school year. If he had not been reasonably certain of this, he would not have recommended her because he regarded her as deficient in the areas of student discipline and academic ability. Boone testified, however, that he did not wish to kill her chances for employment elsewhere and hence he made the favorable recommendation and evaluation outlined above.
In addition, in late March or early April of 1971, she received a letter from the school board stating that due to her failure to score 500 on the NTE she would not be reemployed for the 1971-72 school year.
Ms. Pegram did not apply for reemployment for the 1972-73 school year, which is the first year she would have been able to return after her pregnancy. Under the circumstances the Court believes that her failure to apply precludes recovery. Ms. Pegram was a newly employed teacher who taught for only one year (1970-71). She did not return for the 1971-72 school year because of her pregnancy. Her failure to apply for the 1972-73 school year meant that the school board was not faced with the decision of whether or not to hire her for that year. Consequently recovery on the grounds of a refusal of employment for racially discriminatory reasons is not justified even if Pegram had been a named plaintiff in the case of Walston, et al.
CONCLUSION
The Court's attention has recently been directed to Monell v. Dept. of Soc. Service of City of New York, 532 F.2d 259 (2 Cir. 1976). While this case would be very important on the issue of subject matter jurisdiction involving back pay (but not reinstatement), the Court is obliged to follow the mandate issued by the United States Court of Appeals for the Fourth Circuit. While this issue not heretofore raised may probably be raised at any stage of the proceedings, it is inappropriate for this Court to disobey the mandate of the Court of Appeals and its prior opinion. Assuming an appeal is taken by some party, the question may be presented to the appellate court.
Defendants will pay the taxable costs.
A judgment order will be entered in accordance with the foregoing memorandum. Counsel for Walston, et al., will prepare and circulate the order for endorsement of counsel prior to final presentation to the Court for entry.
NOTES
[1] In excess of 7000 pages in the Congressional Record were devoted to the debate in the Senate. Bernard Schwartz, the author of Statutory History of the United States, Civil Rights, has written a comprehensive analysis of all the proceedings, quoting pertinent parts of the debates in the Senate and House. References are to Schwartz unless otherwise indicated.
[2] The opinion by Mr. Justice Clark states: "No. 73-1492 was filed against the Board on August 20, 1971, by thirteen black teachers as individuals and on behalf of the class represented by them." 492 F.2d at 919.
[3] In Adise v. Mather the court considered a 21 month delay between commencement of the action and filing of the motion for class action determination to be too long. "Delay in bringing the class action question before the Court delays the pretrial proceedings and the ultimate disposition of the litigation. Such has been the result in the instant case. We cannot and should not condone the delay." 56 F.R.D. at 492.
[4] In Jimenez the district court had granted class relief after the original judgment by a three-judge court in favor of the defendants had been reversed by the Supreme Court. No class certification had been granted prior to the appeal. The Court of Appeals ruled that the district court's "class determination, although untimely, was not erroneous." 523 F.2d at 702. The Court noted that although policy favored enforcing the provisions of Rule 23(c)(1), the Rule offered some flexibility and on the particular facts of the case the district court's ruling was not erroneous. It was important that the prerequisites to a class action described in Rule 23(a) were clearly met and that there was no difference in the claims of the original plaintiffs and those of the class members. For the reasons discussed infra, neither of these circumstances is present in our case.
[5] In Peritz the district judge delayed deciding the class action issue until after a jury trial on the merits, at which time he granted certification. The Court of Appeals held that this was error because Rule 23 did not permit such a delay. The Court, however, noted that: "We need not decide whether in all cases Rule 23(c) would bar certification subsequent to a decision on the merits." Footnote 4, 523 F.2d at 354.
[6] We are not unmindful of the number of hours claimed by plaintiffs' counsel. Compensation on an hourly rate would greatly exceed the amount received by way of a percentage of the total recovery. Nevertheless, any allowance of reasonable attorneys' fees must be proportionate with the recovery as to each plaintiff. To hold otherwise would result in litigation primarily for the benefit of attorneys.
[7] Fulton filled out, on March 5, 1971, an "Evaluation of Personnel" form for Walston in which he rated him "outstanding" in one category (categories were related to personal and professional qualities and teaching performance), "above average" in two categories, "average" in ten categories, "below average" in one category, which was professional dedication, and "unsatisfactory" in no categories.
