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26 B.R. 34 (1982)
In re Reginald David HALLMAN and Tammy Jones Hallman, Debtors.
Bankruptcy No. C-B-82-554.
United States Bankruptcy Court, W.D. North Carolina, Charlotte Division.
December 2, 1982.
Langdon M. Cooper, trustee pro se.
Wayne Sigmon, Gastonia, N.C., for debtors.
ORDER DENYING APPLICATION FOR TURNOVER
MARVIN R. WOOTEN, Bankruptcy Judge.
This cause coming on to be heard and being heard before the undersigned in open court on November 16, 1982, upon the application of Langdon M. Cooper, Trustee, for turn over of a 1978 Dodge Colt claimed *35 exempt by the debtors. The Court, having heard the evidence presented herein, makes the following:
FINDINGS OF FACT:
1. On or before August 8, 1982, the debtors owned one automobile, to wit, a 1973 Ford pickup. The certificate of title to said automobile was in the name of the male debtor.
2. On or before August 10, 1982, the debtors owned no real property which was used as their principal residence.
3. As of August 8, 1982, the 1973 Ford pickup had a market value of approximately One Thousand Five Hundred Dollars ($1,500.00).
4. Had the debtors filed for relief under Chapter 7 of the United States Bankruptcy Code on August 8, 1982, they could have exempted the full market value of their 1973 Ford pickup pursuant to the terms of N.C.G.S. Section 1C-1601(a)(2) and (3).
5. On August 8, the debtors sold the 1973 Ford pickup for One Thousand Five Hundred Dollars ($1,500.00) because they were experiencing transmission problems with said vehicle.
6. On or about August 8, 1982, the debtors used the sum of One Thousand Five Hundred Dollars ($1,500.00) received from the sale of their 1973 Ford pickup plus Two Hundred Dollars ($200.00) additional money received from a relative, as a gift, to purchase a 1978 Dodge Colt automobile for the sum of One Thousand Seven Hundred Dollars ($1,700.00), thinking that the exemptions allowed by law would cover the new vehicle.
7. On August 10, 1982, the debtors filed a petition under Chapter 7 of the Bankruptcy Code in this Court and attempted to claim their 1978 Dodge Colt as exempt pursuant to the provisions of N.C.G.S. Section 1C-1601(a)(2) and (3).
8. On November 5, 1982, the trustee brought this action attempting to gain possession of the debtors' 1978 Dodge Colt which has an approximate market value of One Thousand Seven Hundred Dollars ($1,700.00) and which is held by the male debtor free and clear of any liens.
DISCUSSION:
The trustee bases his claim to possession of the 1978 Dodge Colt upon N.C.G.S. Section 1C-1601(d) which provides:
(d) Recent purchases. The exemptions provided in subdivisions (2), (3), (4) and (5) of subsection (a) of this section are inapplicable with respect to tangible personal property purchased by the debtor less than 90 days preceding the initiation of judgment collection proceedings or the filing of a petition for bankruptcy.
Section 1C-1601(d) is a part of New Chapter 1C, Article 16 of the North Carolina General Statutes which became effective on January 1, 1982. It is North Carolina's "opt-out" of the federal exemption scheme of Section 522(d) of the Bankruptcy Code.
The Bankruptcy Code contains no provision comparable to Section 1C-1601(d). Said section when read as written without consideration of its legislative history and its intent and purpose, leads to discriminatory and ridiculous results. Harsh results are inevitable under the facts of this and similar cases. Such a reading would require a debtor to empty his refrigerator, clean out his pantry, and otherwise turn over to the trustee every item of tangible personal property he has purchased within 90 days of his petition. Also a debtor who in good faith sold his home at market value and invested an amount not exceeding his allowable exemption, in a substitute home (a mobile home) within 90 days, would be denied his exemption therein, to which he would have otherwise been entitled.
The purpose behind Section 1C-1601(d) was to prevent insolvency or bankruptcy planning whereby a debtor would convert non-exempt assets into exempt assets, or incur dischargeable obligations in exchange for assets which could then be claimed exempt, in certain instances, in connection with which the debtor could even avoid otherwise valid liens under the provisions of Section 522(f) of the Code. For *36 example, the debtor could borrow money and give as security therefor his household goods, and then invest the same in other exemptable property, and proceed to lien avoidance under 522(f), with regard to his exemptable household goods. The legislative history indicates a legislative intent to prevent the use of credit cards or other unsecured debt (and as indicated above secured debt) to acquire exemptable personal property within 90 days, thereby denying the debtor the ability to augment his exemptions.
The transfer or conversion of non-exempt property into exempt property in contemplation of bankruptcy is a fraudulent conveyance in this Circuit, and should not be permitted, and this also seems to be one of the purposes and intents behind the legislation here involved.
The transfer of exemptable assets into other exemptable assets, without intent to hinder, delay or defraud, and which in fact does not hinder, delay or defraud, and further which does not augment exemptions of the debtor certainly were not intended by the legislature to be excluded by Section 1C-1601(d). After applying this threefold test fully, the section makes sense, and any other interpretation or result would be arbitrary and capricious.
In this case, if the debtor had obtained the additional $200.00 cash by loan or other dischargeable obligation, he would have thereby augmented his exemptable assets and would lose the entire exemptable $1,700.00 asset to the trustee or creditor as the case may be.
This Court does not feel that the facts of the case at bar offend the spirit of Section 1C-1601(d). Though Section 1C-1601(d) is written as a purely objective test of whether tangible personal property is exemptable, its apparent purpose is to prevent "bankruptcy planning" which involves converting non-exempt assets into exempt assets on the eve of bankruptcy. The facts of the case at bar do not indicate such an attempt by the debtors. Rather, the debtors acquired otherwise exemptable assets with exemptable assets and without gaining any advantage over their creditors. This Court feels that Section 1C-1601(d) was not created to preclude the exemption of tangible personal property purchased in the normal course of events during the 90-day period stated therein which does not have the effect of increasing available exemptions, and is not occasioned by his intent to, and which does not hinder, delay or defraud creditors.
BASED UPON THE FOREGOING, IT IS ORDERED, ADJUDGED AND DECREED that the trustee's Application for Turnover filed herein on November 5, 1982, be, and the same hereby is, DENIED, and the debtors' exemption in said property is ALLOWED.
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[Cite as Kubyn v. Follett, 2019-Ohio-3152.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
GEAUGA COUNTY, OHIO
STACEY G. KUBYN, et al., : OPINION
Plaintiffs-Appellants, :
CASE NO. 2019-G-0194
- vs - :
TAMARA FOLLETT, :
Defendant-Appellee. :
Civil Appeal from the Geauga County Court of Common Pleas, Case No. 2018 P
000706.
Judgment: Reversed and remanded.
R. Russell Kubyn, Kubyn & Ghaster, LLP, 8373 Mentor Avenue, Mentor, OH 44060
(For Plaintiffs-Appellants).
L. Bryan Carr, Carr, Feneli & Carbone Co., L.P.A., 1392 S.O.M. Center Road, Mayfield
Heights, OH 44124 (For Defendant-Appellee).
MATT LYNCH, J.
{¶1} Plaintiffs-appellants, Stacey G. Kubyn and R. Russell Kubyn, appeal the
Judgment of the Geauga County Court of Common Pleas, granting defendant-appellee
Tamara Follett’s, Motion to Dismiss the Complaint for lack of personal jurisdiction. For
the following reasons, we reverse the decision of the court below.
{¶2} On September 14, 2018, the Kubyns filed a Complaint for Money,
Temporary Restraining Order, Injunctive Relief for Copyright Infringement, and Other
Equitable Relief in the Geauga County Court of Common Pleas against Follett.
{¶3} On November 15, 2018, the Kubyns filed a First Amended Complaint for
Compensatory and Punitive Damages, Injunctive Relief, and Other Equitable Relief for
Defamation, Copyright Infringement, and Other Tortious Conduct. The Complaint
identified the Kubyns as dog breeders doing business as Esquire Caucasian Mountain
Shepherd Dogs USA in Geauga County, and Follett as a Canadian resident who breeds
similar dogs doing business as ThunderHawk Caucasians. The Complaint was based
on the following alleged conduct:
Defendant Follett has engaged in underhanded, illegal, unethical,
fraudulent, harassing and otherwise improper behavior and
activities including, but not limited to, posting on Facebook her
desire for the death of Defendant [sic] Stacey G. Kubyn, and
requesting other people to post that they too wished death to befall
Defendant Stacey G. Kubyn; embedding keywords on pages of her
website such as “Stacey Kubyn” and “Khan” so that internet search
engines will direct people to her website for her own financial gains
and personal vendetta, ranting defamatory statements against the
Plaintiffs, calling the Plaintiffs foul names, and using the Plaintiffs’
aforementioned pictures and other media falsely, and fraudulently
claiming right of publication thereof.
{¶4} The Amended Complaint further alleged jurisdiction over Follett existed
pursuant to Ohio’s long-arm statute “as she published and/or aided and/or abetted in
the publishing of defamatory statements on the internet directed at the Plaintiffs, Ohio
residents; and other Ohio residents have seen and/or could see the defamatory
statements, * * * as such acts constitute causing tortious injuries by acts in the State of
Ohio * * *.”1
{¶5} On November 23, 2018, Follett filed a Motion to Dismiss, pursuant to Civil
Rule 12(B)(2), on the grounds that “personal jurisdiction is lacking.”
1. The First Amended Complaint contained nine causes of action: Misappropriation of Proprietary and
Intellectual Interests (Count One); Violations of Ohio Revised Code Chapter 2741 (Count Two); Tortious
Interference with Business Contracts and Relationships (Count Three); Federal and State Trade
Infringements and Unfair Competition (Count Four); Quantum Meruit/Unjust Enrichment (Count Five);
Fraud/Misrepresentation (Count Six); Injunctions (Count Seven); Invasion of Privacy/False Light (Count
Eight); and Defamation (Count Nine).
2
{¶6} On December 21, 2018, the Kubyns filed a Brief in Opposition to Motion to
Dismiss.
{¶7} On January 17, 2019, Follett filed a Reply to Plaintiffs’ Brief in Opposition
to Motion to Dismiss.
{¶8} On February 4, 2019, the trial court granted the Motion to Dismiss, ruling
that “Plaintiffs have not adequately established sufficient minimum contacts between
Geauga County and the Defendant to invoke this Court’s jurisdiction over the Canadian
Defendant (regardless of whether the Defendant is a U.S. citizen or not).”
{¶9} On February 5, 2019, the Kubyns filed a Notice of Appeal. On appeal,
they raise the following assignment of error:
{¶10} “[1.] Reviewing the Appellee’s Motion to Dismiss De Novo, the Trial Court
erred to the prejudice of the Appellants by dismissing the First Amended Complaint
despite personal jurisdiction over the US citizen appellee, notwithstanding her current
residency in Canada.”
{¶11} The issue before this court is whether the trial court may exercise personal
jurisdiction over Follett.
{¶12} “Personal jurisdiction is a question of law that appellate courts review de
novo.” Kauffman Racing Equip., L.L.C. v. Roberts, 126 Ohio St.3d 81, 2010-Ohio-2551,
930 N.E.2d 784, ¶ 27. When a motion to dismiss for “lack of jurisdiction over the
person” pursuant to Civil Rule 12(B)(2) is decided upon “written submissions and
without an evidentiary hearing,” the plaintiff need “only [make] a prima facie showing of
jurisdiction.” Id.; Fraley v. Estate of Oeding, 138 Ohio St.3d 250, 2014-Ohio-452, 6
N.E.3d 9, ¶ 11. In determining whether this burden is met, the trial court is “required to
view allegations in the pleadings and the documentary evidence in a light most
3
favorable to the plaintiffs, resolving all reasonable competing inferences in their favor.”
Goldstein v. Christiansen, 70 Ohio St.3d 232, 236, 638 N.E.2d 541 (1994).
{¶13} “Determining whether an Ohio trial court has personal jurisdiction over a
nonresident defendant involves a two-step analysis: (1) whether the long-arm statute
and the applicable rule of civil procedure confer jurisdiction and, if so, (2) whether the
exercise of jurisdiction would deprive the nonresident defendant of the right to due
process of law under the Fourteenth Amendment to the United States Constitution.”
Kauffman Racing at ¶ 28.
{¶14} Ohio’s long-arm statute provides: “A court may exercise personal
jurisdiction over a person who acts directly or by an agent, as to a cause of action
arising from the person’s * * * [c]ausing tortious injury in this state to any person by an
act outside this state committed with the purpose of injuring persons, when he might
reasonably have expected that some person would be injured thereby in this state.”
R.C. 2307.382(A)(6). Similarly, Ohio’s Civil Rules provide: “Service of process may be
made outside of this state * * * upon a person who * * * has caused an event to occur
out of which the claim that is the subject of the complaint arose, from the person’s * * *
[c]ausing tortious injury in this state to any person by an act outside this state committed
with the purpose of injuring persons, when the person to be served might reasonably
have expected that some person would be injured by the act in this state.” Civ.R.
4.3(A)(9).
{¶15} “R.C. 2307.382(A)(6) and Civ.R. 4.3(A)(9) permit a court to exercise
personal jurisdiction over a nonresident defendant and provide for service of process to
effectuate that jurisdiction if the cause of action arises from a tortious act committed
outside Ohio with the purpose of injuring persons, when the nonresident defendant
4
might reasonably have expected that some person would be injured thereby in Ohio.”
Clark v. Connor, 82 Ohio St.3d 309, 313, 695 N.E.2d 751 (1998).
{¶16} The Amended Complaint alleges a variety of tortious conduct committed
by Follett outside of Ohio but with the purpose of injuring the Kubyns and their business
interests so that she might reasonably expect that they would be so injured. This
conduct includes claims of misappropriation of proprietary and intellectual interests, the
use of their personas for commercial purposes without authorization, interference with
business contracts and relationships, trade infringement and unfair competition, fraud
and misrepresentation, invasion of privacy (false light), and defamation.
{¶17} An affidavit executed by Stacey Kubyn and attached to the Kubyns’ Brief
in Opposition provides the following details: The Kubyns own and operate the website
“http://www.esquirecaucasians.com” and maintain a Facebook account, the content of
which is protected by copyright law. Follett is a self-proclaimed competitor and
adversary of the Kubyns in the breeding of Caucasian Shepherds. Although a resident
of Canada, Follett markets her dogs to purchasers in Ohio. Follett has used
copyrighted images of the Kubyns and their stud dog, Kahn, which were created in
Geauga County. She has falsely claimed ownership of the images. She has utilized
social media to wage a defamatory campaign against the Kubyns personally and
against their breeding business.2 These statements have been published to thousands
of people, including Ohio residents. She has used keywords such as “Stacey Kubyn”
and the names of Ohio incorporated dog clubs to which Stacey belongs to direct people
2. Attached to the affidavit is the screenshot of an internet posting by Follett stating: “the Succubus
[Stacey Kubyn] doesn’t do GENETIC SCREENING … the Succubus doesn’t offer GUARANTEES … the
Succubus is breeding and promoting a dog that DOES NOT meet the Breed Standard!” The Amended
Complaint identifies as allegedly defamatory statements claims by Follett that the Kubyns’ “stud dog Kahn
is a mixed breed Chow dog that should not be used for breeding” and that they keep their dogs in a
“military surplus tent in the bitter cold Ohio winter.”
5
to her own website. She has stated that her “active goal” is to interfere with the Kubyns’
Ohio business.
{¶18} Such claims have been held by numerous courts to establish a basis for
the exercise of jurisdiction pursuant to R.C. 2307.382(A)(6) and Civ.R. 4.3(A)(9). See
Kauffman Racing at ¶ 44 (“[w]hen defamatory statements regarding an Ohio plaintiff are
made outside the state yet with the purpose of causing injury to the Ohio resident and
there is a reasonable expectation that the purposefully inflicted injury will occur in Ohio,
the requirements of R.C. 2307.382(A)(6) are satisfied”); MJM Holdings Inc. v. Sims, 9th
Dist. Summit No. 28952, 2019-Ohio-514, ¶ 29 (“fraudulent communications or
misrepresentations directed at Ohio residents satisfy [R.C.] 2307.382(A)(6)’s
requirements”) (citation omitted); Maui Toys, Inc. v. Brown, 7th Dist. Mahoning No. 12
MA 172, 2014-Ohio-583, ¶ 55 (R.C. 2307.382(A)(6) and Civ.R. 4.3 permitted the
exercise of personal jurisdiction over defendants who allegedly “committed tortious acts
* * * by unfairly competing * * * through the misappropriation and use of confidential
information and trade secrets”).
{¶19} Federal district court decisions likewise provide considerable support for
the exercise of personal jurisdiction based on the Kubyns’ claims. “Because district
courts take a ‘broad approach’ in applying (A)(6), out-of-state actions that give rise to
tortious injuries for purposes of the statute are legion.” Haley v. Akron, N.D. Ohio No.
5:13-cv-00232, 2014 WL 804761, *11 (conversion, copyright infringement, using
proprietary information, false representations, fraudulent communications, and
defamatory online postings “all meet the requirements of (A)(6)”) (cases cited); Mumaw
v. Thistledown Racetrack LLC, N.D. Ohio No. 1:13CV1048, 2015 WL 5437747, *4 (“not
only loss of business but also loss of reputation and standing in the horse racing
6
community” based on defamation and false light claims “satisfied Ohio’s long arm
statute showing tortious injury in the State of Ohio”); Puronics, Inc. v. Clean Resources,
Inc., N.D. Ohio No. 5:12-cv-01053, 2013 WL 149882, *6 (sufficient facts to satisfy the
requirements of Section 2307.382(A)(6) existed based on “[p]laintiffs’ allegations of
unfair competition, deceptive and unfair trade practices, defamation, and tortious
interference with business relations in Ohio”); J4 Promotions, Inc. v. Splash Dogs, LLC,
N.D. Ohio No. 08 CV 977, 2009 WL 385611, *8-11 (exercise of personal jurisdiction
pursuant to R.C. 2307.382(A)(6) allowed based on claims of copyright infringement,
defamation, deceptive trade practices, and tortious interference with business relations).
{¶20} Follett argues that Kauffman “is not applicable as the parties in this case
had/have no business relationship whatsoever,” she “has not transacted business in
Ohio since 2003,” and “there is no contact with Ohio that would allow the long-arm
statute to reach Appellee.” Appellee’s brief at 9-10. The existence of a business
relationship between the parties and/or direct contact with the forum state, however, is
not necessary to satisfy the requirements of R.C. 2307.382(A)(6) and Civ.R. 4.3(A)(9).
Follett cites no law to the contrary.
{¶21} The Kauffman decision itself makes clear that a defendant need not
transact business in Ohio in order to be subject to long-arm jurisdiction. Kauffman
Racing, 126 Ohio St.3d 81, 2010-Ohio-2551, 930 N.E.2d 784, at ¶ 44 and 43 (“even if
Roberts did not publish or circulate his statements within the territorial boundaries of
Ohio, he is not shielded from the reach of Ohio’s long arm [statute]”); Maui Toys, 2014-
Ohio-583, at ¶ 52 (“[e]ven if appellee Michael Brown had not transacted business in
Ohio * * * R.C. 2307.382 and Civ.R. 4.3 still confer jurisdiction * * * because appellant’s
claims sound in tort”).
7
{¶22} Nor is a business relationship between the parties necessary. In Mumaw,
the plaintiffs, horse breeders in Ohio, were able to assert jurisdiction over the defendant,
an animal rights activist in California who accused them of selling a horse for slaughter,
based on defamation and false light claims despite the absence of any formal
relationship between the parties. Mumaw, 2015 WL 5437747, at *4 (“[w]hile it is
debatable whether Jones’ activities satisfy Ohio’s long-arm statute under a conducting
business theory, the facts support a showing that Jones[] caused tortious injury in
Ohio”). Similarly, in Cash Homebuyers, Inc. v. Morningstar, N.D. Ohio No. 5:05CV2296,
2006 WL 2869564, the plaintiffs, the owners and licensees of a business website based
in Ohio, brought suit against a Florida resident alleging “that defendant has ‘used and
continues to download, distribute to the public, and/or make available for distribution to
others, certain of the Copyrighted materials.” Id. at *1. Despite the defendant’s claims
that she “does not live in Ohio, has not done business in Ohio, and has no personal or
business contacts with Ohio,” the district court found that the plaintiffs’ claims satisfied
“subsection [(A)]6 concerning causing a tortious injury in the state by an act outside the
state committed with the purpose of injuring persons.” Id. at *2 and *4.
{¶23} Having found that the Kubyns have met the requirements of the long-arm
statute and Civil Rule, we address the issue of “whether the exercise of jurisdiction
would deprive the nonresident defendant of the right to due process of law under the
Fourteenth Amendment to the United States Constitution.” Kauffman Racing at ¶ 28.
“[D]ue process is satisfied if the defendant has ‘minimum contacts’ with the forum state
such that the maintenance of the suit does not offend ‘“traditional notions of fair play
and substantial justice.”’” (Citations omitted.) Id. at ¶ 45. “The minimum-contacts
requirement is met when a nonresident defendant ‘purposefully avails [himself] of the
8
privilege of conducting activities within the forum State.” (Citation omitted.) Id.
{¶24} Where, as here, the defendant does not have continuous and systematic
contacts with Ohio, the plaintiff must establish that it would be proper for the forum court
to exercise specific jurisdiction over the defendant. “Specific jurisdiction applies when ‘a
State exercises personal jurisdiction over a defendant in a suit arising out of or related
to the defendant’s contacts with the forum.’” (Citation omitted.) Id. at ¶ 47. There are
three issues to address when considering whether the exercise of specific jurisdiction is
justified: “First, the defendant must purposefully avail himself of the privilege of acting in
the forum state or causing a consequence in the forum state. Second, the cause of
action must arise from the defendant’s activities there. Finally, the acts of the defendant
or consequences caused by the defendant must have a substantial enough connection
with the forum state to make the exercise of jurisdiction over the defendant reasonable.”
(Citations omitted.) Id. at ¶ 49.
{¶25} With respect to the purposeful availment element, the defendant’s
contacts with the forum state must “proximately result from actions by the defendant
himself that create a ‘substantial connection’ with the forum State.” (Citations omitted.)
Id. at ¶ 51. The purpose of this element is to ensure “that a defendant will not be haled
into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts.”
(Citation omitted.) Id. It has also been recognized that a defendant’s contacts with the
forum may be enhanced where the plaintiff’s residence is “‘the focus of the activities of
the defendant out of which the suit arises.’” (Citation omitted.) Id.
{¶26} Follett’s only real connections with Ohio (given the record before this
court) derive from her deliberate and intentional conduct directed at the Kubyns and
their business operating within Ohio. Stacey Kubyn’s affidavit attached to the brief in
9
opposition claims that Follett’s statements have been published, via social media, “to
thousands of people, including Ohio residents.” Attached to the affidavit are materials
indicating that Follett has solicited business from at least one Ohio resident (located in
Westlake) and Follett’s own statement that she posts information about Stacey Kubyn
“absolutely EVERYWHERE so everyone is warned.” Another posting by Follett, which
she addressed to Stacey Kubyn, invited “those many souls who have been wronged by
SK to post a comment on why she deserves NOTHING MORE than a Swift, Shallow,
and Unmarked Grave!”
{¶27} Construing the rather limited allegations and evidence in the Kubyns’
favor, as we must in the absence of an evidentiary hearing or jurisdictional discovery,
we find the purposeful availment element satisfied. They have established a prima facie
case that Follett has, if not exactly availing herself of the privilege of acting in Ohio,
purposefully undertaken to cause harmful consequences in Ohio.
{¶28} The Ohio Supreme Court’s decision in Kauffman is instructive. In that
case, the court addressed the issue of “whether an Ohio court can properly assert
personal jurisdiction over a nonresident defendant when jurisdiction is predicated on
that defendant’s publication of allegedly defamatory statements on the Internet.” Id. at ¶
1. The plaintiff was an Ohio based manufacturing company and the defendant a
resident of Virginia who had purchased an engine block from the plaintiff but had never
been to Ohio. After a dispute arose between the parties over the quality of the block,
the defendant “posted numerous rancorous criticisms of KRE on various websites
devoted to automobile racing equipment and related subjects.” Id. at ¶ 6.
{¶29} The Ohio Supreme Court deemed the minimum contacts element satisfied
by application of what is known as the “effects test,” the effect that the defendant’s
10
conduct had in Ohio. The court held:
[S]hould a company injured in Ohio need to go to Virginia to seek
redress from a person who, though remaining in Virginia, knowingly
caused injury in Ohio? * * * Roberts is not alleged to have
engaged in untargeted negligence. Roberts’s Internet commentary
reveals a blatant intent to harm KRE’s reputation. Roberts knew
that KRE was an Ohio company. Roberts impugned the activities
that KRE undertakes in Ohio. Roberts hoped that his commentary
would have a devastating effect on KRE and that if there were
fallout from his comments, the brunt of the harm would be suffered
in Ohio.
Id. at ¶ 56.
{¶30} As noted above, Follett would distinguish Kauffman on the grounds that a
business relationship existed between the parties therein which is lacking between
Follett and the Kubyns. While the existence of a business relationship between the
parties is certainly a consideration, it is not a requirement for the establishment of
minimum contacts. The Ohio Supreme Court adopted the effects test from the United
States Supreme Court’s decision in Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79
L.Ed.2d 804 (1984). In Calder, a California plaintiff (an actress) brought a libel action
against Florida defendants (a reporter and editor for the National Inquirer). Despite the
lack of a business relationship between the parties, the high court found “[j]urisdiction
over [the defendants] is * * * proper in California based on the ‘effects’ of their Florida
conduct in California”: “The allegedly libelous story concerned the California activities of
a California resident. It impugned the professionalism of an entertainer whose
television career was centered in California. The article was drawn from California
sources, and the brunt of the harm * * * was suffered in California.” (Footnote omitted.)
Id. at 788-789.
{¶31} We acknowledge that “[t]he Sixth Circuit, as well as other circuits, have
narrowed the application of the Calder ‘effects test,’ such that the mere allegation of
11
intentional tortious conduct which has injured a forum resident does not, by itself,
always satisfy the purposeful availment prong.” Air Prods. & Controls, Inc. v. Safetech
Internatl., Inc., 503 F.3d 544, 552 (6th Cir.2007); Walden v. Fiore, 571 U.S. 277, 290,
134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) (“Calder made clear that mere injury to a forum
resident is not a sufficient connection to the forum,” rather “[t]he proper question is * * *
whether the defendant’s conduct connects him to the forum in a meaningful way”).
Even under a narrower application of the effects test, we conclude that the Kubyns have
satisfied the purposeful availment element. Despite the limited record before us, the
Kubyns’ causes of action are based on conduct specifically directed at their in-state
business which is also the locus of the alleged injuries. Alahverdian v. Nemelka, S.D.
Ohio No. 3:15-cv-060, 2015 WL 5004886, *7 (“although Defendant may have never
traveled to Ohio, nor has he previously conducted activities within Ohio, it is alleged that
Defendant sent electronic communications to various internet users world-wide causing
harm to Plaintiff whom Defendant knew to reside in Ohio * * * [which] injury suffices
since the Defendant in this case, unlike the one in Walden, formed and initiated the
contact with the forum State himself”); Tamburo v. Dworkin, 601 F.3d 693, 706 (7th
Cir.2010) (“although they acted from points outside the forum state, these defendant
specifically aimed their tortious conduct at Tamburo and his business in Illinois with the
knowledge that he lived, worked, and would suffer the ‘brunt of the injury’ there” so as
“to establish personal jurisdiction over these defendants under either a broad or a more
restrictive view of Calder”).
{¶32} The second element required to satisfy the demands of due process is
that the cause of action must arise from the defendant’s activities in the forum state, i.e.,
“that the cause of action * * * have a substantial connection with the defendant’s in-state
12
activities.” (Citation omitted.) Kauffman Racing, 126 Ohio St.3d 81, 2010-Ohio-2551,
930 N.E.2d 784, at ¶ 70. “If a defendant’s contacts with the forum state are related to
the operative facts of the controversy, then an action will be deemed to have arisen
from those contacts.” (Citation omitted.) Id. A “lenient standard * * * applies when
evaluating the ‘arising from’ criterion.” (Citation omitted.) Id.
{¶33} We find this second element readily satisfied. The Kubyns assert that
Follett has published defamatory statements about the quality of their breeding and the
ethical treatment of their animals and have appropriated and/or exploited their names,
images and involvement in local dog clubs from which conduct/contacts their claims
arise. Alahverdian at *7 (“sending emails into the forum intended to harm a specific
person located in that forum is sufficient to confer jurisdiction over a foreign defendant
where the emails form the basis for the action”); Tamburo at 709 (the defendants
“expressly aimed their allegedly tortious conduct at Tamburo and his Illinois-based
business for the purpose of causing him injury there; these ‘contacts’ within the forum
state are the cause in fact and the legal cause of Tamburo’s injury”); Neal v. Janssen,
270 F.3d 328, 333 (6th Cir.2001) (“when a foreign defendant purposefully directs
communications into the forum that cause injury within the forum, and those
communications form the ‘heart’ of the cause of action, personal jurisdiction may be
present over that defendant without defendant’s presence in the state”).
{¶34} The third and final element of the due process inquiry is that “the acts of
the nonresident defendant or consequences caused by the defendant must have a
substantial connection with the forum state to make exercise of jurisdiction over the
defendant reasonable.” Kauffman at ¶ 71. When “the first two elements of a prima
facie case [are satisfied] then an inference arises that this third factor is also present”
13
and “[o]nly the unusual case will not meet this third criterion.” (Citations omitted.) Id.
{¶35} We do not find it at all unreasonable that the Kubyns should seek redress
for their alleged wrongs in the forum where those wrongs have been suffered or that
Ohio should provide a forum for their redress. Compare Haas v. Semrad, 6th Dist.
Lucas No. L-06-1294, 2007-Ohio-2828, ¶ 21 (“[i]t should be foreseeable to one who
places a threatening phone call into a jurisdiction that he may be haled into the state to
answer a petition seeking protection against him”). Ohio’s long-arm statute expressly
sanctions the exercise of jurisdiction over those who cause tortious injury within this
state regardless of where the tortious conduct occurred when such exercise is
consistent with constitutional due process requirements. Admittedly such conduct is
greatly facilitated and enabled by the development of the internet and social media, but
this development does not alter the scope of the jurisdiction of Ohio’s courts.
{¶36} The Kubyns’ sole assignment of error is with merit.
{¶37} For the foregoing reasons, the judgment of the Geauga County Court of
Common Pleas is reversed and this matter is remanded for further proceedings
consistent with this opinion. Costs to be taxed against the appellee.
CYNTHIA WESTCOTT RICE, J.,
MARY JANE TRAPP, J.,
concur.
14
| {
"pile_set_name": "FreeLaw"
} |
129 S.W.3d 324 (2003)
SUPERIOR FEDERAL BANK
v.
George MACKEY and Jones & Mackey Construction Company, LLC.
No. CA 02-1119.
Court of Appeals of Arkansas, Division IV.
November 19, 2003.
*328 Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., by: Donald H. Henry, Lance R. Miller, John K. Baker, and Derrick W. Smith, Little Rock, for appellant.
David M. Hargis, Little Rock, for appellees.
JOSEPHINE LINKER HART, Judge.
This appeal arises from a lawsuit filed by appellees George Mackey and Jones & Mackey Construction Co., LLC, against appellant Superior Federal Bank for breach of contract, promissory estoppel, intentional interference with contractual relations, defamation, and punitive damages. Following a nine-day trial, the jury returned a verdict by interrogatories and awarded the following damages to the LLC: $411,000 for breach of contract, $210,000 for promissory estoppel, $175,000 for defamation, and $5,000,000 in punitive *329 damages.[1] The trial court set aside the promissory-estoppel verdict and awarded the LLC postjudgment interest of 10% on the breach-of-contract count and 6.25% on the remaining counts.
Appellant makes five arguments on appeal: 1) the trial court should have granted a directed verdict on the defamation count; 2) the trial court should have remitted the punitive-damage award; 3) the trial court should have granted a directed verdict on the breach-of-contract count; 4) the trial court erred in allowing jury members to question witnesses; 5) the trial court erred in instructing the jury on spoliation of evidence. The LLC makes two arguments on cross-appeal: 1) the trial court erred in awarding postjudgment interest at a rate of less than 10%; 2) the trial court erred in setting aside the promissory-estoppel award. On direct appeal, we affirm the compensatory damages for defamation, reverse the breach-of-contract award, and remand to the trial court for further consideration of the punitive-damage award. On cross-appeal, we affirm the award of postjudgment interest and reinstate the promissory-estoppel verdict.
Background Facts
George Mackey is the sole owner of Jones & Mackey Construction Co., LLC. His background is in accounting and banking, and he is a former vice president of the Arkansas Development Finance Authority. Testimony at trial showed that, prior to the incidents that led to this lawsuit, Mackey enjoyed a stellar reputation. Witnesses testified that his credibility was without question and that he had been successful in his endeavors. In early 1998, Mackey decided to pursue a career in the construction business. While still with the ADFA, he joined forces with Mr. Robert Jones, who had twenty-five years of building experience, and together they completed several residential building projects.
In late 1998, Jones and Mackey began to do business in Faulkner County. They constructed a home in Conway, which was financed by a construction loan through First Community Bank. Shortly thereafter, Mackey received a phone call from Rick Baney, one of appellant's loan officers. Baney told Mackey that appellant was trying to establish a greater presence in the Conway lending market and would like an opportunity to finance Mackey's next project. As a result, in early 1999, appellant financed appellees' purchase of two residential lots for approximately $122,000 and financed construction of a home for $316,000. At about this same time, Mackey became sole owner of the LLC.
In early 1999, Mackey developed a plan to purchase a piece of property near the hospital in Conway and to construct a medical-office building. In April 1999, the LLC obtained a $270,000 loan from appellant to purchase the land Mackey had selected. Mackey then began to develop the property and incur expenses, including demolition of a building on the property, hiring an architect, and hiring a project manager. However, on May 10, 1999, the University of Central Arkansas, which owned property adjacent to the LLC parcel, filed a petition in Faulkner County Circuit Court to prevent all work on the property, pending negotiations for it to acquire the property through eminent domain. Mackey resisted UCA's petition and called upon appellant's representatives to attend the hearing and testify that the LLC had received financing for a viable project on the property. Steve Bryan and *330 Rick Baney attended the hearing on behalf of appellant but were never called to testify. Following a May 17, 1999 hearing, the circuit judge denied UCA's petition.
The next day, May 18, 1999, Rick Baney sent a letter to George Mackey. The letter stated that it served as "a conditional commitment for approval of a $1,800,000 construction financing" and set forth several conditions that the LLC would have to meet to obtain the loan. As we will discuss in greater detail infra, the LLC contends that this letter created a contract whereby appellant promised to provide construction financing for the medical-office building. Upon receiving this letter, Mackey tendered his resignation to the ADFA and began work on the building. However, on June 7, 1999, Mackey received a fax from Rick Baney. The fax implied that the construction financing had not yet been approved, and it included several conditions that had not been set out in the May 18 letter.
In an attempt to settle the matter and obtain his funding, Mackey met with Tom Wetzel, appellant's regional manager of commercial loans. He and Wetzel clashed immediately, and their relationship deteriorated to the point of outright hostility. Wetzel ultimately sent Mackey the following letter on August 24, 1999, declining appellees' request for construction financing:
Please be advised that as of this date Superior Federal Bank is declining the above referenced loan request for $1,600,000 [sic] due to lack of capital injection on your part. Current financial statements both personal and business indicate an inability to fund your portion of the cash required.
According to appellees, this letter from appellant refusing to finance the construction on the medical-office building constituted a breach of the May 18 commitment letter.
In addition to the construction financing controversy, which would become the basis for the LLC's breach-of-contract and promissory-estoppel claims, five incidents took place between June and October of 1999 that would become the basis for appellees' defamation claims. We will set these incidences out in greater detail later in the opinion, but they generally involved: 1) appellant returning a series of checks drawn on the LLC account marked insufficient funds; 2) appellant's representation to the Gospel Temple church, which had hired the LLC to construct a sanctuary, that the LLC was not on appellant's approved contractors list; 3) Wetzel's statement to a Mr. Frank Waite, an officer at another bank, that appellant was no longer doing business with Mr. Mackey; 4) Wetzel's statement to a Mr. Bernard Veasley, who was trying to help Mackey secure financing, that Mackey was "f* * *ing up"; 5) Wetzel's statement to Veasley that Mackey was a "big, fat slob" and a "big, black gorilla." When the construction financing on the medical office building fell through, the LLC began to lose money rapidly and was unable to pay its bills or continue construction on other projects. Ultimately, numerous lawsuits would be filed against the LLC, and the company would lose a great deal of money. Further, Mackey's and the LLC's once excellent reputations were eroded to the point that Mackey was referred to by one witness as a pariah.
On May 1, 2000, appellees sued appellant in Pulaski County Circuit Court, alleging that they had committed substantial resources to the medical-building project in reliance on appellant's commitment to provide financing and suffered considerable financial losses when appellant failed to follow through. They also alleged that *331 they were defamed by appellant, which caused further damage to their reputations and business interests. During the course of the trial, appellant moved for a directed verdict on the defamation, breach-of-contract, and promissory-estoppel counts, all of which the trial court denied. Judgment was ultimately entered for the LLC on the defamation and contract counts, and appellant now appeals from that judgment.
Defamation
For its first argument on appeal, appellant contends that the trial court erred in failing to grant a directed verdict on the defamation count. In reviewing a denial of a motion for a directed verdict, our task is to determine whether the jury's verdict is supported by substantial evidence. Tricou v. ACI Mgmt., Inc., 37 Ark.App. 51, 823 S.W.2d 924 (1992). Substantial evidence is evidence that is of sufficient force and character that it will, with reasonable certainty, compel a conclusion one way or the other, without having to resort to speculation or conjecture. J.B. Hunt Transp. v. Doss, 320 Ark. 660, 899 S.W.2d 464 (1995). When determining the sufficiency of the evidence, the appellate courts review the evidence and all reasonable inferences arising therefrom in the light most favorable to the party on whose behalf judgment was entered. Coca-Cola Bottling Co. v. Gill, 352 Ark. 240, 100 S.W.3d 715 (2003).
The following elements must be proved to support a claim of defamation: (1) the defamatory nature of the statement of fact; (2) that statement's identification of or reference to the plaintiff; (3) publication of the statement by the defendant; (4) the defendant's fault in the publication; (5) the statement's falsity; (6) damages. Addington v. Wal-Mart Stores, Inc., 81 Ark. App. 441, 105 S.W.3d 369 (2003). A viable action for defamation turns on whether the communication or publication tends or is reasonably calculated to cause harm to another's reputation. Id.
Appellees' claims for defamation were based on the five statements previously mentioned. For the moment, we put aside the last two statements, which were made about Mr. Mackey personally, and focus on those that directly pertain to the LLC. First, we look to appellant's statement that the LLC was not on its approved-contractors list. The events leading up to the statement are as follows. On August 27, 1999, the Gospel Temple Baptist Church obtained a $300,000 loan from appellant to build a new sanctuary. The church had previously entered into a contract with the LLC to construct the sanctuary, and it paid the LLC a deposit of $133,000. Thereafter, Mr. Paul Woolfolk, who served on the church building committee, communicated with at least one and possibly two of appellant's officers. Steve Griffen, the manager of appellant's construction lending department, testified that the church called him asking for consideration of a loan request, and when the church indicated that the LLC would be the contractor, Griffen checked the approved builders list and told the church that the LLC was not on it. Loan officer Steve Bryan testified that he spoke with Woolfolk when the church was preparing to enter the construction phase of its project. Bryan said that, when he learned that the church had given the building contract to the LLC, he told Woolfolk that appellant could not be involved in the project due to "a conflict of interest," allegedly referencing the troubles that were beginning to surface between Mackey and appellant over construction financing for the medical building. Woolfolk testified that Bryan told him that appellant would not finance the project if the LLC was the *332 contractor and that the LLC was not on appellant's list of approved contractors. As a result, Woolfolk said, the church attempted to secure financing with another institution, Regions Bank. Regions approved a $280,000 loan, contingent on, among other things, the LLC furnishing a performance bond. When the LLC could not obtain a bond, the church canceled its contract with the LLC and asked for a refund of the $133,000.
Appellant argues first that the statement that the LLC was not on the approved contractors list was true and that the truth of a statement is a complete defense to defamation. See Wirges v. Brewer, 239 Ark. 317, 389 S.W.2d 226 (1965). In our view, the truth of the statement was disputed because there was evidence that appellant did not actually maintain an approved contractors list. Although Steve Griffen testified as to the existence of the list, he could not produce a copy of it. Further, he testified in his deposition that there was no commercial contractors list, although there was a residential list. Rick Baney, appellant's loan officer, testified as follows:
QUESTION: Insofar as you know today, as of August 1999, when you left the bank, there was no approved builders list existing at the bank?
ANSWER: Not that I know of.
QUESTION: So if somebody said that they can't do business with somebody because they're not on the approved builders list, that would be a false statement?
ANSWER: As far as I know as of August of 1999.
Steve Bryan testified that he did not recall whether appellant had an approved contractors list. Finally, George Mackey, who had done business with appellant as a contractor, testified that he had never heard of an approved contractors list. Viewing this testimony in the light most favorable to appellees, we conclude that there was substantial evidence from which the jury could have found that the statement was false.
Appellant argues next that, even if the statement was false, the LLC did not prove that it sustained damages in connection with the statement. In order for liability for defamation to attach, there must be evidence that demonstrates a causal connection between defamatory statements made and the injury to reputation. Ellis v. Price, 337 Ark. 542, 990 S.W.2d 543 (1999). A plaintiff must establish actual damage to his reputation, but the showing of harm may be slight. Id. A plaintiff must prove that the defamatory statements have been communicated to others and that the statements have affected those relations detrimentally. Id.
We believe there was substantial evidence that the LLC's relations with the Gospel Temple Church were detrimentally affected as the result of the statement. Paul Woolfolk testified that the church terminated the contract with the LLC in part because of appellant's statement. This caused the LLC to lose the money it would have made on the contract and to become liable for return of the $133,000. Further, it is clear that appellant's statement set in motion the series of events that led to the termination of the church's contract with the LLC. Had appellant not made the false statement, the LLC would not have been in the position of being required to meet the demands of another lending institution. Additionally, Steve Griffen testified in his deposition that customers often come to the bank for guidance regarding "who they are dealing with" and that a bank wants to make sure its customer is dealing with a reputable person. He responded affirmatively to *333 counsel's question that the action of telling a customer that a builder was not on an approved list would imply that the person "was not of proper repute to do business with." Finally, although the church maintained the LLC as its contractor even after appellant made the statement about the list, there is evidence that the church did so because it had a contract with the LLC, not because it believed the LLC's reputation was untarnished. The combination of these factors leads us to conclude that there was substantial evidence that the LLC sustained reputational damage as a result of appellant's statement. See generally Northport Health Servs. v. Owens, 82 Ark.App. 355, 107 S.W.3d 889 (2003).
For its final argument regarding this statement, appellant contends that the statement was privileged. A publication may be conditionally privileged if the circumstances induce a correct or reasonable belief that (1) there is information that affects a sufficiently important interest of the recipient or a third person; and (2) the recipient is one to whom the publisher is under a legal duty to publish the defamatory matter or is a person to whom its publication is otherwise within the generally accepted standards of decent conduct. Wal-Mart Stores, Inc. v. Lee, 348 Ark. 707, 74 S.W.3d 634 (2002). However, the qualified privilege must be exercised in a reasonable manner and for a proper purpose. Id. The privilege may be lost if it is abused by excessive publication, if the statement is made with malice, or if the statement is made with a lack of grounds for belief in the truth of the statement. Id. The question of whether a particular statement falls outside the scope of the qualified privilege for one of these reasons is a question of fact for the jury. Id.
Appellant relies on Pierce v. Bank One-Franklin, 618 N.E.2d 16 (Ind. Ct.App.1993), and West v. Peoples Banking & Trust Co., 14 Ohio App.2d 69, 236 N.E.2d 679 (1967), for their holdings that a bank's defamatory statement to a third party may be privileged if the need exists for full and unrestricted communication on a subject in which both parties have a common interest or duty. We agree that, in many instances a bank must be free to impart information to its customers about third persons and that a bank may sometimes have a duty to do so. However, the bank may not exceed the scope of its privilege. Given the controversy in this case over whether an approved builders list actually existed, there is substantial evidence that appellant did not make the statement in good faith and lost any privilege it may have had by making the statement with a lack of grounds for belief in its truth.
Having determined that the jury's defamation verdict was supported by the above statement, it is not necessary that we analyze whether the verdict is supported by the remaining statements. The jury, in its answers to interrogatories, did not clearly indicate which statement or statements it found defamatory, only that defamatory material was published and the LLC was damaged as a result. Thus, in the absence of a specific finding by the jury, we may affirm if any one statement served as substantial evidence of defamation. See generally Elk Corp. of Ark. v. Jackson, 291 Ark. 448, 725 S.W.2d 829 (1987) (affirming where the jury's verdict was supportable on any one of several theories presented). However, in the interest of providing a complete account of the events that occurred in this case, and because it may prove useful to the trial court's reconsideration of the punitive-damage issue, discussed infra, we will briefly address the other four statements that formed the basis of appellees' defamation claim.
*334 The LLC also contended below that it was defamed by appellant returning some of its checks marked "NSF" (insufficient funds). George Mackey testified at trial that he had established a course of dealing with appellant concerning the LLC's checking account. He said that the LLC had a "controlled overdraft" account in which the bank would cover overdrafts up to a certain amount for a short period of time. Mackey testified that he was told not to let the overdraft amount on the LLC account exceed $25,000 to $40,000. Steve Griffen testified that, until November of 2001, the bank had a system whereby it could code certain accounts to permit short-term overdrafts of particular amounts, possibly up to $50,000, although he could not recall if the LLC had participated in that system. Appellant's officer Steve Park also confirmed the existence of such a practice.
In June of 1999, Mackey deposited a $65,000 check into the LLC account and immediately wrote $40,000 in checks thereon. As it happened, the $65,000 check was bad, and Mackey was notified of that fact. He very quickly deposited $40,000 to $50,000 to cover the checks the LLC had written. However, those checks were later returned marked NSF, and appellant accused Mackey of check kiting.
Appellant argues on appeal that the NSF designation cannot serve as a basis for a defamation action because the designation was true, i.e., the LLC did not in fact have sufficient funds in its account to cover the checks it had written. Appellant relies on Kiley v. First National Bank of Maryland, 102 Md.App. 317, 649 A.2d 1145 (1994), in which the court held that a plaintiff's defamation action based on a bank's dishonor of a check must fail where plaintiff's funds were, in fact, insufficient to cover the checks.
The case before us has one important aspect that the Kiley case did not. Viewing the evidence in the light most favorable to appellees, there was a course of dealing between the LLC and appellant whereby appellant would cover any overdrafts for a short period of time.[2] It is possible that the jury, in light of the appellant's usual practice of accepting certain overdrafts as payable, could conclude that there were in actuality sufficient funds available to cover the LLC's checks when they were presented and that appellant's representation otherwise was false. Thus, there is substantial evidence to prove the element of falsity. However, the LLC presented virtually no evidence to establish that the NSF notation on the checks resulted in damage to the LLC's reputation. None of the payees of the checks testified, nor did anyone testify who had seen one of the checks. Therefore, despite our conviction that appellant's conduct in this instance was particularly egregious and seemingly calculated to do harm to the LLC by unexplainedly abandoning an established practice, we decline to hold that it supports the jury's defamation verdict.
The next statement was made by appellant's officer Tom Wetzel. Wetzel told Frank Waite of Regions Bank that appellant was no longer doing business with Mackey. This statement was made at the time Regions was considering the possibility of financing the Gospel Temple construction after appellant declined to do so. At some point, Wetzel told Waite that appellant wasn't "lending Mr. Mackey any more money" and that appellant was "no *335 longer doing business with Mr. Mackey." On appeal, appellant argues that 1) the statement was true and 2) the LLC proved no reputational injury.
Appellant is correct that Wetzel's statement was true because it appears that the statement was made after appellant had declined the LLC's loan request. However, appellees contend that appellant told a half-truth and that the statement carried a derogatory implication that Mackey and the LLC were unfit to do business with. The concept of defamation by innuendo was considered in Pritchard v. Times Southwest Broadcasting, Inc., 277 Ark. 458, 642 S.W.2d 877 (1982), where the court said, "The words to be defamatory in such cases should be susceptible of two meanings, one defamatory and one harmless. In that regard, we read the words in their plain and natural meaning, as they would be interpreted by a reader of the newspaper considering the articles as a whole." Id. at 461, 642 S.W.2d at 878. The court also said that it would not strain to find a defamatory meaning in such instances. Id.
We believe that there is substantial evidence from which the jury could have found that the statement was damning enough to contain a defamatory implication. The statement was incomplete because it tended to imply that appellees were unworthy to loan money to when in fact appellant and appellees broke off relations over the construction-financing conflict. Further, the jury was not required to view the statement in a vacuum. In determining whether the statement carried a defamatory meaning or a harmless meaning, the jury could consider the fact that Tom Wetzel made other disparaging statements about appellees as well, which will be detailed shortly. However, as in the case of the insufficient-funds checks, appellees did not provide evidence to show that the communication of this statement to Frank Waite caused reputational damage. Waite testified that he had no problem with the LLC being the contractor on the Gospel Temple Construction. Therefore, we decline to uphold the jury's verdict on the basis of this statement.
Finally, we come to the two statements that Tom Wetzel made about George Mackey. These statements were made by Wetzel to Bernard Veasley, who was attempting to intercede with appellant and help Mackey obtain permanent financing for the medical building project. At Mackey's request, Veasley went to see Wetzel to assure him that he had a "take-out" lender who was prepared to take out the construction loan. When he arrived to see Wetzel, he overheard a phone conversation between Wetzel and Mackey on the speaker phone in which they were arguing over financing. Later, Wetzel told Veasley that Mackey was a "big, fat, damn slob" who was "f* * *ing up." Wetzel also called Mackey "a big, black gorilla."
There is no doubt that these statements are defamatory in nature. They carry a meaning that Mackey was incompetent in running his business and did not possess the human mental wherewithal to do so. Further, actual reputational damage was caused. Veasely testified that he would no longer do business with Mackey after hearing that he was "messing up." However, appellant argues that these statements reference Mackey personally and so cannot be used to support a defamation verdict in favor of the LLC. We have found no Arkansas case on point and the parties have cited none, regarding whether a company may be defamed by statements made about one of its officers. Because we have already determined that the jury's defamation verdict is supported by substantial evidence, we decline to *336 break new ground on this issue.[3] However, we take this opportunity to express our revulsion toward such malicious and hateful language uttered by a bank about its customer.
To conclude on this point, we affirm the trial court's decision to deny a directed verdict on the LLC's defamation claim and affirm the $175,000 verdict.
Punitive Damages
Appellant's argument on this point is twofold. First, it argues that there was not substantial evidence to support punitive damages. Second, it argues that the punitive-damage award was excessive.
Appellant is procedurally barred from raising the first argument. Appellant made no directed verdict motion to dismiss appellees' claim for punitive damages, nor did it object to the jury being instructed on punitive damages. The first objection appeared in appellant's posttrial motion. In Willis v. Elledge, 242 Ark. 305, 308-09, 413 S.W.2d 636, 638 (1967), our supreme court stated:
Appellant first argues that there was not enough evidence to submit the issue of punitive damages to the jury, but we cannot consider this question, since an instruction on punitive damages was given the jury without objection on the part of appellant. The failure to object to an instruction operates as a waiver of any error that might be committed in giving it.
The supreme court has also recently held that an appellant waives its right to question the sufficiency of the evidence to support a punitive-damage award if it does not make the proper directed-verdict motions. Advocat, Inc. v. Sauer, 353 Ark. 29, 49, 111 S.W.3d 346, 357 (2003):
Appellants' first argument that there was insufficient evidence to support the award of punitive damages in this case is not preserved for this court's review. Arkansas Rule of Civil Procedure 50(e) requires that where "there has been a trial by jury, the failure of a party to move for a directed verdict at the conclusion of all the evidence, because of insufficiency of the evidence will constitute a waiver of any question pertaining to the sufficiency of the evidence to support the jury verdict."
....
Because the appellants failed to renew their motion for directed verdict following the conclusion of the Sauer Estate's rebuttal, they waived any question pertaining to the sufficiency of the evidence to support the jury's award of punitive damages.
In the case at bar, appellant made no directed-verdict motion regarding punitive damages. Further, appellant permitted the jury to be instructed on punitive damages without objection. Appellant's failure to preserve the issue at one of these stages precludes appellant from now raising the issue on appeal.
However, the same does not hold true for appellant's argument that the punitive-damage award was excessive, even though that argument was also made for the first time in a posttrial motion. Obviously, a party is unaware of the excessive nature of a verdict until that verdict is *337 rendered. We therefore consider the merits of this argument.
Ordinarily, we follow a two-step analysis in determining whether a punitive-damage award is excessive. First, we determine whether the award is excessive under state law. That entails an analysis of whether the jury's verdict is so great as to shock the conscience of the court. See Advocat, supra. It also entails a consideration of the extent and enormity of the wrong, the intent of the party committing the wrong, all the circumstances, and the financial and social condition and standing of the erring party. Hudson v. Cook, 82 Ark.App. 246, 105 S.W.3d 821 (2003). Second, we consider the award in light of the federal due process analysis in BMW of North America v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996). This involves an analysis of the degree of the defendant's reprehensibility or culpability; the relationship between the penalty and the harm; and the sanctions imposed in other cases for comparable misconduct. Hudson v. Cook, supra. The United States Supreme Court recently elaborated on the factors to be considered when assessing the degree of a defendant's reprehensibility: whether the harm caused was physical as opposed to economic; whether the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others; whether the target of the conduct had financial vulnerability; whether the conduct involved repeated actions or was an isolated incident; and whether the harm was the result of intentional malice, trickery, or deceit, or mere accident. State Farm Mut. Ins. Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003). The Court in that case also recognized that, in practice, few awards exceeding a single-digit ratio between compensatory and punitive damages will satisfy due process.
The Campbell case was handed down by the Supreme Court on April 7, 2003, while this appeal was pending. Thus, the trial court did not have the opportunity to consider it. It is apparent that the punitive-damage award in this case, which bears a 28.5-to-1 ratio to the compensatory award, should be reexamined in light of Campbell. While we recognize that we have the authority to conduct a de novo review of the punitive award, see Advocat, supra, we believe the better approach in this case is to remand the case to the trial court to reevaluate the award in light of the factors considered in the Supreme Court's recent holding in Campbell. We therefore remand for that purpose.
Breach of Contract
The LLC's breach-of-contract claim was based on the letter that Mackey received from appellant on May 18. The letter reads:
Thank you for allowing Superior Federal Bank to participate in your medical building project at Western and College in Conway, AR. We have approved an interim loan in the amount of $272,000 for the land acquisition for this project. This will serve as a conditional commitment for approval of a $1,800,000 construction financing. Before final construction financing can be approved, the following items are needed:
Loan value not to exceed 80% of the lower of cost or appraisal
3-year projections accompanied by signed lease commitments of 60%-75%
Tax returns on each principal of Jones & Mackey Construction Company, LLC
Appellant argues that the May 18 letter was not an enforceable contract because the parties did not agree on all essential terms. Therefore, appellant contends, the *338 trial court should have granted a directed verdict on the breach-of-contract claim. We agree.
It is well settled that where all essential terms of a contract are not agreed upon, the contract is unenforceable. Troutman Oil Co. v. Lone, 75 Ark.App. 346, 57 S.W.3d 240 (2001); Hunt v. McIlroy Bank & Trust, 2 Ark.App. 87, 616 S.W.2d 759 (1981). The Hunt case involved a situation that is somewhat similar to the case at bar. There, the Hunts alleged that McIlroy had orally promised to loan them an unspecified amount of money between $500,000 and $750,000. The alleged oral agreement contained no interest rate or repayment terms. The trial court held that no contract was created, and the supreme court agreed:
After a study of the evidence presented at trial, we have no hesitancy in agreeing with the chancellor that the appellants failed to prove a contract existed between themselves and the appellee. Appellee's officer, Larkin, and appellant Ben Hunt initially discussed the financing of the expansion of the S.B.H. Farm operation, but the total amount of loan proceeds was never decided. Hunt said that at one time Larkin told him he could have up to $750,000. Larkin testified that the appellee was willing to loan in excess of $500,000, and it could have been $700,000. Both Larkin and Hunt agreed that no interest rate or repayment terms were ever agreed upon. There apparently was some discussion that long term permanent financing would be necessary, but the terms of such financing were left to future determination. Meanwhile, short term notes were signed by appellants for loan proceeds so the farm expansion could commence. Although Larkin and Hunt may have generally agreed on a course of action as to the need for financing the farm project, they never agreed on the essential, much less all of, the terms of a contract to loan monies. There is no way that a court could take the general terms discussed between Larkin and Hunt regarding an open-ended loan with no repayment provisions and be asked to enforce an agreement without filling in necessary terms essential to the formation of a contract. The subject matter of the proposed agreement was indefinite and the mutual assent and obligations were so vague as to be unenforceable.
Id. at 90, 616 S.W.2d at 761. Likewise, in the case at bar, a court could not enforce such an agreement without adding certain essential terms. Although the May 18 letter contains the amount of the loan, it does not contain a repayment schedule, a term of the loan, or an interest rate. These are essential terms of a loan commitment letter. Black's Law Dictionary defines a loan commitment as a:
Commitment to borrower by lending institution that it will loan a specific amount at a certain rate on a particular piece of real estate. Such commitment is limited to a specified time period (e.g. four months), which is commonly based on the estimated time that it will take the borrower to construct or purchase the home contemplated by the loan.
Black's Law Dictionary at 844 (5th ed.1986).
Appellees argue that testimony was presented at trial by several persons familiar with construction lending practices, and all of them testified that the May 18 letter was a "commitment letter" upon which a borrower could rely to begin his project. While such testimony may be relevant to the LLC's promissory-estoppel claim, discussed infra, it does not alter the fact that the letter does not contain the essential terms to establish a formal contract. Appellees *339 also argue that there was evidence from which the term of the loan and the interest rate could be established by custom or usage. For example, there was testimony that the term of a construction loan would typically be the period of construction, which could vary, and that a standard range of short-term interest rates were available on construction loans. However, there was no evidence that a specific term or rate of interest was customary, nor was there any evidence that the parties reached an agreement as to any rates or loan terms. There was also evidence that Mackey had prepared amortization schedules using specific interest rates and terms. However, these schedules were prepared during the negotiating process. There is nothing to show that, following negotiations, the parties ultimately agreed to any particular term or interest rate. In any event, the two amortization schedules referenced by appellees show different loan amounts, different interest rates, and different repayment schedules.
Given the absence of essential terms, we hold that the May 18 letter does not constitute an enforceable contract. We also agree with appellant's argument that the May 18 letter lacks the mutuality required of a contract because it imposed no obligation on the LLC:
A contract to be enforceable must impose mutual obligations on both of the parties thereto. The contract is based upon the mutual promises made by the parties; and if the promise made by either does not by its terms fix a real liability upon one party,
then such promise does not form a consideration for the promise of the other party.... "Mutuality of contract means that an obligation must rest on each party to do or permit to be done something in consideration of the act or promise of the other; that is, neither party is bound unless both are bound." A contract, therefore, which leaves it entirely optional with one of the parties as to whether or not he will perform his promise would not be binding on the other.
Showmethemoney Check Cashers v. Williams, 342 Ark. 112, 120, 27 S.W.3d 361, 366 (2000) (quoting Townsend v. Standard Indus., Inc., 235 Ark. 951, 363 S.W.2d 535 (1962)). In the case at bar, the LLC could have walked away from appellant and obtained financing at another institution, and appellant would have had no right to enforce any obligation. Thus, there was no mutuality of obligation. See also Armstrong Business Servs. v. Am-South Bank, 817 So.2d 665 (Ala.2001) (holding that where there was no showing that the prospective borrower gave or did anything for the benefit of the prospective lender, there was no consideration for the loan commitment).
For the reasons stated, we reverse the jury's breach of contract verdict of $411,000.
Juror Questioning of Witnesses
Throughout the trial, the judge invited jurors to ask questions of the witnesses and the jurors did so on numerous occasions. The procedure was that the jurors would submit written questions to the judge, who would preview the questions and pose them to the witnesses. Appellant contends on appeal that such questioning by jurors should be prohibited because it removes the jury from its position as fact finder and improperly places it in an adversarial role. See, e.g., Wharton v. State, 734 So.2d 985 (Miss.1998); State v. Zima, 237 Neb. 952, 468 N.W.2d 377 (1991); Morrison v. State, 845 S.W.2d 882 (Tex.Crim.App.1992).
*340 We first address appellees' contention that appellant has waived this argument by failing to object. We disagree. From the first time that a juror actually proposed a question, appellant objected and continued to object to the practice throughout the trial.
As for the merits, we note that the supreme court has approved the practice of juror questioning. Nelson v. State, 257 Ark. 1, 513 S.W.2d 496 (1974); Ratton v. Busby, 230 Ark. 667, 326 S.W.2d 889 (1959). Appellant urges this court to join those jurisdictions that ban juror questioning. However, we are without authority to overrule decisions made by the supreme court. Dean v. Colonia Underwriters Ins. Co., 52 Ark.App. 91, 915 S.W.2d 728 (1996). Therefore, we affirm on this issue.[4]
Instructing the Jury on Spoliation of Evidence
Appellant's final argument is that the trial court erred in instructing the jury on spoliation of evidence. The jury was instructed as follows:
If you find that a party intentionally destroyed, lost or suppressed documents in this case with the knowledge that their contents may be material to a pending claim, you may draw the inference that the content of the documents would be unfavorable to that party's defense. When I use the term "material" I mean evidence that could be a substantial factor in evaluating the merit of the claim in this case.
Spoliation is the intentional destruction of evidence; when it is established, the fact-finder may draw an inference that the evidence destroyed was unfavorable to the party responsible for its spoliation. Tomlin v. Wal-Mart Stores, Inc., 81 Ark.App. 198, 100 S.W.3d 57 (2003). An aggrieved party can request that a jury be instructed to draw a negative inference against the spoliator. Id.
A party is entitled to a jury instruction when it is a correct statement of the law and there is some basis in the evidence to support the giving of the instruction. Id. We believe there is sufficient evidence in this case to support the giving of an instruction on spoliation. During the course of trial, appellees questioned appellant about the whereabouts of the 1999 approved contractors list, personnel evaluations of Tom Wetzel, and loan committee minutes that would have referenced the initial land-acquisition loan. Although there was testimony that these items should have existed, none could be found and no credible explanation was given for their absence. We therefore hold that the trial court did not err in giving this instruction.
Cross-Appeal: Postjudgment Interest
The trial court imposed post-judgment interest at a rate of 6.25% on the noncontract damages. Appellees argue that, under Ark.Code Ann. § 16-65-114(a) (1987), a court must impose a 10% rate for postjudgment interest. That statute reads:
Interest on any judgment entered by any court or magistrate on any contract shall bear interest at the rate provided by the contract or ten percent (10%) per annum, whichever is greater, and on any other judgment at ten percent (10%) per annum, but not more than the maximum rate permitted by the Arkansas Constitution, Article 19, Section 13, as amended.
The clear language of this statute is that, in the case of damages that are not awarded on a contract judgment, the court may *341 award postjudgment interest of 10%, but not if 10% exceeds the maximum rate permitted by the Arkansas Constitution. The recent supreme court case of Bank of America v. C.D. Smith Motor Co., 353 Ark. 228, 106 S.W.3d 425 (2003), clearly indicates that postjudgment interest in excess of the rate permitted by the Arkansas Constitution is prohibited. There is no evidence in the record before us as to what interest rate the constitution would have permitted on the date that judgment was entered. However, it is not necessary that we have that information because appellees argue only that the trial court was required to award 10% interest. Based on the language of the statute and the recent supreme court holding, we reject that argument because 10% postjudgment interest is not awardable if it exceeds the amount allowed by the constitution.
Promissory Estoppel
The trial judge set aside the jury's $210,000 promissory-estoppel verdict because he determined it was incompatible with the jury's finding that a breach of contract had occurred. It is correct that promissory estoppel is a basis for recovery when formal contractual elements do not exist. MDH Builders v. Nabholz, 70 Ark. App. 284, 17 S.W.3d 97 (2000). However, our reversal of the breach-of-contract award renders that rationale moot and thus permits reinstatement of the promissory-estoppel verdict.
Appellant argues that, even if the promissory-estoppel verdict is reinstated, there was not sufficient evidence to support it. We disagree. According to Kearney v. Shelter Insurance Co., 71 Ark.App. 302, 307-08, 29 S.W.3d 747, 750 (2000), the black-letter law on promissory estoppel is found in the Restatement (Second) of Contracts, § 90:
A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.
Whether there has been actual reliance and whether it was reasonable is a question for the trier of fact. Kearney, supra.
In the case at bar, Mackey testified that appellant orally promised to finance the construction of the medical-office building and, as a result, he incurred over $500,000 in expenses. The loan memorandum for the land purchase indicates that appellant expected to obtain repayment from lease proceeds of the medical-office building, which could indicate that appellant contemplated providing financing through the construction phase. There was also evidence that appellant may have seen a sign in front of the building site which read that it was providing financing for the project, yet it did not remove or object to the sign. Finally, there was testimony from numerous witnesses that it was reasonable for a borrower to rely on a commitment letter such as the May 18 letter to incur expenses and begin preparation for construction. In light of this evidence, we uphold the jury's $210,000 verdict for promissory estoppel.
Appellees' Motions
Pending before us are appellees' motion to strike appellant's reply brief and motion for sanctions and costs in connection with alleged deficiencies in appellant's abstract and addendum. We deny the motions, except that we award appellees $500 for supplementation of the addendum, pursuant to Ark. R. Sup.Ct. 4-2(b)(1) (2003).
*342 Affirmed in part, reversed in part, and remanded in part on direct appeal; affirmed in part and reversed in part on cross-appeal.
STROUD, C.J., and VAUGHT, J., agree.
NOTES
[1] The jury found in favor of appellant on the intentional interference count and awarded no damages to George Mackey personally. Those findings are not at issue on appeal.
[2] We note, as a matter of interest, that the Uniform Commercial Code provides that a bank may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft. See Ark.Code Ann. § 4-4-402(a) (Repl.2001).
[3] But see Dombey v. Phoenix Newspapers, Inc., 150 Ariz. 476, 724 P.2d 562 (1986), which recognized that a corporation is not defamed by communications defamatory of its officers, agents, or stockholders unless the communications also reflect discredit upon the method by which the corporation conducts its business. The court also recognized that libel of an individual can cause injury to a corporation if they are so interconnected that a reasonable person would perceive harm to one as harm to another.
[4] Certification was attempted on this point and rejected by the supreme court.
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 21, 2008
No. 08-50107
Conference Calendar Charles R. Fulbruge III
Clerk
UNITED STATES OF AMERICA
Plaintiff-Appellee
v.
URIEL GUTIERREZ-MEDINA, also known as Javier Robert Rocha
Defendant-Appellant
Appeal from the United States District Court
for the Western District of Texas
USDC No. 3:07-CR-2477-ALL
Before KING, BARKSDALE, and OWEN, Circuit Judges.
PER CURIAM:*
Uriel Gutierrez-Medina (Gutierrez) appeals the sentence following his
guilty plea conviction for being unlawfully present in the United States following
removal. The district court determined that Gutierrez’s second prior California
conviction for possession of methamphetamine qualified as an “aggravated
felony” under U.S.S.G. § 2L1.2(b)(1)(C).
Gutierrez argues that, pursuant to the Supreme Court’s decision in Lopez
v. Gonzales, 549 U.S. 47, 127 S. Ct. 625 (2006), his second conviction for simple
*
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. 08-50107
possession of methamphetamine under California law does not constitute an
“aggravated felony.” He contends that his two prior drug possession convictions
did not establish a prior aggravated felony conviction because the Government
did not plead and prove the prior convictions, and he was not convicted under
California recidivist enhancement procedures. He recognizes that the Court in
Lopez, 127 S. Ct. at 630 n.6, observed in a footnote that 21 U.S.C. § 844(a) makes
a second possession conviction a federal felony if the Government shows knowing
possession and proves a prior possession conviction through the procedures
specified in 21 U.S.C. § 851. However, he argues that under Lopez, the second
state possession conviction must be brought under state recidivist procedures
that conform to the procedures in § 844 and § 851.
We recently rejected the argument raised by Gutierrez. See United States
v. Cepeda-Rios, 530 F.3d 333, 335-36 (5th Cir. 2008). The district court properly
determined that Gutierrez’s second prior California conviction for possession of
methamphetamine was an “aggravated felony” under § 2L1.2(b)(1)(C). See id.
AFFIRMED.
2
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230 F.2d 958
Byron K. DODDSv.Janet STOKES et al.
No. 5329.
United States Court of Appeals Tenth Circuit.
Jan. 30, 1956.
Before BRATTON, Chief Judge, and HUXMAN, Circuit Judge.
PER CURIAM.
1
Docketed and dismissed, for failure of appellant diligently to prosecute, on motion of appellee.
2
No appearance for appellant.
3
Malcolm Miller, Wichita, Kan., for appellees.
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359 N.W.2d 471 (1984)
In the Interest of H.J.E., a Child,
Appeal of T.D.E., Father.
Nos. 84-131, 84-443.
Supreme Court of Iowa.
December 19, 1984.
Rehearing Denied January 10, 1985.
*472 T.D.E., pro se.
Thomas J. Miller, Atty. Gen., Gordon E. Allen, Sp. Asst. Atty. Gen., and Brent D. Hege, Asst. Atty. Gen., for appellee State.
Considered by HARRIS, P.J., and McGIVERIN, LARSON, SCHULTZ, and WOLLE, JJ.
SCHULTZ, Justice.
We have consolidated two appeals that arise as a result of a child in need of assistance (CINA) proceeding. In earlier proceedings, the juvenile court adjudicated H.J.E. to be a child in need of assistance and entered a dispositional order. In each of the present appeals, the appellant is T.D.E., the father of the child. In the first appeal, the father challenges the juvenile court's refusal to grant his request to terminate his parental rights. In the second appeal, he challenges the juvenile court's redispositional order directing him to pay the cost of the child's counseling, which was ordered by the court in the original dispositional order.
A long and difficult relationship between the mother, D.E., and T.D.E. ended with a dissolution of their marriage in 1981. Custody of their daughter, H.J.E., who was born in 1978, was granted to the mother. The father was required to pay child support and was granted reasonable visitation rights.
*473 Subsequently, in the CINA proceedings, the child was adjudicated a child in need of assistance because of allegations of sexual abuse by the father. As a result of these allegations, the father was denied visitation with the child. The CINA dispositional order directed the mother and child to continue counseling and ordered the father to participate in sexual abuse counseling. The court further ordered that visitation would be restored when the counselors approved. The counseling ordered by the juvenile court for the father never began because the father refused to admit the sexual abuse had occurred, a prerequisite for entering the court-ordered counseling program.
Later proceedings have been somewhat disjointed. The father filed a notice of appeal from the CINA dispositional order, but dismissed the appeal when he filed a petition requesting that his parental rights be terminated. The juvenile court refused to terminate the father's parental rights, and he appealed. In the meantime, the mother filed an application for an order to require the father to pay for court-ordered counseling for the child. A hearing was held to consider the mother's request and matters concerning the father's counseling. In a redispositional order, the juvenile court ordered that the father no longer be required to attend counseling and that he pay for the child's counseling. The father took his second appeal from that portion of the order concerning the payment of the child's counseling expenses. We shall address the appeals separately in the order filed.
I. Termination proceedings. The father petitioned for termination of his parental rights pursuant to Iowa Code section 600A.5 and stated that he voluntarily consented to termination under sections 600A.8(2) and 232.116. He asserted that his decision to seek termination of parental rights arose out of his concern for his daughter's mental health and well-being and that his parental rights already had been constructively terminated. The court declined to terminate the father's parental rights stating:
Termination of parental rights is an absolute which the Court finds to be abhorrent. The Court has found that the father has sexually abused the child, however, the Court has not found that the parent-child relationship is without redeeming value. Further, in dealing with the best interests of children the Court openly considers such intangibles as hope and good will.
The court found that the impasse created by the father's inability to participate in the ordered counseling program and the resultant continued denial of visitation could be broken by provision for other counseling, but that it did not have jurisdiction in a termination proceeding under chapter 600A to change the dispositional order in the chapter 232 proceedings.
The juvenile court's refusal to sever the father's parental rights was ultimately grounded on the best interests of the child. This conclusion is in accord with our recent pronouncement in In re B.L.A., 357 N.W.2d 20 (Iowa 1984). We stated:
In addition to the determination that the statutory grounds for termination have been met, we must determine that the termination would benefit the children. We stated in Klobnock [v. Abbott]: "Section 600A.1 provides that the welfare of the child shall be the paramount consideration in interpreting chapter 600A." 303 N.W.2d 149, 153 [(Iowa 1981) ]. Consequently, the issue of whether the interest of the children will be best served by the termination of their father's parental rights must be resolved.
Id. at 23. We need not examine the record de novo to determine the correctness of the juvenile court's ruling; we believe the dismissal of the petition to terminate was correct on the basis that the juvenile court did not have authority to terminate parental rights in a chapter 600A proceeding while CINA proceedings were pending pursuant to chapter 232.
The Iowa Code contains two provisions for the termination of parental rights, *474 chapter 600A and chapter 232, which create separate and distinct causes of action having different applicability based upon the facts of the situation. Chapter 600A provides for voluntary termination of parental rights, allowing a "parent or prospective parent of the parent-child relationship" to petition for termination. Iowa Code § 600A.5(1)(a) (1983). Under chapter 232 only a "child's guardian or custodian, the department of human services, a juvenile court officer or the county attorney may file a petition for termination of the parent-child relationship ...." Iowa Code § 232.111(1) (1983 Supp.). Consequently, a parent cannot initiate termination proceedings under chapter 232.
Chapter 232 is the exclusive means of termination when a CINA proceeding is in progress. Section 232.109 provides that:
No such termination shall be ordered except under the provisions of this chapter if the court has made an order concerning the child pursuant to the provisions of division III of this chapter [CINA] and the order is in force at the time a petition for termination is filed.
Similar language is found in section 600A.5(2): "If a juvenile court has made an order pertaining to a minor child under chapter 232, division III, and that order is still in force, the termination proceedings shall be conducted pursuant to the provisions of chapter 232, division IV."
In the instant case, the child had been adjudicated a child in need of assistance, and the dispositional order had not expired. Under these facts, the express provisions of sections 232.109 and 600A.5(2) limit termination proceedings to chapter 232. The father chose chapter 600A as a vehicle for termination at a time when a chapter 600A termination was not available. Even if he had chosen chapter 232, he was not a party authorized to file a petition seeking termination under chapter 232. See § 232.111(1). The juvenile court lacked authority to hear the petition and was correct in dismissing it.
II. Redispositional order in CINA proceedings. In this appeal the father challenges the juvenile court's redispositional order in the CINA proceedings. An earlier dispositional order provided, among other things, that the child should undergo counseling. The mother filed an application with the court to modify its dispositional order by requiring the father to pay the expense of the counseling sessions. In resistance, the father moved to dismiss this application, claiming that the dissolution decree granted the mother custody of the child and limited his financial responsibility. This motion was overruled. After a hearing, the juvenile court found the child's need for counseling was caused by the father's sexual abuse. Because the father was at fault, the court ordered him to pay the counseling expenses of the child and noted that a "[f]ailure to do so without good cause will result in contempt proceedings."
Because the court is not included in the list of persons authorized to file a motion seeking modification of a dispositional order in section 232.103(2), the father first asserts that the juvenile court lacked statutory authority to order a redispositional hearing on its own motion. The juvenile court ordered a redispositional hearing on its own motion to consider possible alternative counseling for the father. In a later order, the court stated that it also would consider the mother's application for fees for the child's counseling at the hearing. The father does not challenge the portion of the court's redispositional order concerning counseling for the father; he only challenges the portion ordering him to pay the cost of the child's counseling. Since the mother is a party authorized to move for a modification of the dispositional order, § 232.103(2)(b), this claim has no merit.
In his next assignment of error, the father claims the juvenile court attempted to modify the original decree of dissolution of marriage in which he was ordered to pay $400 per month for child support. He asserts that the proper jurisdiction and venue of this subject matter is vested in the district court rather than the juvenile court.
*475 Although we do not accept the rationale outlined by the father, he is correct.
The legislature has provided express direction concerning the payment of costs of court-ordered examinations and treatment. Section 232.141(2) provides:
Whenever legal custody of a minor is transferred by the court or whenever the minor is placed by the court with someone other than the parents or whenever a minor is given physical or mental examinations or treatment under order of the court and no provision is otherwise made by law for payment for the care, examination, or treatment of the minor, the costs shall be charged upon the funds of the county in which the proceedings are held upon certification of the judge to the board of supervisors. Except where the parent-child relationship is terminated, the court may inquire into the ability of the parents to support the minor and after giving the parents a reasonable opportunity to be heard may order the parents to pay in the manner and to whom the court may direct, such sums as will cover in whole or in part the cost of care, examination, or treatment of the minor. An order entered under this section shall not obligate a parent paying child support under a custody decree, except that any part of such a monthly support payment may be used to satisfy the obligations imposed by an order entered under this section.
(Emphasis added).
Because the father is obligated to pay child support under the decree dissolving his marriage to the mother, the juvenile court may not add an additional burden by assessing the costs of court-ordered counseling. Thus, the order imposing the costs of court-ordered counseling on the father in addition to his child support obligation was in violation of the provisions of section 232.141(2).
III. Disposition of appeals. The appeal from the order dismissing the petition for termination of the father's parental rights is affirmed.
AFFIRMED.
The appeal from that portion of the dispositional order which imposed the costs of the child's counseling on the father is reversed.
REVERSED.
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883 N.E.2d 1159 (2005)
354 Ill. App.3d 1183
PEOPLE
v.
ZUTTEN.
No. 4-03-0598.
Appellate Court of Illinois, Fourth District.
February 16, 2005.
Vac. & rem. with directions.
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64 Md. App. 122 (1985)
494 A.2d 721
BARBARA GREEN
v.
MICHAEL I. GREEN.
No. 1342, September Term, 1984.
Court of Special Appeals of Maryland.
July 8, 1985.
Joel Marc Abramson and Eliot G. Striar, Columbia (Talkin & Abramson, Columbia, on brief), for appellant.
Ann M. Turnbull, Baltimore (Frank, Bernstein, Conaway & Goldman, Baltimore, on brief), for appellee.
Argued before BISHOP, ADKINS and KARWACKI, JJ.
KARWACKI, Judge.
On July 26, 1984, the Circuit Court for Howard County entered a decree of divorce a vinculo matrimonii terminating the 14 year marriage of Barbara Green, the appellant, and Michael Green, the appellee. Custody of the parties' two minor children was awarded to the appellant. The trial court made a determination and valuation of marital property, and then granted the appellant a monetary award of $134,376.95. The court also determined the ownership of certain items of personal property not considered to be marital or family use property. The appellee was ordered to pay to the appellant child support of $400 per week, alimony of $200 per week for a period not to exceed three years, and a $5,000 contribution to her attorney's fees and litigation costs.
The parties were married on November 28, 1970 in Newton, Massachusetts. Each had recently graduated from Boston University. Shortly thereafter they moved to Columbia, Maryland as Mr. Green had earlier accepted an offer of employment with the federal government at the Department of Defense. Both parties also engaged in graduate studies at Johns Hopkins University. Mrs. Green eventually obtained a Master's Degree in computer science. Mr. Green earned a Master's Degree in mathematics.
Mr. Green initially worked for the Defense Department as a mathematician, and later as a computer systems analyst. Mrs. Green worked for some time as a school teacher before she too became employed at the Department of the Defense. The parties' daughter, Jaime Rebecca, was born in October, 1976. After Jaime's birth the appellant continued to work part-time and, as Jaime grew older, worked full-time for a brief period. A son, Jason, was born in May 1979, and after a six month period at home, the appellant returned to work on a part-time basis at the Defense Department. In January of 1979, the appellee left his government job and began work as a salesman for Network Systems, a computer company specializing in high technology computer products.
Throughout the marriage the parties shared the financial, household and child care responsibilities. Until 1979 their standard of living was modest; Mrs. Green testified that at the time her husband left the Defense Department he was earning $26,000 and her income was approximately $22,000. At Network Systems Mr. Green's income increased dramatically; in 1983 he earned $179,900 through salary and commissions. Both parties testified that they continued to live on their combined salaries, and that they invested the appellee's commissions, which comprised approximately 80% of his annual income.
At about the time Mr. Green made his career change, the family situation became less harmonious. The couple suffered several family crises including the death of the appellee's father and the illness of his mother. Their son, Jason, developed spinal meningitis. The appellee's job required that he travel, and this apparently added to the pressures upon the family. In 1981 the parties sought professional counseling in an effort to resolve their personal and marital problems, but their relationship continued to decline.
In September of 1982, the appellee moved out of the marital home and purchased a condominium in College Park where he took up residence. The testimony of the parties indicates that they hoped at the time that the separation would be temporary. At the time of the separation, the parties informally agreed to maintain their finances and investments at the "status quo." The appellee was to deposit money out of his base salary into a household account and the appellant would pay all the household expenses and bills out of this account. The appellee would retain his commissions to meet his expenses. This amicable trial separation came to an abrupt end, however, when in November the appellee withdrew $20,000 from the parties' joint account and deposited those funds in a newly opened account held in his own name. At that time he also limited his support payments for the appellant and their children to $900 per month.[1] On July 26, 1983 he took possession of a home he purchased in Vienna, Virginia, where he thereafter lived with Ms. Diane Sass and her children.
During their marriage the parties accumulated various assets including stocks, mutual funds, public tax shelters, real estate partnership shares, bank accounts, stock options, real estate, and tangible personal property. Some of these assets are held individually by the parties; others are held jointly.
Upon appeal of the trial court's decision, the appellant raises numerous issues for our consideration. She contends that:
I. The court erred in failing to include various items in its list of marital property;
II. The court erred in failing to value the marital property as of the date of the decree of absolute divorce;
III. The court erred in failing to determine the proper valuation of various items of marital property;
IV. The court erred in making certain deductions from the value of the marital property in deciding on the monetary award;
V. The court erred in failing to make an appropriate monetary award to adjust the equities concerning the marital property between the parties;
VI. The court erred in failing to award the appellant a contribution for funds she expended toward maintaining and repairing the marital home and automobile;
VII. The court abused its discretion by failing to order a partition of the personal property owned by both of the parties;
VIII. Md.Code (1974, 1984 Repl.Vol.), §§ 3-6A-03 and 3-6A-04 of the Courts and Judicial Proceedings Article, which prohibit the court from ordering a partition of property titled in the name of only one party, violate the appellant's right to equal protection of the laws guaranteed by the 14th Amendment;
IX. The court erred in failing to award the appellant a chinese vase as her personal property;
X. The court erred in making an unfair and inequitable award of alimony to the appellant for an arbitrarily fixed limited period rather than for an indefinite period;
XI. The court abused its discretion in failing to provide a fair and equitable award of child support to the appellant; and
XII. The court abused its discretion in granting insufficient attorneys' fees and costs to the appellant.
Preliminarily, the appellee has filed a motion to dismiss this appeal. As grounds for his motion he asserts that: 1) in her brief the appellant's statement of the facts grossly distorts the record, in violation of Md.Rule 1031 c. 4.; and 2) the record extract is arranged incoherently, in contravention of Rule 1028 a. Although we acknowledge some validity to the appellee's complaints, we do not consider the appellant's violations sufficiently grave so as to warrant the sanction of dismissing her appeal, and we will deny his motion.
I. The Marital Property
The appellant argues initially that certain assets should have been declared by the trial court to be marital property, pursuant to Md.Code (1984), § 8-201(e) of the Family Law Article.[2] We will address each of those items specifically.
A. Stock Options
Under two separate stock option plans offered by his employer, the appellee, during the marriage, acquired the right to purchase 1,000 shares of Network Systems: 500 shares at $25 per share and 500 shares at $15 per share.[3] As the result of two subsequent stock splits, these options were expanded to the right to purchase a total of 20,000 shares: 10,000 shares at prices ranging from $1.25 to $2.50 per share, and an additional 10,000 shares at prices ranging from $.75 to $1.50.
The options are irrevocable and unassignable. The plans provide that the rights may be exercised over a period of five years in increments of 25% of the total shares on each anniversary date. The plans further provide that the appellee must be an employee of the company at the time he exercises his options. Nevertheless, the options may be exercised by the appellee, even if his employment has been terminated provided such termination occurs not more than 90 days before the date of exercise. The options may also be exercised by the appellee's estate.
As of the date of the close of evidence in the trial below, Mr. Green had exercised his right to purchase 10,000 shares of stock under the January 31, 1979 plan, and 5,000 shares under the August 27, 1980 plan. These shares were treated by the trial court as marital property and valued at approximately $20 per share. As to the options on the remaining 5,000 shares, 2,500 were exercisable at the time of trial, but had not been exercised, and 2,500 were not exercisable until after trial (August 27, 1984). With respect to these unexercised stock options, the trial court made the following determination:
The [appellee] has stock options for 5,000 shares of Network Systems stock which cannot be exercised at this time. The [appellant] contends that these options are marital property and have value. The [appellee] contends that the stocks have not been acquired and thus, something not acquired during the marriage cannot be marital property. He further contends that these options carry no value until exercised and can only be exercised while employed by Network. These options are personal to the employee and cannot be assigned or sold. Further, the option to exercise has not yet arrived. Under these circumstances, the [appellant's] expert witness opined that the options had no fair market value. The Court is of the same opinion.
Mrs. Green argues that these options should have been valued and included as marital property. We agree.
We have yet in Maryland to consider whether stock options acquired during a marriage, but unexercised before the termination of the marriage, are marital property subject to equitable adjustment. The Marital Property Act contemplates a three step process in determining a monetary award. As the Court of Appeals stated in Schweizer v. Schweizer, 301 Md. 626, 629, 484 A.2d 267 (1984), the process requires that:
(1) [T]he court shall determine which property is marital property....
(2) The court shall determine the value of all marital property.
(3) [Upon compliance with (1) and (2)], the court may grant a monetary award as an adjustment of the equities and rights of the parties concerning marital property, whether or not alimony is awarded. The court shall determine the amount and the method of payment of a monetary award....
It is clear that steps 1 and 2 hinge upon the definition of "marital property." Section 8-201(e) provides:
(e) Marital property. (1) "Marital property" means the property, however, titled, acquired by 1 or both parties during the marriage.
(2) "Marital property" does not include property:
(i) acquired before the marriage;
(ii) acquired by inheritance or gift from a third party;
(iii) excluded by valid agreement; or
(iv) directly traceable to any of these sources.
Preliminary to our determination of whether these stock options are marital property, we must ascertain whether they are "property" within the meaning of the Act, and, if so, whether they were "acquired" during the marriage. In Archer v. Archer, 303 Md. 347, 493 A.2d 1074 (1985), the Court of Appeals was presented with the question of whether a medical degree and license to practice medicine obtained by a spouse during marriage constitute marital property within the contemplation of the Marital Property Act. While holding that a professional degree or license does not possess any of the basic characteristics of property as contemplated by the Act, the Court of Appeals reiterated its view that "property" is:
a term of wide and comprehensive signification embracing "`everything which has exchangeable value or goes to make up a man's wealth every interest or estate which the law regards of sufficient value for judicial recognition'"
Deering v. Deering, 292 Md. 115, 125, 437 A.2d 883 (1981); Diffendall v. Diffendall, 239 Md. 32, 36, 209 A.2d 914 (1965). In Bouse v. Hutzler, 180 Md. 682, 686, 26 A.2d 767 (1942), we said that the word "property," when used without express or implied qualifications, "may reasonably be construed to involve obligations, rights and other intangibles as well as physical things." "Goodwill," for example, has been characterized as a legally protected valuable property right. Schill v. Remington Putnam Co., 179 Md. 83, 88-89, 17 A.2d 175 (1941).
Id. at 356, 493 A.2d at 1079. See also Black's Law Dictionary (5th ed. 1979).
The few courts in other jurisdictions that have addressed this question have differed as to whether stock options are "property" subject to equitable allocation. In Richardson v. Richardson, 280 Ark. 498, 659 S.W.2d 510 (1983), the Supreme Court of Arkansas found that stock options obtained during the marriage under a restrictive stock option plan have value and are marital property. The Appellate Court of Illinois, in the case of In re Marriage of Moody, 119 Ill. App.3d 1043, 75 Ill.Dec. 581, 457 N.E.2d. 1023 (1983), held to the contrary that nontransferable options cannot be valued in a situation where "it is possible, if not probable that [the owner] might never be able to exercise the options prior to the expiration dates of the purchase agreements." Id. at 1048, 75 Ill.Dec. at 585, 457 N.E.2d at 1027. Under these circumstances, said the court, the options did not constitute "property." Interestingly, the court on remand was authorized to retain jurisdiction until such time as the options were exercised or expired. If exercised, the court could in its discretion allocate a share of the profit to the nonholder spouse. In Kruger v. Kruger, 73 N.J. 464, 375 A.2d 659 (1977) the Supreme Court of New Jersey, in holding that a federal military pension was property legally and beneficially acquired during marriage and subject to equitable distribution upon divorce, stated that:
The right to receive monies in the future is unquestionably such an economic resource. In most situations its present dollar value can be computed.... No one would quarrel with the proposition that the recipient of a life estate created by a testamentary or inter vivos trust owned a valuable asset which would be subject to equitable distribution. So, too, if one purchased or acquired an insurance annuity which paid a weekly sum certain to the beneficiary for life, the right to collect those funds would also be considered property subject to distribution. There are many different types of employee benefits, which employees or former employees receive, which everyone would readily admit are assets that have been acquired during employment. Deferred compensation, stock options, profit-sharing and pensions are typical examples.
Id. at 468-69, 375 A.2d at 662 (emphasis added.) A year earlier, in the case of Callahan v. Callahan, 142 N.J. Super. 325, 361 A.2d 561 (1976), the Superior Court of New Jersey held that stock options acquired by the husband under a restricted option plan offered by his employer constituted marital property. In so holding, the court viewed such stock option plans as similar in nature to pensions and profit sharing plans, since they all are "form[s] of compensation earned by the spouse during marriage." Id. at 328, 361 A.2d at 562-63.
In Deering v. Deering, 292 Md. 115, 437 A.2d 883 (1981), the Court of Appeals held that a spouse's pension rights, to the extent accumulated during the marriage, constitute "marital property" within the meaning of The Marital Property Act. The Court of Appeals emphasized that its holding applied to all pensions, whether vested or unvested, or whether matured or unmatured. This Court in Ohm v. Ohm, 49 Md. App. 392, 431 A.2d 1371 (1981) had earlier reached the same conclusion. The Court of Appeals in Deering noted: "It is significant that over the past several years, pension benefits have become an increasingly important part of an employee's compensation package which he or she brings to a marriage unit." 292 Md. at 122, 437 A.2d 883. And in Ohm, this Court identified, through citations to numerous cases, those jurisdictions which have held that rights under a private or public pension plan, to the extent such rights were acquired during the marriage, are property subject to division upon dissolution. We noted that these decisions rested upon the rationale "that retirement benefits are a form of deferred compensation or wage substitute and the right to receive such benefits, being contractual in nature, is a chose in action and thus, property." Ohm, 49 Md. App. at 397, 431 A.2d 1371.
As with pension plans, restricted stock option plans like those we consider here are a form of employee compensation, providing to the employee the right to accept within a prescribed time period and under certain conditions the corporate employer's irrevocable offer to sell its stock at the price quoted. If the employer attempts to withdraw that offer, the employee has "a chose in action" in contract against the employer. We therefore conclude that stock option plans, like other benefits in an employee's compensation package, constitute "property" as used in the definition of marital property. Furthermore, because the plans in the case sub judice granted stock options to the appellee while he was married to the appellant, those options were "acquired" during the marriage. See Harper v. Harper, 294 Md. 54, 448 A.2d 916 (1982). The stock options are therefore marital property under the terms of § 8-201(e) and as such are subject to valuation and equitable adjustment in the form of a monetary award, pursuant to §§ 8-204 and 8-205.
The trial court stated in its memorandum opinion that the stock options were valueless because they had no "fair market value." Although it is true that an unassignable, unsalable option has no fair market value, it is nonetheless an economic resource, comparable to pension benefits, to which a value can be attributed. We will comment briefly upon the method by which the trial court may value and adjust the parties' equities in this form of marital property.
The appellate courts of Maryland have recognized the complexity of the task confronting trial courts in properly valuing and allocating certain forms of marital property. Deering, 292 Md. at 129, 437 A.2d 883; Ohm, 49 Md. App. at 405-06, 431 A.2d 1371. An elastic approach to the problem is required so as to accommodate the circumstances presented by each case. Nisos v. Nisos, 60 Md. App. 368, 383, 483 A.2d 97 (1984). As with pensions, the valuation and allocation of stock options necessitates such a flexible approach. In completing steps 2 and 3 of the procedure for allocating this marital property by formulating an equitable monetary award, the court must take into consideration the nature of the appellee's property right in the options. In simple terms, the appellee's property interest can be described as the right to choose whether or not to purchase 5,000 shares of Network Systems stock on certain dates at specified prices. Thus the court may not adopt an approach to the equitable adjustment of that property which would operate to compel the appellee to exercise his options, since to do so would in effect deprive him of the essence of his property interest; i.e., the right to make a choice regarding the exercise of the options.
The trial court may in its discretion, however, adopt an "if, as and when" approach to the valuation and equitable allocation of the unexercised options, including the 2,500 matured options as well as the 2,500 unmatured options. This approach has proven to be a workable method for the allocation of unmatured pensions, see Deering, supra, and, we believe, is equally effective in the allocation of stock options. We explain. Under the second of the three step process for the determination of a monetary award in adjustment of this marital property, the court must attach a value to options as of the date of the decree, see Nisos, 60 Md. App. at 381-85, 483 A.2d 97. That value may be determined by taking into consideration the market value of shares of Network stock as of the time of that decree, and the cost to the appellee of exercising the options. The court may, then, pursuant to the third step of the process, determine a percentage by which the profits should be divided if, as and when the options are exercised. Under such an approach to the equitable allocation of this marital property, the appellee is under no compulsion to exercise his options. At the same time, however, the appellant's equitable interest in the options, if exercised, is protected. We believe this approach fairly implements the process of adjusting the equities between the parties with respect to marital property as mandated by the Act.
For these reasons, we hold that the trial court was clearly erroneous in its conclusion that the stock options were valueless and in failing to include them in its determination of the marital property. We will thus remand this case in order that the court may make appropriate findings of fact with respect to the valuation of those assets, and make such adjustment to the monetary award as it deems equitable.
B. The Partnership Loan
The appellant challenges the trial court's determination that a loan in the amount of $32,073.00, made by the appellee to PBM Investments, a partnership in which the appellee was a partner has "little or no value." She argues that this factual finding was mere speculation on the part of the trial court and unsupported by the facts. We disagree.
The managing partner of PBM Investments, called as a witness by the appellant, testified that the partnership is insolvent and that in his opinion it was "very questionable whether this money could ever be repaid." Since there was evidence to support the court's finding of fact that the loan was valueless, we cannot say that this factual determination is clearly erroneous. Md.Rule 1086.
C. Furniture and Appliances
The appellant alleges as "an oversight" the omission from the list of marital assets items of furniture and appliances purchased by the appellee for his home in Vienna, Virginia. Mrs. Green refers us to no evidence presented below as to the identity and value of those items. It is the obligation of the party asserting a marital property interest in specific property to produce evidence as to the identity and value of that property. See Sharp v. Sharp, 58 Md. App. 386, 398, 473 A.2d 499 (1984). The appellant failed to present the court with evidence of the identity and value of various items. The trial court was therefore correct in omitting the items of furniture and appliances, if any, from its determination of the marital property.
D. Funds Removed From the Joint Account
As recited above, in November, 1982, Mr. Green withdrew $20,000 from the parties' joint account and placed those funds in an individual account. This was done without Mrs. Green's knowledge. The appellee testified that he used those funds to pay alimony and child support. The trial court found as a fact that the appellee did not squander the funds. The record discloses evidence in support of this finding, with no evidence proffered by the appellant to the contrary. Because the $20,000 was no longer owned by the parties at the time of the trial, nor had it been "intentionally dissipated in order to avoid inclusion of that property towards consideration of a monetary award...." Sharp, 58 Md. App. at 399, 473 A.2d 499, the court did not err in refusing to designate that cash as marital property. Md.Rule 1086.
II. The Date of the Marital Property Valuation
Mrs. Green next contends that the trial court erred in valuing the marital assets as of the close of testimony on March 16, 1984, rather than on July 26, 1984, the date of the divorce decree. She cites in support of her contention Maryland Rule S74(c), as well as this Court's recent decision in Dobbyn v. Dobbyn, 57 Md. App. 662, 471 A.2d 1068 (1984).
Rule S74(c) provides:
In an action for divorce, annulment, or alimony in which the testimony has been concluded for more than 90 days without entry of a final decree, a final decree may not be entered until supported by additional testimony justifying the conclusion that there has been no substantial change since the prior testimony was concluded.
Mrs. Green argues that this rule precludes the trial judge from issuing a decree which has incorporated within it a monetary award based upon "stale" testimony. Her reliance upon rule S74(c) is misplaced. The rule is designed to prevent the granting of a divorce on grounds established by stale testimony. There is nothing in the rule's language that warrants its interpretation as governing valuation of marital property. We decline to impose such an interpretation upon it.
In Dobbyn we said that marital property is to be valued as of the date of the decree of absolute divorce based upon the evidence produced at trial. We also said that in the absence of an agreement the trial court, if additional time is needed for determining the value of the marital property, may reserve in the decree an additional 90 days under § 8-203(a)(2). The appellant interprets Dobbyn to require that there be no delay whatsoever between the presentation of testimony and the judgment of divorce which embodies the marital award. Such a reading of our holding in Dobbyn is highly impractical. Most applications of the Marital Property Act to the evidence presented at trial preclude an immediate decision by the court at the close of the evidence. We will not, nor should we, encourage hasty decision making in such cases. On the other hand, unreasonable delays between the close of the evidence and the rendering of the judgment may in some cases cause distortion in the valuation of certain highly volatile marital property, resulting in prejudice to one of the parties. Although we need not decide here whether the four month delay caused prejudice to the appellant since this case will be remanded for a redetermination of the monetary award, we point out that equity requires that reasonable efforts be made to ensure that valuations of marital property approximate the date of a judgment of divorce which includes a monetary award.
III. Valuation of the Marital Property
In addition to the issue just discussed, Mrs. Green has raised a myriad of objections to the factual findings made by the trial court in valuing certain of the marital property. We will comment briefly upon each of these objections.
A. The Partnerships
In valuing the appellee's interest in two real estate investment partnerships, PBM Investments and BERG Properties, the trial court relied upon evidence presented by the appellant's witness, Peter Eckstrand, the managing partner of the partnerships. He testified from the records of these enterprises that PBM was insolvent, i.e., its liabilities exceeded its assets by $135,267, and that BERG had a net worth of $52,226. The appellee held a 35% interest in PBM and a 22% interest in BERG. This being the only evidence as to the value of this marital property, the court placed a value of $11,490 on the interest in BERG. Instead of valuing the appellee's interest in the insolvent enterprise, PBM, at zero, however, the court placed a negative value of $15,271 on it. This resulted in reducing the aggregate value of the marital property titled in the appellee's name by that amount. This calculation was erroneous. In the second of the three step process employed in arriving at the monetary award, i.e., the valuation of marital property, the court must value separately each item of marital property. There is no authority for the deduction of the loss incurred by a spouse in a bad investment from the value of the other marital property titled in his name. On remand the appellee's partnership interest in PBM should be valued at zero.
Finally, although the witness mentioned that the properties purchased by the partnerships were expected to appreciate eventually, and that in the interim the investors were able to take short term tax write-offs, this evidence is speculative and properly was not considered by the court in valuing the properties as of the time of the divorce. There is nothing in the record to indicate to us that the trial court was clearly erroneous in relying upon Mr. Eckstrand's assessment of the value of the partnerships. Md.Rule 1086.
B. The House in Vienna, Virginia
On July 26, 1983 Mr. Green settled on his purchase of the Vienna, Virginia home for $257,500. He obtained a purchase money mortgage loan in the amount of $150,000 and paid $113,434 in cash at the settlement on his purchase. Closing costs in the amount of $5,934 accounted for the difference between the purchase price and the amount charged Mr. Green at settlement. The only evidence as to the value of this marital property at the time of trial was the settlement sheet prepared at the closing. In valuing this marital property the court disregarded the amount Mr. Green paid in closing costs and fixed the value at $107,500, the difference between the purchase price and the purchase money mortgage lien placed on this property on July 26, 1983.
Mrs. Green claims that the valuation should include the amount paid by Mr. Green for closing costs at the settlement. Those costs in the amount of $5,934 included the typical expenses incurred in the transfer of residential real estate: a loan origination fee and loan application fee to the mortgagee, expenses related to the title transfer including a premium for title insurance, charges by the state and local governments for recording the conveyances and taxes in the transfer, a survey fee, a charge for termite inspection, an escrow deposit with the mortgagee for anticipated real estate taxes, interest on the mortgage loan for the period from the date of settlement until the first regular mortgage payment was due, and an adjustment to the seller for prepaid fuel costs. The court apparently concluded that none of those expenses increased the value of the property which had been purchased for $257,500. Although it is possible that the value of Mr. Green's equity in the asset increased between July 26, 1983 and the time of trial, there was no evidence presented to the trial court of any such appreciation. Sharp, 58 Md. App. at 398, 473 A.2d 499. Consequently, the court was not clearly erroneous in valuing Mr. Green's equity in the Vienna home based upon the only evidence submitted to it. Md.Rule 1086.
Mrs. Green also contends that the trial court erred in failing to augment the value of this marital property to the tune of approximately $1,000 paid by Mr. Green for landscaping when he took possession of the home after July 26, 1983. There was no evidence that this expenditure increased the value of the property as of the time of its valuation at trial, nor are we furnished any description of the "landscaping" which was undertaken. The court did not err in omitting this expense item when valuing this marital property. Md.Rule 1086.
C. The College Park Condominium
The appellee purchased this property for $55,550 when he left the marital home. As was the case with the Vienna home just discussed, the only evidence of the value of this item of marital property at the time of trial was the settlement sheet prepared at the closing of this transaction on September 9, 1982. It showed that after making a purchase money mortgage loan the appellee paid $13,005 in cash to complete the transaction ($2,005 of which represented typical closing costs). In valuing Mr. Green's equity in this real estate as marital property, the court relying on the only evidence presented to it fixed that value at the amount of the cash contribution made by him toward the purchase price, $11,000. For the reasons just stated, this was not clearly erroneous. Md.Rule 1086.
D. The BMW Automobile
The appellant argues that in valuing the BMW purchased by the appellee shortly after May 12, 1983 the court failed to consider undisputed evidence that in addition to a $5,600 cash payment, the appellee received a $1,200 trade-in on a 1976 Chevrolet, which added to his equity in the BMW. This was the only evidence of the value of the BMW automobile at the time of trial. Consequently, this marital property should be valued at $6,800 when the court on remand reviews the monetary award.
E. Life Insurance
Mrs. Green also challenges the value attributed to Mr. Green's life insurance. The court received contradictory evidence from the parties as to that value. The court valued the policy at $2,025, as opposed to $11,000, as suggested by Mrs. Green. It is clear to us upon review of the trial court's memorandum opinion that the court weighed the evidence presented in ascertaining the appropriate value, and we do not find that determination to be clearly erroneous. Md.Rule 1086.
IV. Deductions from the Value of Marital Property
In valuing the marital property for the purpose of deciding upon a monetary award, the court deducted the following amounts from the total value it placed on the marital property:
a) Balance due on debt incurred by Mr. Green to lend $32,073
to the partnership, PBM Investments.[4] $7,500
b) Federal and State income taxes due for the year 1983
attributable to Mr. Green's capital gain on the sale of
Network Systems stock, the proceeds of which sale were
used in acquiring the Vienna, Virginia home. $23,000
c) Additional Federal and State taxes due by Mr. Green on his
1983 income. 8,600
_______
TOTAL $39,100
Mrs. Green complains that such deductions from the value of the marital property were unwarranted. We agree.
In Schweizer v. Schweizer, supra, the Court of Appeals, in a case of first impression under the Marital Property Act, determined the proper method of treating the debts of the parties to divorce litigation with respect to formulating a monetary award. Chief Judge Murphy for the Court, after discussing the three steps process by which a monetary award is reached, reasoned:
In determining the amount and method of payment of an award, the court is obliged to consider each of ten specified factors. The third factor is "the economic circumstances of each party at the time the award is to be made" and the tenth is "any other factor that the court considers necessary or appropriate to consider in order to arrive at a fair and equitable monetary award." § 8-205(a)(1) through (10).
301 Md. at 630, 484 A.2d 267.
What constitutes "marital property" under § 8-201(e) is clearly "not dependent upon the legalistic concept of title." Harper, supra, 294 Md. at 78, 448 A.2d 916. Nor does a determination of what constitutes marital property depend upon the factors enumerated in § 8-205(a). Those factors come into play only with respect to the amount of the award and the method of its payment. What property is marital property and the value of that property must be determined before that step in the scheme is reached. Harper, supra, 294 Md. at 79-80, 448 A.2d 916.
301 Md. at 630-31, 484 A.2d 267.
Harper teaches that a "marital debt" is a debt which is directly traceable to the acquisition of marital property. Conversely, a "nonmarital debt" is a debt which is not directly traceable to the acquisition of marital property. That part of marital property which is represented by an outstanding marital debt has not been "acquired" for the purpose of an equitable distribution by way of a monetary award. Therefore, the value of that marital property is adjusted downward by the amount of the marital debt. That is to say, a marital debt is considered under the second step of the process followed in reaching a monetary award, namely the valuation of marital property.
A nonmarital debt may not serve to reduce the value of marital property. It has no function in the second step of the process. But it may be taken into consideration in the third step of the process the determination of the amount and method of payment of the award. The amount outstanding on a nonmarital debt of a party clearly reflects on that party's economic circumstances at the time the award is to be made. § 8-205(a)(3).
301 Md. at 636-37, 484 A.2d 267.
Under this rationale we conclude that the debt incurred by Mr. Green in order to raise money to lend to the partnership, PBM Investments, is directly traceable to the acquisition of the $32,073 note payable to Mr. Green by PBM Investments which the court found to be marital property. Therefore, it would have been proper to adjust downward the value of that marital property, that is, the note payable to Mr. Green, by the amount of that marital debt. But since that marital property was found by the court to be valueless, a finding which we have affirmed, it was improper to deduct that marital debt from other marital property in the second step of the process followed to reach the monetary award. The court on remand may consider this debt in the third step of the process the determination of the amount and method of payment of the monetary award. Schweizer, 301 Md. at 636, 484 A.2d 267.
We next apply Schweizer to the income tax due by Mr. Green on the capital gain he realized in converting a portion of his Network Systems stock into equity in his Vienna, Virginia home. Was that debt directly traceable to the acquisition of the Vienna home and therefore to be treated as a marital debt? We do not think so. While the tax consequences of capital transactions involving marital property are incidental to the acquisition of the marital property being valued under the second step of the process of formulating a monetary award, it cannot be said that a debt thus incurred is directly traceable to the acquisition of that property. Mr. Green's tax liability certainly did not constitute a contribution to the purchase price of the Vienna home. Similarly, in Gravenstine v. Gravenstine, 58 Md. App. 158, 171, 472 A.2d 1001 (1984), we held that real property taxes paid on nonmarital property owned by the husband from the joint funds of the parties did not constitute a contribution by the wife to the acquisition of that nonmarital property. Judge Alpert, for this court, explained:
Appellant posits that the property was fully "acquired prior to marriage" and thus nonmarital property. Section 3-6A-01(e) [of the Courts and Judicial Proceedings Article. (now § 8-201(e) of the Family Law Article)]. He further asserts that "in no sense was the property ... `purchased and paid for' either in whole or in part during the marriage." Appellee replies that the New Jersey land was "part marital property" since she contributed to the payment of taxes.