[8] For example, Walston objected to the method by which children on the Honor Roll were selected because he felt no black children would be able to qualify. Fulton felt Walston continued unnecessarily to involve himself in the problem of stopping a bus driver from seating the children by race. Fulton stated that he was moving to correct the problem at the time but needed more time to handle such an explosive situation. Walston also objected when a black child, an apparent winner of a spelling bee, later lost to a white child as a result of an error made in conducting the contest.
| {
"pile_set_name": "FreeLaw"
} |
In the United States Court of Federal Claims
No. 13-963C
(Filed: August 14, 2014)
************************************
*
GRAY OWL SERVICES, INC., *
*
Plaintiff, *
*
v. *
*
THE UNITED STATES, *
*
Defendant. *
*
*************************************
ORDER OF DISMISSAL
Before the Court is Plaintiff’s claim for alleged breach of contract. Plaintiff, Gray Owl
Services, Inc., (“Plaintiff”) filed its Complaint on December 6, 2013. Plaintiff alleges that by
failing to provide a timely performance evaluation, the Government (“Defendant”) committed a
breach of contract which caused Plaintiff to suffer a loss of annual income. Defendant filed a
Motion to Dismiss based on RCFC 12(b)(1) and 12(b)(6) on April 3, 2014. For the reasons set
forth below, the Court grants the Defendant’s Motion to Dismiss pursuant to RCFC 12(b)(6).
I. Background
a. Factual Background
Plaintiff is a business which provides, inter alia, tree and wildlife maintenance services.
In 2007, the United States Department of Agriculture – Forest Service issued a solicitation for a
multi-award, Indefinite Delivery/Indefinite Quantity (“IDIQ”) contract to provide for tree-
snagging services in order to create structures for cavity nesting wildlife in the Pacific
Northwest. Compl. ¶ 2. The contract specified a base period of one year ending on December
31, 2008, with four option years that could extend the life of the contract through December 31,
2012. Def.’s Mot. to Dismiss Exhibit A at 15. The government chose three contractors based on
the solicitation, one of which was the Plaintiff. Compl. ¶¶ 19, 37. The Government then issued
task orders upon which the three approved providers could bid. Def.’s Mot. to Dismiss at 1-2.
Plaintiff completed its last Task Order related to the contract on December 30, 2010 and
the order was inspected and accepted on January 20, 2011. Compl. ¶ 15. On April 7, 2011,
Plaintiff received a letter of Notice of Final Acceptance for all work completed under the
contract, which stated that Plaintiff’s “continued interest and participation in the acquisition
program of the USDA-Forest Service is welcomed.” Compl. Exh. 4A. Believing itself to be in
1
good standing with the Government, Plaintiff submitted bids on three additional task orders in
the summer of 2011 but was not selected, despite being the lowest bidder on each task order. Id.
at ¶ 39.
As part of a FOIA request, Plaintiff obtained an inter-office e-mail explaining why
Plaintiff’s bid was rejected. According to the e-mails, although the work was “finished [and the]
quality was fine,” Gray Owl owner Steve DiBiase “had difficulty communicating[,] threatened
and harassed the COR’s and Inspectors[, and turned] in incomplete and inaccurate paperwork
and not on time.” Id. Exhibit 7b. Thus, it was concluded that “[d]ue to these difficulties that
increase the cost of administration of the contract, I recommend awarding to the new low bidder
… both Task Orders.” Id.
Plaintiff filed a bid protest with the GAO, which was denied on November 4, 2011.
Matter of: Gray Owl Services, Inc., B-405458, B-405703. The GAO found that the rejection of
Plaintiff’s bid was reasonable because the task orders stated that “past performance, quality
control, and price” would be factors considered in issuing the task orders. Id. at 2. Thus, the
GAO concluded that “the agency’s assessment of Gray Owl’s past performance was reasonable.”