Resolution of this issue requires scrutiny of the word "acquired" as used in Section 3-6A-01(e). As previously explained the Court of Appeals has defined the term as "the on-going process of making payment for property." Harper, supra [294 Md.] at 80, 448 A.2d 916. We hold under the facts of this case that the payment of taxes is not a part of the ongoing process of paying for property fully purchased prior to the marriage. Property tax is the "charge on the owner of a property by reason of his ownership alone without regard to any use that might be made of it." Weaver v. Prince George's Co., 281 Md. 349, 357, 379 A.2d 399 (1977) (emphasis added) (and cases cited therein). "A tax on the mere right to own or have property is a property tax." Id. (emphasis added). Simply stated, payment of property tax does not involve the acquisition of land. We do not believe that the legislature intended that the joint payment of a tax incident to ownership of property would change the characterization of nonmarital to marital property.
Therefore, consideration of this nonmarital debt should be deferred by the court on remand to the third step of the monetary award process.
Finally, the debt of Mr. Green for additional Federal and State tax due on his 1983 income clearly is not directly traceable to his acquisition of marital property and should have played no part in the valuation of marital property in the second step of the process. Again, this nonmarital debt may be considered by the court on remand in formulating the amount and method of payment of the monetary award.
V. The Monetary Award
The appellant challenges two aspects of the court's formulation of the monetary award. She argues first that the court was clearly erroneous in concluding that the parties were entitled to share equally in the marital property. She claims that the parties' relative economic situations and the circumstances of their estrangement dictate a 60-40 split in her favor, rather than a 50-50 split. We disagree. The evidence produced at trial regarding the factors required to be considered in determining a marital award set forth in § 8-205(a)(1)-(10) supports the court's determination that an equal distribution of the marital assets was an appropriate "adjustment of the equities and rights of the parties." Section 8-205(a). We thus affirm that aspect of the monetary award. Rule 1086.
The appellant argues next that the court was not justified in reducing the value of the marital property by 25 percent (approximately $100,000) prior to making the award. The court explained this deduction thus:
The Court, in reaching an equitable property disposition and having considered all of those criteria as set forth in the Marital Property Act, is of the opinion that in order to treat the parties equitably, that the value of the property acquired shall be distributed equally. However, the Court is aware that in order to effect a transfer to satisfy the monetary award rendered hereto, that it will be necessary for the [appellee] to create expenses that are beyond his control (capital gains taxes, stockbroker's fees, real estate broker's costs, attorney's fees, etc.). These liquidation expenses must be deducted from the $396,023.87 figure reached earlier. Under the Marital Property Act the property involved belongs to both parties and such expenses should also be borne equally by the parties. The Court shall therefore reduce this figure by 25% as capital gains and broker's commissions are usually quite high.
The appellant urges that the court lacked any factual basis for such an across the board deduction. We agree. We find no evidence presented by either party to demonstrate that the costs of liquidation would have approached $100,000. Indeed, any of several methods may be employed by the appellee to liquidate assets for the purpose of satisfying the monetary award, some less costly than others. On remand the court may under § 8-205(a)(3) and (10) weigh evidence of liquidation expenses to be incurred by the appellee in satisfying the monetary award when formulating the award and determining the method of its payment.
VI. The Costs of Repairing and Maintaining Marital Property
Mrs. Green contends that she is entitled to a credit for expenditures made by her in the months following the separation of the parties for the purpose of repairing and maintaining the marital home and car.
After the parties separated on September 7, 1982, Mrs. Green and the minor children continued to occupy the marital home in Columbia. Likewise, she used the 1979 Datsun automobile jointly owned by the parties. At the beginning of the separation period, the parties continued to pool their resources and to pay all household expenses from their joint accounts, including the mortgage payments on the Columbia home and the repairs and maintenance costs for the marital home and 1979 Datsun. However, in November of 1982, the financial situation changed dramatically when Mr. Green withdrew $20,000 from the parties' joint account and restricted his contribution to the support of Mrs. Green and their children to $900 per month.
Mrs. Green filed suit for divorce and other relief on March 2, 1983, and on May 12, 1983, the court ordered Mr. Green to pay $1,400 per month to Mrs. Green in alimony pendente lite and $1,990 per month as pendente lite support for the parties' two children who were in the custody of Mrs. Green. By the same order Mrs. Green was granted sole use and possession of the marital home and the 1979 Datsun automobile.
During the entire period from September 7, 1982 until the court rendered its July 26, 1984 judgment, Mrs. Green had paid the monthly mortgage payments of $625 on the Columbia home and had incurred expenses for the maintenance and repairs of that home and of the 1979 Datsun. She now claims that the court failed to order Mr. Green to reimburse her for his share of these expenses as a co-tenant of the Columbia home and the Datsun automobile. She relies on the duty of contribution that generally applies between co-tenants of property where one co-tenant pays the mortgage and other carrying charges on jointly owned property. Crawford v. Crawford, 293 Md. 307, 443 A.2d 599 (1982). That general rule, however, can be modified by agreement of the parties or where the court in a domestic dispute has made provision for the payment of such expenses of maintaining jointly owned property.
It would seem that for the period covered by the pendente lite order of May 12, 1983, the court contemplated that these payments by Mrs. Green were being contributed to by Mr. Green when he responded to his duty to pay monthly alimony and child support pending a final judgment. The record is silent, however, on the arrangements between Mr. and Mrs. Green between November 1982 and May 12, 1983. Since the court's memorandum opinion accompanying its final judgment makes no mention of this claim by Mrs. Green we direct that the court resolve this dispute on remand.
VII. The Failure to Partition the Marital Assets
The appellant next complains that the court abused its discretion by not acting upon her request for partition of certain jointly held marital assets, namely the Datsun automobile and the jointly held stocks. She argues that because of the court's nonaction, she is effectively precluded from making choices regarding her investments, and she is denied the benefits which flow from the individual ownership of those assets. As she concedes, § 8-202 allows the trial court the discretion to partition jointly owned assets. Because we do not find an abuse of this discretion, we uphold the court's decision not to act upon her request.
VIII. The Constitutionality of Md.Code (1974, 1984 Repl.Vol.), §§ 3-6A-03 and 3-6A-04 of the Courts and Judicial Proceedings Article
Mrs. Green asserts that former §§ 3-6A-03 and 3-6A-04,[5] which gave the court authority to partition jointly titled, but not individually titled property, violate the equal protection clause of the Fourteenth Amendment. As evidenced by subsection (b) of each of these sections, the court is expressly prohibited from transferring the ownership of personal or real property from one party to another. The appellate courts of Maryland have reiterated and enforced this prohibition. Deering, supra; Harper, supra; Ward v. Ward, 48 Md. App. 307, 426 A.2d 443 (1981).
Mrs. Green is apparently under the misimpression that because the trial court may determine that certain individually titled property is marital property subject to a monetary award as an adjustment of the equities and rights of the parties in that property, the court should be empowered to effect a change in title to that property. Classification of property as "marital" for the purpose of equitable adjustment has absolutely no effect upon title to that property. We perceive no merit in Mrs. Green's constitutional attack on this legislative design.
IX. Ownership of the Chinese Vase
The appellant also asserts that the court was clearly erroneous in finding that a chinese vase is the personal property of the appellee rather than marital property. After hearing conflicting evidence, the trial judge decided that the vase was a gift to the appellee from his aunt and was therefore excluded from the definition of marital property. § 8-201(e)(2)(ii). As we detect nothing in the record to indicate that his finding is clearly erroneous, we will not disturb that factual determination. Md.Rule 1086.
X. Alimony
Mrs. Green also complains about the trial court's alimony award of $200 per week for a period not to exceed three years. She contends that the circumstances are such as to entitle her to an award of alimony for an indefinite period. § 11-106. Since this case is being remanded for further hearing on issues which will result in an increase in the monetary award, thus requiring a reconsideration of the alimony award, see § 11-106(b)(11)(ii), we will not address the amount of the present alimony award. We have, however, reviewed the evidence bearing upon the court's decision to deny indefinite alimony and affirm its factual determination under § 11-106(c). Md.Rule 1086. The trial judge explained his decision thus:
The [appellant] argues for permanent alimony ..., maintaining that the respective standards of living of the parties will be unconscionably disparate. This Court does not agree. When Mrs. Green returns to full time work she will be earning around $30,000 per year. The Court believes that an additional $13,400 must be added to this amount, said figure representing the investment income producing value of the wife's monetary award, based upon a minimal ten per cent (10%) straight interest rate. Thus, the Court believes that the wife is capable of producing a minimum income of $43,400 per year. For the above reasons, this Court will award alimony in the amount of $200 per week for a period not to exceed three years.
XI. Child Support
The appellant challenges the award of $400 per week in child support, a reduction of $270.00 per month from the pendente lite award of $1,990 per month. Without enumerating specifics, we conclude that from the evidence presented by the parties regarding their relative financial positions and the needs of the children, the court's award of $400 per week is well within the range of his discretion. We will therefore not disturb that award. Md. Rule 1086.
XII. Attorney's Fees
Finally, Mrs. Green claims that in view of her request for a $30,000 contribution to her attorney's fees and costs, the court's award of $5,000 constituted an abuse of discretion. While it is true that during this divorce litigation the parties incurred great expense in attorney's fees and other costs, it is evident that the court in concluding that the parties were entitled to share equally in their marital property reasoned that the parties were likewise equally capable of assuming the bulk of the expense of this proceeding to terminate their marriage and to resolve the financial consequences thereof. We perceive no abuse of the court's discretion under § 11-110 and § 12-101 in fixing this amount.
JUDGMENT AFFIRMED IN PART AND REVERSED IN PART. CASE REMANDED FOR FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION. COSTS TO BE BORNE EQUALLY BY THE APPELLANT AND THE APPELLEE.
NOTES
[1] In May 1983 pursuant to a pendente lite order sought by the appellant, the trial court increased this amount to $1,900 per month in child support and $1,400 per month in alimony.
[2] At the time of the issuance of the parties' divorce decree, provisions of the Property Disposition in Annulment and Divorce Law (hereafter the "Marital Property Act" or the "Act"), were contained within § 3-6A-01 through § 3-6A-08 of the Courts and Judicial Proceedings Article. Those provisions have since been recodified as § 8-201 et seq. of the Family Law Article, effective October 1, 1984. We shall cite to the Family Law sections to avoid confusion with respect to statutory references. All section citations are to sections of the Family Law Article unless otherwise specified.
[3] The plans were offered on January 31, 1979 and August 27, 1980.
[4] See our discussion in section I.B. of this opinion, supra.
[5] These sections have been repealed and replaced by § 8-202 of the Family Law Article containing modified language. See Revisor's Note to § 8-202.
| {
"pile_set_name": "FreeLaw"
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297 F.3d 14
NATIONAL TOWER, LLC; Omnipoint Communications, Inc., Plaintiffs, Appellees,v.PLAINVILLE ZONING BOARD OF APPEALS, Frank A. Frey Jr., Walter S. Lewicki, Clay Conrad, Philip Sias, Leland Sullivan, Defendants, Appellants.
No. 01-2472.
United States Court of Appeals, First Circuit.
Heard June 12, 2002.
Decided July 18, 2002.
COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED John P. Lee with whom Maureen A. Lee was on brief for appellants.
Brian C. Levey with whom Marisa L. Pizzi and Bowditch & Dewey, LLP were on brief for appellees.
Before SELYA, LYNCH, and HOWARD, Circuit Judges.
LYNCH, Circuit Judge.
1
The federal courts now routinely hear cases brought under the Telecommunications Act of 1996 by those who wish to construct cellular antenna towers and have been denied permission to do so by local town officials. Here, the Zoning Board of Appeals of the Town of Plainville, Massachusetts denied the needed zoning permits and variances to National Tower and Omnipoint Communications (collectively "Omnipoint").
2
Omnipoint sued under 47 U.S.C. § 332(c)(7)(B)(v), which provides a federal cause of action to a person adversely affected by a state or local decision that violates the 1996 Act. It also raised claims under state law and under 42 U.S.C. § 1983. The district court found that defendants had violated the Act, and granted Omnipoint partial1 summary judgment. Nat'l Tower, LLC v. Frey, 164 F.Supp.2d 185 (D.Mass.2001). The court concluded that the actions of the board effectively prohibited the provision of seamless wireless service in Plainville in violation of 47 U.S.C. § 332(c)(7)(B)(i)(II). As a remedy, the court ordered issuance of the variances and permit. We affirm.
I.
3
Because the district court granted summary judgment, we review the facts taking all inferences in the light most favorable to the board. Zapata-Matos v. Reckitt & Colman, Inc., 277 F.3d 40, 42 (1st Cir. 2002). The material facts as set forth in the district court's opinion are essentially undisputed, and so we adopt them and add some others from the record. The parties do, however, dispute the inferences to be drawn from those facts.
4
In June 2000, Omnipoint applied to the board for variances from the dimensional by-laws (prohibiting both multiple uses on one lot and structures over two stories) and from the by-law prohibiting radio transmission use. Omnipoint needed these variances in order to erect a 170-foot-tall "lattice" transmission tower on approximately 5000 square feet of a two-and-one-half-acre parcel at 75 Washington Street in Plainville. The site abuts property owned by the New England Power Company, which contains electric transmission lines and poles and is developed for public utility use.
5
Omnipoint's objective was to close a two-mile (non-contiguous) gap in its cellular coverage along the heavily traveled highway Routes 1 and 106. In the vicinity of the coverage gap, approximately 17,000 vehicles travel daily along Route 1 and 10,000 along Route 106. Because of the gap in coverage, a cellular user either cannot connect or cannot maintain a connection. The proposed site lies in a General Commercial District (a "CB District"), and is partially covered by a Watershed Protection Overlay District. Under the town by-law, a radio tower is a prohibited use in a CB District and requires a special permit in a Watershed Protection District. Plainville, Mass. Zoning By-law ch. III, § 2.8 (1999). Moreover, a structure in a CB District may not exceed two stories in height. An engineer working for Omnipoint testified, and the board does not dispute, that a two-story tower in compliance with the by-law would not close the gap. The board may, however, grant both use and dimensional variances for reasons consistent with the state zoning law. See Mass. Gen. Laws ch. 40A, §§ 10, 14 (2000). Similarly, the board may grant a special use permit in a Watershed Protection District so long as it makes certain findings, primarily that there will be no adverse impact on the watershed as a result. By-law ch. III, § 3.12.5.
6
Omnipoint conducted computer simulations and drive tests to identify possible sites for a tower to rectify the break in its coverage. An investigation of the sites thus identified led to the selection of the disputed site. All other possible sites were in the same general area and therefore subject to the same zoning restrictions.2 This evidence was submitted to the board, primarily through Omnipoint's application for the use and dimensional variances. In its initial application Omnipoint characterized its tower as a wireless communications facility. It sought the needed permits and variances, which the by-law permitted the town to grant. See By-law ch. III, § 1.4.3.
7
The board published the requisite notice in a local newspaper, characterizing the application as being for a "radio tower." It held a hearing to consider the application on July 18. Midway through the hearing, the board determined that it had been mistaken in publishing notice of a proposed siting of a "radio tower" on the site. The board voted to suspend the hearing and readvertise the tower as a "public utility" (a permitted use in a CB District). The hearing resumed on September 26, with Omnipoint pressing its case for a dimensional variance. Omnipoint presented evidence of the coverage gap and evidence that it said showed there were no other suitable sites. The board at the hearing articulated no objections to the application, although several owners of abutting property did object.
8
Meanwhile, on August 24, 2000, Omnipoint filed an application for a special watershed permit. The hearing on this application was held on October 3, 2000. As at the hearing on the application for the dimensional variance, the board gave no indication that it might not grant the permit.
9
On October 17, the board unanimously rejected both applications. The board sent Omnipoint two letters dated October 27 explaining its decision. As to the request for the variances, the first letter stated: In denying the variances, the Board found that in a CB Zoning District a wireless communications facility is not a use permitted as a matter of right or a use permitted by special permit and that a use variance, which would be required for the construction of such is not permitted under the Zoning By-Law. In this respect, the Board notes that Chapter 40A, Section 10 of the General Laws, provides in relevant part as follows:
10
"Except where local ordinances or by-laws shall expressly permit variances for use, no variance may authorize a use or activity not otherwise permitted in the district in which the land or structure is located."
11
The Zoning By-Law makes no provision for use variances. As the basis for its denial of the variances is that it has no legal authority to grant them, the Board made no further findings with respect to other objections made to the construction of such facility, particularly as to whether there exists any other location in the Town where such construction is permitted under the Zoning By-Law.
12
The reasons given in the second letter for the rejection of the watershed permit were as terse:
13
On this date, the Board denied the variances requested by the applicant on the grounds that in the underlying CB Zoning District a wireless communications facility is not a use permitted as a matter of right or a use permitted by special permit and that a use variance, which would be required for the construction of such facility, is not permitted under the Zoning By-Law. The construction of a wireless communications facility is clearly not permitted in the underlying CB Zoning District. Accordingly, it is not permitted by special permit in the overlay Watershed Protection District as the proposed use must meet the zoning requirements of both the underlying district and the overlay district.
14
This lawsuit, and appeal, followed.
II.
15
The board appeals the order against it, making three arguments. It says the district court erred in granting Omnipoint's motion for partial summary judgment on the facts in this case because, first, the board's decisions do not prohibit or have the effect of prohibiting the provision of wireless services in the town; second, the board's decisions are supported by substantial evidence in a written record; and, third, the board's decisions do not unreasonably discriminate among providers of functionally equivalent services.
16
We reach only the first two of these arguments.
A. General Standards
17
The Telecommunications Act is an exercise in cooperative federalism and represents a dramatic shift in the nature of telecommunications regulation. See generally Cablevision of Boston v. Pub. Improvement Comm'n, 184 F.3d 88, 97-100 (1st Cir.1999). The Act attempts, subject to five limitations, to preserve state and local authority over the placement and construction of facilities. 47 U.S.C. § 332(c)(7)(A)-(B) (1994 & Supp. II 1996); Town of Amherst, N.H. v. Omnipoint Communications Enters., 173 F.3d 9, 12 (1st Cir.1999). Several of those limiting provisions apply to this case.
18
The first relevant limitation, set forth in subsection (B)(i), provides that in regulating the placement and construction of facilities, a state or local government or instrumentality "shall not prohibit or have the effect of prohibiting the provision of personal wireless services." 47 U.S.C. § 332(c)(7)(B)(i)(II). It is undisputed that in this case there is a significant coverage gap. The argument that no tower is needed is unavailable to the town. Several courts have held that local zoning decisions and ordinances that prevent the closing of significant gaps in the availability of wireless services violate the statute. See Cellular Tel. Co. v. Zoning Bd. of Adjustment, 197 F.3d 64, 68-70 (3d Cir.1999); Sprint Spectrum L.P. v. Willoth, 176 F.3d 630, 643 (2d Cir.1999); Omnipoint Communications MB Operations, LLC v. Town of Lincoln, 107 F.Supp.2d 108, 117 (D.Mass.2000). Finding their reasoning persuasive, we now join their number and will analyze Omnipoint's claim with that standard in mind.
19
The second limitation requires the local government to "act on any request for authorization to place, construct, or modify personal wireless service facilities within a reasonable period of time after the request is duly filed ... taking into account the nature and scope of such request." 47 U.S.C. § 332(c)(7)(B)(ii). Similarly, a reviewing court must hear and decide the action "on an expedited basis." Id. § 332(c)(7)(B)(v). The third states that the denial of a request must be in writing and supported by substantial evidence contained in a written record. Id. § 332(c)(7)(B)(iii). The fourth authorizes judicial review of either final action or a failure to act by the local government that is inconsistent with statutory requirements and limitations. Id. § 332(c)(7)(B)(v).3
20
There is tension between two objectives of the Act: the objective "to facilitate nationally the growth of wireless telephone service," and the objective "to maintain substantial local control over siting of towers"; this and other courts have attempted to achieve the proper balance. Amherst, 173 F.3d at 13. The principles announced in our opinions provide guidance as to that balance. The first limitation — that a town may not through its decisions have "the effect of prohibiting" wireless service — raises the question whether the statute refers only to a blanket ban or whether it may, depending on the facts, encompass individual application decisions. This court has resolved that question and read the statute to encompass individual decisions:
21
[o]bviously, an individual denial is not automatically a forbidden prohibition violating the "effects" provision. But neither can we rule out the possibility that — based on language or circumstances — some individual decisions could be shown to reflect, or represent, an effective prohibition on personal wireless service.
22
Id. at 14. The effective prohibition clause can be violated even if substantial evidence exists to support the denial of an individual permit under the terms of the town's ordinances. The burden is on the proponent of the tower to show "that further reasonable efforts are so likely to be fruitless that it is a waste of time even to try." Id.
23
Similarly, this court has resolved the tension between the recognition that local authorities are frequently lay member boards without many resources and the recognition that the Act provides for judicial review based on a written decision, supported by "substantial evidence" in a "written record." The balance struck is that we do not require formal findings of fact or conclusions of law in a board's written decision. Nor need a board's written decision state every fact in the record that supports its decision. S.W. Bell Mobile Sys. v. Todd, 244 F.3d 51, 59-60 (1st Cir.2001). By the same token, the board, in its decision, may not hide the ball. Its written denial must contain a sufficient explanation of the reasons for the denial "to allow a reviewing court to evaluate the evidence in the record supporting those reasons." Id. at 60.
24
We now make explicit another aspect of judicial review of local decisions. A board may not provide the applicant with one reason for a denial and then, in court, seek to uphold its decision on different grounds. That result follows not only from the requirement that the decision provide an adequate explanation to support judicial review, but also from the background understanding of the model of judicial review of administrative actions against which the Act was enacted. See H.R. Conf. Rep. No. 104-458, at 208 (1996), reprinted in 1996 U.S.C.C.A.N. 124, 223 ("The phrase `substantial evidence contained in a written record' is the traditional standard used for judicial review of agency actions."). That model customarily prohibits a court from affirming an agency on grounds other than those the agency gave in its decision. FEC v. Akins, 524 U.S. 11, 25, 118 S.Ct. 1777, 141 L.Ed.2d 10 (1998); Motor Vehicle Mfrs. Ass'n of U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 50, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983); SEC v. Chenery Corp., 318 U.S. 80, 88, 63 S.Ct. 454, 87 L.Ed. 626 (1943) ("If an order is valid only as a determination of policy or judgment which the agency alone is authorized to make and which it has not made, a judicial judgment cannot be made to do service for an administrative judgment.").
25
The analogy of a local zoning board to a federal administrative agency for judicial review purposes has its limits, however. When a federal court refuses to uphold a federal agency's decision based on reasons the agency has advanced only after the fact, the court will ordinarily remand to the agency for further action. If the agency chooses, it may then reach the same result and defend it with new reasons. See Akins, 524 U.S. at 25, 118 S.Ct. 1777 (noting that a reviewing court unsatisfied with the reasons given for an agency's decision "will set aside the agency's action and remand the case — even though the agency ... might later, in the exercise of its lawful discretion, reach the same result for a different reason"). Courts remand to agencies in such cases because, among other reasons, Congress has committed to the agency the task of policymaking where the governing statute is not clear. See Chenery, 318 U.S. at 88, 63 S.Ct. 454 ("For purposes of affirming no less than reversing its orders, an appellate court cannot intrude upon the domain which Congress has exclusively entrusted to an administrative agency.").
26
Although Congress in the Telecommunications Act left intact some of local zoning boards' authority under state law, we do not think it meant to provide for them as much deference as a federal agency receives, nor to give them new policymaking authority under the Act. The statutory requirements that the board act within "a reasonable period of time," and that the reviewing court hear and decide the action "on an expedited basis," indicate that Congress did not intend multiple rounds of decisions and litigation, in which a court rejects one reason and then gives the board the opportunity, if it chooses, to proffer another. Instead, in the majority of cases the proper remedy for a zoning board decision that violates the Act will be an order, like the one the district court issued in this case, instructing the board to authorize construction. See Brehmer v. Planning Bd., 238 F.3d 117, 120-22 (1st Cir.2001) (discussing and approving decisions by the majority of district courts granting injunctive relief in Telecommunications Act cases); Cellular Tel. Co. v. Town of Oyster Bay, 166 F.3d 490, 497 (2d Cir.1999) (same).
27
In short, a board's decision may not present a moving target and a board will not ordinarily receive a second chance. In addition to preventing undue delay, this approach gives the applicant a fair chance to respond to the board's reasons, and perhaps satisfy the board, without first having, literally, to make a federal case out of the dispute. Thus, we will not uphold a board's denial of a permit on grounds that it did not present in its written decision. As we discuss later, however, the appropriate remedy in that situation may not always be an injunction, but may sometimes be a remand, depending on the nature of the board's decision and the circumstances of the case.
28
Apart from its instructions to local zoning authorities, Congress has also specified the terms of judicial review. These terms themselves amount to an allocation of decisional authority between the local boards and the federal courts. The standards by which district courts, and this court, review state and local decisions under the Act are not unitary. The scope of judicial review depends on the nature of the issue presented and the statutory limitation involved.
29
The anti-prohibition, anti-discrimination, and unreasonable delay provisions, 47 U.S.C. § 332(c)(7)(B)(i)-(ii), present questions that a federal district court determines in the first instance without any deference to the board. Any or all of these questions may well require evidence to be presented in court that is outside of the administrative record compiled by the local authority. Amherst, 173 F.3d at 16 n. 7. If the district court then grants summary judgment, our review of the grant is de novo as well. Id. at 15. If the district court makes evidentiary findings on such claims that go beyond the administrative record, then we will review its factual findings for clear error and its legal conclusions de novo.
30
By contrast, where judicial review is on the issue of whether the board's written decision is supported by substantial evidence in the record, then judicial review is confined to the administrative record, absent a claim of procedural irregularity. The board, then, not the court, is the focus of the decisionmaking process. In this inquiry, the substantial evidence standard of review for the district court is the same that the courts have applied in certain reviews of administrative action. S.W. Bell, 244 F.3d at 58-59. "Substantial evidence" review is that standard articulated in Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951), and applied in Penobscot Air Servs., Ltd. v. FAA, 164 F.3d 713 (1st Cir.1999):
31
Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." The reviewing court must take into account contradictory evidence in the record. But "the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence."
32
Id. at 718 (quoting Universal Camera, 340 U.S. at 477, 71 S.Ct. 456, and Am. Textile Mfrs. Inst. v. Donovan, 452 U.S. 490, 523, 101 S.Ct. 2478, 69 L.Ed.2d 185 (1981)) (citations omitted).
33
Thus, if the issue is simply one of whether the board's decision is supported by substantial evidence, the courts defer to the decision of the local authority, provided that the local board picks between reasonable inferences from the record before it. Because the reasonableness of inferences is a legal and not a factual question, this court gives no special weight to the district court's decision on a substantial evidence issue and applies the same standard of deference to the board as does the district court. S.W. Bell, 244 F.3d at 59.
B. Application of the Standards
34
We start with the board's reasons for its denial, quoted verbatim earlier. It is difficult to know precisely what the board meant by its legal jargon and its apparently purposeful obscurity. The board says that it did not grant the dimensional variances because it lacked the legal authority to do so, and that it denied the watershed permit because it denied the variances. The board specifically refused to make findings as to any other objections, or to make a finding on whether there exists any other location where such construction would be permitted under the by-law. The board did not say anything about the tower's status as a public utility or as a radio tower. Instead, as we understand the order, the board ruled that its by-laws did not allow for wireless communications facilities in CB districts either as a matter of right or a use permitted by a special permit. Citing Mass. Gen. Laws ch. 40A, § 10, therefore, the board said it lacked the power to authorize the use because the by-law did not expressly permit variances for wireless communications facilities.
35
Consulting the by-law, however, we find that it does state that a radio tower is not permitted in a CB district, even by special permit, but that a public utility is permitted in such a district with a special permit. By-law ch. III, § 2.8. Viewing the board's actions in the best light possible, then, it is possible that when it said "wireless communications facility" in the October 27 letters, it meant "radio tower." Perhaps the board meant to revisit its July 18 decision (which had recharacterized the application as for a public utility rather than as for a radio tower) and to re-recharacterize the application as for a radio tower rather than as for a public utility. That is the explanation presented by counsel for the board, who suggests that the district court must resolve whether Omnipoint's tower would be a radio tower or a public utility, and that this is a genuinely disputed issue of material fact that precludes summary judgment for Omnipoint at this time.
36
There are two obvious problems with this position: one factual and one legal. The factual problem is that the board did not say this (perhaps it was too embarrassing a position to take) and it was the board that told Omnipoint it would republish the application as a public utility application rather than as a radio tower application. As Omnipoint says, the board's position means it would be left without any alternative. Omnipoint has tried its application both ways — as a radio tower and as a public utility — and it was blocked each time. The legal problem is that this is exactly the sort of behavior by a board that demonstrates that it would effectively prohibit the provision of gap-covering wireless services. Setting out criteria under the zoning law that no one could ever meet is an example of an effective prohibition. Amherst, 173 F.3d at 14. The Telecommunications Act preempts such by-law strictures. Accordingly, it no longer matters to our inquiry under the Telecommunications Act whether Omnipoint's proposed tower is a radio tower or a public utility under the by-law. Neither classification will save the board's decision.
37
Counsel for the board then offers a different rationale: that Omnipoint failed to satisfy the board that there were no better alternative locations. A single denial of an application based on a supportable finding that another location was available would almost certainly fall short of an effective prohibition of wireless services. If the board had in fact made such a finding, it might also be difficult for us to say that the board's decision to deny was unsupported by substantial evidence.4 But the board did not take that position in its decision. Instead, it chose as its ground that it had no legal power to authorize a wireless communication tower anywhere in the CB district, regardless of the existence of any alternative site. We judge its decision on those terms.
38
The district court appears to have considered the lack of evidence from the board5 about other alternative sites as evidence that further application to the board was futile. On the "effective prohibition" issue, district courts may take evidence beyond the record. Still, even in that context, it is problematic whether courts should rely on the board's failure to come forward with such evidence in court. We doubt that Congress intended local zoning boards to pay for experts to prove that there are alternative sites for a proposed tower, simply to defend themselves from an easily made accusation in court that an individual denial of a permit amounts to an effective prohibition. See S.W. Bell, 244 F.3d at 63 ("For a telecommunications provider to argue that a permit denial is impermissible because there are no alternative sites, it must develop a record demonstrating that it has made a full effort to evaluate the other available alternatives and that the alternatives are not feasible to serve its customers."). The board gets no comfort from this, however. It expressly refused to decide the adequacy of Omnipoint's evidence about the lack of alternative sites. As we have discussed earlier, we will not uphold a board's decision on grounds that were not stated to the applicant.
39
Since the board's order cannot be upheld on the grounds it stated, the question becomes one of what should be the appropriate remedy: remand to the board, or affirmance of the injunction. While we can conceive of circumstances in which a remand may be in order — for example, an instance of good faith confusion by a board that has acted quite promptly — this case is not a candidate for remand to the board.
40
Like the district court, we think the only fair inference from the board's words and actions in this case is that whether or not there is a coverage gap, and whether or not there are alternative sites that could fill that coverage gap, the board is not prepared to permit construction on Omnipoint's chosen site. As a result, any further reasonable efforts by Omnipoint are so likely to be fruitless that it is a waste of time even to try. Thus, the record compels the conclusion that the board has effectively prohibited the provision of wireless services in violation of the Act.6 That justifies the remedial order entered by the district court.7
III.
41
For the reasons given, the judgment of the district court is affirmed. Costs are awarded against the defendants.
Notes:
1
Although the district court's order granted only partial summary judgment, this court determined on December 14, 2001, that the judgment was effectively final, and therefore permitted this appeal to proceed
2
The record does not make clear whether the other potential sites were within the Watershed Protection District
3
Another provision prohibits unreasonable discrimination among providers of functionally equivalent servicesId. § 332(c)(7)(B)(i)(I). Although Omnipoint alleges such discrimination, we do not need to reach this issue.
4
Engineer Elijah Luutu, Omnipoint's expert, said that he was unaware of any other feasible location, but used very qualified language:
I am informed and believe that for reasons such as the inability to obtain a lease or zoning compliance, among others, there are no other feasible sites within or without the Town of Plainville which would allow Voicestream to provide complete service along Routes 1 and 106.
The board might well have been justified in finding insufficient an assertion based on information and belief. Such a qualification would make Luutu's statement inadmissible, for example, to support summary judgment in federal court. Fed.R.Civ.P. 56(e).
5
Where the question is one of substantial evidence, judicial review is based on the written record before the board and there would be no basis to require evidence from the board. The Telecommunications Act firmly keeps initial responsibility for the decision with the board and limits judicial review. It does not provide for a new trial before the district court of issues initially committed to boards, such as whether there are alternative feasible sites
6
As the district court noted, there is no question in this case of a potential inconsistency between the need to protect sensitive historical or environmental sites and the "no alternative site" theory of effective prohibitionNat'l Tower, 164 F.Supp.2d at 188 n. 2. Although the site is technically within a Watershed Protection District, at no stage of the proceedings has the board invoked any substantive environmental concerns. We reserve the question of the proper analysis were such a conflict present.
7
The district court ordered the board "to issue within thirty (30) days of this Order the dimensional and use variances and special permit necessary for the construction of plaintiffs' 170 foot lattice tower and maintenance facility on the locus at 75 Washington Street in Plainville."Nat'l Tower, 164 F.Supp.2d at 190. It added that "[t]he Board may condition the issuance of the variances and permit on plaintiffs' compliance with such reasonable environmental conditions as are necessary to insure the protection of the Town's watershed during the construction and operation of the tower." Id.
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T.C. Memo. 2011-136
UNITED STATES TAX COURT
ARTHUR DALTON, JR. AND BEVERLY DALTON, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23510-06L. Filed June 20, 2011.
Ralph A. Dyer, for petitioners.
Erika B. Cormier, for respondent.
MEMORANDUM OPINION
WELLS, Judge: This case is before the Court on petitioners’
motion for recovery of reasonable litigation and administrative
costs, filed pursuant to section 7430 and Rule 231.1 Petitioners
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect at the time petitioners filed
their petition or incurred their litigation costs, as
(continued...)
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seek to recover litigation and administrative costs of $55,580
incurred in contesting respondent’s rejection of their offer-in-
compromise because of an alleged nominee interest in a trust. We
must decide: (1) Whether petitioners’ motion is deficient on its
face; (2) whether respondent has shown that his position was
substantially justified; (3) whether petitioners are entitled to
litigation and administrative costs claimed; and (4) whether the
attorney’s fees and other costs that petitioners seek to recover
are reasonable. Neither party requested an evidentiary hearing,
and we conclude that a hearing is not necessary for the proper
disposition of petitioners’ motion. See Rule 232(a)(2).
Background
The merits of the underlying case were decided in our prior
opinions in this case, Dalton v. Commissioner, T.C. Memo. 2008-
165 (Dalton I), and Dalton v. Commissioner, 135 T.C. 393 (2010)
(Dalton II). The findings of fact set forth in those opinions
are incorporated herein by reference. We restate below only
those findings that are relevant to the issues presented by
petitioners’ motion for litigation and administrative costs.
The central issue in the underlying case was whether
respondent’s Appeals Office abused its discretion when it
determined that petitioners held a “nominee” interest in certain
1
(...continued)
appropriate, and all Rule references are to the Tax Court Rules
of Practice and Procedure.
- 3 -
real estate held in trust (the Poland property). During the
proceedings before the Internal Revenue Service (IRS) Appeals
Office, petitioners (hereinafter referred to individually as Mr.
Dalton Jr. and Mrs. Dalton Jr.) sought to establish that they
were entitled to an offer-in-compromise on the basis of financial
hardship. The IRS Appeals Office obtained from the IRS Office of
Chief Counsel an advisory opinion on the applicability of alter
ego or nominee principles of ownership to petitioners’ situation.
In that opinion, the IRS Office of Chief Counsel considered
various factors derived from Federal caselaw and concluded that a
nominee relationship did exist between petitioners and the trust.
The advisory opinion was silent on the issue of whether
petitioners had an interest in the trust under State law.
On October 24, 2006, the IRS Appeals Office issued to each
petitioner a separate Notice of Determination Concerning
Collection Action(s) Under Section 6320 and/or 6330 (initial
notice of determination). Petitioners each received the initial
notice of determination on or about October 31, 2006. It stated
that the Appeals Office had rejected petitioners’ collection
alternative, and attachments to the notice explained that the IRS
had determined that petitioners had a nominee interest in the
trust and that any collection alternative would have to
incorporate the equity petitioners had in the property owned by
the trust.
- 4 -
On November 16, 2006, petitioners filed a timely petition in
this Court seeking judicial review of the proposed levy action.
Respondent filed a motion for summary judgment, which we denied
in our opinion in Dalton I. In that opinion, we noted that
recent caselaw has made it clear that the primary factor that
must be considered in deciding whether a nominee relationship
exists is whether such a relationship exists under State law.
Because the record was silent as to whether a nominee
relationship existed under Maine law, we remanded the case to the
IRS Appeals Office to consider whether a nominee interest existed
under State law.
On remand, the Appeals Office requested another advisory
opinion from the IRS Office of Chief Counsel. The Office of
Chief Counsel provided an advisory opinion, which summarily
concluded that Maine “does not have a properly developed body of
law regarding nominee ownership.” It then proceeded to conduct a
Federal factors analysis. The advisory opinion concluded that,
under the Federal factors analysis, petitioners had a nominee
interest in the trust property. On December 1, 2008, the Appeals
Office mailed each petitioner a Supplemental Notice of
Determination Concerning Collection Action(s) under Section 6320
and/or 6330 (supplemental notice of determination). The
supplemental notice of determination concluded that Maine law was
silent on the issue of whether petitioners had a nominee interest
- 5 -
in the property, and it reaffirmed the conclusion that
petitioners had a nominee interest under Federal factors.
After the IRS issued its supplemental notice of
determination, petitioners filed a motion for partial summary
judgment in this Court. In our Opinion in Dalton II, we granted
petitioners’ motion for summary judgment. We held that the IRS
Appeals Office abused its discretion when it sustained the levy
action on the basis of its determination that petitioners had a
nominee interest in the trust property. Dalton II, 135 T.C. at
423. We held that Maine law was not silent on the issue of
whether a nominee interest existed and that, pursuant to Maine
law, petitioners had no such interest in the trust property. Id.
at 407-415. We further concluded that, even under a Federal
factors analysis, petitioners did not have a nominee interest in
the trust. Id. at 415-423.
Discussion
Section 7430(a) provides that the prevailing party in any
administrative or court proceeding may be awarded a judgment for
(1) reasonable administrative costs incurred in connection with
such an administrative proceeding within the IRS, and (2)
reasonable litigation costs incurred in connection with such a
court proceeding. Corson v. Commissioner, 123 T.C. 202, 205
(2004); Maggie Mgmt. Co. v. Commissioner, 108 T.C. 430, 436
(1997). In addition to being the prevailing party, to receive an
- 6 -
award of reasonable litigation costs a taxpayer must have
exhausted all administrative remedies and must not have
unreasonably protracted the court proceeding. Sec. 7430(b)(1),
(3); Corson v. Commissioner, supra at 205. We do not award costs
unless a taxpayer satisfies all of the section 7430 requirements.
Corson v. Commissioner, supra at 205-206; Minahan v.
Commissioner, 88 T.C. 492, 497 (1987).
A taxpayer is the prevailing party if: (1) The taxpayer
substantially prevailed with respect to the amount in controversy
or the most significant issue or set of issues; (2) the taxpayer
meets the net worth requirements of 28 U.S.C. sec. 2412(d)(2)(B)
(2006); and (3) the Commissioner’s position in the court
proceeding was not substantially justified. Sec. 7430(c)(4)(A)
and (B)(i); see also sec. 301.7430-5(a), Proced. & Admin. Regs.
The Commissioner bears the burden of proving that his position
was substantially justified. Sec. 7430(c)(4)(B)(i); Corson v.
Commissioner, supra at 206.
Respondent concedes that petitioners substantially prevailed
with respect to the amount in controversy and the most
significant issue presented, exhausted all administrative
remedies, did not unreasonably protract the proceedings, and meet
the net worth requirements of 28 U.S.C. sec. 2412(d)(2)(B).
However, respondent contends that petitioners’ motion is
deficient on its face because it fails to allege that
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respondent’s position was not substantially justified, and
respondent contends that his position was substantially
justified. Respondent also contends that if we hold that
petitioners are entitled to litigation and administrative costs,
petitioners are not entitled to the amount claimed.
I. Whether Petitioners’ Motion Is Deficient on Its Face
We first consider respondent’s contention that petitioners’
motion is deficient on its face. Respondent directs our
attention to 28 U.S.C. sec. 2412(d)(1)(B), which provides:
A party seeking an award of fees and other expenses shall,
within thirty days of final judgment in the action, submit
to the court an application for fees and other expenses
which shows that the party is a prevailing party and is
eligible to receive an award under this subsection, and the
amount sought, including an itemized statement from any
attorney or expert witness representing or appearing in
behalf of the party stating the actual time expended and the
rate at which fees and other expenses were computed. The
party shall also allege that the position of the United
States was not substantially justified. Whether or not the
position of the United States was substantially justified
shall be determined on the basis of the record (including
the record with respect to the action or failure to act by
the agency upon which the civil action is based) which is
made in the civil action for which fees and other expenses
are sought.
Respondent contends that, because petitioners’ motion made no
allegation that respondent’s position was not substantially
justified, it is invalid on its face. We disagree.
Petitioners seek an award of litigation and administrative
costs pursuant to section 7430, which does not require taxpayers
to meet all the requirements of 28 U.S.C. section 2412. Section
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7430(c)(4)(A)(ii) requires that the moving party meet the
requirements of the first sentence of 28 U.S.C. section
2412(d)(1)(B) and the net worth limitations of 28 U.S.C. sec.
2412(d)(2)(B). The full text of section 7430(c)(4)(A) provides:
(A) In general.--The term “prevailing party” means any
party in any proceeding to which subsection (a) applies
(other than the United States or any creditor of the
taxpayer involved)--
(i) which--
(I) has substantially prevailed with respect
to the amount in controversy, or
(II) has substantially prevailed with respect
to the most significant issue or set of issues
presented, and
(ii) which meets the requirements of the 1st
sentence of section 2412(d)(1)(B) of title 28, United
States Code (as in effect on October 22, 1986) except
to the extent differing procedures are established by
rule of court and meets the requirements of section
2412(d)(2)(B) of such title 28 (as so in effect).
Nothing in section 7430 requires that the moving party satisfy
the other requirements of 28 U.S.C. sec. 2412(d)(1)(B), including
the requirement that the moving party allege that the
Government’s position was not substantially justified. Rather,
section 7430(c)(4)(B)(i) makes it clear that the Commissioner
bears the burden of proving that his position was substantially
justified.2 Corson v. Commissioner, 123 T.C. at 206.
2
Before amendment in 1996 by the Taxpayer Bill of Rights 2,
Pub. L. 104-168, sec. 701, 110 Stat. 1463, the taxpayer bore the
burden of proving that the Commissioner’s position was not
(continued...)
- 9 -
The Tax Court has set forth in Rule 231(b) the required
contents of a motion for litigation and administrative costs.
Petitioners’ motion meticulously complied with those
requirements. On the basis of the foregoing, we hold that
petitioners’ motion is not deficient on its face because
petitioners failed to allege that respondent’s position was not
substantially justified.
II. Whether Respondent Has Shown That His Position Was
Substantially Justified
We next consider whether respondent has shown that his
position was substantially justified. For purposes of deciding a
motion for reasonable administrative costs, an administrative
proceeding is a procedure or action before the IRS, sec.
2
(...continued)
substantially justified. The House report accompanying the
amendment explained the purpose of shifting the burden to the IRS
as follows: “The Committee believes that it is appropriate for
the IRS to demonstrate that it was substantially justified in
maintaining its position when the taxpayer substantially
prevails”. H. Rept. 104-506, at 36 (1996), 1996-3 C.B. 49, 84.
As we noted in Fla. Country Clubs, Inc. v. Commissioner, 122 T.C.
73, 79 (2004), affd. 404 F.3d 1291 (11th Cir. 2005):
Congress amended section 7430(c)(4) in TBOR 2 to shift
to the Government the burden of establishing that its
position was substantially justified. Congress shifted the
burden by amending section 7430(c)(4)(B) to provide that a
taxpayer cannot be a prevailing party if the Government
demonstrates that its position was substantially justified.
In doing so, it eliminated any direct reference to the
“position of the United States” in section 7430(c)(4)(A).
In its current form, therefore, the language of section
7430(c)(4)(A) only requires that the taxpayer show that he
or she substantially prevailed. * * * [Fn. ref. omitted.]
- 10 -
7430(c)(5), and the “position of the United States” in an
administrative proceeding refers to the position taken by the IRS
as of the earlier of (i) the date the taxpayer receives the
notice of decision of the IRS Appeals Office, or (ii) the date of
the notice of deficiency, sec. 7430(c)(7)(B); Rathbun v.
Commissioner, 125 T.C. 7, 12-13 (2005); see also sec.
301.7430-3(a), (c), Proced. & Admin. Regs. In the instant case,
the Government first took a position in the administrative
proceeding when Appeals Office issued the notice of determination
dated October 24, 2006, which petitioners received on or about
October 31, 2006. See sec. 7430(c)(7)(B)(i); Owen v.
Commissioner, T.C. Memo. 2005-115.
A court proceeding, for purposes of section 7430, means any
civil action brought in a court of the United States, including
this Court, sec. 7430(c)(6), and the “position of the United
States” in a court proceeding is the position taken by the IRS in
a judicial proceeding to which section 7430(a) applies, sec.
7430(c)(7)(A). In the instant case, respondent’s initial
litigation position is that taken in his answer to petitioner’s
petition. Sec. 7430(c)(7)(A); see Huffman v. Commissioner, 978
F.2d 1139, 1148 (9th Cir. 1992), affg. in part, revg. in part and
remanding T.C. Memo. 1991-144.
We may consider the Commissioner’s administrative and
litigation positions together if the Commissioner maintains the
- 11 -
same position throughout the administrative and litigation
process. Huffman v. Commissioner, supra at 1144-1147; Maggie
Mgmt. Co. v. Commissioner, 108 T.C. at 442. In the instant case,
respondent concedes that he has maintained the same position
since issuing the initial notice of determination on October 24,
2006. Respondent’s position in that notice of determination was
that petitioners held a nominee interest in the trust property.
Accordingly, our inquiry will be limited to the question of
whether respondent has shown that that position was substantially
justified.
The Commissioner’s position is substantially justified if it
has a reasonable basis in both fact and law and is justified to a
degree that could satisfy a reasonable person. Corson v.
Commissioner, supra at 206; Maggie Mgmt. Co. v. Commissioner,
supra at 443. The reasonableness of the Commissioner’s position
is determined on the basis of the available facts that formed the
basis for the position, as well as the controlling law. Maggie
Mgmt. Co. v. Commissioner, supra at 443; DeVenney v.
Commissioner, 85 T.C. 927, 930 (1985). A position that was
reasonable when established may become unreasonable in the light
of changed circumstances. See sec. 301.7430-5(c)(2), Proced. &
Admin. Regs. A significant factor in determining whether the
Commissioner acted reasonably as of a given date is whether, on
or before that date, the taxpayer presented all relevant
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information under the taxpayer’s control. Corson v.
Commissioner, supra at 206-207; sec. 301.7430-5(c)(1), Proced. &
Admin. Regs. Respondent does not contend, and the record does
not suggest, that petitioners failed to present all relevant
evidence before the Appeals Office issued the initial notice of
determination. The record shows that no new relevant facts
emerged during the proceedings in this Court or during the
Appeals Office hearing on remand.
Respondent contends that his position was substantially
justified because it had a reasonable basis in the facts and the
law. In Dalton II, we held that the Appeals Office had abused
its discretion when it refused to consider petitioners’ offer-in-
compromise on the basis of its conclusion that petitioners had a
nominee interest in the trust property. The question of whether
an abuse of discretion has occurred requires an inquiry into
whether the discretion was exercised “without sound basis in fact
or law.” See Murphy v. Commissioner, 125 T.C. 301, 308 (2005),
affd. 469 F.3d 27 (1st Cir. 2006); Freije v. Commissioner, 125
T.C. 14, 23 (2005).
The standard we apply for purposes of deciding whether the
Commissioner’s position is substantially justified uses similar
language: “The Commissioner’s position is substantially
justified if it has a reasonable basis in both fact and law and
is justified to a degree that could satisfy a reasonable person.”
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Corson v. Commissioner, supra at 206; see also Maggie Mgmt. Co.
v. Commissioner, supra at 443. However, we are not required to
hold that the Commissioner’s position lacked substantial
justification in all cases where the Commissioner abused his
discretion. See Rowe v. Commissioner, T.C. Memo. 2002-136; Mid-
Del Therapeutic Ctr., Inc. v. Commissioner, T.C. Memo. 2000-383,
affd. 30 Fed. Appx. 889 (10th Cir. 2002); Mauerman v.
Commissioner, T.C. Memo. 1995-237. For example, we have held
that the Commissioner generally is not subject to an award of
litigation costs under section 7430 if the case is one of first
impression, even where we hold that the Commissioner abused his
discretion in the underlying case. See Rowe v. Commissioner,
supra; Mid-Del Therapeutic Ctr., Inc. v. Commissioner, supra. We
must consider the facts and circumstances of the particular case.
See Rowe v. Commissioner, supra; Mid-Del Therapeutic Ctr., Inc.
v. Commissioner, supra.
Although Dalton I was decided on the administrative record,
the parties’ constructions of the documents in that record were
different. As we noted in our opinion in Dalton I, in their
motions “the parties [appeared] to advance conflicting views with
respect to the contours of the proper record for review and which
party is attempting to exceed the bounds of the record.” In our
opinion in Dalton I we adopted a construction of the
administrative record that was closer to the construction
- 14 -
advanced by petitioners. After setting forth our construction of
the administrative record, we examined the Appeals Office’s
application of law, and we concluded that the Appeals Office had
failed to apply the correct law because it did not apply State
law. Accordingly, we remanded the case to the Appeals Office,
directing it to apply Maine law to determine whether petitioners
had a nominee interest in the trust property.
However, on remand, when the Appeals Office requested an
advisory opinion from the Office of Chief Counsel, the opinion
from the Office of Chief Counsel gave only cursory treatment to
Maine law, summarily concluding that Maine law is silent with
regard to the nominee doctrine. In our Opinion in Dalton II, we
rejected respondent’s legal position, concluding that Maine law
is not undeveloped on the issue of nominee interest and that
under Maine law petitioners did not have a nominee interest in
the trust property. Dalton II, 135 T.C. at 407-415. We also
concluded that, even using the Federal factors analysis,
petitioners did not have an interest in the trust property. Id.
at 415-423. We therefore held that respondent’s Appeals Office
had abused its discretion when it concluded that petitioners did
have a nominee interest in the trust property. Id. at 423.
When we decide that the Commissioner’s Appeals Office has
abused its discretion, we are holding that its conclusion is
“without sound basis in fact or law.” See Murphy v.
- 15 -
Commissioner, supra at 308; Freije v. Commissioner, supra at 23.
However, in his objection to the instant motion, respondent
contends that his position was substantially justified because it
had a reasonable basis in the facts and the law.
Respondent appears to misunderstand the standard for
“substantially justified” and our holding in Dalton II.
Respondent contends that his position was substantially justified
because it was reasonable for him to conclude that Maine law was
undeveloped. However, our holding in Dalton II went further than
simply holding that petitioners had no interest in the trust
property under Maine law; we also held that petitioners would
have no interest in the trust property even if Federal law
applied. See Dalton II, 135 T.C. at 416-423.
Moreover, in our opinions in both Dalton I and Dalton II we
disagreed with respondent’s construction of documents in the
administrative record. See id. at 394-400. In some particulars,
the Appeals Office’s findings appeared to exceed the facts that
were established by those documents. It appears that respondent
still has not accepted our construction of the administrative
record. During the hearing on remand, in his motion for summary
judgment in Dalton II, and in his opposition to petitioners’
motion now before the Court, respondent advanced proposed
findings of fact in conflict with our opinion in Dalton I. For
example, respondent continued to contend that during 1983
- 16 -
petitioners exchanged lots 3 and 4 with Mr. Dalton Jr.’s father
(Mr. Dalton Sr.) for no consideration despite the fact that we
had found, in Dalton I, that Mr. Dalton Sr. assumed the mortgage
on lot 3. Respondent continued to insist that when Mrs. Dalton
Jr. cosigned a mortgage on lots 3 and 4 with Mr. Dalton Sr.
during 1993, she was treating those lots as her property, despite
the fact that we had found that she did so only at the request of
the bank because of the bank’s concern about Mr. Dalton Sr.’s
advanced age. Respondent continued to assert that because there
was no written lease evidencing a rental agreement between
petitioners and Mr. Dalton Sr., they were living on the Poland
property and treating it as their own, despite the fact that we
had found petitioners paid rent on the Poland property pursuant
to an oral agreement.
In some cases, the Appeals Office’s findings were simply
unsupported by the documents in the record. Because we were
reviewing the Appeals Office’s determination for abuse of
discretion, by disagreeing with its construction of documents in
the administrative record we were concluding that respondent’s
construction of those documents, i.e., his basis in fact, was not
reasonable.
Accordingly, we reject respondent’s contention that his
position was substantially justified because it had a reasonable
basis in the facts and the law. However, as noted above, our
- 17 -
inquiry does not end here. Respondent’s position may still be
substantially justified if, examining all the facts and
circumstances, we find other facts that make his position
substantially justified. See Rowe v. Commissioner, T.C. Memo.
2002-136; Mid-Del Therapeutic Ctr., Inc. v. Commissioner, T.C.
Memo. 2000-383. However, the instant case did not involve an
issue of first impression, and we do not find any other facts or
circumstances that would make respondent’s position substantially
justified.
Accordingly, on the basis of the foregoing, we conclude that
respondent’s position was not substantially justified and that,
therefore, petitioners were the prevailing party.
III. Whether Petitioners Are Entitled to Litigation and
Administrative Costs in the Amounts Claimed
In an affidavit attached to their motion for award of
litigation and administrative costs, petitioners claim that they
are entitled to costs dating back to 1999. Respondent contends
that petitioners are not entitled to costs incurred before
October 31, 2006, the date on which petitioners received the
initial notice of determination and began to prepare their
petition for filing in this Court. We agree with respondent.
Section 7430(a) permits a taxpayer to recover reasonable
administrative costs incurred in connection with an
administrative proceeding. Pursuant to section 301.7430-3(a)(4),
Proced. & Admin. Regs., an “administrative proceeding” does not
- 18 -
include proceedings in connection with collection actions; i.e.,
any action taken by the IRS to collect a tax. Sec. 301.7430-
3(b), Proced. & Admin. Regs. Because the instant case involves a
collection action, petitioners are not permitted to recover costs
incurred in connection with the collection due process hearing.