Id. at 5.
b. The Complaint
The precise legal basis of the Plaintiff’s Complaint before the Court is unclear. Certainly,
it highlights no specific counts with which it charges the Government. That said, the Court
discerns the same two possible bases for the Complaint as the Government has identified in its
motion to dismiss: a bid protest for damages that purportedly arise from the three task orders
issued in the Summer of 2011 and a breach of contract charge for the Government’s alleged
breach of certain contract terms allegedly contained in the original contract.
These two possible “Counts” can be fairly summarized as follows. With respect to the
former, Plaintiff challenges the Government’s decision not to award it the Task Orders based on
its past performance. Notably, this view of the case is supported by Plaintiff’s decision to file a
GAO protest on virtually identical facts as those now before the Court. This particular “Count,”
however, is expressly disclaimed by Plaintiff in its response to the Government’s motion, so the
Court need not address it in detail.
Because Plaintiff has not disclaimed the second reasonable reading of its Complaint, the
Court’s analysis centers on it. Plaintiff’s Complaint states that “[t]he applicable Federal
Acquisition Regulation (FAR) is 42.1503d (42.1503b in 2011) incorporated by reference in
Contract.” Compl. ¶ 7. The heart of Plaintiff’s case is that FAR 42.1503d states that “Agency
evaluations of contractor performance, including both negative and positive evaluations,
prepared under this sub-part shall be provided to the contractor as soon as practicable after
completion of the evaluation. The contractor will receive a CPARS-system generated
notification when an evaluation is ready for comment.” FAR § 42.1503d(d). Although Plaintiff
received its final close out letter on April 7, 2011, the performance report was not entered into
the PPRS system until September 30, 2011. Compl. ¶ 8. This delay, according to Plaintiff’s
allegations, constitutes a breach of contract.
2
Moreover, this alleged breach cost Plaintiff the opportunity to secure other business
opportunities while it was bidding on the Summer 2011 Task Orders. Specifically, Plaintiff
claims that because of this reliance, its 2011 income was “less than half of what [it] would
otherwise have been, and [has] been in the years before and after 2011.” Compl. ¶ 36. As relief,
Plaintiff asks for $48,251.49 which “is estimated to be the earnings the Plaintiff and his
employees would have earned on the three Task Orders the contractor was low bidder on and had
a reasonable expectation of award, but was not awarded.” Compl. ¶ 43.
II. Standard of Review
a. Motion to dismiss under RCFC 12(b)(1)
A motion brought pursuant to RCFC 12(b)(1) challenges the Court's subject matter
jurisdiction. See RCFC 12(b)(1). Subject matter jurisdiction may be challenged at any time by
the parties. Booth v. United States, 990 F.2d 617, 620 (Fed. Cir. 1993). Indeed, this Court's
jurisdiction to entertain claims and grant relief, like all Federal courts, depends on the extent to
which the United States has waived sovereign immunity. United States v. Testan, 424 U.S. 392,
399 (1976). The burden of establishing the Court's subject matter jurisdiction rests with the
plaintiff, who must establish jurisdiction. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561
(1992); McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 189 (1936). Even so,
when faced with a motion to dismiss for lack of subject matter jurisdiction, a court must assume
that all undisputed facts alleged in the complaint are true, and it must draw all reasonable
inferences in the plaintiff's favor. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); see also Henke
v. United States, 60 F.3d 795, 797 (Fed. Cir. 1995).
b. Motion to dismiss under RCFC 12(b)(6)
RCFC 12(b)(6) allows for the dismissal of a complaint if, assuming the truth of all the
allegations, the complaint fails to state a claim upon which relief may be granted as a matter of
law. Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2002). When analyzing a motion to
dismiss under RCFC 12(b)(6), the Court must also accept as true the complaint's undisputed
factual allegations and should construe them in a light most favorable to plaintiff. Gould, Inc. v.
United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991), and "the [f]actual allegations must be
enough to raise a right to relief above the speculative level." Bell Altantic Corp. v. Twombly, 550
U.S. 544, 555 (2007).
III. Discussion
a. This Court has subject matter jurisdiction under RCFC 12(b)(1)
Because the United States has sovereign immunity, it can be sued only if it expressly
consents to suit. United States v. Navajo Nation, 556 U.S. 287 (2009). It is well settled that the
Court of Federal Claims possesses jurisdiction to hear breach of contract claims. The United
States has waived sovereign immunity for breach of contract claims via the Tucker Act, which
provides that "[t]he United States Court of Federal Claims shall have jurisdiction to render
3
judgment upon any claim against the United States founded . . . upon any express or implied
contract with the United States." 28 U.S.C. § 1491(a)(1).