See id.; sec. 301.7430-3(d), Example (5), Proced. & Admin. Regs.
Moreover, before petitioners received the Appeals Office’s
initial notice of determination on October 31, 2006, the IRS had
not taken a position. See sec. 7430(c)(7); Fla. Country Clubs,
Inc. v. Commissioner, 122 T.C. 73 (2004), affd. 404 F.3d 1291
(11th Cir. 2005). Accordingly, we deny petitioners’ claim for
costs incurred in connection with their collection due process
hearing before the Appeals Office issued its initial notice of
determination.
Respondent contends that the fees petitioners’ attorney
charged them for reviewing the initial notice of determination
also constitute administrative costs, not litigation costs, and
that therefore those fees are subject to the limitation described
in section 301.7430-4(b)(3), Proced. & Admin. Regs. Fees
incurred before filing a petition in the Tax Court are considered
litigation costs if those fees are “incurred in connection with
the preparation and filing of a petition”. Sec. 301.7430-
4(c)(3)(i), Proced. & Admin. Regs. The regulations provide two
examples to illustrate the distinction between administrative and
- 19 -
litigation costs when the taxpayer is filing a petition with this
Court:
Example (1). Taxpayer A receives a notice of proposed
deficiency (30-day letter). A files a request for and is
granted an Appeals office conference. At the conference no
agreement is reached on the tax matters at issue. The
Internal Revenue Service then issues a notice of deficiency.
Upon receiving the notice of deficiency, A discontinues A’s
administrative efforts and files a petition with the Tax
Court. A’s costs incurred in connection with the
preparation and filing of a petition with the Tax Court are
litigation costs and not reasonable administrative costs.
Furthermore, A’s costs incurred before the administrative
proceeding date (date of the notice of deficiency as set
forth in § 301.7430-3(c)(3)), are not reasonable
administrative costs.
Example (2). Assume the same facts as in Example 1
except that after A receives the notice of deficiency, A
recontacts Appeals. Again, A’s costs incurred before the
administrative proceeding date, the date of the notice of
deficiency as set forth in § 301.7430-3(c)(3), are not
reasonable administrative costs. A’s costs incurred in
recontacting and working with Appeals after the issuance of
the notice of deficiency, and up to and including the time
of filing of the petition, are reasonable administrative
costs. A’s costs incurred in connection with the filing of
a petition with the Tax Court are not reasonable
administrative costs because those costs are litigation
costs. Similarly, A’s costs incurred after the filing of
the petition are not reasonable administrative costs, as
those are litigation costs.
Sec. 301.7430-4(c)(4), Proced. & Admin. Regs. As those examples
make clear, a taxpayer begins incurring litigation costs as soon
as the taxpayer “discontinues” the taxpayer’s administrative
efforts. We must therefore decide at what time petitioners
discontinued their administrative efforts.
Petitioners never recontacted the Appeals Office after they
received the initial notice of determination. On October 31 and
- 20 -
November 1, 2006, petitioners’ attorney reviewed the notice of
determination from the IRS, wrote a “file memo” for his clients,
and had a telephone conference with his clients. After that
telephone conference petitioners’ attorney began researching and
drafting the petition. Although it is unclear from the record at
exactly what time petitioners decided to discontinue their
administrative efforts and file a petition in the Tax Court, the
record shows that they had made that decision by November 1,
2006, when they had their first conversation about the issue with
their attorney. The regulations make it clear that a taxpayer
can decide to discontinue administrative efforts “Upon receiving
the notice of deficiency”; i.e., without incurring any further
administrative costs. See sec. 301.7430-4(c)(4), Example (1),
Proced. & Admin. Regs. Because petitioners never recontacted the
Appeals Office and almost immediately directed their attorney to
begin preparing a petition to file in this Court, we conclude
that petitioners began incurring litigation costs as soon as they
received the initial notice of determination. We therefore
reject respondent’s argument that some of those costs were
administrative.
IV. Whether the Attorney Fees and Other Costs That
Petitioners Seek To Recover Are Reasonable in Amount
Respondent concedes that if the Court decides that
petitioners are the prevailing party, the litigation costs they
claim beginning on November 2, 2006, are reasonable at the
- 21 -
claimed rate of $150 per hour. As explained above, we also hold
that petitioners are entitled to litigation costs for fees
incurred on October 31 and November 1, 2006. However, we note
that petitioners’ attorney made several typographical or
mathematical errors when computing the proper amount of
attorney’s fees. After correcting for those errors, we hold that
petitioners are entitled to an award for litigation costs of
$45,248.11, which includes $45,015 in attorney’s fees and $233.11
in filing, printing, and mailing costs.
In reaching these holdings, we have considered all the
parties’ arguments, and, to the extent not addressed herein, we
conclude that they are moot, irrelevant, or without merit.
To reflect the foregoing,
An appropriate order and
decision will be entered.
| {
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113 Ariz. 427 (1976)
556 P.2d 1
Edmund FRANCISCO, Petitioner,
v.
The STATE of Arizona, the Honorable J. Richard Hannah, Judge of the Pima County Superior Court, and the Pima County Superior Court, Respondents.
No. 12444-PR.
Supreme Court of Arizona, En Banc.
September 28, 1976.
*428 James J. Purcell, Sandra K. Pharo, Papago Legal Services, Sells, for petitioner.
Dennis DeConcini, Former Pima County Atty., David G. Dingeldine, Pima County Atty. by David R. Ostapuk, Deputy County Atty., Tucson, for respondents.
James T. Van Bergen, William E. Strickland, Tucson, for amicus curiae The Papago Tribe.
HAYS, Justice.
Suit was brought in the Superior Court of Pima County by the State of Arizona in the name of Veronica Toro to determine the petitioner's alleged paternity of Veronica's child, Jonathan. The petitioner, Edmund Francisco, moved to dismiss, claiming lack of personal jurisdiction on the grounds that the Pima County Deputy Sheriff, who served the petitioner, was without authority to do so while on the Papago Indian Reservation. The motion was denied and a special action petition was filed in the Court of Appeals, Division Two, against the State of Arizona, the Honorable J. Richard Hannah, Judge of the Superior Court of Pima County, and the Pima County Superior Court. The Court of Appeals upheld the trial court's denial of the motion to dismiss and denied the special action relief sought. Francisco v. State of Arizona, 25 Ariz. App. 164, 541 P.2d 955 (1975). A motion for rehearing was denied. We accepted the Petition for Review to determine whether the trial court had properly acquired personal jurisdiction over the petitioner. We vacate the Court of Appeals decision and order the trial court to grant petitioner's motion to dismiss.
Petitioner and the mother of the child whose paternity is sought to be established are both Papago Indians. The child was born in Tucson, Arizona, and the mother and child have lived there since the child's birth. It was stipulated at trial that conception occurred in Tucson. The petitioner resides in Sells, Arizona, which is situated within the boundaries of the Papago Indian Reservation. The summons and complaint of the paternity proceeding below were served upon the petitioner by a Pima County Deputy Sheriff within the Papago Indian Reservation.
The issue presented for review is whether the Superior Court's assertion of in personam jurisdiction over the petitioner was proper.
The answer to this question must lie in the resolution of the question of whether the Pima County Deputy Sheriff had authority to serve process on an Indian while on an Indian reservation. The sheriff derives his authority from the Arizona Constitution, art. 12, §§ 3 and 4, as amended, and from the Arizona Revised Statutes, § 11-441, et seq. By virtue of this authority, when the sheriff or his deputy acts in his official capacity, the laws of Arizona are necessarily given effect. Thus, the deputy sheriff's authority while on a reservation must be defined by the state's ability to extend the application of its laws to an Indian residing on a reservation.
We are of the opinion that the laws of the state applying to service by a sheriff could not be applied to an Indian while on the reservation and therefore find, the deputy sheriff being without the proper authority, that the service of process was invalid and ineffectual and thus that the trial court was without personal jurisdiction over the petitioner.[1]
Our decision must be based on an examination of the extent to which the state's jurisdiction over Indian lands has been preempted by the federal government, *429 as defined by the appropriate treaties, executive orders and Acts of Congress. Although the Indians and their lands have been deemed by the United States Supreme Court to constitute a sovereign and semiindependent entity, Worcester v. Georgia, 6 Pet. 515, 31 U.S. 515, 8 L.Ed. 483 (1832); United States v. Kagama, 118 U.S. 375, 6 S.Ct. 1109, 30 L.Ed. 228 (1886), the Court has consistently taken the position that the federal government retains jurisdiction and control over the "whole intercourse" between the Indian tribes and our government. Worcester v. Georgia, supra; Williams v. Lee, 358 U.S. 217, 79 S.Ct. 269, 3 L.Ed.2d 251 (1959). The states have been allowed to give effect to their laws as applied to Indians on reservations when the laws did not infringe on tribal sovereignty and self-government but then only if there were no "governing Acts of Congress." Williams v. Lee, supra. When, however, such "governing Acts of Congress" do exist, the Court has made it clear that the test to be applied is whether, in light of all the relevant statutes and treaties, the states have been allowed by Congress to assume jurisdiction over the Indian lands in question. McClanahan v. State Tax Commission of Arizona, 411 U.S. 164, 93 S.Ct. 1257, 36 L.Ed.2d 129 (1973); Mescalero Apache Tribe v. Jones, 411 U.S. 145, 93 S.Ct. 1267, 36 L.Ed.2d 114 (1973).
Based on the United States Supreme Court decision in Kennerly v. District Court of Ninth Judicial District of Montana, 400 U.S. 423, 91 S.Ct. 480, 27 L.Ed.2d 507 (1971), it is apparent that the Civil Rights Act of 1968, 25 U.S.C. §§ 1321-1326, the successor to the Act of 1953, 67 Stat. 590, Public Law 280, is just such a governing Act of Congress. Thus, the determination of the limits of the states' jurisdictional powers must focus not on the extent of sovereignty the tribes possess but rather on the extent to which the states have been permitted by Congress to assert jurisdiction over Indians and their lands and, in effect, infringe on that sovereignty.
"[T]he trend has been away from the idea of inherent Indian sovereignty as a bar to state jurisdiction and toward reliance on federal preemption. (cite omitted) The modern cases thus tend to avoid reliance on platonic notions of Indian sovereignty and to look instead to the applicable treaties and statutes which define the limits of state power." (citations and footnotes omitted). McClanahan v. State Tax Commission, supra, 411 U.S. at 172, 93 S.Ct. at 1262.
It is then the relevant statutes and, in this case, an executive order on which we must rely in determining the limits of Arizona's jurisdictional power and to which we now turn our attention.
There are no treaties between the Papago Indian tribe and the United States Government. Rather, the reservation was set aside by Executive Order No. 2524 signed by President Wilson on February 1, 1917. The Order made no specific guarantees exempting the Papagos from the State of Arizona's jurisdiction. However, the guarantee of exclusive sovereignty must be implied in such an Order.
McClanahan v. State Tax Commission of Arizona, supra, is analogous in this respect. In McClanahan, the court, in considering the preemptive effect that the Navajo treaty had on the ability of Arizona to impose an income tax on Indians for income earned on the reservation, noted the absence of a provision exempting the Navajo tribe from falling within the ambit of the state's taxing power. Nevertheless, the court reasoned, such an exemption must be implied in the treaty based on the fact that the treaty intended to grant the Indians exclusive sovereignty over their lands:
"... it cannot be doubted that the reservation of certain lands for the exclusive use and occupancy of the Navajos and the exclusion of non-Navajos from the prescribed area was meant to establish the lands as within the exclusive sovereignty of the Navajos under general federal supervision. It is thus *430 unsurprising that this Court has interpreted the Navajo treaty to preclude extension of state law including state tax law to Indians on the Navajo Reservation." 411 U.S. at 174-75, 93 S.Ct. at 1263-64.
In the instant case it is similarly implicit based on the fact that the reservation was set aside for the exclusive use and occupancy of the Papago Indian tribe, that the Executive Order intended to grant in the Papagos exclusive sovereignty over their lands. It would thus follow, based on the reasoning in McClanahan, that the Executive Order would preclude the extension of state law to Indians on the reservation, including the laws which effectuate the authority in the Sheriff to serve process.
We next consider the Arizona Enabling Act, 36 Stat. 569, the relevant language of which is also contained in our state constitution, article 20, paragraph fourth. The Enabling Act and article 20, fourth, disclaims
"... all right and title ... to all lands ... owned or held by any Indian or Indian tribes ... the same shall be and remain subject to the disposition and under the absolute jurisdiction and control of the Congress of the United States."
The Arizona Supreme Court has construed the Act to disclaim only the state's proprietary interest in Indian lands and not its governmental interest therein. Porter v. Hall, 34 Ariz. 308, 271 P. 411 (1928). In Porter, the court stated:
"We have no hesitancy in holding, therefore, that all Indian reservations in Arizona are within the political and governmental, as well as geographical, boundaries of the state, and that the exception set forth in our Enabling Act applies to the Indian lands considered as property, and not as a territorial area withdrawn from the sovereignty of the state of Arizona." 34 Ariz. at 321, 271 P. at 415.
This holding of Porter has been repeatedly reaffirmed. Kahn v. Arizona State Tax Comm'n, 16 Ariz. App. 17, 490 P.2d 846 (1971); Warren Trading Post Co. v. Moore, 95 Ariz. 110, 387 P.2d 809 (1963); Williams v. Lee, 83 Ariz. 241, 319 P.2d 998 (1958), rev'd on other grounds, 358 U.S. 217, 79 S.Ct. 269, 3 L.Ed.2d 251 (1959); Begay v. Miller, 70 Ariz. 380, 222 P.2d 624 (1950); Harrison v. Laveen, 67 Ariz. 337, 196 P.2d 456 (1948).
Moreover, the United States Supreme Court in Organized Village of Kake v. Egan, 369 U.S. 60, 82 S.Ct. 562, 7 L.Ed.2d 573 (1962), in construing identical language in Alaska's Statehood Act, indicated that "absolute" federal jurisdiction means undiminished, not exclusive jurisdiction.
It is clear that the Arizona Enabling Act speaks only to the state's proprietary interest in Indian lands. Therefore, we find that it in no way precludes the state from exercising its governmental interest by way of service of process on an Indian on a reservation. At the same time, however, we note that the Act can not be read to sanction such an exercise of the state's jurisdiction in this case.
Finally, we consider the Civil Rights Act of 1968, 25 U.S.C. §§ 1321-1326.[2] The Civil Rights Act provides a method whereby the states can assume civil or criminal jurisdiction over Indians and Indian lands by appropriately amending its statutes or constitution and by acquiring the consent of the Indian tribe over whom jurisdiction is to be assumed. As summarized in McClanahan, supra:
"Title 25 U.S.C. § 1322(a) grants the consent of the United States to States *431 wishing to assume criminal and civil jurisdiction over reservation Indians, and 25 U.S.C. § 1324 confers upon the States the right to disregard enabling acts which limit their authority over such Indians. But the Act expressly provides that the State must act `with the consent of the tribe occupying the particular Indian country,' 25 U.S.C. § 1322(a), and must `appropriately [amend its] constitution or statutes.' 25 U.S.C. § 1324." 411 U.S. at 177-78, 93 S.Ct. at 1265.
The United States Supreme Court in Kennerly v. District Court of Ninth Judicial District of Montana, 400 U.S. 423, 91 S.Ct. 480, 27 L.Ed.2d 507 (1971), held that absent effective implementation of the Act of 1953, 67 Stat. 590 (also known as Public Law 280), which is the predecessor of the Civil Rights Act of 1968, a state is precluded from extending its jurisdiction to encompass Indians on the reservation. In Kennerly, Montana's exercise of civil jurisdiction over a Blackfeet Indian was held invalid in spite of the Indian tribe's consent to such jurisdiction because among other reasons, Montana has not taken the affirmative state action as was required by the Act of 1953. The Court noted that the requirement conditioning the assumption of state jurisdiction of "affirmative legislative action" by the state
"was intended to assure that state jurisdiction would not be extended until the jurisdictions to be responsible for the portion of Indian country concerned manifested by political action their willingness and ability to discharge their new responsibilities." 400 U.S. at 427, 91 S.Ct. at 482.
For the purpose of delineating the extent of preemption, we can see no difference in the effect of non-implementation of the Act of 1953 and the Civil Rights Act of 1968. If the state has failed to take the requisite steps to confer upon itself jurisdiction under the Act, then, based on the holding in Kennerly, the state must be held to be without jurisdiction. Cf. Poitra v. Demarrias, 502 F.2d 23 (8th Cir.1974); Annis v. Dewey County Bank, 335 F. Supp. 133 (D.S.D. 1971); State Securities, Inc. v. Anderson, 84 N.M. 629, 506 P.2d 786 (1973) (dissenting opinion); Blackwolf v. District Court of Sixteenth Judicial District, 158 Mont. 523, 493 P.2d 1293 (1972); Martin v. Denver Juvenile Court, 177 Colo. 261, 493 P.2d 1093 (1972). As stated in Annis v. Dewey County Bank, supra, at 136, "only strict compliance with 25 U.S.C.A. Secs. 1322 (a and b), 1326, can grant jurisdiction to the states over Indian lands."
Arizona has neither amended its constitution nor passed such appropriate legislation as would confer upon its officers the power to make service of process to Indians on Indian lands. Nor has the state acquired the requisite consent of the Papago Indian tribe to do the same. It is therefore clear that Arizona has not displayed a desire to assume either jurisdiction over Indian lands or its concomitant responsibilities.
Based on the foregoing discussion of the Executive Order which vested in the Papago Indian tribe the lands which comprise their reservation, and, more importantly, Arizona's failure to implement the Act of 1968 to acquire the jurisdiction it now seeks to assert, it is our opinion that Arizona has no authority to extend the application of its laws to an Indian reservation. We therefore hold that the deputy sheriff was without authority to validly make the service of process while within the boundaries of the Indian reservation. The Superior Court was thereby without personal jurisdiction over the petitioner.
The opinion of the Court of Appeals is vacated and the trial court is ordered to grant the petitioner's motion to dismiss.
CAMERON, C.J., STRUCKMEYER, V.C.J., and HOLOHAN and GORDON, JJ., concur.
NOTES
[1] In holding that there was no personal jurisdiction over the petitioner due to an invalid service of process, we think it appropriate to point out that the trial court did indeed have subject matter jurisdiction. This has been conceded by the petitioner and is not here an issue. We further note that service of process could have validly been effected through the Papago Indian authorities who are vested with the power to serve process pursuant to tribal law.
[2] The Civil Rights Act of 1968 repealed Section 7 of Public Law 280, the Act of 1953, 67 Stat. 588, which authorized the states to assume civil or criminal jurisdiction simply by "affirmative legislative action." The State of Arizona has provided in A.R.S. §§ 36-1801 and 36-1865, pursuant to Public Law 280, that its air and water pollution abatement laws will apply to all Indian lands and that the state will have civil and criminal jurisdiction to enforce the laws on the reservations.
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274 Md. 116 (1975)
332 A.2d 897
COUNTY COUNCIL FOR MONTGOMERY COUNTY
v.
SUPERVISOR OF ASSESSMENTS OF MONTGOMERY COUNTY ET AL.
[No. 222 (on motion to dismiss), September Term, 1974.]
Court of Appeals of Maryland.
Decided March 4, 1975.
Motion for rehearing filed April 3, 1975.
Denied April 14, 1975.
*117 The cause was argued on the motion to dismiss before MURPHY, C.J., and SINGLEY, SMITH, DIGGES, LEVINE, ELDRIDGE and O'DONNELL, JJ.
James L. Thompson for James R. Miller and Francis L. Carter, Ex'rs of the Estate of Laura P. Miller, part of appellees.
H. Christopher Malone, Assistant County Attorney, with whom were Richard S. McKernon, County Attorney, and Robert G. Tobin, Deputy County Attorney, on the answer to the motion, for appellant.
SMITH, J., delivered the opinion of the Court.
We shall here hold that the County Council of Montgomery County is not synonymous with the term "county commissioners" as used in Maryland Code (1957, 1969 Repl. Vol.) Art. 81, § 256 (a).
This case began its trip to this Court when the Appeal Tax Court for Montgomery County set assessments on properties of various appellees here (the Taxpayers) which were not to the liking of the Montgomery County Council (the County Council), appellant here. The County Council filed appeals with the Maryland Tax Court claiming that "[t]he reduction granted by the Appeal Tax Court [was] illegal and erroneous, and contrary to fact and law." The Taxpayers moved there to dismiss the appeals on the ground that the content of the petition failed to comply with the requirements of Code (1957) Art. 81, §§ 229 (a) and 256 (b) and the rules of procedure of the Maryland Tax Court. They also moved to dismiss on the further ground that although "Article 81, Section 256 (a) permits a County claiming to be aggrieved because of an assessment reduction to appeal to the Maryland Tax Court," that "Montgomery County operates *118 under the charter form of government, which creates in Article 1 a legislative branch and in Article 2 an Executive branch," which "two branches comprise the government of Montgomery County," and "[t]he County Council has legislative powers only [which] powers do not extend to initiating appellate procedures...." On August 21, 1974, the Tax Court passed an order reciting the fact that the cases "c[a]me on for hearing on Motions to Dismiss only, and no written Memoranda ha[d] been filed in response to the Court's request...." It ordered that the motions to dismiss be granted. Its memorandum of grounds for decision said:
"These cases were heard before the Maryland Tax Court on April 3rd, 1974, solely on the Motions to Dismiss filed therein. At the conclusion of the oral argument, leave was granted to file written Memoranda within thirty days and if additional time was requested to so notify the Court. The thirty days having long since elapsed, no written memoranda having been filed with the Court, and no request having been received by the Court for an extension of time, the Court must rule on the record. The Court is of the opinion that, based upon the record before it, the Motions to Dismiss shall be granted."
Feeling itself aggrieved, the County Council appealed to us under the authority of Code (1957, 1974 Cum. Supp.) Art. 81, § 229 (1). The Taxpayers have moved in this Court to dismiss the appeal of the County Council under Maryland "Rule 835 b (1) which permits the appellee to seek dismissal of an appeal where the appeal is not allowed by law," contending that "[w]hen Article 81, Sections 256 and 229 are read in conjunction with Article XI-A, Section 3 of the Maryland Constitution and Articles 1 and 2 of the Charter for Montgomery County" we "should ... conclude that the Appellant does not have standing or a sufficient legal interest in the subject matter of the appeal to pursue the appeal before this Court."
We conclude that the motion to dismiss must be denied *119 since Art. 81, § 229 (1) provides for an appeal to this Court from a final order of the Tax Court. The order in this instance was indeed a final order and a dismissal of an appeal from an inferior tribunal on the basis of lack of jurisdiction is reviewable.
The basis for the dismissal of the case by the Tax Court does not clearly appear, but a question of the jurisdiction of that administrative agency even though not tried and decided below and neither briefed nor argued, may be raised by this Court, sua sponte, as an exception to the general rule established by Maryland Rule 885. State v. McCray, 267 Md. 111, 126, 297 A.2d 265 (1972), and cases there cited. Because the question of the County Council's right of appeal to the Tax Court was presented to us in the briefing and argument on the motion to dismiss, we proceed to a consideration of that matter rather than requiring further briefing and argument.
The right of appeal to the Maryland Tax Court granted by Code (1957, 1969 Repl. Vol.) Art. 81, § 256 (a) is to "[a]ny taxpayer, any city, or the Attorney General or Department on behalf of the State, or a supervisor of assessments as provided in § 234 of [that] article, or the county commissioners of any county where an appeal tax court has been created...." Thus, a resolution of this controversy depends upon the interpretation of that section when read with that portion of the home rule provisions of the Maryland Constitution embodied in Art. XI-A, § 3 which states in pertinent part:
"Every charter so formed shall provide for an elective legislative body in which shall be vested the law-making power of said City or County. Such legislative body in the City of Baltimore shall be known as the City Council of the City of Baltimore, and in any county shall be known as the County Council of the County. The chief executive officer, if any such charter shall provide for the election of such executive officer, or the presiding officer of said legislative body, if such charter shall not *120 provide for the election of a chief executive officer, shall be known in the City of Baltimore as Mayor of Baltimore, and in any County as the President or Chairman of the County Council of the County, and all references in the Constitution and laws of this State to the Mayor of Baltimore and City Council of the City of Baltimore or to the County Commissioners of the Counties, shall be construed to refer to the Mayor of Baltimore and City Council of the City of Baltimore and to the President or Chairman and County Council herein provided for whenever such construction would be reasonable." (Emphasis added and explained later in this opinion.)
The same general rules are applicable to the interpretation of the Constitution as are applicable to the interpretation of statutes. Kadan v. Board of Supervisors of Elections of Baltimore County, 273 Md. 406, 329 A.2d 702 (1974). All parts of a statute are to be read together to find the intention of the Legislature as to any one part and all parts are to be reconciled and harmonized if possible. Kadan, supra, and Thomas v. Police Commissioner, 211 Md. 357, 361, 127 A.2d 625 (1956). Statutes are construed according to their plain meaning and words used in legislation are to be considered in their plain and ordinary meaning when those words are not ambiguous. Patapsco Trailer Service v. Eastern Freightways, 271 Md. 558, 564, 318 A.2d 817 (1974), and City of Annapolis v. Anne Arundel Co., 271 Md. 265, 292, 316 A.2d 807 (1974).
County Commissioners in non-chartered counties "are declared to be a corporation" by Code (1957, 1973 Repl. Vol.) Art. 25, § 1. They have been such at least since the passage of Chapter 411 of the Acts of 1874. "Historically, County Commissioners are outgrowths of the old levy courts (originally established by Ch. 53 of the Laws of 1794), which were composed of the justices of the peace of the several counties" and "[t]heir duties were to meet and determine the necessary expenses of their counties *121 and to impose an assessment or rate on property to defray county expenses." "The name `County Commissioners' was first constitutionally recognized in the Constitution of 1851," City of Bowie v. County Comm'rs, 258 Md. 454, 461, 267 A.2d 172 (1970), and Cox v. Anne Arundel County, 181 Md. 428, 433-34, 31 A.2d 179 (1943). Moreover, "[u]nder our law County Commissioners are corporations, they act not as individuals but in their corporate entity. Clark v. Harford Agricultural & Breeders' Asso., 118 Md. 608 [, 617, 85 A. 503 (1912)]." Jay v. Co. Comm'rs. Harford, 120 Md. 49, 52, 87 A. 521 (1913). In Clark the observation was made relative to the commission there under consideration that it "must act by a majority vote, and like other boards, or corporations, the individual members thereof exercise no powers except by and through a majority of the body itself."
The provisions of Constitution Art. XI-A, § 3 can be more easily understood and analyzed if written as follows:
The chief executive officer
(if any such charter shall provide for the election of such executive officer), or
the presiding officer of said legislative body
(if such charter shall not provide for the election of a chief executive officer)
shall be known:
a. in the City of Baltimore as Mayor of Baltimore, and
b. in any County as the President or Chairman of the County Council of the County.
All references in the Constitution and laws of this State to the Mayor of Baltimore and City Council of Baltimore shall be construed to refer to the Mayor of Baltimore and City Council of the City of Baltimore, and
all references in the Constitution and laws of this *122 State to the County Commissioners of the Counties shall be construed to refer to the President and County Council or Chairman and County Council,
whenever such construction would be reasonable.
The above referred to language of Art. XI-A, § 3 has undergone but one change since it came into the Maryland Constitution upon ratification by the people in 1915 of the amendment proposed by Chapter 416 of the Acts of 1914. That change was the addition of the words "or Chairman" in the two places in which we have placed italics in our quotation of § 3. In other words, from 1915 until the ratification by the people in 1972 of the amendment proposed by Chapter 371 of the acts of that year, the pertinent section read as though the italicized language did not appear in it. In 1915, the corporate name of the City of Baltimore was "Mayor and City Council of Baltimore," as it is today. See Const. Art. XI, § 7, and Charter of Baltimore City (1964) Art. 1, § 1. Prior to the amendment of the Constitution in 1915 adding Art. XI-A, no provision existed for home rule. Judge W. Mitchell Digges explained for the Court the reason for this amendment in State v. Stewart, 152 Md. 419, 137 A. 39 (1927):
"The wisdom of incorporating in the organic law of the state such provisions as are contained in this article had been urged for a number of years prior to its adoption, the reasons assigned by its proponents being that a larger measure of home rule be secured to the people of the respective political subdivisions of the state in matters of purely local concern, in order that there should be the fullest measure of local self-government, and that these local questions should thus be withdrawn from consideration by the General Assembly, leaving that body more time to consider and pass upon general legislation, and to prevent the passage of such legislation from being influenced by what is popularly known as `log-rolling'; that is, by influencing the attitude and *123 vote of members of the General Assembly upon proposed general laws by threatening the defeat or promising the support of local legislation in which a particular member might be peculiarly interested." Id. at 422.
When one considers the fact that at the time of the adoption of Art. XI-A the corporate name of the City of Baltimore was "Mayor and City Council of Baltimore," that by the provisions of Art. 25, § 1 county commissioners of each county are "declared to be a corporation," that one would hardly expect to call the chief executive officer of a county "mayor," and the words "President and County Council" are an approximation of "Mayor of Baltimore and City Council of the City of Baltimore," it becomes obvious to us that the intent of the framers of the amendment was to refer to the county in its corporate capacity, by whatever name it might ultimately be known upon the adoption of a charter. Accordingly, we conclude that it is the corporate entity of Montgomery County, Maryland, so known in its charter, which is vested with the right of appeal under Art. 81, § 256 (a) in lieu of the prior corporate entity, the County Commissioners of Montgomery County. Cf. Barranca v. Prince George's County, 264 Md. 562, 287 A.2d 286 (1972). For purposes of this opinion we need go no further than to say that it is necessary that the appeal be maintained in the name of the corporate entity. Since the County Council is not the corporate entity, an appeal may not be maintained in its name. County Council for Montgomery County, Maryland v. Montgomery Association, Inc., 274 Md. 52, 333 A.2d 506 (1975), has no bearing on this case since there the County Council was sued as a party defendant and no issue was raised as to whether it was a "proper defendant in an action against Montgomery County," as we pointed out in a footnote in that opinion.
The County Council suggests that there is yet another reason why it should be able to maintain the appeal and that is that its individual members are taxpayers. The short answer to that contention is that the appeal was not *124 docketed in the name of the individual members of the County Council nor did they in any way associate their individual names with the appeal at any time, a different situation from that prevailing in County Commrs. of A.A. County v. Buch, 190 Md. 394, 58 A.2d 672 (1948), where an individual taxpayer complained. Accordingly, this contention is without merit.
Motion to dismiss denied; order affirmed; appellant to pay the costs.
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318 F.Supp. 955 (1970)
GLOBUS, INC., et al., Plaintiffs,
v.
LAW RESEARCH SERVICE, INC. and Ellias C. Hoppenfeld, Defendants.
and
BLAIR & CO., Granbery, Marache, Incorporated, Defendant and Third-Party Plaintiff,
v.
Paul WIENER, Third-Party Defendant.
No. 65 Civ. 1694.
United States District Court, S. D. New York.
October 7, 1970.
*956 Mudge, Rose, Guthrie & Alexander, New York City, for Blair & Co., Granbery, Marache, Inc.; Milton Black, Thomas Esposito, New York City of counsel.
Julien, Glaser, Blitz & Schlesinger, New York City, for Law Research Service, Inc., and Ellias Hoppenfeld; Alfred S. Julien, New York City, of counsel.
FRANKEL, District Judge.
In this lawsuit, a prolific generator of nice questions, plaintiff purchasers of securities have recovered a judgment under the 1933 and 1934 Securities Acts, have been paid a reduced amount allowed by a modification on appeal, and have finally gone hence. There remains a dispute as to whether one defendant, Blair & Co., Granbery, Marache, Incorporated (Blair), having paid in full the amount of the judgment, may recover contribution from the two defendants Law Research Service, Inc. (LRS), and Ellias C. Hoppenfeld held jointly and severally liable with it. The underlying dispute and its outcome have been fully recounted in an opinion by Judge Mansfield, which held, inter alia, that there could be no award of indemnity to Blair, 287 F.Supp. 188 (S.D.N.Y.1968), and an opinion of the Court of Appeals, 2 Cir., 418 F.2d 1276 (1969), affirming on that and all other subjects except punitive damages, which it ruled unavailable under § 17(a) of the 1933 Securities Act, 15 U.S.C. § 77q(a), as well as under § 10 (b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b).[1] For our post-satisfaction purposes, the introductory summary of the case from the latter opinion, at 1278-1280, is enough:
"The plaintiffs * * *, purchasers of the stock of * * * Law Research Services, Inc. * * *, initiated this action against LRS, its president Ellias C. Hoppenfeld, and the underwriter of LRS's public stock offer, Blair & Co. * * *. They contended that the [defendants] violated § 17(a) of the Securities Act of 1933, § 10(b) of the Securities Exchange Act of 1934, * * * and also committed common law fraud. The essence of their charge [was] that the offering circular prepared in connection with LRS's offer to sell 100,000 shares of its stock to the public under Regulation A of the Securities and Exchange Commission * * * was *957 misleading since it prominently featured an attractive contract between LRS and the Sperry Rand Corp. (Sperry Rand) while failing to refer to a dispute between the two companies which had led Sperry Rand to terminate some of its services to LRS and in turn caused LRS to file suit against Sperry Rand. Moreover, the plaintiffs contended that Blair's actions violated § 12(2) of the 1933 Act * * *.
"Judge Mansfield presided over a ten-day trial of these claims, to a jury in the Southern District of New York. The jury returned a verdict in favor of Blair, LRS and Hoppenfeld on the common law fraud claim but also decided that all three had violated both the Securities Act of 1933 and the Securities Exchange Act of 1934. Accordingly, the jury awarded compensatory damages to all plaintiffs totaling $32,591.14 and punitive damages against Hoppenfeld in the amount of $26,812.06 and Blair in the amount of $13,000, based on the violation of § 17(a) of the 1933 Act.
"The jury was also called upon to deal with a cross-claim asserted by Blair against LRS, which rested on an indemnity clause included in the underwriting agreement, and against Hoppenfeld and a third-party defendant, Paul Wiener, Secretary-Treasurer of LRS, sounding in tort. At the same time, LRS and Hoppenfeld asserted a cross-claim against Blair, grounded on the same indemnity agreement. On all these cross-claims, the jury found for Blair.
"Blair and Hoppenfeld then moved unsuccessfully to have Judge Mansfield set aside the award of punitive damages. LRS, Hoppenfeld and Wiener, however, moved successfully to set aside the verdict on the cross-claims for indemnity and the entry of judgment, pursuant to Fed.R.Civ.P. 50(b). Judge Mansfield's careful and thorough opinion of July 19, 1968 is reported at 287 F.Supp. 188. In sum therefore, LRS, Hoppenfeld and Blair appeal[ed] from the award of damages to appellees and Blair appeal[ed] from the Judgment on the cross-claims and third-party action."
As has been mentioned, the judgment in its form following the appeal left Blair, LRS and Hoppenfeld jointly and severally liable to plaintiffs. The liability was for compensatory damages only. Blair, for reasons that are in part of interest now and are considered below, was held barred from recovering on its indemnity agreement with LRS. In substance and effect, while they argued before and continue to argue now about the degrees of their fault, they stood equally culpable and equally responsible.
Nevertheless, Blair alone, on May 8, 1970, paid plaintiffs the full amount of the judgment, plus interest and costs, or a total of $36,888.59, reserving any rights it might have to contribution from the others. When LRS and Hoppenfeld refused to contribute, Blair brought on the motion now before the court seeking judgment against them for one-third each of the sum paid to plaintiffs. The motion will be granted for reasons which follow.
(1) Departing from the rugged flintiness of traditional common law, the general drift of the law today is toward the allowance of contribution among joint tortfeasors. See, e. g., Gomes v. Brodhurst, 394 F.2d 465 (3rd Cir. 1968); Huggins v. Graves, 337 F.2d 486 (6th Cir. 1964); Knell v. Feltman, 85 U.S. App.D.C. 22, 174 F.2d 662 (1949); Bedell v. Reagan, 159 Me. 292, 192 A.2d 24 (1963); Best v. Yerkes, 247 Iowa 800, 77 N.W.2d 23 (1956); Koenigs v. Travis, 246 Minn. 466, 75 N.W.2d 478 (1956); State Farm Mutual Automobile Ins. Co. v. Continental Cas. Co., 264 Wis. 493, 59 N.W.2d 425 (1953); Davis v. Broad St. Garage, 191 Tenn. 320, 232 S.W.2d 355 (1950); Quatray v. Wicker, 178 La. 289, 151 So. 208 (1933); Goldman v. Mitchell-Fletcher Co., 292 Pa. 354, 141 A. 231 (1928); N.Y. CPLR § 1401 *958 (1964); N.J.Rev.Stat. § 2A:53A (1952); Pa.Stat.Ann. tit. 12 §§ 2082-2089 (1951); Md.Ann.Code art. 50, §§ 16-24 (1951). See generally, Prosser, Law of Torts, § 47 (3rd Ed. 1964); Comment, Contribution Among Joint Tortfeasors, 44 Tex.L.Rev. 326, 326 n. 5 (1965) (cataloguing 24 States which have enacted statutes allowing contribution).
(2) More specifically, the securities acts underlying this case point clearly to the result Blair seeks.[2] As Judge Doyle pointed out in the de Haas case, supra note 2 at 815-816,
"those sections of the [securities acts] which expressly provide for civil liability contain express provisions for contribution among intentional wrongdoers. [Citing § 11 of the 1933 Act, 15 U.S.C. § 77k, and §§ 9 and 18 of the 1934 Act, 15 U.S.C. §§ 78i and 78r.] Since the specific liability provisions of the Act provide for contribution, it appears that contribution should be permitted when liability is implied under Section 10(b). III Loss, Securities Regulation 1739-40, n. 178 (1961)."
This is simply a pertinent application of the general principle that the two statutes are to be administered in pari materia. E. g., Globus v. Law Research Service, Inc., supra, 418 F.2d at 1286.
(3) The prior decisions of Judge Mansfield and the Court of Appeals denying Blair's claim to indemnity support Blair's position now. A central ground for the ruling on indemnity was the judgment that allowing such means of absolution would dilute the deterrent impact of the securities laws, which seek "to encourage diligence, investigation and compliance with the requirements of the statute by exposing issuers and underwriters to the substantial hazard of liability for compensatory damages." Id. at 1289. The shoe is now on the other foot. If not identical, the mode of escape sought by LRS and Hoppenfeld is objectionable on substantially similar grounds. They may not effectively nullify their "liability for compensatory damages" by leaving the whole of the burden to the more prompt and diligent party with which they have been cast in joint and several liability.
There is an argument by LRS and Hoppenfeld that Blair should be compelled to proceed by a plenary action, not by motion. The reason is said to be that a law firm and auditors involved in the offering that led to the lawsuit should be brought in because they must share the liability. The argument is frivolous. The law firm and auditors were never brought in when Blair sought indemnity from its two present opponents. The law firm and auditors are not liable under the judgment as joint tortfeasors.
Other contentions in opposition to the motion, still less weighty, have been considered and rejected.
Blair's motion is granted, The Clerk of the Court will enter judgments for Blair against LRS and Hoppenfeld, each in the amount of $12,296.19 (the shares as computed by Blair), plus interest from May 8, 1970.
It is so ordered.
NOTES
[1] Plaintiffs' petition for certiorari was denied, 397 U.S. 913, 90 S.Ct. 913, 25 L.Ed.2d 93 (1970).
[2] There is no basis for doubting that the subject of contribution, like indemnity (as has been held in this case), is governed here by federal law. See, e. g., de Haas v. Empire Petroleum Company, 286 F. Supp. 809, 815-816 (D.Colo.1968).
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132 S.W.3d 380 (2004)
Anthony LEGGETT, Appellant
v.
The STATE of Texas.
No. 1136-03.
Court of Criminal Appeals of Texas.
April 21, 2004.
John R. Gaines, Huntsville, for appellant.
Mark R. Maltsberger, Assist. DA, Huntsville, Matthew Paul, State's Attorney, Austin, for state.
OPINION
PER CURIAM.
The trial court convicted Appellant of attempted aggravated sexual assault and assessed his punishment at three years. The Court of Appeals affirmed and held that judge ordered community supervision is not available to a defendant convicted of attempted aggravated sexual assault. Leggett v. State, 110 S.W.3d 142 (Tex. App.-Houston [1st Dist.] 2003).
The Court of Appeals reasoned that even though attempted aggravated sexual assault is not listed under Article 42.12, § 3G (a), V.A.C.C.P., as an offense for which judge ordered community supervision is unavailable, aggravated sexual assault is included, and a conviction for an attempted offense constitutes a conviction for the underlying offense as well. To reach this conclusion, the Court of Appeals relied on its opinion in Parfait v. State, 85 S.W.3d 829 (Tex.App.-Houston [1st Dist.] 2002), which applied that same reasoning to Penal Code Section 3.03(b)(2)(A), allowing cumulation of sentences for certain offenses arising out of the same criminal episode.
However, this Court granted the State's petition in Parfait and reversed. Parfait v. State, 120 S.W.3d 348 (Tex.Crim.App. 2003). This Court held that attempted sexual assault was not included in the laundry list of offenses in the statute, and we rejected the Court of Appeals' theory that a conviction for an attempted offense is a conviction of the underlying penal code provision as well.
At the time the Court of Appeals handed down its opinion in this case, it did not have the benefit of our opinion in Parfait. Accordingly, we grant ground two of Appellant's petition for discretionary review, vacate the judgment of the Court of Appeals, and remand to that court for reconsideration in light of our opinion in Parfait. Appellant's remaining ground for review is refused.
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383 F.2d 722
COLLINS & AIKMAN CORPORATION, Petitioner,v.NATIONAL LABOR RELATIONS BOARD, Respondent.
No. 10973.
United States Court of Appeals Fourth Circuit.
Argued March 7, 1967.
Decided September 15, 1967.
COPYRIGHT MATERIAL OMITTED Frank A. Constangy, Atlanta, Ga. (Constangy & Powell, Atlanta, Ga., on brief), for petitioner.
Vivian Asplund, Atty., N. L. R. B. (Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, and Solomon I. Hirsh, Atty., N. L. R. B., on brief), for respondent.
1
Before BOREMAN and WINTER, Circuit Judges, and SIMONS, District Judge.
SIMONS, District Judge:
2
Pursuant to Section 10(f) of the National Labor Relations Act as amended, 29 U.S.C.A., Section 160(f), Collins and Aikman Corporation (hereinafter referred to as the Company) petitions this court to review and set aside an order of the National Labor Relations Board (hereafter the Board), which held that the Company had violated Section 8(a) (5) and (1) of the Act by refusing to bargain with the Textile Workers Union of America, AFL-CIO, (hereafter the Union), as the exclusive representative for its employees in its branch operation in Culver City, California,1 and ordered the Company to cease and desist from such practice. The Board cross-petitioned for enforcement of its order, 29 U.S.C.A., Section 160(e).
3
The sole issue raised by the petition for review is whether the Board's certification of the representation election is valid. If so, the Company's refusal to bargain with the Union violated Section 8(a) (5) and (1) of the Act, and requires enforcement of the Board's order.
4
This controversy arose as a result of an election conducted on June 4, 1965 by the Board pursuant to Section 9 of the National Labor Relations Act as amended for the purpose of having the Company's production and maintenance employees at its Culver City, California plant determine whether they desired to have the Union as their exclusive bargaining agent. In the election 13 employees voted for and 12 against Union representation. Timely objections to the election were filed by the Company upon its discovery that the Union made certain alleged pre-election misrepresentations, and improper financial inducements to some of its employees which it contended actually affected, or tended to affect, the results of the election. The Company's objections were as follows:
5
(1) That the Union promised to waive initiation fees to employees signing Union cards prior to the election, but that such waiver was conditioned upon the Union's "winning the election";
6
(2) That the Union induced an employee, Wener, who had theretofore refused to do so, to act as its representative and observer at the election by promising to pay him for doing so a sum far in excess of his regular earnings for the period of time involved;
7
(3) That the Union substantially misrepresented the wage provisions of the contract it had negotiated with other carpet manufacturers in the area in order to obtain support of eligible voters; and
8
(4) That the Union promised immediate and substantial wage adjustments to employees in the event it won the election.
9
The Regional Director conducted an investigation of the Company's objections and thereafter submitted to the Board his report recommending that all of the objections be overruled and that it certify the Union as a result of the election. The Company then filed timely exceptions with supporting affidavits to the Regional Director's report. The Board ordered a hearing to explore and resolve the factual and legal issues raised by the Company's objections and exceptions.
10
All parties were represented at the hearing, produced witnesses and participated therein, and such testimony was taken as was tendered. Thereafter, the Hearing Officer recommended that the Company's objections be rejected and that the election results be certified. The Board on review, although noting that the Hearing Officer had erred with respect to his findings that the Union's misrepresentations referred to in objection number three had not occurred, nevertheless accepted the Hearing Officer's recommendations and certified the Union.2 With such conclusion we cannot agree. We hold for the reasons hereinafter stated that the Board's order overruling the Company's objections two and three and certifying the election as valid is not supported by substantial evidence on the record as a whole. Enforcement of the order under review should therefore be denied. 29 U.S.C.A. § 160(f).
11
MISREPRESENTATIONS AS TO WAGE RATES OF COMPANY COMPARED TO THOSE OF ITS UNIONIZED COMPETITORS — (OBJECTION THREE)
12
Briefly stated the background facts relative to this issue are as follows: Subsequent to the filing of its election petition and during the campaign, the Union called a meeting at the Moose Hall a short distance from the plant two or three weeks prior to the election. Upon his arrival at the hall for such meeting, employee-voter Louis Winkley learned from Union representative Chester Wright that the formal meeting had been called off because the hall was being used by some other group. Winkley then engaged Wright in conversation in the parking lot, and questioned him concerning the policies of the Union. The conversation turned to wages paid by the Company as compared to those paid by other carpet manufacturers in the area. Winkley's testimony at the Board hearing3 concerning their wage rate conversation is as follows:
13
"I asked him, okay, if the Union got in — he asked me was I a shipper, and at the time I was a shipper, and I had switched jobs because I couldn't take all them pressures; so, I got to be a creeler, and he told me if he thought I was a shipper, he thought I should be making at least $2.25. And I told him I was making $1.85, and I told him I was a creeler now and only making $1.65. And he said a creeler should be making at least $1.90 and that is when he came up with that list."
14
"That list" which was shown by Wright to Winkley as being the wage rates at the unionized Holly-Tex plant supported his statement that at the Holly-Tex plant the Union had negotiated considerably higher wage rates for a "shipper" and a "creeler". Winkley had been a "shipper" for the Company before transferring to that of a "creeler" a short time before. Winkley testified that Wright told him that the "list" contained the wage rates at the Holly-Tex plant where the Union had negotiated a rate of $2.25 per hour for a "shipper" and $1.90 per hour for a "creeler". The Company had been paying Winkley $1.85 per hour while working for it as a "shipper", and he was currently making $1.65 as a "creeler".4 The fact that these misrepresentations had been made by Wright to Winkley did not come to light until after the election, thus the Company had no opportunity to combat or correct them. Prior to the hearing on its objections the Company obtained a copy of the actual rates contained in the Holly-Tex Union contract, and it was stipulated at the hearing that the rates shown on such list were the current rates for the period of time in question. In this connection it is noted that Winkley testified5 that the rates contained on the stipulated list were not the rates nor the paper shown to him by Wright. In fact, a comparison of the Holly-Tex rates and the Company's rates in effect at that time discloses that a "creeler" at Holly-Tex, under its Union contract, was receiving $1.60 per hour while the Company was paying $1.65 to Winkley. Wright had misrepresented to Winkley that the Holly-Tex pay rate for such position was $1.90 per hour.
15
It is significant that Wright, who was called as the last witness at the hearing by the Board after Winkley had testified, was not questioned concerning Winkley's testimony and in no way disputed or contradicted such testimony concerning the misrepresentations he had made to Winkley. Neither was the list (apparently fictitious) which Wright had exhibited to Winkley on the night in question produced in court.
16
Generally the task of correcting inaccurate and untrue statements during a campaign of a representation election is left to the parties and ultimately to the good sense of the voters. An election will not be set aside because of campaign misrepresentations unless it is likely that such utterances had a significant impact on the election. Linn v. United Plant Guard Workers of America, Local 114, 383 U.S. 53, 60, 86 S.Ct. 657, 15 L.Ed.2d 582 (1966); Olson Rug Co. v. N.L.R.B., 260 F.2d 255 (7th Cir. 1958); Anchor Mfg. Co. v. N.L.R.B., 300 F.2d 301, 303 (5th Cir. 1962). Determination of the validity of such elections has been reposed in the expertise of the Board by Congressional mandate, subject only to review by the Courts of Appeal, and on review "the findings of the Board with respect to questions of fact if supported by substantial evidence on the record considered as a whole shall in like manner be conclusive." 29 U.S.C. Section 160(f). N.L.R.B. v. National Plastics Products Co., 175 F.2d 755 (4th Cir. 1949). The burden of proof that an election was unfair and that it did not represent the free and untrammeled will of the electorate is upon the objecting party, in this case the Company. N.L. R.B. v. Mattison Machine Works, 365 U.S. 123, 81 S.Ct. 434, 5 L.Ed.2d 455 (1961).
17
When material misrepresentations are made by a Union or its representatives in the course of an election which offend the electoral process, tend to affect or are likely to have a significant impact upon such election, then there can be no fair, uninfluenced or untrammeled election and the same should not be certified as valid. N.L.R.B. v. Schapiro and Whitehouse, Inc., 356 F.2d 675 (4th Cir. 1966). Our comments in N.L.R.B. v. Bonnie Enterprises, Inc., 341 F.2d 712, at page 714 (4th Cir. 1965), concerning false representations made in the course of an election campaign are equally applicable to the material misrepresentations made in the instant case by the Union's business representative who told an interested employee-voter before the election that "shippers" and "creelers" at a nearby competing carpet plant operating under a Union contract were getting substantially larger wage rates than were being paid by the Company:
18
"It is clear that the promises contained in the circular went far beyond the bounds of permissible hyperbole sometimes indulged in during pre-election campaigns for public office. They were substantial misrepresentations of material facts of vital concern to employees voting in the election. In fact, it is difficult to conceive of more important misrepresentations. Furthermore, the timing of the publication afforded no opportunity for the interested parties to either verify the claims or to determine their untruthfulness.
19
"While we recognize the considerable discretion with which the Board has been entrusted, it is proper to observe that with discretion goes responsibility.
20
* * * * * *
21
"It follows that the enforcement of the order of the Board should be denied, because of the impropriety of this piece of campaign literature which was sufficient to mislead the electorate when casting their votes."
22
The general rule relating to material misrepresentations during pre-election campaigns has been well stated by the Seventh Circuit in Celanese Corporation of America v. N.L.R.B., 291 F.2d 224, at page 226 (1961), cert. den. 368 U.S. 925, 82 S.Ct. 360, 7 L.Ed.2d 189 (1961):
23
"In accordance with the `wide discretion' entrusted to it, the Board has adopted the policy to set aside a representation election where it appears that (1) there has been a material misrepresentation of facts (2) this misrepresentation comes from a party who has special knowledge or was in an authoritative position to know the true facts, and (3) no other party had sufficient opportunity to correct the misrepresentations before the election. * * * Where these elements are present, the Board has found that the legitimate limits of campaign propaganda have been exceeded and has set aside the election on the ground that it does not reflect the free desires of the employees without further requiring that prejudice to the fairness of the election be shown."
24
See also N.L.R.B. v. Houston Chronicle Publishing Co., 300 F.2d 273 (5th Cir. 1962); Grede Foundries, Inc., 153 N.L. R.B. 984 (1965).
25
The elements present in the Celanese and Houston Chronicle cases are present here. The Board has found and the evidence substantiates that there was a misrepresentation of a material fact made to voter Winkley. The materiality of such misrepresentation is self evident. Additionally the misrepresentation came from a recognized representative of the Union who had negotiated the Holly-Tex contract, and who was clearly in position to hold himself out as a person having special knowledge and in an authoritative position to know the true facts. Neither did the Company have an opportunity to counter or correct the misrepresentations before the election. We are not impressed with the Board's determination which in effect sweep such misrepresentations under the rug, nor with respondent's argument that the variance between the official Holly-Tex wage rates and the rates quoted by Wright to Winkley were not substantial and that Winkley had sufficient time between the misrepresentations and the election to check the truth of the Union's claims. All wage earners in today's economy are indeed conscious of and affected by their rates of pay. Surely one of the strongest selling points of the Union is its ability to negotiate effectively more favorable working conditions, especially increased pay rates, in selling itself to a majority of the workers at a non-union plant. It could hardly be expected that Winkley would check to verify the accuracy of any statements in regard to wages made to him by Wright, the Union Representative. Wright was known as the official spokesman for the Union and there was no reason for Winkley to doubt him. Neither can the Company be faulted for failure to rebut or counter such misrepresentations since it had no knowledge of them until after it was too late.6 We agree with the Fifth Circuit in N.L.R.B. v. Trinity Steel Co., 214 F.2d 120, at page 123 (1954), wherein it stated:
26
"We recognize that is was primarily for the Board to determine whether the election was fairly conducted or was unfairly conducted and should be set aside. However, it is the court's responsibility to see that the Board keeps within reasonable grounds and where as here the standard of reasonableness appears to have been misapprehended, the Board's findings must be set aside."
27
We recognize that it is a well settled Board policy which has been approved repeatedly by the courts not to set aside an election because of campaign misrepresentations unless it is found that such utterances had or tended to have a significant impact on the election. Graphic Arts Finishing Co., Inc. v. N.L.R.B., 380 F.2d 893 (4th Cir. 1967); Hollywood Ceramics Co., Inc., 140 N.L.R.B., 221 (1962); The Gummed Products Company, 112 N.L.R.B. 1092 (1955). In this particular case where the election was decided by one vote we are compelled to the conclusion that the Board's determination that such misrepresentations were not likely to have a significant impact on the election is not supported by substantial evidence on the record as a whole. 29 U.S.C.A. Section 160, and Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1952).
28
IMPROPER INDUCEMENT PROMISED COMPANY EMPLOYEE TO SERVE AS UNION ELECTION OBSERVER — (OBJECTION TWO)
29
The night before the representation election the Union asked company employee Wener to serve as its observer in the election and he declined. The next morning a Union representative called Wener to the polling place and again sought to have him serve as the Union's observer. Once again he refused stating that he did not "want to lose any money for the time spent." Thereupon the Union agreed to pay him the wages he would lose and he still declined. Finally the Union told him it would pay him for a "straight eight hours" if he would serve, and he said "Well, all right." Thus, in order to obtain his services as an observer the Union agreed to pay him for an eight-hour day,7 or a total of $14.00 to act as an observer at an election which only lasted for one and one-half hours. His regular pay for this period of time was approximately $2.00 and the Union subsequently only paid him $7.00 although it had promised to pay him $14.00.