One principle of contract law holds that a party may seek damages in any action for
breach of contract unless the contract at issue provides otherwise. United States v. Winstar
Corp., 518 U.S. 839, 885 (1996) (plurality opinion) (citing, e.g., Restatement (Second) of
Contracts § 346, cmt. a (1981)). In government contracts, as with private agreements, there
exists a presumption "in the civil context" that a damages remedy will be available upon a
breach. Sanders v. United States, 252 F.3d 1329, 1334 (Fed. Cir. 2001). As a result, in a
contract claim under the Tucker Act, the contract at issue does not have to mandate monetary
relief in the event of a breach. See Westover v. United States, 71 Fed. Cl. 635, 640 (2006) (citing
Ontario Power Generation v. United States, 369 F.3d 1298, 1301 (Fed. Cir. 2004); Martinez v.
United States, 333 F.3d 1295, 1302-03 (Fed. Cir. 2003); Hamlet v. United States, 63 F.3d 1097
(Fed. Cir. 1995)). Only Tucker Act claims not sounding in contract must seek money damages
on the basis of a constitutional provision, statute, regulation, or executive order. Westover, 71
Fed. Cl. at 640.
The Defendant argues that Plaintiff’s complaint must be dismissed under RCFC 12(b)(1)
because this Court lacks subject matter jurisdiction. Specifically, Defendant contends that
Plaintiff’s breach of contract claim is merely a disguised bid protest claim, designed “to bypass
[41 U.S.C. § 253j(d)]’s jurisdictional bar.” Def’s Mot. to Dismiss at 3-4. According to
Defendant, “[t]he issue presently before this Court is whether it may adjudicate individual task
order claims brought under the CDA despite the restriction provided in section 253j(d).” Id. at 4.
Whether or not this characterization is correct in a vacuum, Plaintiff has expressly
disavowed any basis for relief relating to the Summer 2011 task orders. The Complaint must,
therefore, be read as a claim for breach of contract on the basis that the Government failed to
prepare and provide to Plaintiff the relevant performance evaluation “as soon as practicable.”
Even though, as explained below, the Court sees no realistic factual basis for this case, the legal
theory of the case does fall within the Court’s jurisdiction.
The Court sees no reason why Plaintiff should not be allowed to proceed with its claim
under a breach of contract theory. Defendant need not fear this Court construing Plaintiff’s
claims as a bid protest because Plaintiff has not framed its argument as a bid protest and the
Court has no intention of construing it as such. Because this Court is authorized to hear breach
of contract claims under the Tucker Act, this Court has subject matter jurisdiction over Plaintiff’s
claim. Thus, Defendant’s request to dismiss the Complaint under RCFC 12(b)(1) is denied.
b. Plaintiff has failed to state a claim upon which relief can be granted because
FAR § 42.1503d was not incorporated into the service contract
To recover damages for a breach of contract, a plaintiff must allege and establish that: (1)
a valid contract existed between the parties; (2) there was an obligation or duty arising out of that
contract; (3) the Government breached that duty; and (4) plaintiff suffered damages that were
caused by the breach of contract. Zulueta v. United States, 553 Fed. Appx. 983, 985 (Fed. Cir.
2014) (citing San Carlos Irrigation & Drainage Dist. V. United States, 877 F.2d 957, 959 (Fed.
4
Cir. 1989)). The first element for breach of contract has been satisfied – there is no dispute that a
valid contract existed between the parties. The Court examines the other three elements in order.
i. Obligation or Duty
The Court’s inquiry begins with an examination of the second element, whether the
Government had an obligation or duty arising out of the contract to provide a timely performance
report to Plaintiff. Plaintiff argues that 48 C.F.R. § 42.503(d) (also mentioned as FAR §
42.1503(d)) was incorporated by reference into the service contract. Compl. at ¶ 7. Defendant
rejects this position, noting that “[n]owhere in the contract is FAR § 42.1503(d) cited,
mentioned, or even implied.” Def.’s Mot. to Dismiss at 8. Thus, it is argued, “no duty or
obligation existed.” Id. at 7. Plaintiff responds by noting “[t]he government appears to be
correct that there is no specific reference in the contract to the requirement for performance
evaluations. However, the contract record shows many references by the parties to these
performance evaluations, and that it was the intent of the parties to follow these regulations.”
Pl.’s Resp. at 4.
Whether and to what extent material has been incorporated by reference into a host
document is a question of law. Cook Biotech, Inc. v. Acell, Inc., 460 F.3d 1365, 1376 (Fed. Cir.
2006) (citing Advanced Display Sys., Inc. v. Kent State University, 212 F.3d 1272, 1282 (Fed.
Cir. 2000)). "Incorporation by reference provides a method for integrating material from various
documents into a host document . . . by citing such material in a manner that makes clear that the
material is effectively part of the host document as if it were explicitly contained therein."
Advanced Display Sys., Inc., 212 F.3d at 1282 (citations omitted). "To incorporate material by
reference, the host document must identify with detailed particularity what specific material it
incorporates and clearly indicate where that material is found in the various documents." Id.
"Under general principles of contract law, a contract may incorporate another document by
making clear reference to it and describing it in such terms that its identity may be ascertained
beyond doubt." New Moon Shipping Co., Ltd. v. MAN B & W Diesel AG, 121 F.3d 24, 30 (2d
Cir. 1997) (citations omitted); see also Standard Bent Glass Corp. v. Glassrobots Oy, 333 F.3d
440, 447 (3d Cir. 2003) ("[i]ncorporation by reference is proper where the underlying contract
makes clear reference to a separate document, the identity of the separate document must be
ascertained, and incorporation of the document will not result in surprise or hardship");
American Dredging Co. v. Plaza Petroleum, Inc., 799 F. Supp. 1335 (E.D.N.Y. 1992)
("[i]ncorporation by reference requires that the document to be incorporated be referred to and
described in the contract so that the referenced document may be identified beyond doubt").
Incorporation by reference also requires not only that the incorporating document refer to the
incorporated document, but that it bring the terms of the incorporated document into itself as if
fully set out. Sucesion J. Serralles, Inc. v. United States, 46 Fed. Cl. 773, 785 (2000) (citing
Firth Constr. Co., Inc. v. United States, 36 Fed. Cl. 268, 275 (1996)).
Specific to the government contracts arena, the Court of Appeals for the Federal Circuit
has noted:
This court has been reluctant to find that statutory or regulatory provisions are
incorporated into a contract with the government unless the contract explicitly
5
provides for their incorporation. Smithson v. United States, 847 F.2d 791, 794
(Fed. Cir. 1988). In Smithson, the court warned that wholesale incorporation of
regulations into a contract would allow the contracting party to "choose among a
multitude of regulations as to which he could claim a contract breach--and thus
[a] wholly new ground of obligation would be summarily created by mere
implication." Id. (internal quotation omitted).
St. Christopher’s Assocs., L.P. v. United States, 511 F.3d 1376, 1384 (Fed. Cir. 2008).
With the above standard in mind, after viewing the documents Plaintiff cites as evidence
of FAR § 42.1503(d) being incorporated into the contract, the Court concludes that the provision
in question has not been incorporated into the contract. After reviewing the whole of the
contract (submitted to the Court by Defendant as Exhibit A in its Motion to Dismiss), the Court
is in agreement with both parties that FAR § 42.1503(d) is not mentioned anywhere within the
document.1 The contract is not lacking in references to various FAR provisions – in fact, an
entire section is devoted to a checklist where the contracting officer can simply check a box
indicating that a particular FAR provision is to be incorporated by reference into the contract.
See Def.’s Mot. to Dismiss, Exhibit A at 17-20.