30
We do not question the right of the Union to select Wener as its observer and to pay him a reasonable sum for "services rendered." The fact that he was paid in itself does not constitute ground for setting aside an election. Shoreline Enterprises of America, 114 N.L.R.B. 716 (1965). However, unreasonable or excessive economic inducements should not be permitted. Here the employee was promised seven times his regular pay rate to act as the Union observer. While we cannot say that such conduct on the part of the Union actually influenced the vote of Wener or other employees in the election, we do find that such conduct undoubtedly had a tendency to influence the election results. In a case of similar import, Teletype Corp., 122 N.L.R.B. 1594, (1959), the Board upheld objections to an election where payments were made by competing unions to a company's employees to encourage them to attend meetings of the respective unions. In setting aside the representation election and ordering that a new one be held the Board stated at pages 1595-96:
31
"As each union sought to attract more employees to its meetings, the rates paid for attendance increased until, at one point, employees at a 3-hour IBEW meeting were paid an amount equal to 8 hours at their regular hourly rates * * *
32
"* * * The investigation failed to reveal that the payment of moneys to employees for attending union meetings was contingent upon their voting for the respective union whose meetings they attended. However, the investigation showed that these competitive payments created much excitement among the employees in the plant.
33
"The Regional Director recommended that the election be set aside because the above-described action `by both unions made impossible a free and untrammeled choice by the voters.' We agree with that recommendation.
34
"It is the Board's policy to set aside an election `when a record reveals conduct so glaring that it is almost certain to have impaired employees' freedom of choice'. We have here such outrageous conduct. The unions' method of competitive bidding was so blatant and the payments of moneys so excessive that we cannot assume that the election truly reflected the employees' choice. The campaign standards deemed essential to the proper conduct of an election were here displaced by the atmosphere of the auction room. Such impropriety we cannot, in good conscience, countenance. Therefore, whether or not payments were contingent upon voting for any particular union, we find that both unions so lowered the standards of election conduct as to necessitate a new election. Accordingly, we shall set aside the election and order that a new one be held."
35
Under the Act it is the Board's responsibility to establish reasonable and proper standards essential to the conduct of a representation election, and to police the campaign sufficiently to assure compliance with its ground rules. As the First Circuit said in N.L.R.B. v. Trancoa Chemical Corporation, 303 F.2d 456, at 462, 3 A.L.R.2d 879 (1962):
36
"If the Board tolerates low standards, that is where they will stop. The Board twice asserts that it does not `condone' untruthfulness, but standards will be set by what it does, and not by what it says."
37
Here the Union made false representations of wage rates it had negotiated at a competing plant, a most material matter; and it promised excessive economic inducements to a company employee to prevail upon him to act as Union observer, which transgressed the bounds of propriety. Such conduct was violative of reasonable and proper standards. We find such actions likely to influence unduly and mislead the electorate when casting its votes in a very close election, especially where a change of one vote would have reversed the outcome.
38
In view of the foregoing conclusions we find it unnecessary to consider and pass upon the other related aspects of the Union's pre-election conduct.8
39
We thus conclude that the Board's certification of the election and its determination overruling the Company's objections two and three are not supported by substantial evidence on the record as a whole. The Company's petition to set aside the Board's order finding it in violation of Section 8(a) (5) and (1) of the Act for failure to bargain with the Union should be granted, and the Board's cross-petition for enforcement should be dismissed.
40
Petition granted; enforcement denied.
Notes:
1
Petitioner is incorporated under the laws of Delaware and maintains its principal office and place of business at Albemarle, North Carolina, within the jurisdiction of this court. In addition to its North Carolina operations petitioner also owns and operates a small branch carpet plant in Culver City, California where it employs approximately 25 production and maintenance employees
2
Specifically the Board found that a misrepresentation was made by an admitted agent of the Union that the Union had a contract with a neighboring carpet plant (Holly-Tex) which provided wage rates in the two jobs performed from time to time by the employee to whom the misrepresentation was made of more than twenty-five cents and as much as forty cents per hour above the employee's own wage rate with the Company. Also the evidence substantiates that the Union representative in fact misrepresented to the employee that the rates on a paper he showed him were the actual rates of the contract he referred to. Nevertheless, the Board determined that because of the "amount of the misrepresentation" and the "timing of the misrepresentation," it would not disturb the Hearing Officer's recommendations in this regard
3
Pages 134-135 of Joint Appendix in record before this court
4
The Board in modifying the Hearing Officer's findings stated:
"With respect to the Hearing Officer's disposition of Objection 3, although we agree with his result we do so only for the following reasons:
The Hearing Officer, in finding that the Petitioner's alleged misrepresentation was not significant, erroneously presumed that at the time the misrepresentation was made to employee Winkley, he was also given a copy of the correct rates. The record does not support that presumption. However, in view of the amount of the variance, and the fact that the misrepresentation was made 2 or 3 weeks before the election, we do not regard it is sufficient to warrant reversing the Hearing Officer's recommendation." Note 1 of Board's Decision and certification of Representative, dated January 24, 1966 Joint Appendix 206).
5
J.A. 136
6
Anchor Mfg. Co. v. N.L.R.B., 300 F.2d 301 (5th Cir. 1962), heavily relied upon by respondent in brief and argument before this court, is distinguishable from the case at bar since the court at page 304 pointed out that the handbill relating to the wage rates at the unionized plant could not be said to be false and misleading and further, that "[e]ven had the statements been false, however, it is clear that the employees had no reason to believe that the Union had greater knowledge of the facts than the Company, which again had the opportunity to and did rebut the Union assertions, for on the same day a meeting of the employees was held, and with a copy of the Manchester contract in his hand, the Company representative explained the company's version of the facts."
7
It is noted that the Hearing Officer made the following finding:
"I find that Wener agreed to act only after he was promised the eight hours pay." (J.A. 199).
8
As to the Company's objection number one attention is invited to the recent decision of the National Labor Relations Board in Dit-MCO, Inc., employer, and International Union, United Automobile, Aero Space and Agricultural Implement Workers of America, UAW-AFL-CIO, petitioner, 163 N.L.R.B. 47, decided April 15, 1967 after the instant case was argued in this court
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512 So.2d 918 (1987)
Tommye Summerville SPINDLOW
v.
Paul Clayton SPINDLOW.
Civ. 5670.
Court of Civil Appeals of Alabama.
March 11, 1987.
Rehearing Denied April 8, 1987.
*919 Joseph W. Adams, Birmingham, for appellant.
Walter Cornelius, Birmingham, for appellee.
EDWARD N. SCRUGGS, Retired Circuit Judge.
This appeal concerns a Rule 60(b)(6), Alabama Rules of Civil Procedure, amended motion by Mr. Spindlow to set aside an adjudication of paternity as had been established by the May 5, 1982 final judgment which divorced the parties. The former Mrs. Spindlow's answer was that the divorce judgment constituted res judicata as to paternity. For convenience and clarity, the parties will be referred to as the husband and the wife.
At a hearing as to the husband's motion, he testified that the child was born on July 29, 1981 and that he had regularly visited with the child from the time of the divorce until he moved to Michigan in February 1985. In late June 1985 the wife telephoned the husband with a request that he keep the almost-four-year-old child for at least six months because of the wife's illness. He further testified that the wife told him in that same conversation that he was not the child's father. A day or so later the husband came to Birmingham and took the child with him to Michigan.
On October 7, 1986 the trial court ordered blood tests of the parties and the child, and, additionally, pursuant to Rule 60(b), set aside the prior adjudication of paternity as determined by the original divorce judgment. The matter of the paternity of the child was deferred for further hearing in accordance with the rules of evidence pertaining to such issue. No further proceedings were held before the trial court.
The wife appealed from that portion of the October 7, 1986 judgment which granted the Rule 60(b) motion, and the wife sought a writ of mandamus in the alternative. That judgment was an interlocutory judgment only, and it will not support an *920 appeal. Hobbs v. Hobbs, 423 So.2d 878 (Ala.Civ.App.1982).
A motion for relief from a final judgment on account of the fraud, misrepresentation, or other misconduct of the adverse party must be instituted within four months after the entry of the judgment. Rule 60(b)(3), A.R.Civ.P.; McPherson v. King, 437 So.2d 548 (Ala.Civ.App.1983). Here, Rule 60(b)(3) cannot have any application, for the husband's motion was filed many months after the four-month deadline.
Additionally, Rule 60(b)(6) authorizes the filing of an independent action to relieve a party from a judgment for "fraud upon the court" if the independent action is brought within three years after the entry of the judgment or within the additional time of two years after the discovery of the fraud as is now permitted by section 6-2-3 of the Alabama Code of 1975 (1986 Cum. Supp.). We will consider the husband's motion as being such an independent action. It was timely filed.
The Supreme Court of Alabama has defined "fraud upon the court" as embracing only that species of fraud which defiles or attempts to defile the court itself or which is a fraud perpetrated by an officer of the court, and it does not include fraud inter parties without more. Brown v. Kingsberry Mortgage Co., 349 So.2d 564 (Ala.1977). To the same practical effect, see Aker v. State, 477 So.2d 437 (Ala.Civ. App.1985); Anonymous v. Anonymous, 473 So.2d 502 (Ala.Civ.App.1984); McPherson, supra; and Stewart v. Stewart, 392 So.2d 1194 (Ala.Civ.App.1980), cert. denied, 392 So.2d 1196 (Ala.1981). In addition to Stewart, certiorari was also denied in each of the other cases. Perjury of a party is not per se a ground for postjudgment interference with a final judgment. Aker, supra; Stringer v. Sheffield, 451 So.2d 320 (Ala.Civ.App.1984); Stewart, supra. Under factual conditions which are comparable with the present case, it has been consistently held that similar acts of a party did not constitute a fraud upon the court. Aker, supra; Anonymous, supra; Stringer, supra; McCrary v. McCrary, 408 So.2d 523 (Ala.Civ.App.1981); Stewart, supra. We likewise hold that the acts and words of the wife in the present case were not a fraud upon the court.
As to the parties' divorce action, it was alleged in the wife's complaint that this particular child was born of the marriage. The settlement agreement of the parties concerning their domestic difficulties contained the following language: "It is agreed that there was one child born of the marriage of the parties [naming the child]"; the mother is awarded the custody "of the minor child of the parties"; the husband agreed to pay $75 per month "for the support and maintenance of said minor child of the parties"; and the husband is granted visitation rights "with the said minor child of the parties." The wife's testimony included proof that "[t]here was one child born of the marriage [naming the child]." The divorce judgment made the agreement of the parties a part of the judgment by reference. Accordingly, the divorce proceeding established the paternity of the child and the parties are precluded by res judicata from disputing the child's paternity in subsequent proceedings. Aker, supra; Anonymous, supra; Collier v. State, ex rel. Kirk, 454 So.2d 1020 (Ala.Civ.App.1984); Stringer, supra; McCrary, supra; Julian v. Julian, 402 So.2d 1025 (Ala.Civ.App.1981); Stewart, supra. Many of those cases are factually similar to the instant case, and Stewart is almost on all fours.
The husband relies greatly upon Coburn v. Coburn, 474 So.2d 728 (Ala.Civ.App. 1985). The post-divorce litigation in Coburn was an attempt to legitimate a child who had been bastardized by an agreement of the parties, while the present case is one to bastardize a child who had been previously adjudged to be the child of the parties. In Coburn it was expressly emphasized that prior holdings that an adjudication of paternity is generally res judicata were not overruled. Coburn, 474 So.2d at 731. Coburn does not here applyStewart and its progeny do.
For the foregoing reasons the learned trial court erred in setting aside the prior adjudication of paternity as established by *921 the parties' original divorce judgment. As a matter of law, the holding of the divorce judgment established the paternity of the child and, as to the parties, is res judicata as to the child's paternity. Stewart, supra. A writ of mandamus shall issue to the circuit court unless that court within fourteen days from this date (1) sets aside its October 7, 1986 judgment in this cause; (2) enters a judgment restoring the prior adjudication of paternity as established by the parties' original divorce judgment of May 5, 1982; and (3) dismisses the husband's Rule 60(b) motion as amended. A copy of such order of the circuit court shall be promptly filed with the clerk of this court.
The foregoing opinion was prepared by Retired Circuit Judge EDWARD N. SCRUGGS while serving on active duty status as a judge of this court under the provisions of section 12-18-10(e), Code 1975, and this opinion is hereby adopted as that of the court.
WRIT OF MANDAMUS CONDITIONALLY GRANTED.
All the Judges concur.
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783 F.2d 1532
12 Media L. Rep. 1842
Jack JERSAWITZ, Plaintiff-Appellant,v.Jack HANBERRY, et al., Defendants-Appellees.
No. 85-8434.
United States Court of Appeals,Eleventh Circuit.
March 10, 1986.Rehearing and Rehearing En Banc Denied April 17, 1986.
Jeffrey O. Bramlett, Atlanta, Ga., Norman P. Stein, University, Ala., Gary A. Ratner, Michael J. Gerhardt, Atlanta, Ga., for plaintiff-appellant.
Robert Tayloe Ross, Asst. U.S. Atty., Atlanta, Ga., for defendants-appellees.
Appeal from the United States District Court for the Northern District of Georgia.
Before JOHNSON and ANDERSON, Circuit Judges, and DYER, Senior Circuit Judge.
DYER, Senior Circuit Judge:
1
Plaintiff Jersawitz, a self-styled independent journalist, sought a declaratory judgment against the Warden and another official of the Atlanta Penitentiary, that a prison regulation which limits interviews with inmates to representatives of the news media whose principal employment is to gather or report news for a radio or television news program of a station holding a Federal Communications Commission license is unconstitutional insofar as it distinguishes between Jersawitz and the defined representatives of the news media. The district court, 610 F.Supp. 535 (1985), upheld the constitutionality of the regulation and granted summary judgment for the defendants. We affirm.
2
The facts are undisputed. Jersawitz self-produces an editorial-type television show called "Let's Tell It Like It Is" and utilizes a public access channel operated by Prime Cable, Channel 12, Atlanta to project his show. He was not and is not an employee of Channel 12. In fact he has never been employed by anyone to gather or report news. The station is independent from major media organizations and, according to Jersawitz, any citizen can walk in off the street and utilize the facilities of public access free of charge. Channel 12 does not ordinarily supervise the taping of anyone's shows, and it exercises little, if any, control over the programming.
3
Jersawitz requested permission to interview Father Bourgeois, a critic of United States foreign policy, who was a prisoner confined in the Atlanta Federal Penitentiary. He intended to tape and then replay the interview on his show. The Warden denied Jersawitz access to the penitentiary on the ground that he was not a representative of the news media as that term is defined in the media access regulation established by the Bureau of Prisons, 28 C.F.R. Section 540.2(G)(4). The regulation governs federal prisoners contact with the media and defines representatives of the news media in pertinent part "as ... persons whose principal employment is to gather or report news for ... a radio or television news program of a station holding a Federal Communications license." Jersawitz concedes that he is not a representative of the news media as defined by the regulation.
4
The district court, in upholding the constitutionality of the regulation, applied the traditional rational relationship test in evaluating the challenge to the regulation, concluding that a compelling state interest analysis proposed by Jersawitz was inappropriate because the case neither involved a suspect class nor implicated fundamental constitutional rights. The court found that the Bureau of Prisons had a rational basis for its classification and granted the Bureau of Prisons' motion for summary judgment.
5
Jersawitz' basic attack on the constitutionality of the Bureau of Prisons regulation is that it does not give even-handed treatment to journalists, that is, if the Bureau of Prisons admits some journalists to the penitentiary for a face-to-face interview with a certain inmate, it must let all journalists in for the same purpose absent a showing of compelling state interest. Jersawitz contends that the regulation is unconstitutional because it discriminates among journalists based upon their employment status.
6
At the outset we note that there is nothing in the record to indicate that the difference in classification in the regulation, i.e. those journalists who may, and those who may not gain access to the Atlanta Federal Penitentiary, is content based. Nor is there any evidence of bad faith on the part of the government in adopting such a classification.
7
We need not pause long to dispose of the First Amendment claim. It is now settled without peradventure that newsmen have no constitutional rights of access to prisons or their inmates beyond that afforded the general public. Pell v. Procunier, 417 U.S. 817, 834, 94 S.Ct. 2800, 2810, 41 L.Ed.2d 495 (1974); Saxbe v. Washington Post Co., 417 U.S. 843, 94 S.Ct. 2811, 41 L.Ed.2d 514 (1974). Accepting the holding in these cases as he must, Jersawitz turns to the Equal Protection Clause and argues that Pell and Saxbe are distinguishable from this case because in both of those cases the restrictions to access were on an even-handed basis, and the journalists were therefore no more disabled than the general public. Yet when the Bureau of Prisons here says that it is in the public interest to grant face-to-face interviews with inmates, but that to insure fair and accurate reporting the Bureau of Prisons will decide which journalists are fair and objective, it oversteps the even-handed approach under the equal protection guarantee.
8
Jersawitz' argument states, then builds upon a slanted premise. The regulation was not adopted for the purpose of providing, nor can it be construed to mean, that the Bureau of Prisons could give or withhold access to the Atlanta Maximum Security Penitentiary simply on its decision whether or not a newsman would report fairly and objectively. In clear terms the regulation recognizes the need for the prison to maintain security and order within the prison and allow limited access for interviews by insuring that the representatives of the news media are responsible persons employed by and responsible to recognized media organizations. This permits the prison facility to identify those persons who are not likely to pose any threat to security without the facility having to conduct extensive individual investigations of each applicant. Thus, it provides the public with an objective and accurate news presentation by a person whose profession is gathering and reporting news without the likelihood of breaching the prison's security. Jersawitz contends that this is not enough. Since the Bureau of Prisons grants the privilege to selected categories of the media while denying it to him, the regulation violates the Equal Protection Clause unless the Bureau of Prisons can show a compelling state interest to validate the classifications, and this it has failed to do. We agree with the district court that the compelling state interest analysis only arises in cases involving governmental action which implicates a constitutional right or affects a suspect class. This case does not involve a claim of constitutional magnitude, a suspect class, invidious discrimination, or any other matter that would require strict scrutiny of the Bureau of Prisons regulation here at issue.
9
We have no difficulty in agreeing with the district court's holding that the Bureau of Prisons regulation is rationally related to the Bureau of Prisons "obvious need to maintain security and order within the prison, and the administrative need in implementing visitor regulations." This is especially true, where, as here, we are dealing with a maximum security penitentiary. It is undeniable that the administration of the penal system is a task of monumental proportions, Block v. Rutherford, 468 U.S. 576, 104 S.Ct. 3227, 3231, 82 L.Ed.2d 438 (1984), and that the necessity to preserve order and authority in the prisons is self-evident. Jones v. North Carolina Prisoners' Union, 433 U.S. 119, 132, 97 S.Ct. 2532, 2541, 53 L.Ed.2d 629 (1977). Security is the prime concern and is central to all other correctional goals, Pell, supra, 417 U.S. at 823, 94 S.Ct. at 2804. As pointed out in Bell v. Wolfish, 441 U.S. 520, 547-48, 99 S.Ct. 1861, 1878, 60 L.Ed.2d 447 (1979):
10
[T]he problems that arise in the day-to-day operation of a corrections facility are not susceptible of easy solutions. Prison administrators therefore should be accorded wide-ranging deference in the adoption and execution of policies and practices that in their judgment are needed to preserve internal order and discipline and to maintain institutional security. (Citations omitted). "Such considerations are peculiarly within the province of professional expertise of corrections officials, and, in the absence of substantial evidence in the record to indicate that the officials have exaggerated their response to these considerations, courts should ordinarily defer to their expert judgment in such matters. Pell v. Procunier, 417 U.S. at 827 [94 S.Ct. at 2806]."
11
We cannot say that the Bureau of Prisons in any way exaggerated the legitimate concern or abused its discretion in promulgating the regulation in question.
12
Finally Jersawitz contends that to sustain a classification system that differentiates between members of the news media on the basis of their employment, the government must demonstrate that it selected the regulatory path least restrictive of a constitutionally-protected interest. As we have already said, this case does not involve a claim of constitutional magnitude. In any event, this argument was peremptorily disposed of in Block v. Rutherford, supra, 104 S.Ct. at 3235 n. 11, in which the court said, "We reaffirm that administrative officials are not obliged to adopt the least restrictive means to meet their legitimate objectives" (citing Bell v. Wolfish, 441 U.S. 542 n. 25, 99 S.Ct. 1876 n. 25.).
13
We conclude that the challenged Bureau of Prisons regulation does not create an arbitrary classification in violation of Jersawitz' right to equal protection of the law. The regulation bears a rational relationship to the objective of maintaining order and security in the maximum security Atlanta Federal Penitentiary while granting limited access to the prison to interview face-to-face designated inmates by "representatives of the news media" as they are defined in the regulation. See Johnson v. Robinson, 415 U.S. 361, 94 S.Ct. 1160, 39 L.Ed.2d 389 (1974).
14
AFFIRMED.
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Order entered June 30, 2015
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-14-01491-CV
RICHARDSON EAST BAPTIST CHURCH, Appellant
V.
PHILADELPHIA INDEMNITY INSURANCE COMPANY AND JAMES GREENHAW,
Appellees
On Appeal from the 298th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-13-13868
ORDER
We GRANT appellant’s June 29, 2015 motion for extension of time to file reply briefs
and ORDER the briefs be filed no later than July 15, 2015.
/s/ CRAIG STODDART
JUSTICE
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285 F.3d 111
In re The HOME RESTAURANTS, INC., Debtor.Banco Bilbao Vizcaya Argentaria, Defendant, Appellant,v.Family Restaurants, Inc., and Hector Cuevas Cuevas, Plaintiffs, Appellees,Wigberto Lugo Mender, Defendant, Appellee.
No. 01-9014.
United States Court of Appeals, First Circuit.
Heard March 5, 2002.
Decided April 2, 2002.
Wanda I. Luna-Martinez, with whom Montanez & Alicea Law Offices was on brief, for appellant.
Ramon Torres Rodriguez for plaintiffs-appellees.
Wigberto Lugo Mender for defendant-appellee.
Before TORRUELLA, Circuit Judge, COFFIN, Senior Circuit Judge, and SELYA, Circuit Judge.
COFFIN, Senior Circuit Judge.
1
Appellant Banco Bilbao Vizcaya Argentaria ("the Bank"), a creditor in a Chapter 7 bankruptcy proceeding, claims that the bankruptcy court wrongly refused to grant it relief, under Fed.R.Civ.P. 60(b) and Fed. R. Bankr.P. 9024, from a default judgment totaling $24,506.55.1 The Bankruptcy Appellate Panel for the First Circuit ("BAP") affirmed the bankruptcy court's ruling, and we likewise find no reversible error.
2
Although this case reaches us by way of the BAP, we are charged with direct review of the bankruptcy court's decision. See In re Healthco Int'l, Inc., 132 F.3d 104, 107 (1st Cir.1997). We consider that court's conclusions of law de novo and scrutinize its factual findings for clear error. Id. Absent legal error, we review the court's refusal to set aside a default judgment under Rule 60(b) only for abuse of discretion. See Claremont Flock Corp. v. Alm, 281 F.3d 297, 299 (1st Cir. 2002); Key Bank of Maine v. Tablecloth Textile Co., 74 F.3d 349, 352 (1st Cir.1996).
3
The Bank's appeal has three primary prongs, two of which challenge the bankruptcy court's legal authority to order the default. It argues that the court lacked jurisdiction to address appellees' claims in light of the United States Supreme Court's decision in Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 120 S.Ct. 1942, 147 L.Ed.2d 1 (2000), and lacked authority to grant the default judgment without examining the merits of appellees' claims in a hearing. The Bank also contends that the court abused its discretion in ordering a default judgment in the circumstances of this case.
4
We briefly dispose of each of these contentions.
5
A. Jurisdiction.
6
In their complaint, plaintiffs relied on section 506(c) of the Bankruptcy Code to demand reimbursement of rent and other costs incurred at the restaurant premises while property in which the Bank had a security interest remained there. See 11 U.S.C. § 506(c). The section provides that "[t]he trustee may recover from property securing an allowed secured claim the reasonable, necessary costs and expenses of preserving, or disposing of, such property to the extent of any benefit to the holder of such claim." Id. In Hartford Underwriters, which was decided about one month after the bankruptcy court's challenged ruling, the Supreme Court held that only a trustee, and not an administrative claimant, is a proper party to seek recovery under section 506(c). See 530 U.S. at 14, 120 S.Ct. 1942. As the BAP observed, that decision overruled First Circuit precedent allowing such a claim by "third parties who equitably come to stand in the trustee's shoes," see In re Parque Forestal, Inc., 949 F.2d 504, 511 (1st Cir. 1991). The Bank contends that Hartford Underwriters requires reversal of the bankruptcy court's judgment in favor of Cuevas, a third-party claimant.
7
Although Hartford Underwriters would appear to negate Cuevas's standing to bring a section 506(c) claim, it does not require us to disturb the bankruptcy court's judgment. The rents and related costs awarded to Cuevas also were incorporated within the cross-claims filed by the trustee, who unquestionably had standing to pursue such relief.2 We are thus satisfied that the bankruptcy court's judgment was consistent with the principles espoused in Hartford Underwriters.3
8
B. Lack of Hearing.
9
The Bank contends that the bankruptcy court could not grant judgment on the merits without a hearing to determine whether the claims and cross-claims were meritorious. To the contrary, it is precisely the right to contest liability that a party gives up when it declines to participate in the judicial process. See Franco v. Selective Ins. Co., 184 F.3d 4, 9 n. 3 (1st Cir.1999) ("A party who defaults is taken to have conceded the truth of the factual allegations in the complaint as establishing the grounds for liability...."); Brockton Savings Bank v. Peat, Marwick, Mitchell & Co., 771 F.2d 5, 13 (1st Cir. 1985) ("[T]here is no question that, default having been entered, each of [plaintiff's] allegations of fact must be taken as true and each of its [] claims must be considered established as a matter of law.").
10
A hearing may be required, however, to set damages when the amount is in dispute or is not ascertainable from the pleadings. See Fed.R.Civ.P. 55(b)(2);4 Ortiz-Gonzalez v. Fonovisa, 277 F.3d 59, 64 (1st Cir.2002); HMG Property Investors v. Parque Indus. Rio Canas, 847 F.2d 908, 919 (1st Cir.1988). Here, there was no uncertainty about the amounts at issue; the complaint and cross-claims contained specific dollar figures, and the court also requested and received affidavits from appellees. The court's order to show cause allowed the Bank the opportunity to respond to appellees' claims before entry of judgment, but the Bank failed to do so.
11
Where a court has jurisdiction over the subject matter and parties, the allegations in the complaint state a specific, cognizable claim for relief, and the defaulted party had fair notice of its opportunity to object, the court has the discretion to order a default judgment "without a hearing of any kind," HMG Property Investors, 847 F.2d at 919. By the same token, the court may choose to hold a hearing to "establish the truth of any averment" in the complaint. See Fed.R.Civ.P. 55(b)(2); Quirindongo Pacheco v. Rolon Morales, 953 F.2d 15, 16 (1st Cir.1992) (per curiam). There was no abuse of the court's discretion in this case.
12
C. Relief from the Default Judgment.
13
As noted earlier, a court's refusal to set aside a default judgment is reviewed for abuse of discretion. See supra p. 113. On this issue, we find it unnecessary to add to the well reasoned decisions of the bankruptcy court and BAP. See Lawton v. State Mut. Life Assur. Co. of America, 101 F.3d 218, 220 (1st Cir.1996). Their assessments of the Bank's conduct and its asserted justifications suffice to explain why no such abuse occurred here.
14
Affirmed.
Notes:
1
The court's default judgment resolved two separate claims against the Bank for the costs of preserving or disposing of property of the debtor in which the Bank had a security interestSee infra p. 113. The original complaint was filed by Family Restaurants, Inc. and its president, Hector Cuevas, who had subleased restaurant premises to the debtor, The Home Restaurants, Inc. Plaintiffs (whom we at times refer to collectively as "Cuevas") named both the Bank and the bankruptcy trustee, as representative of the debtor, as defendants. The trustee, in turn, filed cross-claims against the Bank. Cuevas sought reimbursement for rent and related costs; the trustee sought, in addition, the cost of electricity and a contractor's services.
The Bank never responded to the cross-claims, and the court described its judgment in favor of the trustee as "a simple default judgment." Although the Bank filed an answer to the complaint, it took no further action until after the default judgment was entered. The court termed the default judgment for plaintiffs "a sanction for [the Bank's] repeated failure to comply with orders of the Court."
2
In Count Two of his cross-claims, the trustee asked that the Bank be obliged to pay any "rent and preservation costs [that] are due to plaintiff."
3
The court unquestionably had subject matter jurisdiction; both the claims and cross-claims were within the bankruptcy court's core jurisdictionSee 28 U.S.C. § 157(b)(2)(A), (O) (core proceedings include "matters concerning the administration of the estate" and "other proceedings affecting the liquidation of the assets of the estate," with exceptions not relevant here).
4
Rule 55(b)(2) states:
If, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings or order such references as it deems necessary and proper and shall accord a right of trial by jury to the parties when and as required by any statute of the United States.
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440 F.Supp.2d 626 (2006)
Cassandra KOHL, Plaintiff,
v.
THE WOODLANDS FIRE DEPARTMENT Defendant.
No. CIV A. H-05-0975.
United States District Court, S.D. Texas, Houston Division.
July 11, 2006.
*627 Brady Sherrod Edwards, Patrick Kenneth-Allen Elkins, Edward Burns & Krider LLP, Houston, TX, for Plaintiff.
Stephen W. Schueler, Tonja Kirkland Doddy, Winstead Sechrest & Minick P.C., Houston, TX, for Defendant.
MEMORANDUM AND OPINION
ROSENTHAL, District Judge.
Cassandra Kohl has sued her employer, The Woodlands Fire Department ("WE'D"), asserting violations of the Fair Labor Standards Act, 29 U.S.C. § 201, et. seq. Kohl worked as the Fire and Life Safety Officer for the WFD for two years. She was paid a salary and was not paid overtime. She alleges that the WFD violated the FLSA by classifying her as an exempt administrative employee and failing to pay her overtime rates during the time she worked as the Fire and Life Safety Officer. The parties conducted discovery and filed opposing dispositive motions. The WFD moved for summary judgment on the basis that it properly classified Kohl as an exempt administrative employee under section 213(a)(1) of *628 the FLSA. (Docket Entry No. 18). Kohl filed a motion for partial summary judgment on the basis that she was not exempt from the FLSA's overtime pay requirements. (Docket Entry No. 19). Kohl also filed a response to the WFD's summary judgment motion, arguing that at a minimum there were disputed fact issues mate-rial to determining whether the FLSA administrative employee exemption applied. (Docket Entry No. 22). The parties filed replies and surreplies. (Docket Entry Nos. 23, 24, 25, 26, 29).
Based on a careful review of the pleadings; the motions, responses, replies, and surreplies; the record; and the applicable law, this court denies the WFD's motion for summary judgment and denies Kohl's motion for partial summary judgment, finding the record inadequate to determine whether Kohl was properly classified as an exempt administrative employee. The reasons are discussed below.
I. Background
The WFD is a nonprofit Texas corporation located in Montgomery County, Texas. Its purpose is "combating residential and commercial fires, . . . educating the public about safety and fire prevention[,] providing health certification training to community residents[,] serving as a liaison between various safety organizations and citizens[,] and participating in civic activities for community enrichment purpose." (Docket Entry No. 18 at ¶ 7). Susan Welbes, the human resources director for the Woodlands Community Service Corporation, which provides human resources, finance, accounting, and general management support to the WFD, testified that the WFD is a service organization that provides fire protection and suppression, emergency medical services, fire prevention, and public education. (Docket Entry No. 22, Ex. A, Susan Welbes Dep., at 56).
In 2001, the WFD created the Fire and Life Safety Officer ("FLSO")[1] position to coordinate and oversee fire and life safety programs for the WFD. The duties had previously been performed by an employee who also performed inspections. (Docket Entry No. 22, Ex. E, Cassandra Kohl Dep., at 81). The inspection and program coordination duties were split into two jobs. Kohl agreed in her deposition that her job as the FLSO was to "direct the public education effort that the [WE'D] was making." (Id. at 17). This included teaching classes and giving lectures herself. It also included working on expanding the public education offerings that the WFD provided, finding additional programs in response to requests from the chiefs of the WFD or from members of the public. A third aspect of Kohl's job was to arrange for appearances by other WFD personnel and at classes or other community events. Kohl also appeared at various community events as a representative of the WFD. With one small exception, she supervised no employees and had no authority over other employees. The issue is whether her primary duties qualify her as an exempt administrative employee.
The record includes the job description for the FLSO position. It listed the job's essential duties and responsibilities, as follows:
(1) Oversee, deliver, and coordinate fire and life safety programs (NFPA Risk Watch, Youth Firesetter Prevention Programs, Senior Fire and Life Safety Programs, Neighborhood Watch Programs, etc.)
(2) Manage fire and life safety budget
*629 (3) Work with Operation staff on coordination of Fire and Life Safety Programs
(4) Manage and deliver CPR and First Aid classes
(5) Participate in community events as required
(6) Participate in department's Emergency Operations Center
(7) Serve as Victim Assistance Liaison.
(Docket Entry No. 22, Ex. B). The job description stated that the position required knowledge of fire and life safety education practices, EMS education practices, and program development, management, and evaluation. The description also noted that the position required the ability to: work cooperatively with local departments and other governmental, social services, and private agencies; write clear and grammatical safety articles and reports; and communicate orally with employees, the general public, and representatives in one-on-one and group settings. The job had no supervisory responsibilities. The, job required an associate of arts degree with experience that was similar to delivering public education programs for a fire department or working in school systems as an educator. The reasoning ability required was to carry out "detailed but uninvolved written or oral instructions" and to "deal with problems involving a few concrete variables in standardized situations." Somewhat inconsistently, the work was described as "performed with considerable independence." (Id.).
Welbes, director of human resources for the Woodlands Community Service Corporation, reviewed the job description the WFD provided and determined that the position should be designated as exempt for FLSA purposes. (Docket Entry No. 22, Ex. A, Welbes Dep., at 13-44). She testified in her deposition that she based her decision on the following factors:
The fact that the position was going to coordinate and oversee fire and life safety programs, the fact that this position was going to use independent discretion and decision making as it pertains to the fire and life safety programs of The Woodlands Fire Department, and the fact that these programs went to the overall mission and vision of the fire department.
(Id. at 14-15). Welbes testified that she made the decision based on the job description and did not later analyze the actual job duties Kohl performed to determine whether the administrative exemption should apply.
The WFD announced that it was hiring for the FLSO position in the spring of 2002. Kohl applied for and received the promotion to the FLSO position. Kohl was told from the outset that her new position would be salaried and exempt from the FLSA overtime pay requirements. (Docket Entry No. 18, Ex. A-1; Docket Entry No. 22, Ex. E, Kohl Dep., at 120-23). Kohl began working in the FLSO position on May 15, 2002 and remained in that position until June 30, 2004, when she was demoted to her former position as a firefighter. As the FLSO, Kohl was paid a beginning salary of $43,237.38. After merit bonuses, she received $45,421.25. (Docket Entry No. 22, Ex. A, Welbes Dep., at 12). Kohl alleges that she worked extensive overtime hours while serving as the FLSO, for which she was not compensated at overtime rates because of her classification as an exempt administrative employee.
As noted, Kohl testified that her job as fire and life safety officer was to direct the public education effort that the fire department was making. (Docket Entry No. 22, Ex. E, Kohl Dep., at 17). She summarized the types of work her job included:
I coordinated programs. I pulled in programs and wrote them. I had a *630 budget that I followed. Bought materials. Went out and lectured.
(Id. at 7). Kohl expanded that testimony:
Q. So the first part of your job is selecting which programs your department is going to sponsor or teach; is that right?
A. No. I mean, I went out and evaluated the jobs, and then I had to go and give them the information I had to go any further, and then I would get the clarification to go any further if they wanted that or not.
Q. So you evaluated a program or a training session or something, you then made a recommendation to the fire department, yes, I think this is a good program or no, I think it's a bad program; is that correct? Is that what you're saying?
A. Correct.
Q. And then based on that recommendation, the fire department would make a decision, yes, we're going to incorporate that into what we're doing, or if you recommend no, then they'd say no, we're not going to do that?
A. Then we'd go further if they liked the program.
Q. So in that respect, part of your job was to exercise your discretion as to the content of these programs and decide which ones you would recommend and which ones you would not recommend; is that correct?
A. I guess that would be true.
Q. And then if I'm understanding you and I want to be sure that I am then once a program was decided upon, also part of your responsibility would be to write it up or modify it or do something to it so that it could be taught appropriately to whatever audiences the department was going to go out and present the program to. Is that also part of your job?
A. Yes.
(Id. at 9-10).
When Kohl was hired, the WFD had only a few fire and life safety programs: a Risk Watch Program, a fourth-grade program, and a program to instruct on the use of fire extinguishers. (Id. at 87). Kohl was asked to improve the implementation of these programs and to add new programs. She testified that many of the ideas for new programs were brought to her by the WFD chiefs and that some ideas originated with a request from someone in the Woodlands Community. (Id. at 35). Kohl's responsibility was to research whether there were publicly available programs responsive to the requests and to evaluate the programs she found to decide whether to recommend that they be added to the WFD curriculum. Once Kohl had researched and located an existing publicly available program, she would evaluate it and recommend to the WFD management whether to add the program to the WFD curriculum. If the recommendation was accepted, she would "write [the program] down in an educational form which other people can follow." (Id. at 9). Kohl testified that she would recommend whether a program should be included in the curriculum, but did not make the final decision. (Id. at 35-36). Once the decision was made to include the program, she would modify the materials as needed for teaching to a particular audience, although she stated that there was not a "whole lot of modification to do." (Id. at 37).
The programs Kohl added to or expanded included school programs relating to exit drills, evacuations, drug overdoses, and arson. Kohl also responded to a request from a business in the Woodlands Community, located a program to teach evacuation from high-rise or multistory buildings and developing evacuation plans, *631 and recommended it to her management. The program was approved and she implemented it, although it was discontinued after a period. (id. at 44-45). Kohl added a program about the proper installation of car seats and how to check whether they were properly installed, (id. at 71-73), and a program about safety practices for baby sitters, (Id. at 75-78). She also responded to a request for fire safety programs for elderly people, locating and recommending to the WFD that it should present programs instructing individuals in assisted-living facilities on what they should do in a fire scene. (Id. at 87-88).
Once a program was approved, Kohl purchased the materials necessary for the approved programs, within a preset budget she was provided. Kohl worked within a defined budget set by her supervisors. (Id. at 12-15). Kohl testified that early in her tenure, her budgetary decisions were closely monitored, but over time she was given "some leeway." (Id.). Working within the budget, she would purchase "materials and supplies or whatever [she] thought was necessary to carry out the functions of the fire and life safety officer." (Id. at 11-12). Welbes similarly testified that Kohl was given some latitude in her financial decisions and that she needed permission only if the implementation of a program "exceeded [Kohl's] signature authority that was allowed to spend or if it would take significant resources, either time or individuals H." (Docket Entry No. 22. Ex. A, Welbes Dep., at 60). If she exceeded a certain dollar limit, she had to get specific authority to make purchases. She had no authority to, or involvement in, the creation of the budget, and no authority to change it. (Id. at 59-61).
When organizations such as schools, day care centers, geriatric centers, church groups, or businesses asked the WFD for educational programs on fire and life safety, it was Kohl's job to respond to the requests. Part of that job was to be sure that the classes and lectures the programs required were delivered to the right group at the right time. Kohl did not teach all the classes or give all the lectures, but she testified that she personally taught and gave many of them herself. Kohl also scheduled lectures and classes given by other WFD members. The administrative assistant to the chief did part of this work, although Kohl scheduled all of the CPR classes. Kohl testified that she had the authority to direct her own attendance at a scheduled event, but she could not order other members of the WFD to attend an event. (Docket Entry No. 22, Ex. E, Kohl Dep., at 16-18, 20). Kohl had no supervisory authority over other members of the WFD, but she did have the authority to respond to requests for appearances by WFD personnel or equipment by scheduling specific events. (Id. at 23). Certain events, such as parades, required supervisory approval, but Kohl was authorized to respond to requests from the community for most appearances by the WFD and to schedule those appearances. (Id. at 28).
A related part of Kohl's job concerned the CPR classes the WFS provided. The WFD was a certified CPR training center, and Kohl coordinated the center. She scheduled CPR classes and, with contract personnel, taught CPR classes. (Docket Entry No. 22, Ex. E, Kohl Dep., at 52-53, 55). Her responsibilities in this role included scheduling CPR classes, scheduling the contract instructors for the classes, and evaluating the CPR instructors. (Id.). Although she had no general supervisory authority, it was part of her job to evaluate the CPR instructors. During the two years of her tenure, she was critical of two of the instructors and recommended that they no longer teach the CPR classes. One of the instructors was placed on probation, but Kohl's personnel suggestions were riot otherwise implemented. (Id. at 56-60).
*632 Kohl also attended public and community events on behalf of the WFD. These ranged from events such as Earth Day observances to various community fairs or festivals. At these events, Kohl would hand out brochures. At some of these events, Kohl would also provide services, such as registering bicycles and checking car seats. (Id. at 60-63). Kohl testified that her presence at such events was in part public relations to generate goodwill for the fire department to provide some educational services, and to let people know what other classes and fire safety presentations WFD offered. (Id.). She did not, however, have a general responsibility to represent the WFD other than to hand out brochures, deliver prepared lectures, classes, or programs, or answer questions about the WFD's educational offerings.
The WFD put a victim's assistance program into place when Kohl became the fire and life safety officer, and she became the victim's assistance liaison, counseling people who had suffered fires and giving advice and information on financial help and social services that were available. (Id. at 111). It is undisputed, however, that Kohl spent a very small amount of her time in this role. (Docket Entry No. 22, Ex. A, Welbes Dep., at 6-7). The job description also identified work in the WFD's Emergency Operations Center, but the Center is only deployed in times of emergency and it appears that Kohl did not participate in it as the Fire and Life Safety Officer. (Id. at 34).
Kohl received a job evaluation signed in early 2003. The evaluation covered her knowledge of fire, life, and safety education; ability to communicate well with internal and external customers; ability to write reports, safety articles and reports and procedure manuals; ability to present information effectively and respond to questions from groups of customers and the general public; ability to define problems, collect data, establish facts, and draw valid conclusions; and knowledge of program development, management and evaluation. (Docket Entry No. 18, Ex. A-3). Kohl was rated poorly in the area of verbal and written communication skills. Her "performance contract" identified the following key objectives and assignments: "1) revise & monitor school fire prey. program; 2) continue to oversee CPR/1st Aid education program; 3) expand fire prey. /life safety ed to area assisted living facilities/high risk occupants; 4) work w/ fire chiefs assistant to improve comm. between WFD. & community." (Docket Entry No. 18, Ex. A-3 at 6).
On June 30, 2004, Kohl was demoted to firefighter. She filed this lawsuit on March 22, 2005, alleging that the WFD improperly had classified her FLSO position administratively under the FLSA's exemption for administrative employees.
II. The Applicable Legal Standards
A. Summary Judgment
Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. FED. R. Cry. P. 56. Under Rule 56(c), the moving party bears the initial burden of "informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Stahl v. Novartis Pharms. Corp., 283 F.3d 254, 263 (5th Cir.2002). The party moving for summary judgment must demonstrate the absence of a genuine issue of material fact, but need not negate the elements of the nonmovant's case. Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir.2005). "An issue is material if its resolution *633 could affect the outcome of the action." Weeks Marine, Inc. v. Fireman's Fund Ins. Co., 340 F.3d 233, 235 (5th Cir.2003) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).
When the moving party has met its Rule 56(c) burden, the nonmoving party cannot survive a motion for summary judgment by resting on the mere allegations of its pleadings. The nonmovant must identify specific evidence in the record and articulate the manner in which that evidence supports that party's claim. Johnson v. Deep E. Tex. Reg'l Narcotics Trafficking Task Force, 379 F.3d 293, 305 (5th Cir. 2004). The nonmovant must do more than show that there is some metaphysical doubt as to the material facts. Armstrong v. Am. Home Shield Corp., 333 F.3d 566, 568 (5th Cir.2003).
In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party. Calbillo v. Cavender Oldsmobile, Inc., 288 F.3d 721, 725 (5th Cir.2002); Anderson, 477 U.S. at 255, 106 S.Ct. 2505. "Rule 56 `mandates the entry of summary judgment, after adequate time for discovery, and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.'" Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (quoting Celotex, 477 U.S. at 322, 106 S.Ct. 2548).
B. The FLSA
Section 207(a) of the FLSA requires covered employers to compensate nonexempt employees at overtime rates for time worked in excess of statutorily defined hours. 29 U.S.C. § 207(a). Section 216(b) creates a cause of action for employees against employers violating the overtime compensation requirements. It provides, in relevant part:
An action . . . may be maintained . . . by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought.
29 U.S.C. § 216(b).
Section 13(a)(1) of the FLSA exempts employees occupying "bona fide executive, administrative, or professional" positions from the overtime requirements of section 207. 29 U.S.C. § 213(a)(1). These terms "are [to be] defined and delimited from time to time by regulations of the Secretary [of Labor]." Id. New regulations were put into place in August 2004. "Under [the old regulations], the Secretary of Labor . . . defined the terms executive, administrative, and professional, by setting out `long' tests for employees earning more than $155 per week but less than $250 per week, and `short' tests for employees earning more than $250 per week." Lott v. Howard Wilson Chrysler-Plymouth, Inc., 203 F.3d 326, 331 (5th Cir.2000) (citing Dalheim v. KDFW-TV, 918 F.2d 1220, 1224 (5th Cir.1990)); see also 29 C.F.R. § 541.2(a)-(e) (2001); 29 C.F.R. § 541.214 (2001). Both parties agree that the short test, which applies to "high salaried administrative employees," 29 C.F.R. § 541.214, applies. See Lott, 203 F.3d at 331.[2]
*634 Under the "short" test, an exempt administrator must primarily perform (1) office or nonmanual work, (2) that is directly related to management policies or general business operations for the employer or the employer's customers, and (3) involves the exercise of discretion and independent judgment. 29 C.F.R. §§ 541.2(e)(2) (superceded); 541.2(e)(1) (superceded). The first question is whether the employee's primary work duty is directly related to management policies or general business operations. Section 541.205(a) defines the "directly related" element by distinguishing between what it calls "the administrative operations of a business" and "production." Administrative operations include such duties as "advising the management, planning, negotiating, representing the company, purchasing, promoting sales, and business research and control." Id. § 541.205(b). "Directly related" administrative work is of "substantial importance" to the business operations of the enterprise in that it involves "major assignments in conducting the operations of the business, or . . . affects business operations to a substantial degree." Id. § 205(c). Examples of employees in administrative positions include buyers in industrial plants and retail establishments; personnel analysts; and advisory specialists and consultants such as credit managers, safety directors, claims agents and adjustors, wage-rate analysts, tax experts, account executives at advertising agencies, stock brokers, and promotion people. See 29 C.F.R. § 541.205(c)(1)-(c)(5).
The first issue is to determine the employee's primary duties. "[I]t may be taken as a good rule of thumb that primary duty means the major part, or over 50 percent, of the employee's time." 29 C.F.R. § 541.103. However, time alone, is not the sole test. Id. A job duty that is of principal importance to the employer, or other duties that are collateral to that job duty, may be considered a primary duty even though it occupies less than 50 percent of the employee's time. Dalheim v. KDFW-TV, 918 F.2d 1220, 1224 (5th Cir. 1990); Schaefer v. Ind. Mich. Power Co., 358 F.3d 394, 401 (6th Cir.2004) (citation omitted). The actual day-to-day job activities of the employee are relevant to determining whether employees are exempt administrative employees under the FLSA, not the labels the employee or the employer place on those duties. See, e.g., Tyler v. Union Oil Co. of Calif, 304 F.3d 379, 404 (5th Cir.2002); Schaefer, 358 F.3d at 400. In determining what an employee's day-to-day job activities are, general job descriptions contained in an employee's resume or prepared by the employer may be considered, but are not determinative, and descriptions contained in depositions and affidavits should be considered as well. See Schaefer, 358 F.3d at 400-01.
In determining whether an employee's primary work duty is directly related to management policies or general business operations, the question is whether the types of activities the employee is engaged in relate to the administrative operations *635 of the business as distinguished from production or sales. The regulations do not set up a dichotomy under which all work must either be classified as production or administrative. Rather, the regulations distinguish production work from the administrative operations of the business at 29 C.F.R. § 541.205(a) production work cannot be administrative and define the administrative operations of the business at 29 C.F.R. § 541.205(b). Courts have struggled to apply the distinction between administration and production, while acknowledging that the distinction is clearly set out in the regulations. The traditional model of production work is factory manufacturing or assembly-line work, but the regulations clearly are not limited to such settings. See, e.g., Martin v. Cooper Elec. Supply Co., 940 F.2d 896, 903 (3rd Cir.1991). Courts analogize from the factory setting to other work settings.
In Dalheim, 918 F.2d 1220, the court held that television news producers, directors, and assignment editors were not exempt as administrators because their duties clearly related to the production of the news department's stories, not to its administrative operations. In Reich v. John Alden Life Ins. Co., 126 F.3d 1 (1st Cir.1997), the Secretary of Labor sought to enjoin the John Alden Life Insurance Company from violating FLSA's overtime requirements. The Secretary argued that John Alden's marketing representatives were not exempt administrative employees because they were engaged in "production" rather than "administrative" activities. Id. at 3. The district court ruled in favor of John Alden, and the First Circuit agreed. The parties in Reich had stipulated that the product produced by the employer, a life insurance company, was life insurance policies. Because the marketing representatives were not involved in the design or generation of the policies, they could not be considered "production" employees and were therefore exempt. Id. at 9. The court also found that the day-to-day activities of the marketing representatives included keeping agents informed of changes in the product and pricing structures, advising agents on which policies should be marketed against competing products, and helping agents put together proposals to bid on new business. Id. at 10. These activities were more in the nature of "representing the company" and "promoting sales" of the company's products, ancillary to the production of life insurance policies, and corresponded to examples of exempt administrative work provided by 29 C.F.R. § 541.205(b). Id. The marketing agents were engaged in "something more than routine selling efforts. . . ." Id. (quotations omitted). Rather, their agent contacts are "aimed at promoting . . . customer sales generally," activity deemed administrative sales promotion work under section 541.205(b). Id. (citations omitted).
The Reich court distinguished the Third Circuit's decision in Martin v. Cooper Electric Supply Company, 940 F.2d 896 (3d Cir.1991), in which the court found that the salespeople for an electrical parts wholesaler were nonexempt because they were "production" employees. Reich, 126 F.3d at 9-10. Because the company's primary purpose in Cooper was to produce sales of electrical products, the salespeople were engaged in generating the very product that the company existed to market the sales of electrical products. The court explained that in Reich, by contrast, the insurance company actually produced a product of its own insurance policies and did not exist merely to produce sales. Consistent with the "servicing" component of the interpretive regulations, see 29 C.F.R. § 541.205(b), the Reich court agreed with the Third Circuit's explanation that "servicing a business" entails "employment activity ancillary to an employer's principal production activity." Id. at *636 10 (citing Cooper Electric, 940 F.2d at 904). The issue is not whether an employee worked for an enterprise engaged in production activity, but whether the employee's primary duty was producing the product in question.
The analytic difficulty of applying the "production/administration" distinction has led some courts to question whether the dichotomy is analytically helpful in the context of modern service industries and to emphasize that the analogy applies in a particular case only to the extent that it "elucidates the phrase `work directly related to the management policies or general business operations."` Bothell v. Phase Metrics, Inc., 299 F.3d 1120, 1126 (9th Cir.2002); see also Shaw v. Prentice Hall Computer Publ'g, Inc., 151 F.3d 640, 644 (7th Cir.1998). The revised 2004 Department of Labor regulations have moved away from this dichotomy in the context of service industries. "Only when work falls `squarely on the "production" side of the line,' has the administration/production dichotomy been determinative." Bothell, 299 F.3d at 1127 (citing Reich, 3 F.3d at 587-88; Cooper, 940 F.2d at 904-05; Shockley v. Newport News, 997 F.2d 18, 29 (4th Cir.1993)). This approach has been adopted under the new DOL regulations. See Edwards v. Audubon Ins. Group, No. 3:02-CV-1618, 2004 WL 3119911, at *5 (S.D.Miss. Aug.31, 2004).[3]
The administrative exemption is further limited to employees who perform work of "substantial importance to management or operations." 29 C.F.R. § 541.205 (superceded). The issue is whether the employee directly or indirectly formulates, affects, executes, or carries out management policies by, for example, undertaking major assignments in conducting the operation of the business or performing work that affects business operations to a substantial degree, even if related only to the operation of a particular segment of the business. Id. Work need not involve the formulation of management policies or the operation of a business as a whole, however, in order to quality as work of "substantial importance." Id. Employees whose work is "directly related" to management policies or to general business operations include those [whose] work affects policy or whose *637 responsibility it is to execute or carry it out. Id. The phrase also includes a wide variety of persons who either carry out major assignments in conducting the operations of the business, or whose work affects the business operations to a substantial degree, even though their assignments are tasks related to the operation of a particular segment of the business. Id. Examples of such employees include those holding positions in personnel administration, labor relations, and research and planning, as well as those who provide assistance to management officials in carrying out their executive or administrative functions. See id.; see also Cooper Electric, 940 F.2d at 902, 906 (holding that an administratively exempt employee must be directly or indirectly involved in the determination, administration, or implementation of the employer's management or operational policies).
The third aspect of the "short test" for the administrative exemption requires that the exempt employee exercise "discretion and independent judgment" in her work. Discretion and independent judgment must be "real and substantial," that is, they must be exercised with respect to matters of consequence. 29 C.F.R. § 541.207(d)(1). The exercise of independent judgment involves "the comparison and the evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered." 29 U.S.C. § 541.207(a). An employee who exercises independent judgment "has the authority or power to make an independent choice, free from immediate direction or supervision." Id.
The term "discretion and independent judgment" as used in the regulations "does not necessarily imply that the decisions made by the employee must have a finality that goes with unlimited authority and a complete absence of review." 29 C.F.R. § 541.207(e). Indeed, the decisions made by the employee may merely lead to recommendations for further action. See id. The fact that an employee's decisions are subject to review, and that they may on occasion be reversed, or the recommendations rejected, "does not mean that the employee is not exercising discretion and independent judgment." Id.
The interpretive regulations emphasize that employees who follow prescribed procedures, or who determine whether specified standards are met or whether an object falls into one or another of a number of definite grades, classes, or other categories, are not exercising discretion and independent judgment. See 29 C.F.R. § 541.207(c)(1). Nonexempt employees include inspectors or examiners such as graders of lumber or insurance appraisers, who rely on techniques and skills acquired through training and experience, but who basically perform work along standardized lines involving well-established techniques and procedures. See Id. § 541.207(c)(2) (4). Other examples include personnel clerks who screen job applicants based on their conformity with specific qualifications established by the employer, as contrasted with personnel officers who make hiring decisions or recommendations, or computer programmers as contrasted with keypunch operators or programmer trainees. See Id. § 541.207(c)(5), (7).
The employer bears the burden of proving that its employee is exempt, and the provisions of the exemption must be narrowly construed against the employer. Hogan v. Allstate Ins. Co., 361 F.3d 621, 625 (11th Cir.2004); Bondy v. City of Dallas, 77 Fed.Appx. 731, 732 (5th Cir.2003).
III. Analysis
Although the parties have stated that there are no genuine issues of material fact as to Kohl's job duties, (Docket Entry No. 18 at 1; Docket Entry No. 19 at 12), *638 they vigorously dispute whether given these duties, Kohl should have been classified as an exempt administrative employee. The parties agree that Kohl's duties were nonmanual office duties. The inquiry is whether there are meaningful disputes about what her primary duties were, whether they directly related to the WFD's management policies or general business operations, and whether they involved the exercise of discretion and independent judgment. See Dalheim, 918 F.2d at 1226.
A. Kohl's Primary Duties
Kohl testified that the "majority of her job was to educate." (Docket Entry No. 22, Ex. E, Kohl Dep., at 32). In both her motion for partial summary judgment and her response to the WFD's summary judgment motion, Kohl argues that because the WFD has admitted that public education is a commodity or service that it provides, and because Kohl's primary duty was to provide that service, Kohl produced the service that constitutes the WFD's marketplace offering, rather than contributing to running the business itself. See Dalheim, 918 F.2d at 1230. Although Kohl was clearly not involved in what would at first glance appear to be the WFD's primary service firefighting the WFD has identified that its services include public fire and life safety education. (Docket Entry No. 18 at ¶ 7; Docket Entry No. 22, Ex. A, Susan Welbes Dep., at 56).
Kohl's summary description of her duties as "education" does not clarify what her primary duties are or even what she spent most of her time doing. It is clear from the job description and from Kohl's extensive deposition testimony that "education" included a number of related but distinct duties. Kohl personally delivered lectures and classes in schools, commercial establishments, nursing homes, and in the CPR program. (Docket Entry No. 22, Ex. E, Kohl Dep., at 17, 42-44, 52-53). Other WFD personnel also gave lectures and classes, delivered programs, and were regularly assigned to the CPR program. (Id. at 42-44, 52-53). There was, however, only one Fire and Life Safety Officer. What set that officer apart from others who also gave classes and lectures, delivered programs, and were assigned to the CPR program, were the duties involving the coordination and direction of the WFD fire and life safety offerings.
Neither party provides a breakdown of the time Kohl spent personally teaching and lecturing, on other aspects of developing, coordinating, and directing the WFD fire and life safety program, and on representing the WFD in various community events. Kohl simply characterizes all of her duties as related to "education." The WFD provides a breakdown of the amount of time Kohl spent on different programs, but it does not distinguish between her work in delivering these programs by teaching the classes or giving the lectures, and her work in putting the programs together and coordinating them.
Under § 541.103, "[i]n the ordinary case it may be taken as a good rule of thumb that primary duty means the major part, or over 50 percent, of the employee's time[,] time alone . . . is not the sole test." Dalheim, 918 F.2d at 1227 (quoting 29 C.F.R. § 541.103 (superceded)). "An employee's 'primary duty' cannot be ascertained by applying a simple `clock' standard that contrasts the amount of time each day an employee spends on exempt and nonexempt work." Id.; see also Lott v. Howard Wilson Chrysler-Plymouth, Inc., 203 F.3d 326, 326 (5th Cir.2000). Exempt work may be an employee's primary duty even though such work occupies less than half her time "if the other pertinent factors support such a conclusion." Dalheim, 918 F.2d at 1227; Smith v. City of Jackson, 954 F.2d 296, 299 (5th Cir.1992). *639 In general, "the employee's primary duty will usually be what she does that is of principal value to the employer, not the collateral tasks that she may also perform, even if they consume more than half her time." Dalheim, 918 F.2d at 1227. In Lott, the Fifth Circuit held that "even assuming that the majority of [the employee's] time was not spent on [management activities], such a finding does not preclude the determination that [the employee's] primary duties consisted of the administration of the general business operations of [the employer], such that the administrative and supervisory duties performed . . . were of principal importance[,] . . . as opposed to those collateral tasks which may have taken more than fifty percent of her time." Lott, 203 F.3d at 332 (citations omitted). In that case, although Lott spent the majority of her time engaging in nonexempt activities, the combination of her administrative and clerical duties led the court to find that she was an exempt administrative employee. Id
In this case, the record does not permit a determination as to whether Kohl's primary duties were to arrange for new or expanded WFD programs; scheduling the presentation of the WFD programs in a variety of venues in the Woodlands Community; teaching a number of the programs and classes herself; or attending various community events on behalf of the WFD. It would appear from the record that Kohl's primary duties were those specific to the newly created position of the Fire and Life Safety Officer, unlike the duties of teaching classes or delivering lectures that were shared by others. Kohl testified that one of the reasons she was hired was to expand the number of programs that the WFD offered, as well as improve the quality of the programs. Although Kohl spends a great deal of her brief arguing that her job duties did not include that of "community liaison" because those words were not used in the job description, Kohl testified that when she attended different events, fairs, and other community functions on behalf of the WFD, part of the reason she was there was public relations. (Docket Entry No. 22, Ex. E, Kohl Dep., at 60-63). Kohl's job evaluation makes it clear that her duties included improving communications between the WFD and the community. (Docket Entry No. 18, Ex. A-3 at 6).
The record is also unclear as to whether the duties of principal value to the WFD were the work Kohl did to locate and add preexisting programs to the WFD curriculum of fire and life safety classes; to purchase materials to put on these programs; to schedule the programs; to teach the classes or present the programs herself; or to appear at various community events on behalf of the WFD. The record does not show how much time Kohl spent on the various components of her job. There is no evidence from her supervisors or from anyone except herself about what duties she actually did in her job or how valuable different duties were to her employer. As a result, it is unclear on the present record what her primary duties were.
B. Directly Related to Management Policies or General Business Operations
The WFD must show that Kohl's primary duties were "the performance of office or nonmanual work directly related to the management policies or general business operations of the employer or the employer's customers." 20 C.F.R. § 541.2(a)(1) (superceded). Such duties include "those types of activities relating to the administrative operations of a business as distinguished from `production' or, in a retail or service establishment, `sales' work." Id. § 541.205(a) (superceded). The regulations state that the phrase limits the exemption to "persons who perform *640 work of substantial importance to the management or operation of the business of his employer or his employer's customers." Id. The regulations clarify that the phrase "directly related to management policies or general business operations" is not limited to those employees who "participate in the formulation of management policies or in the operation of the business as a whole." Id. § 541.205(c) (superceded). The regulations describe the "administrative operations" of a business as including the "work performed by so-called white collar employees engaged in `servicing' a business as, for example, advising management, planning, negotiating, representing the company, purchasing, promoting sales, and business research and control." Id. § 541.205(b) (superceded).
The parties dispute whether Kohl's admittedly nonmanual work was directly related to the WFD's management policies or general business operations, as the WFD contends, or to the services that the WFD produced, as Kohl contends. As noted, it is unclear whether Kohl's primary duties were researching, evaluating, and making recommendations about what safety programs to incorporate into the WFD's curriculum; implementing approved programs; responding to requests for programs from the public and scheduling the delivery of classes and programs; teaching classes herself; or representing the WFD at community events.
Kohl's argument that "servicing the community or being a community resource by educating the community in fire and life safety programs was a commodity or service the WFD was organized to provide," and that Kohl's primary duties were to educate the community through fire and life safety programs, (Docket Entry No. 22 at 11), proves too much. Although the WFD has stated that one of its purposes is to provide fire and life safety education, it did not state, and the record does not show, that the WFD was in the business of creating or modifying classes, lectures, or programs on fire and life safety. Rather, the record shows that the relevant commodity or product the WFD delivered was the presentation of prepared and scripted classes, lectures, or programs. To the extent that Kohl taught prepackaged classes, delivered preset lectures, or presented preestablished programs, she was not engaged in administrative work, but rather in producing one of the services the WFD provided. But to the extent Kohl was evaluating different publicly available programs to see if they responded to needs identified by requests from her chief or members of the Woodlands Community, making recommendations as to whether the programs should be added to the WFD curriculum, and modifying the approved programs to make them fit the curriculum, she was not engaged in "production" work. To the extent Kohl was representing the WFD in various community events at which she informed the public about what educational programs the WFD could offer, she was not engaged in "production" work. These responsibilities did not end when the specific class she gave, or the lecture she delivered, ended, as was the case with the news producers in Dalheim, 918 F.2d 1220. Rather, her work consisted of advising management on developing the programs, coordinating the programs, and, through her appearances at public events, promoting the programs. These are the types of administrative tasks noted in 29 C.F.R. § 541.205(b).
Cases also suggest that such work falls in the administrative rather than the production category. See Renfro v. Ind. Mich. Power Co., 370 F.3d 512 (6th Cir. 2004) (holding that, when employer's principal production activity was generating electricity in a nuclear plant, employees who created plans for maintaining equipment and systems in the plant were ancillary *641 to the principal production activity and formed the type of "servicing" that the FLSA deems administrative work directly related to general business operations); Reich, 126 F.3d at 9 (holding that marketing representatives were exempt because the employer's products were the insurance policies themselves, which the representatives did not create or generate); McAllister v. Transamerica Occidental Life Ins. Co., 325 F.3d 997, 1003 (8th Cir. 2003) (holding that an insurance claims coordinator was an administrative employee exempt from FLSA requirements); Bratt v. County of Los Angeles, 912 F.2d 1066 (9th Cir.1990) (holding that deputy probation officers employed by County were not exempt because they conducted factual investigations and provided information used in the court's day-to-day production process, not information on the proper way to conduct the business of the court); Bates v. United States, 51 Fed. Cl. 460, 462-63 (Fed.Cl.2002) (holding that Assistant Chief Patrol Agents at the United States Border Patrol Academy were exempt because they played a substantial role in the development of Academy curriculum and maintenance of its facilities, formulated and executed management programs and policies, and were involved in providing training for incoming border patrol agents); Copas v. E. Bay Mun. Util. Dist., 61 F.Supp.2d 1017, 1021 (N.D.Cal. 1999) (concluding that public relations officer was exempt because her duties related to community outreach and public information functions, which are part of general business operations).
Even assuming that Kohl's primary duties were not productions duties, the record is inadequate to determine whether such nonproduction duties directly related to the WFD's management policy or to its general business operations. The case law makes it clear that although production work cannot be administrative, it is not the case that nonproduction work must be administrative. See Martin v. Ind. Mich. Power Co., 381 F.3d 574, 584 (6th Cir.2004) (stating that the regulations do not set up an absolute dichotomy under which all work must either be classified as production or administrative, but distinguish production work from the administrative operations of the business at 29 C.F.R. § 541.205(a) and then go on to define the administrative operations of the business at 29 C.F.R. § 541.205(b)). It would appear that activities such as advising management about what offerings to add to the WFD curriculum of fire and life safety classes, coordinating and scheduling the delivery of classes, and appearing at community events to promote the curriculum, would be in the category of administrative work recognized by the regulations. See 29 C.F.R. § 541.205(b)(listing advising management, representing the company, and business research as "administrative" in nature). However, unless these were Kohl's primary duties, the exemption does not apply.
The parties spend a great deal of time and a number of pages attempting to distinguish various cases and other precedents. Analyzing exempt status under the FLSA is intensely fact-specific. See Schaefer, 358 F.3d at 400-01; Ale v. Tenn. Valley Authority, 269 F.3d 680, 688-89 (6th Cir.2001); Roberts v. Nat'l Autotech, Inc., 192 F.Supp.2d 672, 677 (N.D.Tex. 2002). Kohl emphasizes opinion letters from the Department of Labor that she asserts are "more on point" than the cases the WFD cites. The opinion letters are not particularly helpful. One letter addresses whether the safety director of a city's electricity department was exempt. The employee's duties were to investigate accidents, investigate power diversions, and operate the meter reading section. The letter also notes that the safety director administered energy programs and marketing programs. Noting that the information *642 provided was not enough for a definitive determination, the Department of Labor stated that the making of investigations, the keeping of records, and the handling of customer complaints were not administrative work. The letter did not address any of the other duties of the employee the duties similar to parts of Kohl's job or explain which duties were primary and which were not. (Docket Entry No. 22, Ex. F, U.S. Dep't of Labor Op. Ltr., 1992 WL 845086 (Mar. 16, 1992)).
Kohl also cites a DOL opinion letter dealing with a fire district's training and safety officer. The officer was expected to perform basic firefighting, rescue, and emergency medical services, as well as fire inspection and training. The department stated that this position did not qualify as administrative, noting that generally a firefighter who also trains fellow firefighters is not an exempt administrative employee. (Id., Ex. G, U.S. Dep't of Labor Op. Ltr., 1992 WL 845098 (Aug. 20, 1992)). In the present case, Kohl's duties went far beyond training firefighters, and she was not required to participate in regular firefighting duties. Finally, Kohl cites a third letter, involving the status of fire prevention inspectors. These employees inspected buildings to enforce fire prevention laws, managed and administered public relations and educational efforts for public fire prevention and safety for the city, and also responded to fires and performed firefighting duties. The letter concluded that the employees' primary duties were to inspect buildings to enforce fire safety standards, determine the cause of fires, and respond to fires and perform the duties of a firefighter. The letter implicitly found that the employees' primary duties did not include educational efforts or community involvement. In this case, by contrast, Kohl's duties were not firefighting or its related duties, such as building inspection. (Id., Ex. H, U.S. Dep't of Labor Op. Ltr., 1992 WL 845084 (Mar. 3, 1992)). These letters are not helpful to determining where on the production-administrative continuum Kohl's duties fall.
C. Of Substantial Importance to Management or Operations
If Kohl's primary duties were to improve the content, coordination, and delivery of the fire and life safety curriculum for the WFD, the record shows that such work was of substantial importance to the WFD because her work affected, executed, and carried out a management policy that Kohl identified in her deposition-improving the quality and quantity of the WFD public safety offerings and the WFD's general business operations as it related to providing fire and life safety programs for the Woodlands Community. Kohl engaged in research and planning for new and existing fire and life safety classes, lectures, and programs, and advised her chiefs as to how they could expand the WFD curriculum using publicly available programs. Engaging in research and planning, and providing assistance to management officials in carrying out their functions, are examples of the duties of employees performing work of substantial importance. 29 C.F.R. § 541.205(c); see also Dalheim, 918 F.2d at 1230; Reich, 126 F.3d at 9; Piscione, 171 F.3d at 540. The record is unclear, however, as to what were Kohl's primary duties and there is scant evidence in the record as to the relative importance of those duties to the WFD.
D. Exercising "Direction and Independent Judgment"
Last, the WFD must show that the undisputed facts demonstrate that Kohl's primary duties involve the exercise of discretion and independent judgment. Discretion and independent judgment involve the "comparison and the evaluation of possible *643 courses of conduct and acting or making a decision after the various possibilities have been considered. . . . [It] implies that the person has the authority or power to make an independent choice, free from immediate direction or supervision and with respect to matters of significance." 29 C.F.R. § 541.207.
Kohl's deposition testimony is at times unclear, but it appears that she exercised discretion, in some aspects of her job duties and not in others. Although the regulations require exempt administrative employees to exercise discretion and independent judgment "customarily and regularly," this must be "greater than occasional" but may be "less than constant". 29 C.F.R. § 541.207(g).
Kohl testified that she did not originate programs, but clarified that although the ideas for new programs usually originated with her chiefs or from people in the community who made requests or identified problems and needs, she took the steps necessary to locate, evaluate, recommend, and implement programs that could be delivered to the Woodlands Community by the WE'D, using materials that were already available in the public. Kohl testified as follows:
Q. Was there ever a time when you came up with the idea for a new program?
A. I'm sure within that time period I might have come up with lots of ideas.
Q. Can you remember any of them?
A. That came out of nothing?
Q. Well, I don't know if they came out of nothing, but where you came up with the idea. you said you came up with lots of the ideas; is that true? Did you?
A. From questions from the public.
Q. Regardless of where they came from, Ms. Kohl, you've said
A. I mean, if it's not there and we designed a program, obviously, you know, I came up with something.
Q. Well, that's all I'm trying to ask you, is to tell us what you did. Did you come up with programs?
A. Yes.
Q. Tell us some of the programs you came up with.
A. We developed when I walked in there, we did four programs. They had one program a one-page program for the Risk Watch program for one, the fourth grade, and then the fire extinguisher program. That's it. That's all they had. And within that time period, I developed programs from or found programs, brought them in. Did I handwrite every program? No, but I found programs that were already out there and brought them into the fire department, multi, incorporated them into it.
Q. There were many programs that you did that with, right?
A. All the programs that we well, they don't have them anymore, but they did.
Q. How many programs did you implement, do you think? What's your best recollection?
A. We taught from pre-k up to high school, so there's 12, 13 programs right there. We did, I believe, five different commercial programs. We did a baby-sitters program. We did the car seat program. We worked with the elderly.
(Docket Entry No. 22, Ex. E, Kohl Dep., at 86-87).
Kohl exercised discretion in researching whether a particular preexisting program responded to her chief's instruction or a request from the community, in evaluating *644 the publicly available program, and in determining whether to recommend the program to her supervisors for inclusion in the WFD curriculum. Kohl's argument that she did not exercise final authority is not dispositive. To satisfy the discretionary element, it is unnecessary that an employee have the "[f]inal decision making authority over [the] matters of consequence." Lott, 203 F.3d at 331 (citing Reich, 126 F.3d at 13; Dymond v. U.S. Postal Serv., 670 F.2d 93, 96 (8th Cir. 1982)). "`Even though an employee's work is subject to approval, even to the extent that a decision may be reversed by higher level management, it does not follow that the work did not require the exercise of discretion and independent judgment.'" Reich, 126 F.3d at 13 (quoting Dymond, 670 F.2d at 96). "While the regulations require the employee to exercise independent judgment, the term does not require this judgment to be made in isolation." Piscione, 171 F.3d at 535 (emphasis removed). The fact that others may review or even reverse an employee's judgment does not mean necessarily that the employee will fall outside the FLSA's administrative exemption. Id.
Kohl also exercised some discretion in customizing the program for the intended audiences, although her testimony is inconsistent and unclear as to the extent or nature of the customization involved. (Docket Entry No. 22, Ex. E, Kohl Dep., at 8-9). The extent to which Kohl exercised discretion in executing the educational programs is unclear. (Docket Entry No. 22, Ex. A, Welbes Dep., at 60-61). Once a program was approved, little discretion appeared to be required to respond to a request for a program and arrange for its delivery.
Kohl's work delivering preexisting programs and classes does not appear to involve discretion. See Ale v. Tenn. Valley Auth., 269 F.3d 680 (6th Cir.2001) (holding that training officer that inherited lesson plans and only adjusted those plans to incorporate newly issued procedures and protocols did not exercise discretion or independent judgment); Rutlin v. Prime Succession, Inc., 220 F.3d 737, 749 (6th Cir.2000) (approving decision in Hashop v. Rockwell Space Operations Co., 867 F.Supp. 1287 (S.D.Tex.1994), in which instructors who trained Space Shuttle ground control personnel during simulated missions were not exempt because, "[a]lthough the instructors could make technical recommendations within the framework of the simulation scripts, they had no discretion to change how or when simulations were operated or to modify them in any other way").
It is unclear whether Kohl's work in appearing at community events to promote the WFD fire and life safety classes, to generate good will for the WFD, and to provide such services as bicycle registration, involved discretion or independent judgment. Although the courts have recognized that an organization's public relations or media officer can enjoy significant discretion in her work, such work generally involves a wide range of responsibility to respond to inquiries from the media and public on sensitive matters and autonomy in formulating responses, which Kohl did not have. See, e.g., Copas v. E. Bay Mun. Utility Dist., 61 F.Supp.2d 1017, 1021-33 (N.D.Cal.1999) (analyzing work by public affairs representatives and media spokespersons including a safety director charged with public relations and media communications duties who had significant discretion in responding to questions from media and public individuals and entities); Raper v. Iowa, 688 N.W.2d 29 (Iowa 2004) (analyzing work by media relations officer). A limited view of Kohl's discretion would be consistent with the job description, which stated that the job required the "[a]bility to apply common *645 sense understanding to carry out detailed but uninvolved written or oral instructions" and to "deal with problems involving a few concrete variables in standardized situations." (Docket Entry No. 22, Ex. A, Welbes Dep., at 37). A more expansive view of Kohl's discretion is supported by her own testimony as to certain aspects of her job and the fact that in her evaluation, she was charged with more responsibility for communications between the WFD and the community. (Docket Entry No. 18, Ex. A-3, at 6).
Additionally, Kohl was afforded discretion in carrying out her duties and in arranging her own work days, both in terms of what she did and when she did it. She testified that she scheduled her own appearances at different events, classes, and programs, and decided where and when she needed to be. (Docket Entry No. 22, Ex. E, Kohl Dep., at 101-04). Indeed, Kohl testified that she exercised so much autonomy over her schedule that in the last six months of her tenure, her chief criticized her frequently for not telling anyone where she was going. (Id. at 105). Such autonomy is a characteristic of discretion. Lott, 203 F.3d at 330 (holding that employee who had discretion over her work schedule "exercised autonomy and independent judgment"); Demos v. Indianapolis, 302 F.3d 698, 705 (7th Cir.2002) ("Although the totality of plaintiffs duties are relevant, we may also consider the relative importance of those duties to the employer, the frequency that the employee exercises discretion, and the employee's autonomy and authority in his or her organization."); Auer v. Robbins, 65 F.3d 702 (8th Cir.1995) (holding that police sergeants who were "minimally supervised, exercise[d] near unfettered discretion and enjoy[ed] a great deal of autonomy" were exempt).
In sum, the record is conflicting and inadequate to determine whether, as a matter of law, Kohl "customarily and regularly [exercised] discretion and independent judgment," as opposed to merely applying her "knowledge in following prescribed procedures or determining which procedure to follow." 29 C.F.R. § 541.207(c).
IV. Conclusion
For the reasons stated above, the record is inadequate to determine Kohl's exempt status. The motions for summary and partial summary judgment are denied.
NOTES
[1] At times the position is titled the Fire and Life Safety Educator. Both titles refer to the position held by Cassandra Kohl between May 15, 2002 and June 30, 2004.
[2] Under the new exemption, employees earning in excess of $100,000 per year are exempt from the overtime pay requirement as long as they "customarily and regularly" perform "any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee." 29 C.F.R. 601.
The new regulations were not expressly made retroactive. See 69 Fed.Reg. 22122-01, 22122 (Apr. 23, 2004). Federal courts have held that the new regulations do not apply retroactively. See, e.g., Kennedy v. Commonwealth Edison Co., 410 F.3d 365, 369 (7th Cir.2005); Tiffey v. Speck Enters., Ltd., 418 F.Supp.2d 1120, 1124 n. 3 (S.D.Iowa 2006); Smith v. Heartland Auto. Servs., Inc., 404 F.Supp.2d 1144, 1148 n. 2 (D.Minn.2005). The Fifth Circuit has refused to apply other FLSA statutory not regulatory amendments that were not expressly made retroactive. See Vela v. City of Houston, 276 F.3d 659, 674 (5th Cir.2001). Because Kohl's employment as the FLSO ended on June 30, 2004, before the new regulations went into effect, the pre-2004 regulations apply. Because the new relevant regulations are not inconsistent with the old, but clarify the application, they are also usefully consulted.
[3] The 2004 revisions of 29 C.F.R. § 541.201 state:
(a) To qualify for the administrative exemption, an employee's primary duty must be the performance of work directly related to the management or general business operations of the employer or the employer's customers. The phrase "directly related to the management or general business operations" refers to the type of work performed by the employee. To meet this requirement, an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment.
(b) Work directly related to management or general business operations includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; legal and regulatory compliance; and similar activities. Some of these activities may be performed by employees who also would qualify for another exemption.
(c) An employee may qualify for the administrative exemption if the employee's primary duty is the performance of work directly related to the management or general business operations of the employer's customers. Thus, for example, employees acting as advisers or consultants to their employer's clients or customers (as tax experts or financial consultants, for example) may be exempt.
29 C.F.R. § 541.201.
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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 97-30594
LOUISIANA BRICKLAYERS & TROWEL TRADES
PENSION FUND & WELFARE FUND,
Plaintiff-Appellee,
v.
ALFRED MILLER GENERAL MASONRY
CONTRACTING COMPANY,
Defendant-Appellant.
Appeal from the decision of the United States District Court
for the Western District of Louisiana
October 16, 1998
Before GARWOOD, JONES, and WIENER, Circuit Judges.
EDITH H. JONES, Circuit Judge:
Although Congress has conferred primary jurisdiction on
the National Labor Relations Board (“NLRB”) for most disputes
arising in the labor context, the Employee Retirement Income
Security Act of 1974 (“ERISA”) established a remedy, enforceable in
the district courts, whereby multiemployer plans may recover
delinquent contributions from employers obligated to make the
payments under the terms of a collective bargaining agreement
(“CBA”). Faced with such an ERISA claim, the employer here sought,
first, a refuge under the NLRB’s jurisdiction; second, a decision
on successorship in labor law that, it contends, relieves it of
liability to the plan; and third, a finding that it terminated the
CBA. We hold that the first alternative is not supportable on
these facts; the second raises a defense not cognizable in the
ERISA case; and the third argument is meritless.
I. INTRODUCTION
For nearly forty years, Alfred Miller General Masonry
Contracting Company (“Miller”) and Bricklayers Local 4 (“Local 4”)
have maintained an employer/union relationship. In July 1990, the
parties entered into a new CBA. Pursuant to the CBA, Miller
regularly contributed certain amounts to the Louisiana Bricklayers
& Trowel Trades Pension Fund and Welfare Fund (“the Funds”).
Article XXIII1 of the CBA (“Article XXIII”) provided for automatic
renewal from year to year unless either party furnished written
notice of intent to terminate the agreement not later than sixty
days nor more than ninety days prior to the July 1 anniversary
date.2
In July 1994, Local 4 was among 28 locals in three states
that were merged into a consolidated “local,” Bricklayers Local
1
Article XXIII was improperly labeled Article XIII in the CBA. For
convenience, this court will refer to the provision, as have the parties, by the
proper designation, “Article XXIII.”
2
Article XXIII reads, in pertinent part:
This agreement shall be effective commencing July 1, 1994, shall
continue in full force to and including June 30, 1995, and shall be
automatically continued yearly thereafter unless written notice of
decision to negotiate a new [a]greement, in whole or in part[,] is
given in writing by either party to the other not later than (60)
days nor more than (90) days prior to the expiration date or
anniversary date thereafter.
2
Union Number 1 (“Local 1”), by the International Executive Board of
the International Union of Bricklayers and Allied Craftsmen. The
newly-designated president/secretary-treasurer of Local 1 informed
Miller of the merger by memorandum dated July 18, 1994.
On August 30, 1994, Miller wrote to the president of
Local 1 contesting the local’s representation rights. Miller
refused to recognize Local 1 as a successor union to Local 4.
However, Miller did state,
[F]or the immediate future we will continue to make
monthly contributions to our local benefit funds on
behalf of those employees covered by the Local 4
collective bargaining agreement. If there is a change in
our position, we will notify you in another letter.
In September 1994, without further notification, Miller stopped
contributing to the Funds.
II. THE DISPUTE
When Miller ceased making fund contributions, the Funds
brought suit in the Western District of Louisiana in order to
3
compel payment. Citing sections 5023 and 5154 of ERISA and section
3015 of the Labor Management Relations Act (“LMRA”), the Funds
sought to recover the delinquent contributions and available
interest, penalties, costs, and attorneys’ fees. The parties filed
cross-motions for summary judgment regarding the claims, and the
magistrate judge granted summary judgment in favor of the Funds.
In his memorandum ruling, the magistrate judge addressed
three issues. First, the court determined that a district court
could properly exercise jurisdiction over the claims –– rejecting
Miller’s argument that the NLRB is the exclusive forum for
resolution of the disputed labor law issues. Second, the court
ruled that Local 1 is a successor to Local 4. Third, the court
found that Miller’s August 30 letter failed to terminate the CBA.
3
29 U.S.C. § 1132. Section 502(a)(3) provides,
A civil action may be brought . . . by a participant, beneficiary,
or fiduciary (A) to enjoin any act or practice which violates any
provision of this subchapter or the terms of the plan, or (B) to
obtain other appropriate equitable relief (i) to redress such
violations or (ii) to enforce any provisions of this subchapter or
the terms of the plan . . . .
29 U.S.C. § 1132(a)(3). As fiduciaries, the trustees of a multiemployer benefit
plan may maintain a cause of action under section 502(a)(3) of ERISA. See
Laborers Health and Welfare Trust Fund v. Advanced Lightweight Concrete Co., 484
U.S. 539, 547, 108 S. Ct. 830, 835 (1988); see also 29 U.S.C. § 1002(21)(A).
4
29 U.S.C. § 1145. ERISA section 515 states,
Every employer who is obligated to make contributions to a
multiemployer plan under the terms of the plan or under the terms of
a collectively bargained agreement shall, to the extent not
inconsistent with law, make such contributions in accordance with
the terms and conditions of such plan or such agreement.
29 U.S.C. § 1145.
5
29 U.S.C. § 185. Neither party argues the § 301 claim on appeal.
4
When Miller moved for reconsideration, the magistrate
judge revised his earlier ruling, retreating from the finding that
Local 1 was a successor union to Local 4. In so doing, the court
noted, “[W]hether Local 1 was a successor to Local 4 . . . is
immaterial to the proper disposition of this matter.” Instead, the
court focused on the limited defenses to an action under ERISA
section 515 and concluded that the dissolution of Local 4 was not
a defense to the underlying action. Based on these rulings, the
court entered judgment for the Funds for delinquent payments
covering the period of September 1994 to November 1996. Miller has
appealed.
III. DISCUSSION
A. Standard of Review
When a district court grants summary judgment, this court
reviews the determination de novo, employing the same standards as
the district court. See Urbano v. Continental Airlines, Inc., 138
F.3d 204, 205 (5th Cir. 1998). Summary judgment is appropriate
when, viewing the evidence in the light most favorable to the
nonmoving party, the record reflects that no genuine issue of
material fact exists, and the moving party is entitled to judgment
as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317,
322-24, 106 S. Ct. 2548, 2552-53 (1986); see also Fed. R. Civ. P.
56(c).
5
B. Jurisdiction, Defenses, and ERISA section 515
Generally, the NLRB retains primary jurisdiction to
address disputes arguably subject to sections 7 or 8 of the
National Labor Relations Act (“NLRA”). See Kaiser Steel Corp. v.
Mullins, 455 U.S. 72, 83, 102 S. Ct. 851, 859 (1982). As was
previously noted, however, ERISA was amended to facilitate the
collection of past-due pension and welfare fund contributions from
employers in federal courts.
Notwithstanding the Funds’ proper invocation of federal
court jurisdiction, Miller asserts that the labor law defenses it
raises should have been heard first under the auspices of the NLRA
and that the federal court should have dismissed pending an NLRB
action. In so contending, Miller principally relies on Laborers
Health & Welfare Trust Fund for Northern California v. Advanced
Lightweight Concrete Co., 484 U.S. 539, 108 S. Ct. 830 (1988).
Advanced Lightweight is, however, distinct, as it involved
negotiations following the lapse of a collective bargaining
agreement. See 484 U.S. at 542, 108 S. Ct. at 832. A discussion
of the Advanced Lightweight facts and holding is enlightening.
Advanced Lightweight was required to contribute to
several employee benefit plans under the terms of a collective
bargaining agreement. See id., 108 S. Ct. at 832. Following the
lapse of the agreement, the employer discontinued contributions to
the plans. See id., 108 S. Ct. at 832. When the employer ceased
6
contributing, the plans filed suit in federal court. Grounding
jurisdiction on ERISA sections 502 and 515,6 the plans argued that
the fund payments were due and owing because the employer’s
unilateral decision to forestall payment constituted an unfair
labor practice under NLRA section 8(a)(5)7. Advanced Lightweight,
484 U.S. at 542-43, 108 S. Ct. at 832. Advanced Lightweight
maintained that section 515 of ERISA did not govern the
“delinquent” contributions because the duty to make these payments
would only arise under the good-faith bargaining provisions of the
NLRA, not the expired collective bargaining agreement. See id. at
543-44, 108 S. Ct. at 833. As a result, the employer contended
that the NLRB retained exclusive jurisdiction over the post-
contractual contributions dispute. See id. at 544, 108 S. Ct. at
833.
The Supreme Court ruled that the remedy provided by
section 515 of ERISA did not extend to post-contract delinquencies.
See id. at 547-49, 108 S. Ct. at 835-36. The Court held,
[B]oth the text and the legislative history of §§ 515 and
502(g)(2) provide firm support for the . . . conclusion
that [the remedy provided by these sections] is limited
to the collection of “promised contributions” and does
not confer jurisdiction on district courts to determine
whether an employer’s unilateral decision to refuse to
make postcontract contributions constitutes a violation
of the NLRA.
6
Although the plans had alleged jurisdiction under LMRA section 301
in the original complaint, this basis of jurisdiction was abandoned on appeal.
Advanced Lightweight, 484 U.S. at 543 n.4, 108 S. Ct. at 832 n.4.
7
29 U.S.C. § 158(a)(5).
7
Id. at 548-49, 108 S. Ct. at 835-36 (footnotes omitted).
In Advanced Lightweight, the termination date of the CBA,
and thus the last date on which contractually-based fund payments
were due under section 515, was a given fact. The NLRB’s
jurisdiction, according to the Court, had to be invoked to
determine non-section 515 liability for the company’s alleged post-
contractual unfair labor practice.
This case is different. First, the funds are not relying
on an unfair labor practice, i.e., a claim under NLRA section
8(a)(5), as the basis for their claim. Second, Miller argues that
“the Funds seek contributions during a time at which there was no
union party to a collective bargaining agreement with the
employer.” To reach that conclusion, which would determine that
the CBA ended in 1994, we would have to infer the answer to the
labor law issue that no valid union successorship occurred. No
such issue regarding the termination date of the CBA was presented
to or ruled on by the Court in Advanced Lightweight, however, and
it is an issue within the unique expertise of the NLRB. In this
sense, Miller asks the federal court to usurp the NLRB’s function
in the labor arena, contrary to Advanced Lightweight, by deciding
if and when a facially valid CBA becomes unenforceable. In light
of the limited defenses to a claim under section 515, Advanced
Lightweight furnishes neither factual or theoretical support for
the extension Miller seeks.
8
Miller’s non-jurisdictional arguments assert defenses to
the Funds’ lawsuit based on lack of proper successorship and a
purported termination of the CBA. Under the facts presented here,
these defenses are not cognizable in a section 515 action. Section
515 of ERISA was designed to “permit trustees of plans to recover
delinquent contributions efficaciously, and without regard to
issues which might arise under labor-management relations law --
other than 29 U.S.C. [§] 186.” Benson v. Brower’s Moving &
Storage, Inc., 907 F.2d 310, 314 (2d Cir. 1990) (quoting 126 Cong.
Rec. 23039 (1980) (remarks of Rep. Thompson)). The Funds are not
identical to the unions; Congress intended to protect the Funds’
financial stability by limiting the scope of issues litigable when
they seek to recover employers’ contributions.
In keeping with this intent, only three defenses to a
delinquency action have been recognized by all of the circuit
courts that have considered the issues: (1) the pension
contributions are illegal,8 (2) the CBA is void ab initio, e.g.,
for fraud in the execution,9 and (3) the employees have voted to
decertify the union as their bargaining representative10. See
Agathos v. Starlite Motel, 977 F.2d 1500, 1505 (3d Cir. 1992)
8
See Kaiser Steel, 455 U.S. at 86-88, 102 S. Ct. at 861-62.
9
See Southwest Administrators, Inc. v. Rozay’s Transfer, 791 F.2d 769,
773-74 (9th Cir. 1986) (discussing distinctions between fraudulent execution and
fraudulent inducement as defenses to claim under section 515).
10
See Sheet Metal Workers' Int’l Ass’n, Local 206 v. West Coast Sheet
Metal Co., 954 F.2d 1506, 1509-10 (9th Cir. 1992).
9
(discussing potential defenses to section 515 action); cf. Advanced
Lightweight, 484 U.S. at 547-49, 108 S. Ct. at 835-36 (finding
fund’s cause of action under section 515 dissolves following
termination of CBA). Thus, the court decisions distinguish between
actions which invalidate the underlying CBA and conduct, including
unilateral action by the employer,11 which raises potential defenses
to the enforceability of a facially valid CBA. See Bla-Delco, 907
F.2d at 314 (“[O]nce an employer knowingly signs an agreement that
requires him to contribute to an employee benefit plan, he may not
escape his obligation by raising defenses that call into question
the union’s ability to enforce the contract as a whole.”) (emphasis
added).
The defenses asserted by Miller in the case sub judice
merely raise potential defenses to the enforceability of the
underlying CBA. Miller asserts neither fraud in the execution of
the CBA nor illegality in any of its contributions to the Funds.
Instead, lack of successorship is raised as an affirmative defense
to the facial continuation of the CBA and Miller’s contribution
obligation. However, Local 1’s status as a valid successor to
Local 4 involves a complex labor law determination. Thus, West
Coast Sheet Metal Co. is factually distinct from Miller’s
11
See MacKillop v. Lowe’s Market, Inc., 58 F.3d 1441, 1444-45 (9th Cir.
1995) (an employer’s unilateral decision to cease contributing to pension funds
in light of questions regarding representation status of union failed to
constitute defense under section 515); Carpenter’s Health and Welfare Trust Fund
v. Bla-Delco Constr., Inc., 8 F.3d 1365, 1369 (9th Cir. 1993) (employer’s attempt
to terminate collectively bargained agreement failed to establish legitimate
defense to an action under section 515 as contract merely became voidable).
10
successorship argument. When employees vote to decertify a union,
no material, factual labor law issue arises regarding the
enforcement of the previous CBA. See West Coast Sheet Metal Co.,
954 F.2d at 1509 (“The trust fund provisions have no legal effect
when the Union is no longer the certified representative of West
Coast's employees.”) On the other hand, when a union claims
arguable successor rights, the proper methods for adjudication of
this labor law question are either arbitration under the CBA or
timely litigation before the NLRB. See Lowe’s Market, Inc., 58
F.3d at 1446 (holding employer’s contribution obligations under
section 515 continue until questions regarding continuing validity
of CBA are resolved by arbitration or NLRB); Brower’s Moving and
Storage, 907 F.2d at 316 (“[A] district court may . . . stay its
proceedings pending an NLRB determination with respect to the
collective bargaining agreement . . . .”).
Also unhelpful to Miller is the question of termination
pursuant to the employer’s August 30 letter.12 At best the letter
suggests a defense to enforcement of the CBA. But we can go
further than this in agreeing with the magistrate judge that, on
12
Although a district court may consider the significance of a
purported termination, the court’s examination must end following a superficial
inquiry into the termination’s effect. Thus, a court may determine whether an
attempted termination was timely or not. Cf. Bla-Delco Constr., 8 F.3d at 1369.
Further, a court may review an alleged termination to determine if the requisite
intent has been conveyed. Cf. OPEIU, Local 42 v. UAW, Westside Local 174, 524
F.2d 1316, 1317 (6th Cir. 1975). However, if the issue of termination cannot be
resolved through cursory review, the defense to a section 515 action will not
succeed. See Bla-Delco Constr., 8 F.3d at 1369 (“The dispute centers on whether
Bla-Delco effectively terminated the CBA. Consequently, the CBA was not ‘void,’
but merely ‘voidable’ . . . .”)
11
the face of the documents, whatever the letter did, it neither
unequivocally indicated an intention to terminate the CBA, nor
could it do so. See OPEIU, 524 F.2d at 1317 (“[N]otice to
terminate must be clear and explicit.”). While the August 30
letter rejected any successorship claims of Local 1, Miller
equivocated by agreeing to abide by the terms of the CBA “for the
immediate future.” The letter clearly presupposes future action
prior to the complete rejection of the CBA. Moreover, Miller’s
“termination” letter to Local 4 was also untimely based on the
express language of Article XXIII. See Article XXIII, supra note
2 (requiring written notification between April 2 and May 2 in
order to avoid renewal of the CBA).
IV. CONCLUSION
The magistrate judge correctly concluded that the Funds
were entitled to recover the contributions Miller failed to make
from September 1994 to November 1996, when the CBA terminated by
its own terms. Section 515 of ERISA severely limits the defenses
available to an employer that has failed to timely contribute to a
multiemployer plan. Although Miller established that the CBA was
potentially unenforceable, it appears that remedies were available
to Miller under the CBA or with the NLRB -- not in the district
court. In actions under section 515, a federal court lacks
jurisdiction to consider such defenses. See Kaiser Steel, 455 U.S.
at 83, 102 S. Ct. at 859; see also Rozay’s Transfer, 791 F.2d at
12
773 (“[C]ongress and the courts have acted to simplify trust fund
collection actions by restricting the availability of contract
defenses . . . .”). Accordingly, this court AFFIRMS the judgment
of the district court.
AFFIRMED.
13
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540 F.2d 1086
U. S.v.Amaya
No. 75-2753
United States Court of Appeals, Fifth Circuit
9/23/76
W.D.Tex., 533 F.2d 188
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50 F.3d 16
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.Larry BURSTEIN, Defendant-Appellant.
No. 94-10185.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted Feb. 13, 1995.Decided March 9, 1995.
Before: FLETCHER, PREGERSON, and RYMER, Circuit Judges.
* The district court's repeated and coercive Allen instructions were plain error under United States v. Seawell, 550 F.2d 1159 (9th Cir.1977), prejudiced Burstein, and hurt the integrity of the proceedings, justifying reversal under the plain error standard of United States v. Olano, 113 S.Ct. 1770 (1993).
II
Under the circumstances, Burstein preserved his objection to the district court's misstatement of the Jewell instruction. We review de novo whether a jury instruction misstates the elements of a crime, and examine whether the jury instructions overall are misleading or inadequate to guide the jury's deliberations. United States v. Blinder, 10 F.3d 1468, 1477 (9th Cir.1993). By several times omitting the word "not" from the last paragraph of the Jewell instruction, the district court failed to give the jury adequate guidance, entitling Burstein to a new trial. This was not cured by one interspersed statement that was not incorrect.
REVERSED AND REMANDED.
1
---------------
* This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3.
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667 A.2d 1254 (1995)
Michael A. BUCCI, in his Capacity as Director of the Department of Business Regulation
v.
Jane ANTHONY et al.
No. 95-81-Appeal.
Supreme Court of Rhode Island.
December 22, 1995.
*1255 Richard B. Wooley, Asst. Atty. General, Walnut, CA, for Plaintiff.
Arthur M. Read, II, Providence, for Defendants.
OPINION
PER CURIAM.
This matter came before the Supreme Court on December 5, 1995, pursuant to an order directing the parties to appear and show cause why the issues raised by their appeals should not be summarily decided. After hearing the arguments of counsel and examining the memoranda submitted by the parties, including the parties' supplemental memoranda, we are of the opinion that cause has not been shown and that this matter should be summarily decided.
The plaintiff, Michael A. Bucci, in his capacity as the director of the Department of Business Regulation (DBR), appeals from a Superior Court judgment granting defendants' motion for summary judgment. The defendants appeal from the trial justice's denial of their request for attorney's fees.
This action arises out of litigation which occurred in the Federal Court in 1991. The defendants, state employees who were members of the Republican Party, were terminated from their positions as employees of Jai Alai Fronton in Newport and replaced by members of the Democratic Party. The defendants filed suit against the DBR in the United States District Court for the District of Rhode Island and alleged that their terminations were politically motivated. An injunction was granted which prevented the termination of defendants by the DBR. Subsequently, in August 1992, the parties executed a settlement agreement in which defendants' agreed to dismiss their claim in exchange for the state's promise that they would not lose their jobs. That agreement provided in relevant part as follows:
"4. Reorganization: The [state] agree[s] that the [employees] will hold their per diem positions with the State of Rhode Island, Department of Business Regulation (or its successor) as the same are presently constituted and that their work hours, duties, compensation, number of hours worked and other terms of employment will not be modified, altered or changed in any way (except for such increases in wages as may be granted to similarly situated state employees).
"In the event that the State of Rhode Island seeks to reorganize the Department of Business Regulation, or its successor, while defendant Sundlun holds the office of Governor, with regard to those jobs currently held by plaintiffs and, as a result, the per diem positions are held by the plaintiffs are eliminated and new full time positions are created (whether classified or unclassified) then, upon such reorganization, the plaintiffs, should then apply for employment by the State in any such now job or position created or modified as a result of such reorganization, would be considered fairly by the State for employment in any or all such new positions whose job description is substantially similar to any per diem job ever held by such plaintiff with the State. In so considering *1256 such plaintiff's application, the State of Rhode Island will give credit for and great weight to such applicant's prior experience and tenure in such per diem position and will not give any credit, consideration or weight to such plaintiff's political beliefs."
In April 1995 plaintiff filed the instant action, seeking declaratory relief. In the petition, plaintiff alleged that the revenues generated by the Division of Racing and Athletics, which employs defendants, had declined in recent years. As a result the DBR sought permission to change the rate of pay of the per-diem personnel employed at Lincoln Greyhound Park and the Jai Alai Fronton in Newport. In response to the proposed action by the DBR, defendants filed a counterclaim, alleging that the changes in compensation violated the terms of the settlement agreement. The Superior Court hearing justice found that the wage modification would violate the terms of the settlement agreement and enjoined the state from modifying the terms of the defendants' employment. He further ordered the DBR to pay defendants retroactive wages. The defendants' request for attorney's fees was denied. We are of the opinion that the hearing justice's interpretation of the agreement is consistent with the clear, unequivocal language contained therein. The agreement provides that the terms of defendants' employment will not be "modified, altered or changed in any way." Moreover, as the trial justice noted, if the DBR wanted to reserve a right to reduce defendants' pay without discrimination in the event of a fiscal crisis, the time to include that provision was before signing the agreement, not afterward. Accordingly we find that the hearing justice properly denied the DBR's motion for summary judgment.
With respect to defendants' contention that the hearing justice erred in denying their request for attorney's fees we find this argument to be without merit. General Laws 1956 (1985 Reenactment) § 9-1-45, as amended by P.L. 1990, ch. 371, § 2 permit a court to award reasonable attorney's fees to a prevailing party when the court finds that there was a complete absence of a justifiable issue raised by the losing party and is discretionary. In the instant case the hearing justice determined that the DBR's position rested upon an arguable proposition of law. Therefore, we find that he acted within his sound discretion in denying the defendants' request for counsel fees.
For these reasons the DBR's appeal and the defendants' cross-appeal are denied and dismissed. The Superior Court judgment is affirmed and the papers of the case are remanded to the Superior Court.
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17 B.R. 708 (1982)
In re Anthony J. DONATO, Evelyn B. Donato, Debtors.
Anthony J. DONATO, Evelyn B. Donato, Plaintiffs,
v.
DOMINION NATIONAL BANK OF TIDEWATER, Defendant.
Bankruptcy No. 81-01407-N, Adv. No. 81-0693-N.
United States Bankruptcy Court, E.D. Virginia, Norfolk Division.
February 17, 1982.
*709 John T. Midgett, Wilkins & Midgett, Norfolk, Va., for plaintiffs.
Anthony M. Thiel, Eley, Rutherford & Leafe, Norfolk, Va., for defendant.
OPINION AND ORDER
HAL J. BONNEY, Jr., Bankruptcy Judge.
The issue prevailing has not previously come before the Court as a result of Bankruptcy Reform Act of 1978 [the Code]. The debtors seek the turnover of funds held by Dominion National Bank of Tidewater pursuant to rights, it says, under the "setoff" provisions of 11 U.S.C. 553.
The Facts
The debtors signed a promissory note on October 20, 1979, with the Dominion National Bank of Tidewater for the purchase of a tractor. Subsequently, there was a default in payments and according to the exhibits and testimony, the tractor was voluntarily repossessed by the bank on April 1, 1981. As a result of the repossession and sale of the tractor, there was on July 17, 1981, a balance due the bank of $7,830.14.
The bank moved on September 14th and offset the debtors' checking account in the amount of $1,155.07. The computer printout reflects that the setoff was accomplished at 12:08 p.m. on the 14th. The same day the debtors filed their petition for relief in this Court under Chapter 13. This was at 3:12 p.m.
On September 15th, the bank corrected its records to show an offset of $609.76, the amount in the debtors' checking account as of September 14th.
The Law
As a preliminary manner, the bank raises the question of whether the debtors have standing to bring this action. The debtors are attempting to recover a setoff under § 553. Sections 522(g) and (h) specifically empower a debtor to bring such an action if the trustee has the right to and doesn't. And the provisions of Chapter 5 of the Code apply to Chapter 13 debtors. 11 U.S.C. § 103(a). There is no question as to debtors' standing. The trustee has brought no action; therefore they may.
Generally, a creditor may offset a mutual debt owed to the debtor against a claim the creditor has against the debtor. In re Duncan, 10 B.R. 13, 6 BCD 1310 (Bkrtcy.D.Tenn.1980). 11 U.S.C. § 553 regarding setoffs is not an independent source of law. The section merely preserves the common law right of setoff under applicable non-bankruptcy law. In re Haffner, 12 B.R. 371 (Bkrtcy.M.D.Tenn. 1981).
However, section 553 does place several restrictions on the right of setoff. The automatic stay applies to setoffs accomplished after the filing of the petition for debts which arose prior to the commencement of the case. 11 U.S.C. § 362(a)(7). In addition, any setoff accomplished within 90 days of bankruptcy is subject to the "improvement of position test" of § 553(b). The rationale for this test parallels the improvement of position test in the voidable preference section of the Code. 11 U.S.C. § 547(c)(5); Legislative History, H.Rep. 95-595, p. 185, U.S.Code Cong. & Admin.News 1978, p. 5787.
The Court finds that the bank accomplished the setoff prior to the filing of the debtors' petition. Because the setoff occurred prior to the petition, the action was not subject to the automatic stay provisions of § 362.
The bank had the right to offset against the debtors' checking account. That right is subject to the improvement of position test enunciated in § 553(b). Under this test, any increase during the 90 days before bankruptcy in the amount of the debt owing by the creditor to the debtor would not be permitted to be offset.
The evidence presented at trial is insufficient to determine whether the bank may retain all or a portion of the offset *710 amount under the improvement of position analysis. The figures required by the Court are the amount of the debt and the balance in the debtors' account on the following dates:
(1) 90 days prior to the filing of the petition,
(2) the date of the setoff [which the Court determines to be September 14, 1981 at 12:08 P.M.], and
(3) the first date during the 90 days preceding the date of the filing of the petition on which there was an insufficiency, if this date was not (1), above.
In re Satterla, 15 B.R. 166, 169 (Bkrtcy.W. D.Mich.1981).
If the parties cannot agree upon these figures, the bank shall within fifteen (15) days of this order request a further hearing.
IT IS SO ORDERED.
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81 Mich. App. 682 (1978)
266 N.W.2d 49
SMITH
v.
MARTINDALE
Docket No. 77-1541.
Michigan Court of Appeals.
Decided March 7, 1978.
H. William Martin, for plaintiffs.
Neal & Lengauer (by Paul Lazar), for defendants.
Before: V.J. BRENNAN, P.J., and D.E. HOLBROOK and R.B. MARTIN,[*] JJ.
D.E. HOLBROOK, J.
Plaintiffs appeal from an April 19, 1977, order granting the summary judgment motion of R.L. White Erectors, Inc. Plaintiffs' amended complaint claimed damages from an injury to Michael Smith caused by Don Martindale's negligence in operating a crane on a construction *684 project. Michael Smith's employer, Freedland Steel, was the general contractor for the project and had rented the use of a crane and operator (Don Martindale) from White. Freedland voluntarily paid workmen's compensation benefits to plaintiff and thereafter plaintiffs commenced a third-party action against Martindale and R.L. White Erectors. Plaintiffs sought to hold R.L. White Erectors vicariously liable because of the employer-employee relationship between the corporation and Martindale. White moved for summary judgment on the grounds that, as a matter of law, at the time of the accident, Don Martindale was the employee of Freedland and hence plaintiffs' remedy was through Freedland's worker's compensation: The trial court granted the summary judgment motion in an opinion dated April 14, 1977.
Michael Smith was a construction worker employed by Freedland Steel Company. General Motors contracted with Freedland Steel for construction work at the A.C. Spark Plug Plant in Flint, Michigan. On January 24, 1975, Michael Smith was working at the construction site when he was hit on the head with a steel "bracing angle" which fell from a steel trestle. The trestle was being positioned by a crane which was operated by Don Martindale and owned by R.L. White Erectors, Inc. Freedland Steel fabricated the trestle and the "bracing angle". Michael Smith received a skull fracture and a scalp laceration.
R.L. White Erectors, Inc., is in the business of leasing cranes and persons to operate them. Don Martindale had worked for R.L. White three years as a crane operator. R.L. White paid Martindale's wages, along with deducting his social security and income taxes from his check. Additionally, R.L. White paid Martindale's worker's compensation *685 insurance. On January 23, 1975, Freedland rented the services of a crane and operator from White. White instructed Don Martindale and an "oiler", Rick White, to report to the A.C. construction site on January 24, 1975. Don Martindale and Rick White transported the crane to the site. On their second day on the job, January 25, Don Martindale and Rick White returned to the site without further instructions from White.
Under the rental contract, Freedland paid White a set rate for the crane and an hourly rate set at the union wage for Don Martindale and Rick White.