While Plaintiff contends that “the contract record shows many references by the parties to
these performance evaluations, and that it was the intent of the parties to follow these
regulations,” Pl.’s Resp. at 4, the evidence cited is wholly irrelevant. The documents that
Plaintiff alleges demonstrate the intention of the parties include an excerpt from the GAO bid
protest decision, a FOIA response letter, several close out letters for issued task orders, midterm
evaluations, and various e-mail correspondence between assorted government officials and
Plaintiff. See Compl. Appendex A. Plaintiff’s argument, however, is unavailing. None of these
documents explicitly mentions or references performance evaluations, with the exception of an
affidavit signed by Plaintiff’s attorney regarding a FOIA request, and the GAO bid protest
decision, in which Plaintiff raised a nearly identical argument. Except the GAO decision, none
of these documents mention FAR § 42.1503(d). Finally, none of the documents proffered by
Plaintiff existed at the time the contract was entered into on August 31, 2007. Because the
documents fail to make any reference whatsoever to FAR § 42.1503(d) and because the
documents were not in existence at the time the contract was executed, the Court finds that none
of these documents support an inference that it was the intention of the parties to incorporate
FAR § 42.1503(d) into the contract.
1
Under RCFC 12(d), “matters outside the pleadings” may not be considered by the Court in
deciding a motion under RCFC 12(b)(6). However, although the court primarily examines the
allegations in the complaint when considering a motion to dismiss pursuant to RCFC 12(b)(6), it
may also consider "'matters incorporated by reference or integral to the claim, items subject to
judicial notice, [and] matters of public record.'" A&D Auto Sales, Inc. v. United States, No. 2013-
5019, 2014 U.S. App. LEXIS 6338, 2014 WL 1345499, at *1 (Fed. Cir. Apr. 7, 2014). There is
no doubt that in a claim for breach of contract, the contract itself is integral to the claim. Thus,
the Court may consider the contract when reaching its decision, even though it was submitted by
the Defendant, without converting the motion to one for summary judgment.
6
ii. Breach
Little in the parties’ briefing is directed specifically to the issue of breach. To the extent
the Government addresses this issue, it is largely implicit in the Government’s argument that it
was under no duty or obligation. Plaintiff, for its part, offers nothing of substance on this
element. It certainly does not explain how a delay of several months violates the “as soon as
practicable” language contained in the FAR, especially in light of the Forest Service’s transition
from one past performance review system to another during that time period.
The Court has already explained that the past performance provision of the FAR was not
incorporated into the contract, and why it finds no evidence of the parties’ intent to include that
provision in the contract. Without a duty, there can be no breach. Thus, in light of the contract’s
plain language, Plaintiff cannot prove breach under any set of facts.
iii. Damages
Assuming, arguendo, that Plaintiff could demonstrate the existence of the Government’s
obligation and its breach thereof, the Court turns to the issue of damages. Plaintiff alleges that it
“was contra[c]tually obligated to submit … quotes, and maintain and reserve the capacity to
perform Task Orders” on the contract. Compl. ¶ 22; see also Compl. ¶¶ 27-28. On the basis of
this allegation, Plaintiff alleges that it could not devote its time to securing work from other
customers. See Compl. ¶¶ 32, 36-68.
The Government argues that Plaintiff once again attempts to build its case around non-
existent contract terms. It observes that nothing in the contract requires Plaintiff to limit its
involvement with other customers. Plaintiff’s response fails to address this issue at all.
While the point is irrelevant given the Court’s analysis above, it is worth noting that the
contract is entirely silent on exclusivity. The obvious conclusion to be drawn from this silence is
that the contract is not exclusive. The only decision to avoid involvement with other customers
was one made by Plaintiff. To this point, the Government’s argument is correct. That said,
again assuming that Plaintiff adequately pled all other elements of a breach of contract claim,
this point would not necessitate dismissal. Perhaps Plaintiff’s evident failure to even attempt to
mitigate damages would lessen the remedy available by some amount, but it would not
necessitate dismissal at this juncture.
IV. Conclusion
For the reasons set forth above, the Court concludes that because FAR § 42.1503(d) was
not incorporated by reference into the contract, the Government owed Plaintiff no duty under the
contract to provide a performance report, timely or otherwise and the Government, therefore,
breached no duty. Hence, the Court hereby GRANTS the Government’s Motion to Dismiss
7
pursuant to RCFC 12(b)(6) for failure to state a claim upon which relief can be granted. The
Clerk is directed to enter judgment accordingly.
_______________________
EDWARD J. DAMICH
Senior Judge
8
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