According to plaintiffs, Don Martindale and Rick White had some discretion in operating the crane in that Martindale could refuse to operate the crane in any way he felt would harm it. However, in the actual use of the crane for placement of the trestle, Freedland's employees by a recognized set of hand signals, directed the crane operator as to where the trestle should go.
R.L. White Erectors, Inc., chose Don Martindale as the operator of the crane. Freedland Steel Company had no power to fire him, but could have him removed from the job if it felt it was necessary to do so. Although officers of R.L. White Erectors, Inc., visited the construction site on certain occasions, R.L. White apparently exercised no control or supervision over the construction project.
After reviewing the above facts, the trial court determined that Don Martindale was actually the "loan servant" or employee of Freedland and granted White's motion for summary judgment.
The first issue raised on appeal is whether an employee-crane operator of a company in the business of renting cranes and crane operators becomes *686 the "loaned servant" of the company renting the crane and operator.
The determination of who employed Don Martindale is significant in that it controls plaintiffs' ability to recover. Plaintiffs have worker's compensation rights with respect to Michael Smith's employer, Freedland Steel. The worker's compensation benefits are plaintiffs' exclusive remedy against Freedland. Plaintiffs might recover further if Don Martindale was White's employee, and if Don Martindale was negligent, by suing White under the respondeat superior doctrine. However, if Don Martindale was a Freedland employee, the respondeat superior doctrine is of no value to plaintiffs because of the exclusive nature of the worker's compensation remedy. Also, if Don Martindale and Michael Smith are coemployees for Freedland, then plaintiffs are barred from recovering from Don Martindale by reason of the worker's compensation act.
Both plaintiffs and defendants agree that the economic reality test is applicable to the case at bar. However, plaintiffs claim that the test indicates that Martindale is R.L. White's employee whereas defendants maintain that Martindale is Freedland's employee.
The economic reality test has been adopted by the Michigan courts to discern an employment situation. Goodchild v Erickson, 375 Mich 289, 293; 134 NW2d 191 (1965), Cronk v Chevrolet Local 659, 32 Mich App 394, 398; 189 NW2d 16 (1971), lv den, 385 Mich 784 (1971), McKissic v Bodine, 42 Mich App 203, 205-208; 201 NW2d 333 (1972), lv den, 388 Mich 780 (1972). Under the economic reality test, the Michigan Supreme Court in Askew v Macomber, 398 Mich 212, 217-218; 247 NW2d 288 (1976), listed relevant factors to be used to discern an employment situation:
*687 "(1) [C]ontrol of a worker's duties, (2) the payment of wages, (3) the right to hire and fire and the right to discipline, and (4) the performance of the duties as an integral part of the employer's business towards the accomplishment of a common goal."
We review each factor as it relates to the facts in the instant case to determine whether Don Martindale was an employee of R.L. White or Freedland Steel at the time of the accident.
(1) Control of a worker's duties.
Prior to the economic reality test, control of the employee was the test used. Today, control is merely part of the test. Askew, supra. A case decided under the control test was White v Bye, 342 Mich 654; 70 NW2d 780 (1955), a case which was factually very similar to the case at bar. In White v Bye, the plaintiff was an employee of the J.A. Utley Company, who was the general contractor for the construction of a plant for General Motors in Flint, Michigan. Utley leased a crane and operator from Bye Excavating for work on the project. Another contractor on the project was the Wilcox Company. Wilcox borrowed from Utley the crane and operator rented from Bye for a very small job. Such borrowing was common in large construction projects. While the crane operator was using the crane, a terminal hook broke loose and struck the plaintiff. At the time the crane operator was being directed by hand signals from Wilcox's employees. Plaintiff brought an action against Bye on the theory that their employee, the crane operator, was negligent in the operation of the crane. Bye argued that the operator was no longer their employee at the time of the accident. The Court ruled in favor of the plaintiff White therein.
Defendants and the lower court distinguished White v Bye on the grounds that Wilcox had no *688 formal relationship with Bye, whereas R.L. White herein had a formal relationship with Freedland. Although the two cases are not totally on all fours, we hold that the Court's reasoning and findings in White v Bye are instructive as to the question of control in the instant case. The Court in White, supra, at 660-663 stated:
"The facts pertinent to this issue are that: Bye owned the crane and hired the operator and paid his wages; the crane and operator were hired as a unit, with Bye paying the maintenance, insurance, et cetera; Bye was in the business of renting cranes with his own skilled employees to operate them; the operator was the only person who could operate the controls of the crane; Utley or Wilcox could not discharge the operator from Bye's employ though they could apparently force Bye to put another operator in his place; Wilcox gave hand signals and directions for moving the reel of cable to indicate to the operator where the crane was to go; the operator could refuse to do any job which he felt would injure the crane; and it was customary on a building project of this kind for a lessee of a crane to accommodate other contractors by lending them his crane either for a charge or in some cases for nothing. Bye contends that the operator ceased being his servant because Wilcox or Utley `exercised detailed on-the-spot control of the actual operation' and it was their work that was being done at the time. We are convinced, however, that the directions and signals on the scene were not sufficiently significant, in and of themselves, to establish the master-servant relationship. The noise and the nature of the work made the directions and signals from below necessary. In Rockwell v Grand Trunk Western Railway Co, supra, [253 Mich 144; 234 NW 159 (1931)] the defendant maintained an electric crane for the unloading of heavy freight and the plaintiff trucker was unloading a car. In respect to defendant's liability, as master, we stated (p 148):
"`The plaintiff had no control over the crane or the operator except that by signals he could direct when and in what direction the beams should be hoisted. *689 Beyond this he was not allowed to interfere with its operation.'
"In the landmark and oft-quoted case of Standard Oil Co v Anderson (1909), 212 US 215 (29 S Ct 252, 53 L ed 480), the court considered this problem as applied to the Standard Oil Company whose ship was being loaded by means of its own winch, operated by its own man, though the stevedoring company gave signals and directions and supplied the tackle. The court stated in holding the company liable (pp 222, 226):
"`Here we must carefully distinguish between authoritative direction and control, and mere suggestion as to details or the necessary cooperation, where the work furnished is part of a larger undertaking.
* * *
"`Much stress is laid upon the fact that the winchman obeyed the signals of the gangman, who represented the master stevedore, in timing the raising and lowering of the cases of oil. But when one large general work is undertaken by different persons, doing distinct parts of the same undertaking, there must be cooperation and coordination, or there will be chaos. The giving of signals under the circumstances of this case was not the giving of orders, but of information, and the obedience to those signals showed cooperation rather than subordination, and is not enough to show that there has been a change of masters.'
* * *
"In the instant case, Bye furnished the crane, operator and the operator's know-how as an entity. The operator was hired by and remained under Bye's control. Bye was in the business of lifting and transporting of objects for other persons by means of cranes. He furnished these services and not the operator and crane individually. In the Rockwell Case, supra, we said (p 148):
"`In the instant case the defendant furnished the crane to increase its business in the carrying of heavy weight. It selected a man who had been instructed in its use to care for and operate it. * * * While operating it, he was engaged in the furtherance of the defendant's business. He did nothing that the plaintiff was required *690 to do. He knew the safe way and the unsafe way to operate it. He was selected by the defendant, paid by the defendant, and could be discharged whenever it pleased the defendant.'"
Therefore, we hold that the control of Martindale was by R.L. White and not Freedland.
(2) Payment of wages.
Martindale's wages were paid to him by R.L. White. White also deducted social security and income taxes from his check. Martindale did not receive any money from Freedland Steel. Freedland claims that it was required to pay R.L. White for the number of hours worked by Martindale at the construction site and that it was in effect paying Martindale's wages. However, we do not agree. Martindale was paid by a check issued by R.L. White and White was responsible for the withholding taxes. We hold that the most reasonable view of this relationship is that R.L. White paid Martindale's wages.
(3) Right to hire and fire and discipline.
Allen Clark, a vice-president of Freedland Steel, was questioned in a deposition in part as follows:
"Q [Plaintiffs' attorney] Do you know who directed Don Martindale to report to the A.C. Spark Plug Plant to work that job?
"A Well, I'm assuming his supervisor or someone at the company where he's employed.
"Q Would you or Mike Davis have any authority to fire Don Martindale from the R.L. White Company?
"A Would we have authority?
"Q Yes.
"A Yes.
"Q To fire him from his own company?
"A No. No. I'm sorry. I misunderstood you. No, none whatsoever.
*691 "Q So whether or not he worked is up to his company, not up to you?
"A That's correct."
Thus, Freedland had no right to fire Martindale. As to the disciplining of Martindale, by Freedland, Clark was questioned as follows:
"Q [Plaintiffs' attorney] If you didn't like the way Don Martindale or anybody else was running their crane, what procedures would you follow in getting them off the premises?
"A There would be various types of ways. It would be according to the circumstances. You would possibly go to the owner of the equipment you rented or if it was severe enough, why, you just politely asked him to leave the job and if not, you'd take other action accordinly [sic]."
Thus, although Martindale could be asked to leave the job, any disciplining was up to White. We do not agree with defendants that the right of removal is equal to the right to fire, hire and discipline. The firing and disciplining of Martindale was up to R.L. White, not Freedland.
(4) The performance of the duties as an integral part of the employer's business towards the accomplishment of a common goal.
Martindale's performance of his duties, i.e., operation of the crane, was an integral part of Freedland's business towards accomplishment of a common goal, i.e., construction of a building at the A.C. Spark Plug Plant. Thus, the fourth factor indicates a possible employment situation between Martindale and Freedland. However, as Justice SMITH stated in Schulte v American Box Board Co, 358 Mich 21, 33; 99 NW2d 367 (1959):
"Control is a factor, as is payment of wages, hiring *692 and firing, and the responsibility for the maintenance of discipline, but the test of economic reality views these elements as a whole, assigning primacy to no single one."
Also see, Askew, supra, p 220. Considering the four factors, assigning primacy to no single one, we rule that Martindale was the employee of R.L. White Erectors, Inc.
The next issue plaintiffs raise is the question of whether a person is a "borrowed servant" represents a question of fact precluding summary judgment under GCR 1963, 117.2(3).
This case is on appeal from the granting of defendants' summary judgment motion under GCR 1963, 117.2(3). The trial judge held that as a matter of law Don Martindale was Freedland's employee. Plaintiffs claim a question of fact existed as to whose employee Don Martindale was.
This issue was raised in Renfroe v Higgins Rack Coating & Manufacturing Co, Inc, 17 Mich App 259, 261-262; 169 NW2d 326 (1969), wherein the Court stated:
"In the case at bar, the record contains numerous interrogatories, depositions, and affidavits, which set out the underlying events and circumstances in great detail. These, as well as the agreed statement of facts submitted for purposes of this appeal, reveal that there is no dispute as to any of the underlying facts. Plaintiff's only contention is that on the basis of the agreed facts, defendant should not be labeled an `employer' within the meaning of the workmen's compensation law. This is not a question of fact for a jury to decide; it is a question of law which must ultimately be decided by the courts. As such, it is appropriately decided under a motion for summary judgment where full affidavits and depositions disclose no disputed issue of fact."
*693 See also, Askew, supra, at 217.
Thus, under the facts and circumstances of the instant case, the motion for summary judgment was a proper means to determine the issue as to whose employee Martindale was. However, the trial judge's decision that Martindale was Freedland's employee was in error.
Affirmed in part and reversed in part. Remanded for trial in accordance with this opinion. No costs, neither party prevailing fully.
NOTES
[*] Circuit judge, sitting on the Court of Appeals by assignment.
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382 S.C. 25 (2008)
674 S.E.2d 495
CRUSADER SERVICING CORPORATION, Respondent/Appellant,
v.
The COUNTY OF LAURENS, South Carolina, a Body Politic, and Southeastern Housing Foundation, Appellants/Respondents.
No. 4464.
Court of Appeals of South Carolina.
Heard October 22, 2008.
Decided December 4, 2008.
Withdrawn, Substituted and Refiled February 26, 2009.
*28 Robert Hill, of Newberry and Benjamin Goldberg, of Charleston, for Respondent/Appellant.
William Douglas Gray, of Anderson, for Appellant/Respondent, Laurens County.
Richard B. Ness, of Bamberg, for Appellant/Respondent, Southeastern Housing Foundation.
KONDUROS, J.:
Laurens County (the County) and Southeastern Housing Foundation (Southeastern) appeal the special referee's finding they were jointly and severally liable to Crusader Servicing Corporation (Crusader) for bid interest related to a delinquent tax sale. Crusader cross-appeals alleging the special referee erred in denying its request for statutory prejudgment interest. We affirm in part and reverse in part.
FACTS
Southeastern failed to pay ad valorem property taxes for 2001 and 2002 for its property located in Laurens County and known as the Westside Manor Apartments. In 2003, the County proceeded with a tax sale of the property. Crusader bid $348,000[1] for the property and deposited the bid money with the County. Southeastern claimed it was tax exempt and filed for such status with the Department of Revenue (the Department) subsequent to the sale of the property.[2] Two *29 days prior to the expiration of the redemption period, Southeastern paid the taxes due to Laurens County plus twelve percent interest to be given to Crusader as the bidder pursuant to section 12-51-90(B) of the South Carolina Code (Supp. 2007). Four days later, the Department awarded Southeastern tax exempt status for the year 2002. Laurens County returned $67,569.00 to Southeastern, which specifically included the twelve percent interest on Crusader's bid.
The County sent a letter to Crusader indicating the tax sale was void and requesting return of the tax sale receipt to the property in exchange for a refund of the bid amount. Crusader refused to return the tax sale receipt at that time, arguing it was entitled to the twelve percent interest under the redemption statute. The parties eventually entered a consent order in August of 2005 pursuant to which Crusader returned the tax sale receipt, and the County returned the bid money to Crusader.
Litigation ensued, and the special referee concluded Southeastern and Laurens County were jointly and severally liable for the twelve percent bid interest. The court reasoned the redemption statute provided for the payment of the interest. The court found the County was without authority under section 12-51-100 of the South Carolina Code (2000) to void a tax sale unless they made a procedural error in the conduct of the sale. The County and Southeastern appeal.
STANDARD OF REVIEW
"The sale of the property of a defaulting taxpayer is governed by statute." Key Corporate Capital Inc., v. County of Beaufort, 373 S.C. 55, 59, 644 S.E.2d 675, 677 (2007). Statutory interpretation is a question of law. State v. Sweat, 379 S.C. 367, 373, 665 S.E.2d 645, 648 (Ct.App.2008). "When an appeal involves stipulated or undisputed facts, an appellate court is free to review whether the trial court properly applied the law to those facts. In such cases, the appellate court is not required to defer to the trial court's legal conclusions." Id., 665 S.E.2d at 649. "If a statute's language is plain, *30 unambiguous, and conveys a clear meaning, `the rules of statutory interpretation are not needed and the court has no right to impose another meaning.'" Buist v. Huggins, 367 S.C. 268, 276, 625 S.E.2d 636, 640 (2006) (quoting Hodges v. Rainey, 341 S.C. 79, 85, 533 S.E.2d 578, 581 (2000)).
LAW/ANALYSIS
I. Bid Interest Under Sections 12-51-90, 12-51-100, and 12-51-150 of the South Carolina Code
Southeastern contends the special referee erred in finding it liable to Crusader for bid interest pursuant to section 12-51-90 of the South Carolina Code (Supp.2007) because the tax sale was voided once Southeastern was declared tax exempt for 2002. We disagree.
Under section 12-51-90(A), the defaulting taxpayer may redeem the affected property within the redemption period by paying delinquent taxes, assessments, penalties, and costs, together with interest as provided in subsection (B). Subsection (B) requires the delinquent taxpayer to remit interest on the tax sale bid amount in accordance with the schedule set forth. For property redeemed in the final three months of the redemption period, the interest rate is twelve percent. Section 12-51-100 of the South Carolina Code (2000) dictates what happens when the redemption is instituted: "The successful purchaser, at the delinquent tax sale, shall promptly be notified by mail to return the tax sale receipt to the person officially charged with the collection of delinquent taxes in order to be expeditiously refunded the purchase price plus the interest provided in Section 12-51-90." (emphasis added).
Section 12-51-150 of the South Carolina Code (Supp.2007) governs the procedure for voiding a tax sale:
If the official in charge of the tax sale discovers before a tax title has passed that there is a failure of any action required to be properly performed, the official may void the tax sale and refund the amount paid, plus interest in the amount actually earned by the county on the amount refunded, to the successful bidder. If the full amount of the taxes, assessments, penalties, and costs have not been paid, the property must be brought to tax sale as soon as possible.
*31 The statutory framework for tax sales does not seem to contemplate the precise situation presented in this case. The interest provision of section 12-51-90(B) is intended to encourage the prompt payment of delinquent taxes and to penalize the delinquent taxpayer for delay. Furthermore, the interest provision is an incentive for purchasers to bid on tax sale property even though there is risk involved that the property could be redeemed or the sale voided altogether.[3]
Once the redemption was accomplished by Southeastern under section 12-51-90, the terms of section 12-51-100 were triggered, and Crusader was entitled to the twelve percent interest on its bid. Section 12-51-150 does not provide that the official in charge of conducting the sale can void the sale because taxes were wrongfully assessed and the property was tax exempt. It only addresses situations in which the sale was not properly conducted. We decline to read more into the statute than can be discerned from its plain language. See Buist v. Huggins, 367 S.C. 268, 276, 625 S.E.2d 636, 640 (2006) (finding the court cannot impose another meaning on plain statutory language). Therefore, we cannot conclude the sale was void pursuant to section 12-51-150.
However, as Southeastern points out, section 12-4-730 of the South Carolina Code (2000) permits the county auditor to "void any tax notice applicable to the property" once notified by the department that a property is exempt from ad valorem taxes. We do not find it necessary to determine whether the auditor could retroactively void the tax notice thereby nullifying the sale. The record shows Southeastern did not pay, nor did it attempt to pay, the 2001 back taxes until after the tax sale. It is undisputed Southeastern was ultimately responsible for paying those taxes. The county was within its rights to proceed with a sale of the subject property based on the outstanding taxes owed for 2001. The failure to pay the undisputedly due taxes validates the sale even if the tax notice for the 2002 taxes was retroactively voided. Consequently, the sale was valid, the redemption was valid, and the subsequent determination of tax exempt status for 2002 did *32 not affect the sale. The tax exempt determination entitled Southeastern to the refund of taxes assessed for 2002, but did not render the requirements under sections 12-51-90 and 12-51-100 ineffective. Therefore, we find the special referee correctly concluded Southeastern was required to pay the bid interest to the County of Laurens to be remitted to Crusader.
The County argues it should not be responsible for payment of the bid interest to Crusader. We agree. Under the statute, the person officially charge with the collection of delinquent taxes should "expeditiously refund the purchase price plus the interest provided in Section 12-51-90." § 12-51-100. Under section 12-51-90, it is the defaulting taxpayer, in this case Southeastern, who is responsible for paying the bid interest. The County, under the statute, is responsible for remitting the paid money to the bidder as part of the redemption process.
Our analysis with respect to the County's liability must be performed in light of another case from this court, H & K Specialists v. Brannen, 340 S.C. 585, 532 S.E.2d 617 (2000). In H & K Specialists, the Beaufort County treasurer provided improper notice regarding the tax sale of the property. Id. at 586, 532 S.E.2d at 618. After the title to the property had passed to the successful bidder, H & K, the treasurer set aside the sale and refunded the purchase price less the tax delinquency to the defaulting taxpayers, the Brannens. Id. H & K then sued Beaufort County for the return of its purchase price plus statutory interest as provided under the redemption statute. Id. In finding the County liable for the funds, the court stated:
Finally, we are mindful of the fact that the master based his decision, in part, on the fact that the Brannens received both the property and the money and thus H & K's sole remedy was against the Brannens. However, it was the Beaufort County Respondents which created this inequitable situation by failing to provide the Brannens with the proper notice that resulted in the tax sale being set aside and erred in refunding the purchase price, less the tax delinquency, to the Brannens rather than to H & K. Therefore, *33 we do not believe H & K is limited to pursuing a legal remedy solely against the Brannens.
Id. at 589, 532 S.E.2d at 619-20.
In this case, the County does not appear to be responsible for the inequity that has resulted to the parties. Southeastern neglected to pay its 2001 taxes and was not as diligent as it should have been in ascertaining the status of its tax exemption for 2002. Had Southeastern paid the taxes due and then sought a refund, the property would not have been sold, thereby avoiding the present scenario.
The County was faced with a legitimate conundrum in light of the Department's notice of tax exemption being issued almost simultaneously with the redemption. The County consulted its legal counsel, and based on that advice proceeded to refund the 2002 taxes and the bid interest paid to Southeastern believing the sale to be legally void at that time. The County then attempted to return the purchase price to Crusader as mandated and was willing to return the interest actually earned.
We do not find statutory authority for requiring the County to pay the bid interest to Crusader, and we find the present facts distinguishable from those present in H & K Specialists so that the County should not be found jointly and severally liable with Southeastern for the bid interest. Therefore, we conclude the bid interest was properly due to Crusader under section 12-51-100, but only Southeastern, the defaulting taxpayer thereunder, is liable for payment.
II. Statutory Prejudgment Interest on the Bid Interest
Crusader contends the special referee erred in denying its request for statutory prejudgment interest on the bid interest it was due under the redemption statute. We disagree.
Section 34-31-20(A) of the South Carolina Code (Supp.2007) provides "[i]n all cases of accounts stated and in all cases wherein any sum or sums of money shall be ascertained and, being due, shall draw interest according to law, the legal interest shall be at the rate of eight and three-fourths percent per annum." (emphasis added). Prejudgment interest is allowed if the sum is certain or capable of being reduced to *34 certainty based on a mathematical calculation previously agreed to by the parties. Butler Contracting, Inc. v. Court St., LLC, 369 S.C. 121, 133, 631 S.E.2d 252, 258-59 (2006).
In the instant case, the sum due to Crusader was the bid interest under the redemption statute. Although the bid interest ultimately would be paid to Crusader, the statute required the money first pass from Southeastern through the County. According to the County, the bid interest was no longer due and owing. Consequently, the sum was removed from the purview of section 34-31-20(A), and Crusader is not entitled to statutory prejudgment interest.
III. Statutory Interest on the Bid
The County contends the special referee erred in awarding Crusader $25,375 in interest on Crusader's $348,000 bid. We agree.
The special referee awarded statutory prejudgment interest pursuant to section 34-31-20(A) for the period of time in which the County held Crusader's bid money while awaiting return of the tax sale receipt. According to section 12-51-100, "[t]he successful purchaser, at the delinquent tax sale, shall promptly be notified by mail to return the tax sale receipt to the person officially charged with the collection of delinquent taxes in order to be expeditiously refunded the purchase price plus the interest provided in section 12-51-90." (emphasis added). Thus, as a condition precedent to return of the bid, the bidder is required to return the tax sale receipt. Therefore, we find the County is not liable for prejudgment interest on Crusader's bid for the time in which Crusader retained the tax sale receipt after notification by the County.
CONCLUSION
We find Southeastern liable for the bid interest due to Crusader pursuant to section 12-51-100, but Southeastern is not responsible for statutory prejudgment interest. We conclude this case is distinguishable from H & K Specialists so that the County is not responsible for payment of the bid interest or statutory prejudgment interest. We further find the County is not liable for prejudgment interest on Crusader's *35 bid for the time in which Crusader retained the tax sale receipt. Therefore, the order of the circuit court is
AFFIRMED IN PART and REVERSED IN PART.
ANDERSON and WILLIAMS, JJ., concur.
NOTES
[1] This was a clear overbid for the property.
[2] The record is unclear whether Southeastern may have at some point been declared tax exempt for the year 2001, but it is undisputed that Southeastern was assessed the taxes, failed to pay them in a timely manner, and was ultimately found liable for the ad valorem taxes for 2001.
[3] We recognize section 12-51-150 provides the bidder is entitled to the interest actually accrued on the bid amount in the event the sale is voided.
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871 So.2d 294 (2004)
Charles JOHNSON, Petitioner,
v.
STATE of Florida, Respondent.
No. 1D04-0278.
District Court of Appeal of Florida, First District.
March 26, 2004.
Rehearing Denied May 6, 2004.
Charles Johnson, petitioner, pro se.
Charlie Crist, Attorney General, Tallahassee, for respondent.
PER CURIAM.
We conclude that Charles Johnson's claim of ineffective assistance of appellate counsel is premature inasmuch as the appeal that is the subject of his claim remains pending, and a review of the docket therein does not establish that his appellate counsel has unduly delayed the prosecution of that appeal.
PETITION DENIED.
ALLEN, WEBSTER and BENTON, JJ., concur.
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J-S10009-19
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
COMMONWEALTH OF PENNSYLVANIA : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
:
v. :
:
:
DARNELL WINGFIELD :
:
Appellant : No. 1567 EDA 2018
Appeal from the Judgment of Sentence April 12, 2018
In the Court of Common Pleas of Philadelphia County Criminal Division at
No(s): CP-51-CR-0004645-2013
BEFORE: GANTMAN, P.J.E., STABILE, J., and COLINS*, J.
MEMORANDUM BY COLINS, J.: FILED MARCH 22, 2019
Appellant, Darnell Wingfield, appeals from the judgment of sentence of
seven and one-half to fifteen years of confinement followed by five years of
probation, which was imposed upon resentencing, after his jury trial conviction
for two counts of robbery and one count each of possessing instruments of
crime (PIC) and firearms not to be carried without a license.1 We affirm.
The underlying facts in this case were set forth in our prior decision in
this matter. Commonwealth v. Wingfield, No. 2017 EDA 2014, unpublished
memorandum at 1-3 (Pa. Super. filed Sept. 28, 2015) (affirming judgment
of sentence on direct appeal).
On December 6, 2013, at the conclusion of a three-day jury trial,
Appellant was found guilty of the aforementioned charges. The trial court
____________________________________________
1 18 Pa.C.S. §§ 3701(a)(1)(ii), 907(a), and 6106(a)(1), respectively.
____________________________________
* Retired Senior Judge assigned to the Superior Court.
J-S10009-19
sentenced Appellant on February 12, 2014 to concurrent terms of seven and
one-half to fifteen years of imprisonment on the robbery charges, followed by
five years of probation on the firearms charge. No further sentence was
imposed with respect to the PIC charge. Appellant appealed the original
judgment of sentence to this Court, arguing that the conviction was against
the weight of the evidence. This Court affirmed Appellant’s conviction on
September 28, 2015.
On September 12, 2016, Appellant filed a pro se petition under the Post-
Conviction Relief Act (PCRA).2 Appellant’s court-appointed counsel later
amended the PCRA petition to argue that Appellant’s trial and appellate
counsel provided ineffective assistance because they failed to raise the issue
of whether the seven and one-half to fifteen years sentences on the robbery
charges included a mandatory minimum based on facts not found beyond a
reasonable doubt by a jury in violation of Alleyne v. United States, 570 U.S.
99 (2013). On January 16, 2018, the PCRA court granted the petition and
ordered that Appellant be resentenced.
Following a hearing on April 12, 2018, the sentencing court3 resentenced
Appellant to the identical punishment as in his original sentence.4 Appellant
____________________________________________
2 42 Pa.C.S. §§ 9541-9546.
3We refer to the lower court as the “sentencing court” in this memorandum
decision with respect to its role in the April 12, 2018 resentencing of Appellant.
4 Though Appellant’s new sentence is identical to the one originally imposed,
the sentencing court explained at the April 12, 2018 hearing that his new
-2-
J-S10009-19
moved for reconsideration of the sentence, which the sentencing court denied
on April 25, 2018. Appellant then filed a timely appeal of the April 12, 2018
judgment of sentence.5
Appellant presents one issue for this Court’s consideration:
Did the [sentencing court] abuse its discretion in re-sentencing
[Appellant] to the exact same sentence that was originally
imposed, which had been vacated because it had not met
constitutional norms?
Appellant’s Brief at 3.
Appellant’s argument on appeal relates to the discretionary aspect of his
sentence. See Commonwealth v. Lee, 876 A.2d 408, 411 (Pa. Super. 2005)
(claim that trial court imposed an excessive sentence is a challenge to the
discretionary aspects of a sentence). A defendant does not have an automatic
right of appeal of the discretionary aspects of a sentence and instead must
petition this Court for allowance of appeal, which “may be granted at the
____________________________________________
sentence was not imposed pursuant to a mandatory minimum statute. N.T.,
4/12/18, at 29; see also Sentencing Court Opinion, 6/21/18, at 2. Because
Appellant’s new sentence does not include a mandatory minimum, Alleyne is
no longer implicated. Alleyne, 570 U.S. at 116-17 (noting that ruling only
applies to facts that increase mandatory minimum sentences and does not
limit broad discretion of judges to select a sentence within the range
authorized by law). We further note that Appellant’s new sentence of seven
and one-half to fifteen years of confinement on the robbery counts falls below
the statutory maximum for a felony of the first degree. 18 Pa.C.S. § 1103(1)
(maximum sentence for felony of the first degree is twenty years of
imprisonment); 18 Pa.C.S. § 3701(b) (robbery offense under 18 Pa.C.S. §
3701(a)(1)(ii) is graded as a felony of the first degree).
5Appellant filed his statement of matters complained of on appeal on June 18,
2018, and the sentencing court filed its Rule 1925(b) opinion on June 21,
2018.
-3-
J-S10009-19
discretion of the appellate court where it appears that there is a substantial
question that the sentence imposed is not appropriate under” the Sentencing
Code. 42 Pa.C.S. § 9781(b); see also Commonwealth v. Williams, 198
A.3d 1181, 1186 (Pa. Super. 2018).
Prior to reaching the merits of a discretionary sentencing issue, we must
engage in a four-part analysis to determine:
(1) whether the appeal is timely; (2) whether Appellant preserved
his [] issue; (3) whether Appellant’s brief includes a concise
statement of the reasons relied upon for allowance of appeal with
respect to the discretionary aspects of sentence [pursuant to
Pa.R.A.P. 2119(f)]; and (4) whether the concise statement raises
a substantial question that the sentence is [not] appropriate under
the [S]entencing [C]ode.
Williams, 198 A.3d at 1186 (citation omitted).
In this matter, Appellant filed a timely notice of appeal and preserved
his appellate issue in a post-sentence motion. The Commonwealth argues,
however, that Appellant failed to include a separate Rule 2119(f) statement
in his brief and therefore his claim is unreviewable on appeal.
Commonwealth’s Brief at 6-7.
We agree with the Commonwealth that Appellant has failed to satisfy
Rule 2119(f). This rule requires that an appellant challenging the
discretionary aspect of a sentence include a separate section in his brief,
immediately preceding the argument section, setting forth “a concise
statement of the reasons relied upon for allowance of appeal.” Pa.R.A.P.
2119(f). As this Court has explained:
-4-
J-S10009-19
[A] party appealing from the discretionary aspects of sentence
[must] articulate the manner in which the sentence violates either
a particular provision of the sentencing scheme set forth in the
Sentencing Code or a particular fundamental norm underlying the
sentencing process. … Thus, the Rule 2119(f) statement must
specify where the sentence falls in relation to the sentencing
guidelines and what particular provision of the Code is violated
(e.g., the sentence is outside the guidelines and the court did not
offer any reasons either on the record or in writing, or double-
counted factors already considered). Similarly, the Rule 2119(f)
statement must specify what fundamental norm the sentence
violates and the manner in which it violates that norm (e.g., the
sentence is unreasonable or the result of prejudice because it is
500 percent greater than the extreme end of the aggravated
range). If the Rule 2119(f) statement meets these requirements,
we can decide whether a substantial question exists.
Commonwealth v. Goggins, 748 A.2d 721, 727 (Pa. Super. 2000) (en banc)
(italics in original). Failure to include a Rule 2119(f) statement results in
waiver of a discretionary sentencing claim where, as here, the opposing party
objects to the statement’s absence. Commonwealth v. Griffin, 149 A.3d
349, 353 (Pa. Super. 2016).
A thorough review of Appellant’s brief demonstrates that he has failed
to include a separate section in his brief in which he states the reasons relied
upon for the allowance of appeal pursuant to Rule 2119(f). Furthermore,
nowhere in Appellant’s brief does he cite to Rule 2119(f) or attempt to identify
what specific provision of the Sentencing Code or what fundamental norm
underlying the sentencing scheme that the sentencing court violated. In
addition, Appellant fails to cite to any supporting authority to substantiate his
claim that his sentence was excessive. Accordingly, Appellant’s discretionary
sentencing argument, the sole issue he seeks to raise on appeal, is waived.
-5-
J-S10009-19
See Griffin, 149 A.3d 349 at 353-54 (holding that challenge to discretionary
aspect of sentence was waived where the appellant did not include a separate
Rule 2119(f) statement in his appellate brief); Commonwealth v. McNear,
852 A.2d 401, 408 (Pa. Super. 2004) (holding that challenge to discretionary
aspect of sentence was waived where the appellant did not include a separate
Rule 2119(f) statement in his brief and failed to cite any supporting authority
for argument that sentence was excessive).
Judgment of sentence affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/22/19
-6-
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In The
Court of Appeals
Ninth District of Texas at Beaumont
____________________
NO. 09-06-425 CV
____________________
CHRISTOPHER HOGAN, Appellant
V.
TEXAS DEPARTMENT OF CRIMINAL JUSTICE - CRIMINAL
INSTITUTIONAL DIVISION, JAMES MOSSBARGER,
and JEFFREY FURR, Appellees
On Appeal from the 58th District Court
Jefferson County, Texas
Trial Cause No. A-176,194
MEMORANDUM OPINION
Christopher Hogan, an inmate, filed suit for injunctive relief and damages under the
Texas Tort Claims Act and 42 U.S.C. § 1983 against TDCJ employees James Mossbarger
and Jeffrey Furr related to a disciplinary hearing. (1) Mossbarger and Furr filed a motion to
dismiss Hogan's suit pursuant to Chapter 14 of the Civil Practice and Remedies Code. See
Tex. Civ. Prac. & Rem. Code Ann. § 14.003 (Vernon 2002). Hogan appeals the trial
court's order granting the motion and dismissing his case.
We review a Chapter 14 dismissal under an abuse of discretion standard. Moore v.
Zeller, 153 S.W.3d 262, 263 (Tex. App.--Beaumont 2004, pet. denied). To establish an
abuse of discretion, an appellant must show the trial court acted arbitrarily or unreasonably
in light of the circumstances. Jackson v. Tex. Dept' of Crim. Justice-Inst'l Div., 28 S.W.3d
811, 813 (Tex. App.--Corpus Christi 2000, pet. denied). Trial courts are given broad
discretion to determine whether a case should be dismissed because: "(1) prisoners have a
strong incentive to litigate; (2) the government bears the cost of an in forma pauperis suit;
(3) sanctions are not effective; and (4) the dismissal of unmeritorious claims accrue to the
benefit of state officials, courts, and meritorious claimants." See Montana v. Patterson, 894
S.W.2d 812, 814-15 (Tex. App.--Tyler 1994, no writ).
Section 14.003 allows a court to dismiss an inmate claim if it determines the allegation
of poverty in the affidavit or unsworn declaration is false, if the claim is frivolous or
malicious, or if the inmate filed an affidavit or unsworn declaration required by Chapter 14
that the inmate knew was false. Tex. Civ. Prac. & Rem. Code Ann. § 14.003(a). To enable
the court to determine whether the suit arises from the same operative facts as a previous
claim filed by the same inmate, thereby making the suit frivolous, section 14.004 requires the
inmate to file an affidavit or declaration "relating to previous filings." Tex. Civ. Prac. &
Rem. Code Ann. § 14.004 (Vernon 2002); Spurlock v. Johnson, 94 S.W.3d 655, 658 (Tex.
App.--San Antonio 2002, no pet.). In this affidavit, the inmate must identify each suit, other
than a suit under the Texas Family Code, that he has previously filed pro se and must
describe each of those suits by (a) stating the operative facts for which relief was sought; (b)
listing the case name, cause number, and the court in which the suit was brought; (c)
identifying each party named in the suit; and (d) stating the result of the suit, including
whether the suit was dismissed as frivolous or malicious, and the date it was dismissed. Tex.
Civ. Prac. & Rem. Code Ann. § 14.004(a)(2),(b). Section 14.005, entitled "Grievance
System Decision; Exhaustion of Administrative Remedies," provides
(a) An inmate who files a claim that is subject to the grievance system
established under Section 501.008, Government Code, shall file with the court:
(1) an affidavit or unsworn declaration stating the date that the
grievance was filed and the date the written decision described by Section
501.008(d), Government Code, was received by the inmate; and
(2) a copy of the written decision from the grievance system.
(b) A court shall dismiss a claim if the inmate fails to file the claim before the
31st day after the date the inmate receives the written decision from the
grievance system.
(c) If a claim is filed before the grievance system procedure is complete, the
court shall stay the proceeding with respect to the claim for a period not to
exceed 180 days to permit completion of the grievance system procedure.
Id. § 14.005 (Vernon 2002).
The motion to dismiss alleged that Hogan failed to list all suits brought by him in the
affidavit required by section 14.004, failed to indicate when he received the written decisions
from the grievance system as required by section 14.005(a)(1), failed to attach the Step 1
grievance as required by section 14.005(a)(2), and failed to file his claim within thirty-one
days after the date he received the written decision from the grievance system. Hogan filed
a motion for leave to file an amended complaint to remedy his admitted failure to comply
with sections 14.004 and 14.005(a) and filed a response to Mossbarger and Furr's motion to
dismiss. He attached exhibits including an affidavit of previous filings which included the
suit Mossbarger and Furr asserted he failed to include, an unsworn declaration stating the
dates he filed his grievances, and a copy of his Step 1 grievance.
Hogan presents three issues on appeal. In issues one and three, he argues his limited
access to the law libraries at the prison units in which he was confined and access to limited
supplies prevented him from effectively researching his claim and meeting section
14.005(b)'s thirty-one-day deadline. In his written response to Mossbarger and Furr's motion
to dismiss, Hogan asserted he had not met section 14.005(b)'s thirty-one-day deadline
because he "receiv[ed] a late Notice of Extension of Time and a late Step 2 response [which]
conceal[ed] facts that were necessary for [Hogan] to know he had a cause of action." (2) At the
hearing on the motion to dismiss (3), the trial court asked Hogan to respond to Mossbarger and
Furr's allegations that Hogan failed to comply with the thirty-one-day deadline:
THE COURT: Mr. Hogan, what do you say in reply?
MR. HOGAN: Well, sir - -
. . . .
Well, I filed for a motion to extend time so I could get my -- my
complaint in. I filed that in that supreme -- in that other court, but they sent me
back and told me it wasn't -- that I filed a lawsuit in that court. It was I was
trying to get a motion for extension of time. So, I was -- I really didn't file --
I didn't know what I was doing, as a matter of fact. I had to do some research
on how to file a complaint; and then when I did file my complaint, you know,
I don't understand how it was out of time.
THE COURT: Anything further?
MR. HOGAN: No, sir.
As to Hogan's failure to meet the thirty-one-day deadline, he failed to raise his argument that
he had been denied adequate time in the law library and adequate supplies both in his
pleadings as well as at the hearing on the motion to dismiss. Because he failed to raise this
ground to the trial court, we cannot address it on appeal. Tex. R. App. P. 33.1(a)(1)(A).
Hogan admitted he failed to file his claim within thirty-one days of receiving a written
decision from the grievance system procedure. The trial court did not abuse its discretion in
dismissing the suit pursuant to section 14.005(b). We overrule issues one and three.
In his second issue, Hogan complains that the prison law librarian removed the copy
of his Step 1 grievance from two outgoing pieces of legal mail preventing his Step 1
grievances from reaching the courts and the Attorney General's office. Because the trial
court properly dismissed Hogan's claim pursuant to section 14.005(b), we do not reach this
issue.
We affirm the trial court's order granting Mossbarger and Furr's motion to dismiss.
AFFIRMED.
__________________________________
CHARLES KREGER
Justice
Submitted on April 12, 2007
Opinion Delivered August 16, 2007
Before McKeithen, C.J., Kreger and Horton, JJ.
1. Hogan later filed amended complaints adding new defendants and causes of
action.
2. Even if these assertions not raised on appeal were true, the time period under
section 14.005(b) began when Hogan received a final written decision from the grievance
system. See Tex. Civ. Prac. & Rem. Code Ann. § 14.005(b) (Vernon 2002).
3. Mossbarger and Furr filed an amended motion to dismiss under Chapter 14, but
they only argued the original motion at the hearing because the amended motion was
mailed to Hogan at the wrong prison unit. Regardless of which motion was before the
trial court at the hearing, a trial court can sua sponte dismiss a suit for not complying with
Chapter 14's requirements. See generally Pena v. McDowell, 201 S.W.3d 665, 665 (Tex.
2006).
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United States Bankruptcy Appellate Panel
FOR THE EIGHTH CIRCUIT
____________________
No. 99-6051MN
____________________
In re: *
*
Larry Kenneth Alexander, *
*
Debtor. *
_____________________________ *
* Appeal from the United States
Larry Kenneth Alexander, * Bankruptcy Court for the
* District of Minnesota
Debtor - Appellant, *
*
v. *
*
Mary Jo A. Jensen-Carter, *
*
Trustee - Appellee. *
____________________
Submitted: August 27, 1999
Filed: October 21, 1999
____________________
Before WILLIAM A. HILL, SCHERMER, and SCOTT, Bankruptcy Judges.
____________________
WILLIAM A. HILL, Bankruptcy Judge.
Debtor Larry Kenneth Alexander appeals from the bankruptcy court’s1 June 30, 1999,
order sustaining the chapter 7 trustee’s objection to Alexander’s claimed homestead
1
The Honorable Dennis D. O’Brien, Chief Judge, United States Bankruptcy Court for the
District of Minnesota.
exemption.2 We have jurisdiction over this appeal from the final order of the bankruptcy
court. See 28 U.S.C. § 158(b). For the reasons set forth below, we affirm.
BACKGROUND
On June 18, 1998, debtor Larry Kenneth Alexander filed a chapter 13 bankruptcy
petition which listed his address as 175 N. Lexington Parkway, St. Paul, Minnesota. The
debtor then filed Schedule C on July 6, 1998, claiming a homestead exemption for property
located at 875 Laurel Avenue, St. Paul, Minnesota. The chapter 13 trustee filed a timely
objection to the debtor’s homestead exemption, asserting that as the debtor was living at the
Lexington Parkway residence at the time of petition filing, he could not claim the Laurel
Avenue residence for a homestead exemption. On November 30, 1998, an evidentiary
hearing was held wherein the debtor admitted that at the time he filed his chapter 13 petition,
he was living at the Lexington Parkway residence but that his family was living at the Laurel
Avenue residence. By an order dated December 3, 1998, the bankruptcy court sustained the
chapter 13 trustee’s objection and involuntarily converted the case to chapter 7. At the time
of conversion, the debtor was living at the Laurel Avenue residence. The debtor appealed
the bankruptcy court’s order of December 3, 1998, to the district court, asserting, inter alia,
that the bankruptcy court erred in (1) denying confirmation of the debtor’s chapter 13 plan;
(2) sustaining the chapter 13 trustee’s objection to the debtor’s homestead exemption; and
(3) converting the case to chapter 7. By an order dated August 4, 1999, the district court
affirmed the bankruptcy court’s order of December 3, 1998, in all respects.
On December 21, 1998, the debtor filed a Schedule C in the converted chapter 7 case,
claiming a homestead exemption for his Laurel Avenue residence. The section 341 creditors’
meeting in the converted chapter 7 case was held on January 25, 1999. On February 22,
1999, the chapter 7 trustee filed an objection to the debtor’s homestead exemption on the
same basis that was asserted by the chapter 13 trustee; namely, that the debtor’s Laurel
Avenue residence did not qualify for a homestead exemption in the converted chapter 7 case
because the debtor was living elsewhere at the time he filed his chapter 13 petition. On
March 17, 1999, the bankruptcy court conducted a hearing to determine whether the debtor
could exempt his Laurel Avenue residence as a homestead in the converted chapter 7 case
2
See In re Alexander, 236 B.R. 679 (Bankr. D.Minn. 1999).
2
and thereafter issued the order now on appeal, which sustained the trustee’s objection to the
debtor’s homestead exemption for the Laurel Avenue residence. The debtor now argues,
inter alia, that his entitlement to a homestead exemption for the Laurel Avenue residence in
the converted chapter 7 case is governed by Armstrong v. Lindberg (In re Lindberg), 735
F.2d 1087 (8th Cir. 1984). In addition, the debtor raises various procedural issues for our
consideration. We shall first dispose of these issues before moving on to the substantive
basis for the appeal.
STANDARD OF REVIEW
On appeal, we review the bankruptcy court’s findings of fact for clear error and its
conclusions of law de novo. Fed. R. Bankr. P. 8013; In re Usery, 123 F.3d 1089, 1093 (8th
Cir. 1997); O’Neal v. Southwest Mo. Bank (In re Broadview Lumber Co.), 118 F.3d 1246,
1250 (8th Cir. 1997).
DISCUSSION
I. Debtor’s “Motion to Strike”
By a letter dated August 16, 1999, the chapter 7 trustee (the appellee in this case)
submitted to this Court a copy of the U. S. District Court’s opinion and order of August 4,
1999. The debtor responded by filing a “motion to strike,” seeking to bar this Court from
taking into consideration the district court’s opinion and order of August 4, 1999. The debtor
asserts that the district court’s opinion should be excluded from our consideration because
it is prejudicial and because it was not a part of the record developed before the bankruptcy
court when it issued its order of June 30, 1999–the order from which the present appeal was
taken.
“Ordinarily an appellate court should base its decision on the facts as they existed at
the time the trial court made its decision.” Frankfurth v. Cummins (In re Cummins), 20 B.R.
652, 653 (B.A.P. 9th Cir. 1982). In extraordinary circumstances, however, an appellate court
may “take judicial notice of developments in a case on appeal which have occurred in the
district court after the appeal was filed.” Cummins, 20 B.R. at 653 (quoting Samuel v.
University of Pittsburgh, 506 F.2d 355, 360 n.12 (3rd Cir. 1973)). “[T]he on-going nature
of bankruptcy proceedings, on occasion, creates situations where the reviewing court may
take notice of fundamental events occurring after the entry of the judgment from which the
3
appeal was taken.” Cummins, 20 B.R. at 653. Moreover, appellate courts regularly take
similar judicial notice of post-appeal developments which trigger the mootness doctrine. Id.
at 653 (citing Landy v. Federal Deposit Ins. Corp., 486 F.2d 139, 151 (3rd Cir. 1973)).
In Cummins, a real estate broker brought an adversary proceeding against the debtors
to recover his real estate commission. Cummins, 20 B.R. at 652-53. The bankruptcy court
entered judgment in favor of the debtors based on a conclusion that the real estate broker was
a professional person who failed to receive court approval of his employment as required by
§ 327(b) of the Bankruptcy Code. Id. The real estate broker appealed that judgment to the
Ninth Circuit Bankruptcy Appellate Panel. Id. Subsequently, while the appeal was pending,
the debtors’ voluntarily dismissed their bankruptcy petition. Id. The dismissal was brought
to the appellate panel’s attention during a telephonic hearing and again during oral argument.
Id. at 654. The debtors argued that the appellate panel could not consider the dismissal of
the debtors’ bankruptcy petition because the dismissal had occurred after the bankruptcy
court’s decision in the adversary proceeding. Id. Nevertheless, the appellate panel took
notice of the voluntary dismissal, and that fact formed the basis for the panel’s decision to
reverse and remand the case. Id. at 653-54.
In the present case, the debtor’s argument closely resembles the argument made by
the debtors in Cummins, and a similar result is appropriate. The debtor has not demonstrated
how his present appeal to this Court would be prejudiced by our taking notice of the district
court’s opinion and order of August 4, 1999. Accordingly, we take judicial notice of the
aforementioned decision, and the debtor’s “motion to strike” is denied. Moreover, although
our inquiry regarding the homestead exemption issue may be similar to that of the district
court, our procedural context is different. The district court was concerned with the chapter
13 trustee’s objection to the debtor’s homestead exemption. Thus, the district court was not
squarely faced with the issue of whether a debtor may claim a homestead exemption in a
converted chapter 7 case based on residency at the time of conversion. Because the district
court did not address this issue, its opinion need not be given preclusive effect and should
not impede this Court’s determination of the issue now presented. The present appeal arises
in the context of the converted chapter 7 case wherein the debtor has attempted to exempt
the homestead where he resided at the time of conversion. Therefore, this Court is in a
proper procedural context to address the debtor’s argument that homestead exemption
4
eligibility is determined according to the date of conversion. First, however, we will dispose
of the debtor’s argument that the chapter 7 trustee’s objection was untimely filed.
II. Timeliness of the Chapter 7 Trustee’s Objection
On December 21, 1998, the debtor filed an amended Schedule C, claiming his Laurel
Avenue homestead as exempt in the converted chapter 7 case. On January 25, 1999, the
creditors’ meeting for the converted chapter 7 case was held. On February 22, 1999, the
trustee in the converted chapter 7 case filed an objection to the debtor’s homestead
exemption. The debtor asserts that the chapter 7 trustee’s objection was untimely under Rule
4003(b) because it was not filed within 30 days after the debtor filed his amended schedule.
The debtor argues that objections to exemptions must be filed within 30 days after an
amendment to Schedule C or within 30 days after the original creditors’ meeting in the
chapter 13 case, citing In re Ferretti, 230 B.R. 883 (Bankr. S.D.Fla. 1999) in support of his
position. Apparently interpreting Rule 4003(b) according to its plain meaning, the
bankruptcy court concluded that the trustee’s objection to the debtor’s homestead exemption
was timely filed because it occurred within 30 days after the creditors’ meeting in the
converted chapter 7 case. See In re Alexander, 236 B.R. 679, 681 (Bankr. D.Minn. 1999).
The trustee or any creditor may file objections to a debtor’s claimed exemptions
within 30 days after the conclusion of the section 341 creditors’ meeting, or within 30 days
after the filing of any amended schedules. Fed. R. Bankr. P. 4003(b). A trustee who fails
to timely file an objection to an exemption pursuant to Rule 4003(b) is precluded from
objecting at a later time, and the disputed asset is exempt. Taylor v. Freeland & Kronz, 503
U.S. 638, 112 S.Ct. 1644, 118 L.Ed.2d 280 (1992). “Because an order of conversion
constitutes an order for relief under the chapter to which the case is converted, Rule 2003(a)
mandates the United States trustee to call a meeting of creditors.” Ferretti, 230 B.R. at 887.
In the context of conversion from chapter 11 to chapter 7, the chapter 7 trustee may file
objections to exemptions within 30 days after the creditors’ meeting in the converted chapter
7 case. See LaRossa v. Leydet (In re Leydet), 150 B.R. 641 (Bankr. E.D.Va. 1993); In the
Matter of Bergen, 163 B.R. 377 (Bankr. M.D.Fla. 1994); In re Kleinman, 172 B.R. 764
(Bankr. S.D.N.Y. 1994). But see In re Brown, 178 B.R. 722 (Bankr. E.D.Tenn. 1995); In
re Halbert, 146 B.R. 185 (Bankr. W.D.Tex. 1992). Similarly, in the context of conversion
from chapter 13 to chapter 7, the chapter 7 trustee may timely file an objection to the
5
debtor’s claimed exemptions within 30 days after the creditors’ meeting in the converted
chapter 7 case. Weissman v. Carr (In re Weissman), 173 B.R. 235, 237 (M.D.Fla. 1994);
In re Jenkins, 162 B.R. 579, 580-81 (Bankr. M.D.Fla. 1993). But see In re Beshirs, 236 B.R.
42 (Bankr. D.Kan. 1999); Ferretti, 230 B.R. at 891 (holding that the chapter 7 trustee in a
case converted from chapter 13 cannot file objections to exemptions unless the case was
converted in bad faith or amended schedules were filed following conversion).
Leydet, Bergen, Kleinman, Weissman, and Jenkins stand for the proposition that the
trustee in a converted chapter 7 case may timely file objections to exemptions within 30 days
after the creditors’ meeting in the converted case. Halbert reached a different conclusion
based largely on the idea that once property is successfully exempted by the debtor in
possession in the chapter 11 case, it is no longer part of the bankruptcy estate, and an
objection in the converted chapter 7 case would not be sufficient to bring the previously
exempted property back into the estate. Halbert, 146 B.R. at 188-89. Brown adopted this
reasoning from Halbert. Brown, 178 B.R. at 726-27. However, the concern raised in Brown
and Halbert is not present in this case because the debtor did not successfully exempt his
Laurel Avenue property within the context of his chapter 13 case. Therefore, Brown and
Halbert are less applicable to the present case.
Furthermore, part of the basis for the Ferretti court’s decision was that a different
holding would “have the effect of setting aside and emasculating” a previous order by the
bankruptcy court in that case. Ferretti, 230 B.R. at 890. The present case raises a similar
concern. In the chapter 13 context of this case, the bankruptcy court ruled that the debtor
could not exempt the Laurel Avenue property under Minnesota law. The applicable legal
standard remains the same in the context of the converted chapter 7 case. Therefore, it
would be illogical to hold that a debtor in a converted case may reverse a previous ruling of
the bankruptcy court simply by filing an amended schedule. To quote the court in Ferretti,
“[s]uch a result nullifies the principle of law of the case” and “ignores the statutory mandate
that property of a converted case is to be determined as of the date of the original petition.”
Ferretti, 230 B.R. at 890.
Finally, we are unpersuaded by the reasoning of the court in Beshirs. As the court
observed in Leydet, nothing in the Bankruptcy Code or Bankruptcy Rules restricts the term
6
“meeting of creditors” in Rule 4003(b) to refer only to the original meeting of creditors that
occurred before conversion. Leydet, 150 B.R. at 643. The argument that the trustee in a
converted chapter 7 case is precluded from filing objections to exemptions because Rule
1019(2) fails to provide a new filing period after conversion is unpersuasive. Id. Stating a
new filing period in Rule 1019(2) would be unnecessary and repetitious because the plain
meaning of Rule 4003(b) already provides for a new filing period after the meeting of
creditors pursuant to Rule 2003(a) in the converted case. Id. Moreover, discovering
improper exemptions is one of the primary purposes for conducting a meeting of creditors.
Thus, precluding the trustee from filing objections to exemptions in a converted chapter 7
case runs contrary to the role of the chapter 7 trustee in bankruptcy and needlessly
compromises the rationale for conducting section 341 meetings in converted cases. Id. at
644. Accordingly, we affirm the bankruptcy court’s conclusion that the trustee’s objection
to the debtor’s homestead exemption in the converted chapter 7 case was timely filed
pursuant to Rule 4003(b).
III. Debtor’s Homestead Exemption
At the time the original chapter 13 petition was filed, the debtor was living at his
Lexington Parkway property. At the time of conversion, the debtor was living at his Laurel
Avenue property. The debtor asserts that he can claim a homestead exemption for his Laurel
Avenue property, citing Armstrong v. Lindberg (In re Lindberg), 735 F.2d 1087 (8th Cir.
1984) in support of his proposition that facts existing at the time of conversion control
homestead exemption eligibility.
In Lindberg, the court ruled that when a case is converted from chapter 13 to chapter
7, the date of conversion controls what exemptions may be claimed in the converted chapter
7 case. Lindberg, 735 F.2d at 1090-91. When Lindberg was decided, the majority of courts
agreed that property of the converted chapter 7 bankruptcy estate was determined at the time
of conversion, and the Lindberg decision relied heavily on this principle. Lindberg, 735 F.2d
at 1090 (citations omitted). As the Lindberg court stated, “[o]nly if the same date controls
what is property of the estate and what exemptions may be claimed can the debtor make full
use of exemption laws.” Id.
7
However, later decisions by the Eighth Circuit cast doubt on the Lindberg decision’s
continued viability in light of the 1994 amendments to the Bankruptcy Code. See Armstrong
v. Harris (In re Harris), 886 F.2d 1011, 1013 (8th Cir. 1989); Armstrong v. Peterson (In re
Peterson), 897 F.2d 935, 937-38 (8th Cir. 1990). Without expressly overruling Lindberg, the
Harris court stated that the interplay of section 522(b)(2)(A) and section 348(a) “indicates
that the date of petition controls exemption eligibility.” Harris, 886 F.2d at 1013.
Furthermore, the Peterson court ruled unequivocally that exemption eligibility is determined
according to the facts and exemption laws applicable at the time a bankruptcy petition is
filed. Peterson, 897 F.2d at 937-38. However, neither the Harris court nor the Peterson
court specifically addressed the situation where a bankruptcy case was converted from one
chapter to another.
In 1994, the Bankruptcy Code was amended to include the following provision:
. . . [W]hen a case under chapter 13 of this title is converted to a case under
another chapter of this title–
(A) property of the estate in the converted case shall consist of
property of the estate, as of the date of filing of the petition, that
remains in the possession of or is under the control of the
debtor on the date of conversion; . . .
11 U.S.C. § 348(f)(1)(A) (italics added). Moreover, conversion of a case from one chapter
to another “does not affect a change in the date of the filing of the petition.” 11 U.S.C. §
348(a). The Bankruptcy Code clearly indicates that in a case converted from chapter 13,
property of the estate in the converted case is determined according to the filing date of the
original chapter 13 petition. Therefore, exemption eligibility should also be determined as
of the original chapter 13 filing date. This principle is consistent with the Harris decision,
the Peterson decision, and the Lindberg court’s reasoning that property of the estate and
exemption eligibility should be determined as of the same date. Indeed, other courts have
concluded that Lindberg has been superseded by the 1994 Bankruptcy Code amendments and
that exemption eligibility is determined as of the date the original chapter 13 petition was
filed. See Lowe v. Sandoval (In re Sandoval), 103 F.3d 20 (5th Cir. 1997); In re Weed, 221
B.R. 256 (Bankr. D.Nev. 1998); In re Ferretti, 230 B.R. 883 (Bankr. S.D.Fla. 1999); In re
8
Beshirs, 236 B.R. 42 (Bankr. D.Kan. 1999). Therefore, we affirm the bankruptcy court’s
conclusion that Lindberg is no longer good law.
CONCLUSION
Based on the foregoing, the debtor’s “motion to strike” is denied, and the bankruptcy
court’s order of June 30, 1999, is affirmed.
A true copy.
Attest:
CLERK, U.S. BANKRUPTCY APPELLATE PANEL,
EIGHTH CIRCUIT.
9
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F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
JUL 8 2004
TENTH CIRCUIT
PATRICK FISHER
Clerk
NEAL K. OSTLER,
Plaintiff - Appellant,
v. No. 03-4293
(D.C. No. 2:01-CV-291-C)
STATE OF UTAH; DEPARTMENT (D. Utah)
OF TRANSPORTATION;
DEPARTMENT OF HUMAN
SERVICES; DEPARTMENT OF
CORRECTIONS; U.S.
DEPARTMENT OF COMMERCE;
DEPARTMENT OF NATURAL
RESOURCES; UTAH STATE TAX
COMMISSION; DEPARTMENT OF
WORKFORCE SERVICES; STATE
BOARD OF PARDONS;
COMMISSION ON JUVENILE
JUSTICE; DEPARTMENT OF
PUBLIC SAFETY; MANAGEMENT
& TRAINING, a Subcontractor of the
State of Utah,
Defendants - Appellees,
and
ROBIN ARNOLD WILLIAMS;
EMMA CHACON; BLAKE CHARD;
JOHN MATTHEWS; BRENT PERRY;
JOHN NJORD, Executive Director;
ALAN LAKE; LOREN GRAHMS,
employee; PETE HAUN, Executive
Director; MIKE SIBBETT, of the
Board of Pardons; ABDUL BAKSH,
employee; DOUGLAS BORBA,
Executive Director; ANTHONY
TAGGART, Securities Director;
KATHLEEN CLARKE, Executive
Director; BILL WOOLEY, Director of
Law Enforcement; CARLOS
RODRIGUEZ, Human Resource
Manager; ROD MARELLI, Executive
Director; KENT JORGENSON, Law
Enforcement Supervisor; (FNU)
DENNIS, Human Resource Manager;
ROBERT GROSS, Executive Director;
CAMILLE ANTHONY, Director;
DAN BAILESS, Office of Crime
Victims Reparation Supervisor;
CRAIG DEARDEN, Department
Commissioner, Department of Public
Safety; SID GROLL, Director of
Peace Office Standards and Training;
LYNN MILLER, Human Resouce
Director; DEPARTMENT OF
HUMAN RESOURCE
MANAGMENT; KAREN OKABE,
Executive Director; WARDEN,
Promontory Facility; JANE
SCHILLING, of Human Resources,
Defendants.
ORDER AND JUDGMENT *
*
The case is unanimously ordered submitted without oral argument pursuant
to Fed. R. App. P. 34(a)(2) and 10th Cir. R. 34.1(G). This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. The court generally disfavors the citation of orders and
judgments; nevertheless, an order and judgment may be cited under the terms and
conditions of 10th Cir. R. 36.3.
-2-
Before SEYMOUR , LUCERO , and O’BRIEN, Circuit Judges.
Neal Ostler, appearing pro se, appeals from the district court’s dismissal of
his civil rights and employment discrimination complaint for lack of timely
service of process. We AFFIRM.
On April 25, 2001, Ostler brought an action under 42 U.S.C. §§ 1981 and
1983 and Title VII of the Civil Rights Act of 1964, naming the State of Utah and
certain state departments of Utah as defendants. On October 3, 2001, the district
court dismissed the action without prejudice. Ostler amended his complaint and
added numerous individuals as defendants as well as claims under the Age
Discrimination in Employment Act (ADEA), 42 U.S.C. § 6101, and Utah state
law. However, Ostler never accomplished service of the individual defendants
despite the district court’s repeated admonitions to do so.
Instead of serving the individual defendants with copies of the amended
complaint as directed, Ostler requested permission to serve them with abbreviated
copies of the complaint, or in the alternative, a second amended complaint which
had not been filed with the district court. The magistrate judge to whom the
district court referred Ostler’s requests denied the motion; objecting to the
magistrate’s recommendations, Ostler argued that “[t]he requirement to serve a
full copy of the complaint is even more a technicality than the requirement to
-3-
serve the individuals and is an additional expense to the Plaintiff that should not
be necessary to satisfy the requirements of service.” (App. Vol. II, Doc. 105 at
3.) On November 12, 2003, the district court denied Ostler’s objections to the
magistrate judge’s Order and dismissed the individual defendants from the suit.
Ostler appeals from those dismissals. 1
We review a district court’s order of dismissal for failure to comply with
the Federal Rules of Civil Procedure or prior orders of the district court for abuse
of discretion. Olsen v. Mapes, 333 F.3d 1199, 1204 (10th Cir. 2003). Ostler
claims that the district court abused its discretion by not accepting as adequate his
attempts to serve the individual defendants with an abbreviated amended
complaint or the unfiled second amended complaint. However, the Federal Rules
of Civil Procedure require that service be effected “by delivering a copy of the
summons and of the complaint.” Fed. R. Civ. P. 4(e).
While we construe the complaints of pro se litigants liberally, see Hall v.
Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991), “[a] pro se litigant is still
obligated to follow the requirements of Fed. R. Civ. P. 4.” DiCesare v. Stuart, 12
1
Although it is unclear from the record whether the district court entered a
separate final judgment, even if no separate final judgment was entered, we have
jurisdiction over this appeal given that both parties waived the separate document
requirement. Clough v. Rush , 959 F.2d 182, 186 (10th Cir. 1992) (recognizing
that both parties may waive the requirement and that “[e]fficiency and judicial
economy would not be served by requiring the parties to return to the district
court to obtain a separate judgment.”)
-4-
F.3d 973, 980 (10th Cir. 1993). In this case, Ostler did not comply with Rule 4;
thus we cannot conclude that the district court’s dismissal for failure to deliver an
actual copy of the summons and complaint was an abuse of discretion.
Accordingly, we AFFIRM.
ENTERED FOR THE COURT
Carlos F. Lucero
Circuit Judge
-5-
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308 S.W.3d 643 (2009)
2009 Ark. App. 335
Martha TAGGART, Appellant,
v.
MID AMERICA PACKAGING and Continental Casualty Company, Appellees.
No. CA 08-1303.
Court of Appeals of Arkansas.
April 29, 2009.
*644 Kenneth E. Buckner, Pine Bluff, for appellant.
Laser Law Firm, P.A., by: Frank B. Newell, Little Rock, for appellee.
M. MICHAEL KINARD, Judge.
In this workers' compensation case, Martha Taggart appeals from the Commission's decision awarding her wage-loss *645 benefits in the amount of twenty percent. She raises two points on appeal: (1) The amount of wage-loss benefits awarded by the Commission is insufficient; (2) The Commission erred in reversing its original order awarding her attorney fees as the prevailing party on appeal. Because we find merit in appellant's wage-loss argument, we reverse and remand the case for proceedings consistent with this opinion. We affirm on appellant's second point.
Appellant Martha Taggart began working for the employer, which is now known as Delta Natural Kraft, in 1977 and was terminated in 2005. She held various positions with the employer over the years. On December 31, 2003, she was working as a senior boiler operator when she sustained injuries to her back and right knee as the result of tripping and falling over a drain cover. Appellant continued to work until May 2, 2004. Working as a boiler operator required, among other things, walking, climbing ladders and stairs, and occasionally shoveling, climbing on top of rail cars, and crawling inside of boilers.
Appellant saw several different doctors for the treatment of her injuries, and she was unable to obtain a release allowing her to return to work without restrictions. In a letter from her employer dated August 1, 2005, appellant's employment was terminated because she had been on medical leave for over a year and the company did not have a job available within her physical limitations. In April 2005, appellant received a two-percent impairment rating for the lower right extremity[1] from Dr. Mulhollan. In August 2005, Dr. Moore assigned appellant a rating of seven-percent permanent partial impairment to the body as a whole for her lumbar spine injury, which he diagnosed as a lumbar HNP L3/4. Appellees accepted these impairment ratings, and appellant was paid some temporary total disability and permanent partial disability benefits.
At the time of appellant's injury, she was earning $24.72 per hour and working a significant amount of overtime. Company records reflect that from June 6, 2003, through December 26, 2003, she earned $37,931.70. For the period from January 2, 2004, through June 11, 2004, she earned $29,789.37, for a total of $67,721.07 for the period from June 6, 2003, through June 11, 2004. At the time of the hearing before the administrative law judge, appellant was studying for her associate's degree and earning $5.15 per hour teaching children to read at a public elementary school. She worked twenty hours per week. She testified that she had applied for jobs with the Arkansas Department of Human Services and with Wal-Mart, without success. Her plan was to obtain a bachelor's degree from the University of Arkansas at Pine Bluff and ultimately to obtain a master's degree in social work. She testified that, according to her research, she could expect to make from $28,000 to $35,000 per year as a social worker. Additionally, appellant's disability insurer[2] provided a list of sedentary occupations that she would be capable of performing. The annual salaries for these jobs ranged from approximately $32,590 to $34,620.
*646 Appellant had a functional capacity evaluation (FCE) on January 27, 2005. The report stated that appellant gave an unreliable effort, with her pain rating not correlating with her outward indicators of pain and her self-perceived abilities not correlating with her actual abilities. Overall, she demonstrated the ability to work at least at the "light" work category over the course of an eight-hour day. Appellant underwent a second FCE on June 20, 2005. The results again demonstrated an unreliable effort on appellant's part, but the ability to perform work at least at the "light" category.
The issues litigated before the administrative law judge (ALJ) were appellant's entitlement to additional temporary total disability benefits from April 25, 2005, through July 25, 2005, and appellant's entitlement to wage-loss benefits. In an opinion filed August 8, 2007, the ALJ found that appellant was entitled to twenty-percent wage loss disability benefits as a result of her compensable low back injury over and above her physical permanent impairment. In explaining this finding, the ALJ wrote:
The claimant is only age 54 and has taken a number of college-level studies. She has completed 24 or more hours toward her degree in Social Work and intends to pursue a Master's Degree. While her work history primarily involves industrial work, the preponderance of the evidence demonstrates that the claimant has reached maximum medical improvement and is capable of performing at least light duty work and should be able to secure steady employment. However, the evidence demonstrates that she will not be able to return to her prior work as a boiler operator or similar work due to the limitations and restrictions that have been placed on her due to her back injury by her treating physician. While the claimant is currently attending a full schedule of classes and working a part-time job, the evidence demonstrates that she will have difficulty in replacing her wages at the level before her injury.
In an opinion filed August 27, 2008, the Full Commission affirmed and adopted the ALJ's decision, with one Commissioner dissenting in part. When the Commission adopts the conclusions of the ALJ, as it is authorized to do, this court considers both the decision of the Commission and the decision of the ALJ. See Death & Perm. Total Disability Trust Fund v. Branum, 82 Ark.App. 338, 107 S.W.3d 876 (2003). Under our substantial-evidence standard of review, we must affirm if fair-minded persons with the same facts before them could have reached the Commission's conclusion. Ellis v. J.D. & Billy Hines Trucking, Inc., 104 Ark.App. 118, 289 S.W.3d 497 (2008). For her first point on appeal, appellant argues that the award of twenty-percent wage loss is not supported by substantial evidence and that the award should have been higher. We agree.
The wage-loss factor is the extent to which a compensable injury has affected the claimant's ability to earn a livelihood. Emerson Elec. v. Gaston, 75 Ark.App. 232, 58 S.W.3d 848 (2001). The Commission is charged with the duty of determining disability based upon a consideration of medical evidence and other matters affecting wage loss, such as the claimant's age, education, and work experience. Eckhardt v. Willis Shaw Exp., Inc., 62 Ark.App. 224, 970 S.W.2d 316 (1998). Objective and measurable physical or mental findings, which are necessary to support a determination of "physical impairment" or anatomical disability, are not necessary to support a determination of *647 wage-loss disability. Arkansas Methodist Hosp. v. Adams, 43 Ark.App. 1, 858 S.W.2d 125 (1993). To be entitled to any wage-loss disability benefit in excess of permanent-physical impairment, a claimant must first prove, by a preponderance of the evidence, that he or she sustained permanent-physical impairment as a result of a compensable injury. Wal-Mart Stores, Inc. v. Connell, 340 Ark. 475, 10 S.W.3d 882 (2000). Other matters to be considered are motivation, post-injury income, credibility, demeanor, and a multitude of other factors. Glass v. Edens, 233 Ark. 786, 346 S.W.2d 685 (1961); Curry v. Franklin Electric, 32 Ark.App. 168, 798 S.W.2d 130 (1990); City of Fayetteville v. Guess, 10 Ark.App. 313, 663 S.W.2d 946 (1984). The Commission may use its own superior knowledge of industrial demands, limitations, and requirements in conjunction with the evidence to determine wage-loss disability. Oller v. Champion Parts Rebuilders Inc., 5 Ark.App. 307, 635 S.W.2d 276 (1982).
In this case, the ALJ appears to have considered manybut not allof the relevant factors. In considering wage loss, the ALJ referenced appellant's age, education, current job, future career plans, motivation to return to full-time employment, and her post-injury income. Significantly, appellant's pre-injury income was not addressed beyond a general finding that appellant "will have difficulty in replacing her wages at the level before her injury." The amount of appellant's pre-injury wages was not contested. In the "Factual Background" section the ALJ states that at the time of her work-related injury, appellant was making $67,721.07 during the period from June 6, 2003, to June 11, 2004. It appears that the ALJ (and thus, the Commission) failed to properly consider these pre-injury earnings when determining the amount of appellant's wage-loss disability. The evidence in the record clearly shows that the most appellant would be able to make as a social worker or in one of the sedentary jobs found by the disability insurer was $35,000 per year, an amount significantly less than appellant's pre-injury earnings. While we acknowledge that there is no formula for determining wage loss, this record simply does not support a finding that appellant's wage-loss disability was no more than twenty percent. We hold that substantial evidence does not support an award of only twenty-percent wage-loss disability. Accordingly, we reverse and remand this case for further proceedings consistent with this opinion, taking into consideration appellant's wages during the period from June 6, 2003, to June 11, 2004.
As her second point on appeal, appellant argues that "the Commission's decision to take away claimant's attorney's fee for being `successful' on appeal should be reversed." In its order filed August 27, 2008, the Full Commission not only affirmed and adopted the ALJ's decision in this case, it also awarded appellant's attorney an additional attorney's fee in the amount of $500 in accordance with Ark. Code Ann. § 11-9-715(b) (Repl.2002), for prevailing in the appeal. Appellees filed a petition for reconsideration of the attorney's fee award, alleging that the award was not merited because appellant did not prevail on appeal. In an opinion filed October 3, 2008, the Commission ordered that appellant's attorney should not receive the $500 previously awarded.
Arkansas Code Annotated section 11-9-715 (Repl.2002) provides, in pertinent part:
(b)(1) If the claimant prevails on appeal, the attorney for the claimant shall be entitled to an additional fee at the full commission and appellate court levels in addition to the fees provided in subdivision (a)(1) of this section.
*648 Accordingly, the issue before this court is whether the Commission erred when it held that appellant (the claimant) did not prevail on appeal to the Full Commission and thus should not be awarded attorney fees. In this case, it was appellant who appealed to the Full Commission, which affirmed and adopted the opinion of the ALJ. Appellees (the respondents) did not cross-appeal any issue. Because we believe substantial evidence supports the Commission's finding that appellant did not prevail on appeal to the Full Commission, we affirm on this point.
Reversed and remanded in part; affirmed in part.
ROBBINS and BAKER, JJ., agree.
NOTES
[1] As a scheduled injury, appellant's knee injury does not give rise to wage-loss disability because it was not found to be permanently and totally disabling. See Ark.Code Ann. § 11-9-521 (Repl.2002); Taylor v. Pfeiffer Plumbing & Heating Co., 8 Ark.App. 144, 648 S.W.2d 526 (1983).
[2] Appellant's disability insurer, Jefferson Pilot Financial, paid her long-term disability from October 2004 through October 2006, when it determined that she did not meet the definition of "totally disabled" beyond her "own occupation period." This was a policy that appellant purchased and paid for herself.
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 12-4055
UNDER SEAL,
Defendant-Appellant.
Appeal from the United States District Court
for the District of South Carolina, at Charleston.
David C. Norton, District Judge.
(2:08-cr-01198-DCN-1)
Argued: December 7, 2012
Decided: February 26, 2013
Before WILKINSON, AGEE, and KEENAN,
Circuit Judges.
Affirmed by published opinion. Judge Agee wrote the opin-
ion, in which Judge Wilkinson and Judge Keenan joined.
2 UNITED STATES v. UNDER SEAL
COUNSEL
ARGUED: Ann Briks Walsh, OFFICE OF THE FEDERAL
PUBLIC DEFENDER, Charleston, South Carolina, for
Appellant. Jeffrey Mikell Johnson, OFFICE OF THE
UNITED STATES ATTORNEY, Columbia, South Carolina,
for Appellee. ON BRIEF: William N. Nettles, United States
Attorney, Matthew J. Modica, Assistant United States Attor-
ney, OFFICE OF THE UNITED STATES ATTORNEY,
Columbia, South Carolina, for Appellee.
OPINION
AGEE, Circuit Judge:
The juvenile defendant-appellant ("Appellant") appeals
from the judgment of the district court which imposed, as a
condition of his juvenile delinquent supervision, that Appel-
lant register under the Sex Offender Registration and Notifi-
cation Act ("SORNA"), 42 U.S.C. § 16901 et seq. Appellant
argues that SORNA’s registration requirements contravene
the confidentiality provisions of the Federal Juvenile Delin-
quency Act ("FJDA"), 18 U.S.C. § 5031 et seq., and violate
the Eighth Amendment’s prohibition on cruel and unusual
punishment. As a consequence, Appellant contends the dis-
trict court erred in requiring him to register under SORNA.
Because we conclude that Congress, in enacting SORNA,
intentionally carved out a class of juveniles from the FJDA’s
confidentiality provisions, and that SORNA’s registration
requirements are not punitive as applied to Appellant, the dis-
trict court did not err by imposing the sex offender registra-
tion condition.
I.
In 2007, Appellant began residing in Japan with his mother,
an active member of the United States Navy, his stepfather,
UNITED STATES v. UNDER SEAL 3
and two half-sisters, ages ten and six at the time. On February
21, 2008, Appellant’s mother reported to the United States
Naval Criminal Investigation Service ("NCIS") that Appellant
had been having inappropriate sexual contact with his two
half-sisters. NCIS conducted an investigation, which con-
firmed, through sexual assault medical examinations, that
both girls had been anally penetrated and the youngest vagi-
nally penetrated by Appellant.
On December 4, 2008, Appellant was charged in a one-
count Information filed under seal in the District of South Caro-
lina.1 In general terms, the Information alleged that Appellant,
a juvenile who was under the age of eighteen, had committed
an act of juvenile delinquency, aggravated sexual abuse, in
violation of 18 U.S.C. §§ 5032 and 3261(a). Appellant admit-
ted true to the allegations in the Information on September 16,
2009.
After a presentence investigation report was completed, a
dispositional hearing was held on October 8, 2009, in which
the district court adjudicated Appellant delinquent. Appellant
was sentenced to incarceration until July 1, 2010, and placed
on a term of juvenile delinquent supervision not to exceed his
twenty-first birthday, subject to a number of special condi-
tions. As a special condition, the district court ordered Appel-
lant to comply with the mandatory reporting requirements of
SORNA.
Due to Appellant’s objection to the registration require-
ments under SORNA at sentencing, the district court required
the parties to provide the court with memoranda on the issue.
1
Jurisdiction was properly based on 18 U.S.C. § 3261(a) because Appel-
lant was "accompanying" a member of the Armed Forces outside the
United States. Under 18 U.S.C. § 3267(2)(A)(i), a person "accompanies"
a member of the Armed Forces when he or she is a dependent of that
member of the Armed Forces. Appellant and his family thereafter resided
in South Carolina, which allowed for prosecution in the District of South
Carolina under 18 U.S.C. § 3238.
4 UNITED STATES v. UNDER SEAL
On December 7, 2011, the district court issued an Order over-
ruling Appellant’s objection to the sex offender registration
condition.
Appellant filed a timely notice of appeal, and we have
jurisdiction pursuant to 28 U.S.C. § 1291.
II.
SORNA, which is part of the Adam Walsh Child Protection
and Safety Act of 2006, 42 U.S.C. § 16901 et seq., was
enacted "to protect the public from sex offenders and offend-
ers against children, and in response to the vicious attacks by
violent predators." 42 U.S.C. § 16901. SORNA "establishes a
comprehensive national system for the registration of those
offenders." Id.
SORNA defines "sex offender" as "an individual who was
convicted of a sex offense." 42 U.S.C. § 16911(1). The statute
also specifies:
The term "convicted" or a variant thereof, used with
respect to a sex offense, includes adjudicated delin-
quent as a juvenile for that offense, but only if the
offender is 14 years of age or older at the time of the
offense and the offense adjudicated was comparable
to or more severe than aggravated sexual abuse (as
described in section 2241 of Title 18), or was an
attempt or conspiracy to commit such an offense.
42 U.S.C. § 16911(8) (emphasis added). As described under
18 U.S.C. § 2241(c), any person who "knowingly engages in
a sexual act with another person who has not attained the age
of 12 years" may be convicted of aggravated sexual abuse.
For purposes of the case at bar, we note that Appellant
meets the two statutory prerequisites for "an individual who
was convicted of a sex offense." 42 U.S.C. § 16911(1). He
UNITED STATES v. UNDER SEAL 5
was "14 years of age or older at the time of the offense," and
he pled true to the Information for committing an act of juve-
nile delinquency for what would have been a violation of 18
U.S.C. § 2241(c)—aggravated sexual abuse. 42 U.S.C.
§ 16911(8); (J.A. 8.) Under the specific terms of SORNA,
Appellant qualifies as a sex offender.
Pursuant to SORNA’s comprehensive national registration
system, sex offenders must "register, and keep the registration
current, in each jurisdiction where the offender resides, where
the offender is an employee, and where the offender is a stu-
dent." 42 U.S.C. § 16913(a). The offender must "appear in
person, allow the jurisdiction to take a current photograph,
and verify the information in each registry." 42 U.S.C.
§ 16916. Each jurisdiction must make public the contents of
its sex offender registry, including each registrant’s name,
address, photograph, criminal history, and status of parole,
probation, or supervised release. 42 U.S.C. §§ 16914(b),
16918(a).
In contesting his SORNA registration requirements, Appel-
lant raises two issues on appeal. First, he contends that
SORNA’s registration requirements contravene the confiden-
tiality provisions of the FJDA. He also contends that
SORNA’s registration requirements, as applied to him, violate
the Eighth Amendment’s prohibition on cruel and unusual
punishment. We review each issue de novo. United States v.
Abuagla, 336 F.3d 277, 278 (4th Cir. 2003) (questions of stat-
utory interpretation); United States v. Malloy, 568 F.3d 166,
176 (4th Cir. 2009) (constitutional challenges).
III.
A.
We first consider whether the district court’s imposition of
SORNA’s registration requirements contravenes the confiden-
tiality provisions of the FJDA, which governs the detention
6 UNITED STATES v. UNDER SEAL
and disposition of juveniles charged with delinquency in the
federal system. The primary purpose of the FJDA is to "re-
move juveniles from the ordinary criminal process in order to
avoid the stigma of a prior criminal conviction and to encour-
age treatment and rehabilitation." United States v. Robinson,
404 F.3d 850, 858 (4th Cir. 2005).
The FJDA includes a number of provisions to ensure that
information about juvenile delinquency proceedings remains
closed to public release. 18 U.S.C. § 5038(a) provides that
"[t]hroughout and upon the completion of the juvenile delin-
quency proceeding, the records shall be safeguarded from dis-
closure to unauthorized persons." 18 U.S.C. § 5038(a).
"[I]nformation about the juvenile record may not be released
when the request for information is related to an application
for employment, license, bonding, or any civil right or privi-
lege," except in limited circumstances relating to court pro-
ceedings, medical treatment, law enforcement investigation,
or national security. Id. The FJDA specifies that the identity
and image of the juvenile may not be disclosed even where
proceedings are opened or documents are released: "neither
the name nor picture of any juvenile shall be made public in
connection with a juvenile delinquency proceeding." 18
U.S.C. § 5038(e).
As a consequence of the FJDA statutory restrictions,
Appellant argues that the application of SORNA’s registration
requirements contravenes the FJDA. Specifically, he contends
that the FJDA mandates the non-disclosure of juvenile delin-
quency proceeding records, which is in direct contradiction to
the mandatory reporting requirements of SORNA.
SORNA’s registration provision makes public information
that would otherwise remain confidential under the FJDA.
The FJDA provides that "[u]nless a juvenile who is taken into
custody is prosecuted as an adult neither the name nor picture
of any juvenile shall be made public in connection with a
juvenile delinquency proceeding." 18 U.S.C. § 5038(e)
UNITED STATES v. UNDER SEAL 7
(emphasis added). As previously noted, the FJDA further pro-
vides that "information about the juvenile record may not be
released when the request for information is related to an
application for employment, license, bonding, or any civil
right or privilege." 18 U.S.C. § 5038(a). In direct contrast,
SORNA requires that a sex offender registry include the
name, address, physical description, criminal history and sta-
tus of parole, probation, or supervised release, current photo-
graph, and other identifying information. 42 U.S.C. § 16914.
SORNA further requires that "each jurisdiction shall make
available on the Internet, in a manner that is readily accessible
to all jurisdictions and to the public, all information about
each sex offender in the registry." 42 U.S.C. § 16918(a).
Because it is clear that the government’s public release of
juvenile records authorized by SORNA would be prohibited
under the FJDA, but for the passage of SORNA, we agree
with Appellant that the two statutes conflict.
Where two statutes conflict, "a specific statute closely
applicable to the substance of the controversy at hand controls
over a more generalized provision." Farmer v. Emp’t Sec.
Comm’n of N.C., 4 F.3d 1274, 1284 (4th Cir. 1993). We con-
clude that SORNA is the more specific statute, and therefore
controls over any contrary provision of the FJDA. SORNA
unambiguously directs juveniles ages fourteen and over con-
victed of certain aggravated sex crimes to register, and thus
carves out a narrow category of juvenile delinquents who
must disclose their status by registering as a sex offender. See
42 U.S.C. § 16911(8). For all other juvenile delinquents, the
FJDA’s confidentiality provisions remain in force.
The primacy of SORNA over a conflicting provision of the
FJDA is further elucidated by the clearly stated intent of Con-
gress to limit confidentiality in the case of certain juvenile sex
offenders. In enacting SORNA, Congress recognized the
competing interests of juvenile confidentiality (under the
FJDA) and public safety (under SORNA), but unequivocally
recognized in enacting SORNA that:
8 UNITED STATES v. UNDER SEAL
While the Committee recognizes that States typically
protect the identity of a juvenile who commits crimi-
nal acts, in the case of sexual offenses, the balance
needs to change; no longer should the rights of the
juvenile offender outweigh the rights of the commu-
nity and victims to be free from additional sexual
crimes. . . . [SORNA] strikes the balance in favor of
protecting victims, rather than protecting the identity
of juvenile sex offenders.
H.R. Rep. No. 109-218, pt. 1, at 25 (2005), 2005 WL
2210642 (Westlaw) (emphasis added); see also 152 Cong.
Rec. S8012-02 (daily ed. July 20, 2006) (statement of Sen.
Kennedy), 2006 WL 2034118, at *S8023 (Westlaw) ("This
compromise allows some offenders over 14 to be included on
registries, but only if they have been convicted of very serious
offenses."). Congress was aware that it was limiting protec-
tions under the FJDA by applying SORNA to certain juvenile
delinquents, and clearly intended to do so.2
Although Appellant may disagree with the policy implica-
tions of SORNA, particularly with regard to confidentiality,
Congress considered these concerns in enacting SORNA. Our
review is limited to interpreting the statutes, and both the stat-
utory text, legislative history and timing of SORNA indicate
that its reporting and registration requirements were plainly
intended by Congress to reach a limited class of juveniles
2
We further note that there is an additional ground for deciding that
SORNA is the controlling statute: leges posteriores priores contrarias
abrogant—the rule that the more recent of two conflicting statutes shall
prevail. Hale v. Gaines, 63 U.S. 144, 148–49 (1859); see also Watt v.
Alaska, 451 U.S. 259, 285 (1981) (Stewart, J. dissenting) ("If two incon-
sistent acts be passed at different times, the last . . . is to be obeyed; and
if obedience cannot be observed without derogating from the first, it is the
first which must give way." (internal quotation marks omitted)). The rele-
vant provisions of SORNA in this case were enacted in 2006; the relevant
provisions of the FJDA in this case were enacted in 1996. See 42 U.S.C.
§§ 16911, 16914, 16918; 18 U.S.C. § 5038.
UNITED STATES v. UNDER SEAL 9
adjudicated delinquent in cases of aggravated sexual abuse,
including Appellant, despite any contrary provisions of the
FJDA. We therefore hold that the district court properly deter-
mined SORNA’s registration requirements applied to Appel-
lant.
B.
We next consider whether SORNA’s registration require-
ments, as applied to Appellant, violate the Eighth Amend-
ment’s prohibition on cruel and unusual punishment.
The Eighth Amendment mandates that "[e]xcessive bail
shall not be required, nor excessive fines imposed, nor cruel
and unusual punishments inflicted." U.S. Const. amend. VIII.
The amendment prohibits "not only barbaric punishments, but
also sentences that are disproportionate to the crime commit-
ted." Solem v. Helm, 463 U.S. 277, 284 (1983). Appellant
contends that the consequences of requiring him to register as
a sex offender under SORNA rise to the level of punishment.
To determine whether the application of SORNA to Appel-
lant has a punitive effect, we utilize the two-part test set forth
by the Supreme Court in Smith v. Doe:
If the intention of the legislature was to impose pun-
ishment, that ends the inquiry. If, however, the inten-
tion was to enact a regulatory scheme that is civil
and nonpunitive, we must further examine whether
the statutory scheme is so punitive either in purpose
or effect as to negate the State’s intention to deem it
civil.
538 U.S. 84, 92 (2003) (quotation marks and brackets omit-
ted). The Supreme Court indicated that seven factors, previ-
ously enumerated in Kennedy v. Mendoza-Martinez, 372 U.S.
144, 168–69 (1963), provide a useful framework in determin-
ing whether a statute has a punitive effect:
10 UNITED STATES v. UNDER SEAL
(1) Whether the sanction involves an affirmative dis-
ability or restraint; (2) whether it has historically
been regarded as a punishment; (3) whether it comes
into play only on a finding of scienter; (4) whether
its operation will promote the traditional aims of
punishment—retribution and deterrence; (5) whether
the behavior to which it applies is already a crime;
(6) whether an alternative purpose to which it may
rationally be connected is assignable for it; and (7)
whether it appears excessive in relation to the alter-
native purpose assigned.
See Smith, 538 U.S. at 97; see also Mendoza-Martinez, 372
U.S. at 168–69. The Mendoza-Martinez factors are "neither
exhaustive nor dispositive," but are "useful guideposts."
Smith, 538 U.S. at 97 (internal citations and quotation marks
omitted). Because we "ordinarily defer to the legislature’s
stated intent . . . only the clearest proof will suffice to over-
ride legislative intent and transform what has been denomi-
nated a civil remedy into a criminal penalty." Id. at 92
(internal citations and quotation marks omitted) (emphasis
added).
We find that SORNA is a non-punitive, civil regulatory
scheme, both in purpose and effect. The "clearest proof" suffi-
cient to override the intent of Congress that SORNA’s regis-
tration requirements are civil and non-punitive is absent in
this case. See id. With SORNA, Congress purposefully sought
to "establish[ ] a comprehensive national system for the regis-
tration of [ ] sex offenders" in order "to protect the public
from sex offenders and offenders against children." 42 U.S.C.
§ 16901. This express language indicates that Congress
sought to create a civil remedy, not a criminal punishment.3
3
Although the goal of protecting the public might also be consistent
with the purposes of criminal justice, the government’s "pursuit of it in a
regulatory scheme does not make the objective punitive." Smith, 538 U.S.
at 94.
UNITED STATES v. UNDER SEAL 11
The legislative history of SORNA supports the conclusion
that its purpose is civil and non-punitive. Congress noted that
the earlier federal efforts to create sex offender registries
state-by-state had left gaps in the system, resulting in an esti-
mated 100,000 unaccounted for sex offenders. H.R. Rep. No.
109-218, pt. 1, at 14 (2005), 2005 WL 2210642 (Westlaw).
With SORNA, Congress sought to fill those gaps and put in
place a national sex offender registration system for the pro-
tection of the public. See id.
Most of SORNA, including the registration requirements at
issue here, were placed by Congress in title 42 of the United
States Code, the public health and welfare section, a civil law
provision. Although the criminal penalties for violating
SORNA are contained in section 18 of the United States
Code, the crimes and criminal procedure section, that place-
ment is not dispositive because civil regimes may impose
criminal penalties for violations of their regulatory require-
ments and vice versa. See Smith, 538 U.S. at 95–96. While not
controlling, the manner in which SORNA was codified in title
42 is indicative of Congress’ intent that SORNA’s registration
provisions are civil in nature.
SORNA’s statutory language, its legislative history, and its
place of codification all indicate that the intent of Congress
was to create a non-punitive regulatory framework to keep
track of sex offenders.4 Therefore, Appellant must present the
"clearest proof" that the effect of the regulation is in fact so
punitive as to negate its civil intent. Id. at 92 ("only the clear-
est proof will suffice to override legislative intent and trans-
4
Several other circuits have similarly concluded that SORNA is a non-
punitive, civil regulatory scheme. See, e.g., United States v. Young, 585
F.3d 199, 204–05 (5th Cir. 2009); United States v. Ambert, 561 F.3d 1202,
1208 (11th Cir. 2009); United States v. Lawrance, 548 F.3d 1329,
1332–36 (10th Cir. 2008); United States v. May, 535 F.3d 912, 920 (8th
Cir. 2008) ("SORNA’s registration requirement demonstrates no congres-
sional intent to punish sex offenders."). No circuit court of appeals has
concluded to the contrary.
12 UNITED STATES v. UNDER SEAL
form what has been denominated a civil remedy into a
criminal penalty" (internal citations and quotation marks
omitted)).
Appellant cannot show, much less by the "clearest proof,"
that SORNA’s effects negate Congress’ intent to establish a
civil regulatory scheme. Further, an analysis of the relevant
Mendoza-Martinez factors compels us to conclude that the
application of SORNA to Appellant does not have a punitive
effect.5
First, SORNA does not subject Appellant to an affirmative
disability or restraint. It "imposes no physical restraint, and so
does not resemble the punishment of imprisonment . . . the
paradigmatic affirmative disability or restraint." Smith, 538
U.S. at 100 (holding that Alaska’s Sex Offender Registration
Act did not impose an affirmative disability or restraint). Like
the statute at issue in Smith, SORNA "does not restrain activi-
ties sex offenders may pursue but leaves them free to change
jobs or residences," and registrants need not seek permission
to do so. Id. at 100. SORNA does not prohibit changes, it only
requires that changes be reported. Although Appellant is
required under SORNA to appear periodically in person to
verify his information and submit to a photograph, see 42
U.S.C. § 16916, this is not an affirmative disability or
restraint. "Appearing in person may be more inconvenient,
but requiring it is not punitive." United States v. W.B.H., 664
F.3d 848, 857 (11th Cir. 2001).
5
Both parties concede that the third and fifth Mendoza-Martinez fac-
tors—whether the regulation comes into play only upon a finding of
scienter and whether the behavior to which it applies is already a
crime—are of little weight in this analysis. The Supreme Court reached a
similar conclusion in Smith, where it upheld Alaska’s Sex Offender Regis-
tration Act as a non-punitive, civil regulatory scheme. 538 U.S. at 105
("The regulatory scheme applies only to past conduct, which was, and is,
a crime. This is a necessary beginning point, for recidivism is the statutory
concern. The obligations the statute imposes are the responsibility of reg-
istration, a duty not predicated upon some present or repeated violation.").
UNITED STATES v. UNDER SEAL 13
Second, SORNA’s registration requirements have not been
regarded in our national history and traditions as punishment.
In Smith, the Supreme Court held that adult sex offender reg-
istries do not resemble historical and traditional forms of pun-
ishment, such as public shaming. 538 U.S. at 98 (early
punishments like whipping, pillory, branding, and "[e]ven
punishments that lacked the corporal component, such as pub-
lic shaming, humiliation, and banishment, involved more than
the dissemination of information"). Appellant attempts to dis-
tinguish Smith, arguing that records involving criminal
offenses committed by juveniles are not made public, such
that disseminating information about them must be punitive.
A court, however, may permit the inspection of records relat-
ing to a juvenile delinquency proceeding under some circum-
stances. See 18 U.S.C. § 5038(a). Further, the Supreme Court
has held that "[o]ur system does not treat dissemination of
truthful information in furtherance of a legitimate governmen-
tal objective as punishment." Smith, 538 U.S. at 98.
Third, SORNA does not promote the traditional aims of
punishment, such as retribution and deterrence. While the
threat of having to comply with SORNA’s registration
requirements may have a deterrent effect on would-be juve-
nile sex offenders, the Supreme Court has recognized that
"[a]ny number of governmental programs might deter crime
without imposing punishment. To hold that the mere presence
of a deterrent purpose renders such sanctions ‘criminal’ would
severely undermine the Government’s ability to engage in
effective regulation." Id. at 102 (quotation marks omitted).
Fourth, SORNA has a rational connection to a legitimate,
non-punitive purpose—public safety—which is advanced by
notifying the public to the risk of sex offenders in their com-
munity. See id. at 93 ("[I]mposition of restrictive measures on
sex offenders adjudged to be dangerous is a legitimate non-
punitive governmental objective and has been historically so
regarded." (quotation marks omitted)). This, according to the
Supreme Court, is the "most significant" factor in determining
14 UNITED STATES v. UNDER SEAL
whether a sex offender registration system is non-punitive. Id.
at 102.
Finally, the regulatory scheme is not excessive with respect
to SORNA’s non-punitive purpose. Congress, in enacting
SORNA, intentionally carved out a specific and limited class
of juvenile offenders:
SORNA does not require registration for juveniles
adjudicated delinquent for all sex offenses for which
an adult sex offender would be required to register,
but rather requires registration only for a defined
class of older juveniles who are adjudicated delin-
quent for committing particularly serious sexually
assaultive crimes.
National Guidelines for Sex Offender Registration and Notifi-
cation, 73 Fed. Reg. 38030-01, at 38050 (July 2, 2008), 2008
WL 2594934 (Westlaw). Under 42 U.S.C. § 16911(8),
SORNA’s registration requirements apply only to those who
commit the most serious sex crimes and only if the offender
was at least 14 years of age or older at the time of the offense.
In sum, when it enacted SORNA, Congress did not intend
to impose additional punishment for past sex offenses but
instead wanted to put into place a non-punitive, civil regula-
tory scheme. Given that intent, the question is whether Appel-
lant has presented the "clearest proof" that SORNA is so
punitive in effect, as applied to him, as to negate its civil
intent. Smith, 538 U.S. at 92. That "clearest proof" is lacking,
as examination of the Mendoza-Martinez factors makes clear.
Id. at 97–106. We therefore hold that SORNA’s registration
requirements, as applied to Appellant, do not violate the
Eighth Amendment’s prohibition on cruel and unusual pun-
ishment.
IV.
Accordingly, we affirm the judgment of the district court
imposing the SORNA registration requirements as a condition
of supervision on Appellant.
UNITED STATES v. UNDER SEAL 15
AFFIRMED
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This memorandum opinion was not selected for publication in the New Mexico Appellate Reports.
Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum
opinions. Please also note that this electronic memorandum opinion may contain
computer-generated errors or other deviations from the official paper version filed by the Court of
Appeals and does not include the filing date.
1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 STATE OF NEW MEXICO,
3 Plaintiff-Appellee,
4 v. NO. 32,558
5 VICTOR E. TRUJILLO,
6 Defendant-Appellant.
7 APPEAL FROM THE DISTRICT COURT OF TORRANCE COUNTY
8 Edmund H. Kase III, District Judge
9 Gary K. King, Attorney General
10 Santa Fe, NM
11 for Appellee
12 Victor E. Trujillo
13 Santa Rosa, NM
14 Pro Se Appellant
15 MEMORANDUM OPINION
16 WECHSLER, Judge.
1 Defendant appeals from the district court’s order denying his motion to correct
2 an illegal sentence. [SRP 993]. This Court issued a calendar notice proposing to
3 affirm. Defendant has filed a memorandum in opposition to this Court’s proposed
4 disposition, which we have duly considered. Unpersuaded, we affirm.
5 Defendant has asked this Court to reverse the district court’s order, arguing that
6 he was wrongfully convicted on two counts of contributing to the delinquency of a
7 minor because the victim was over the age of eighteen when the offenses occurred.
8 [DS 1] In this Court’s calendar notice, we proposed to apply the doctrine of law of the
9 case and affirm. We based our proposed disposition on our review of the same issues
10 raised herein in Defendant’s prior appeal, State v. Trujillo, No. 24,919, slip. op. (N.M.
11 Ct. App. (Jan. 6, 2005)
12 Defendant takes issue with this Court’s proposed disposition, arguing that the
13 same issue is not being presented in the current case as was decided by this Court in
14 State v. Trujillo, Case No. 24,919. Although Defendant attempts to distinguish the
15 arguments raised in Case No. 24,919 from the present case, the legal issue presented
16 is still the same. [Compare RP 503 (Trujillo, No. 24,919, slip. op. at 2) (stating that
17 Defendant was arguing that his plea agreement was invalid because the crimes to
18 which he pled required Victim to be under eighteen and Victim was not under 18
19 when the crimes were committed, and holding that Defendant could not challenge the
2
1 facts underlying his plea where he had admitted that there was sufficient factual
2 support for the charges) with RP 964-65 (Defendant’s motion to correct an illegal
3 sentence) (requesting that the district court vacate two counts of contributing to the
4 delinquency of a minor because Victim was over the age of eighteen when the crimes
5 were committed)] While Defendant is correct in noting that he may raise the issue of
6 an illegal sentence at any time—even for the first time on appeal and even though he
7 entered a plea of guilty—this Court has already concluded once before that he cannot
8 change the facts supporting his convictions for contributing to the delinquency of a
9 minor given the entry of his guilty plea. As a result, under the doctrine of law of the
10 case, we are bound by this Court’s prior decision and we affirm.
11 IT IS SO ORDERED.
12 ________________________________
13 JAMES J. WECHSLER, Judge
14 WE CONCUR:
15 _______________________________
16 CYNTHIA A. FRY, Judge
3
1 _______________________________
2 MICHAEL E. VIGIL, Judge
4
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24 F.3d 254
U.S.v.Williams*
NO. 93-8041
United States Court of Appeals,Eleventh Circuit.
May 24, 1994
1
Appeal From: N.D.Ga.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 11th Cir.R. 34-3
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458 F.2d 160
*U. S.v.McConnell
71-3331
UNITED STATES COURT OF APPEALS Fifth Circuit
April 28, 1972
1
S.D.Ala.
2
---------------
* Summary Calendar cases; Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of
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754 F.Supp.2d 689 (2010)
Ivan VELIUS, Plaintiff,
v.
TOWNSHIP OF HAMILTON, et al., Defendants.
Civil Action No. 09-53 (JEI/JS).
United States District Court, D. New Jersey.
December 7, 2010.
*690 Thomas Bruno, II, Esq., Abramson & Denenberg, P.C., Philadelphia, PA, for Plaintiff.
A. Michael Barker, Esq., Barker, Scott & Gelfand, P.C., Linwood, NJ, for Defendants.
OPINION
IRENAS, Senior District Judge:
At the trial of this § 1983 excessive force case, the jury found that two of the three Defendants, police officer Francis Smyth, and police officer Kevin Zippilli, violated Plaintiff Ivan Velius's Fourth Amendment right not to be subjected to excessive force.[1] However, the jury also found that Defendants' acts did not cause injury to Velius; and one dollar in nominal damages was awarded to Velius. Defendants now move to alter the judgment pursuant to Fed.R.Civ.P. 59(e), asserting that, "without an injury, there can be no Fourth Amendment violation," (Moving Brief, p. 1), and alternatively, Defendants Smyth and Zippilli are entitled to qualified immunity. For the reasons set forth herein, the Motion will be denied.
I.
For the purposes of the instant Motion, it is not necessary to set forth all of the evidence produced at trial. Plaintiff's excessive force claim was primarily based on his own testimony that, during Plaintiff's arrest, either Officer Zippilli or Officer Smyth secured handcuffs too tightly on Plaintiff's wrists/forearm area, causing Plaintiff severe pain.[2] Plaintiff also testified that neither Defendant responded to Plaintiff's complaints that the handcuffs were causing him pain.[3]
While Plaintiff did introduce some medical evidence that could support a finding that the handcuffs caused nerve damage, the jury apparently concluded that Plaintiff had not proven that injury by a preponderance of the evidence. The jury specifically indicated on its verdict sheet that Defendants caused no injury to Plaintiff.[4]*691 However, the jury did find that both Defendants Smyth and Zippilli used excessive force when arresting Plaintiff and also failed to intervene to stop the use of excessive force.
II.
Federal Rule of Civil Procedure 59(e) "permits a court to alter or amend a judgment, but it may not be used to relitigate old matters, or to raise arguments or present evidence that could have been raised prior to the entry of judgment." Exxon Shipping Co. v. Baker, 554 U.S. 471, 486 n. 5, 128 S.Ct. 2605, 171 L.Ed.2d 570 (2008). "A proper Rule 59(e) motion therefore must rely on one of three grounds: (1) an intervening change in controlling law; (2) the availability of new evidence; or (3) the need to correct clear error of law or prevent manifest injustice." Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d Cir.2010) (quoting North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir.1995)).
III.
A.
Before turning to the merits, the Court briefly addresses whether the instant Rule 59(e) Motion is procedurally proper. Plaintiff argues that it is not because Defendants could have raised their arguments prior to the entry of judgment. On the other hand, Defendants argue that disputed issues of fact precluded any earlier determination of these issues of law. Specifically, Defendants point to evidence in the record (and presented at trial) that Plaintiff did sustain an injury as a result of the Defendants' actions or failure to act. According to Defendants, they could not have raised the instant arguments via a summary judgment motion, for example, because their arguments are based on the jury's factual determination that Plaintiff sustained no injury.[5] Thus, Defendants reason, the jury's finding of no injury is tantamount to new evidence, and in light of the jury's finding, justice requires post-judgment consideration of Defendants' arguments.
Because Defendants' arguments are specifically based on the jury's finding of fact, the Court is persuaded that Defendants could not have raised their arguments at an earlier stage of the litigation. Accordingly, the Court will proceed to consider the merits of the instant motion.
B.
The Court addresses the constitutional question, then qualified immunity.
(1)
The issue is whether a state actor's use of force which does not cause injury can violate the Fourth Amendment's prohibition of unreasonable seizures.
The Court begins with the Third Circuit's Model Civil Jury Instructions (hereafter "Model Instructions"), which were used at trial. The Court charged the jury:
In this case, Plaintiff claims that Defendants Smyth and Zippilli used excessive force when they arrested and handcuffed him. In order to establish that these Defendants used excessive force, Plaintiff must prove both of the following by a preponderance of the evidence:
*692 First: Defendants intentionally committed certain acts.
Second: Those acts violated Plaintiff's Fourth Amendment right not to be subjected to excessive force.
In determining whether Defendants Smyth and Zippilli's individual acts constituted excessive force, you must ask whether the amount of force each Defendant used was the amount which a reasonable officer would have used under similar circumstances. You should consider all the relevant facts and circumstances that each Defendant reasonably believed to be true during the time period at issue. You should consider those facts and circumstances in order to assess whether there was a need for the application of force, and the relationship between that need for force, if any, and the amount of force applied. The circumstances relevant to this assessment can include:
the severity of, and the risks posed by, Plaintiff's conduct;
whether Plaintiff posed an immediate threat to the safety of the Defendants or others;
the possibility that Plaintiff was armed;
whether Plaintiff was actively resisting arrest or attempting to evade arrest by flight;
the duration of each Defendant's action;
the number of persons with whom Defendants had to contend; and
whether the physical force applied was of such an extent as to lead to unnecessary injury; [for example, whether a Defendant placed handcuffs on Plaintiff that were excessively tight.][6]
(Joint Trial Exhibit C-5) (emphasis added); see Model Instructions § 4.9. As the accompanying comment to the instruction makes clear, the inquiry focuses on the amount of force applied, not necessarily the presence or absence of a physical injury:
The Fourth Amendment permits the use of `reasonable' force .... Physical injury is relevant but it is not a prerequisite of an excessive force claim. See Sharrar [v. Felsing], 128 F.3d at 822 ("We do not agree that the absence of physical injury necessarily signifies that the force has not been excessive, although the fact that the physical force applied was of such an extent as to lead to injury is indeed a relevant factor to be considered as part of the totality.").
Comment, Model Instructions § 4.9 (emphasis added). In other words, a § 1983 plaintiff may suffer a constitutional injury (i.e., an infringement of his right to be free from an unreasonable seizure) without suffering a physical injury.
Indeed, this conclusion is consistent with the Model Instruction and Comment regarding nominal damages: "[a] person whose federal rights were violated is entitled to a recognition of that violation, even if he suffered no actual injury. Nominal damages (of $1.00) are designed to acknowledge the deprivation of a federal right, even where no actual injury occurred." Model Instruction § 4.8.2[7]; see also Comment, Model Instruction § 4.8.2 (citing with approval Slicker v. Jackson, 215 F.3d 1225, 1232 (11th Cir.2000) ("[W]e agree with the reasoning of our sister circuits which have held that a § 1983 plaintiff *693 alleging excessive use of force is entitled to nominal damages even if he fails to present evidence of compensable injury.")).
Moreover, the Supreme Court's decision in Wilkins v. Gaddy, ___ U.S. ___, 130 S.Ct. 1175, 175 L.Ed.2d 995 (2010), lends further support to the conclusion that the absence of a physical injury does not, as a matter of law, automatically preclude a finding that a state actor used excessive force. In Wilkins, the Court reaffirmed Hudson v. McMillian's[8] "direction to decide [Eighth Amendment] excessive force claims based on the nature of the force rather than the extent of the injury." 130 S.Ct. at 1177. Wilkins specifically emphasized that the "`core judicial inquiry,'" for Eighth Amendment claims is "the nature of the force," not "the extent of the injury," explaining, "[i]njury and force ... are only imperfectly correlated, and it is the latter that ultimately counts. An inmate who is gratuitously beaten by guards does not lose his ability to pursue an excessive force claim merely because he has the good fortune to escape without serious injury." 130 S.Ct. at 1178-79 (citing with approval Smith v. Mensinger, 293 F.3d 641, 648-49 (3d Cir.2002) ("[T]he Eighth Amendment analysis must be driven by the extent of the force and the circumstances in which it is applied; not by the resulting injuries.... [D]e minimis injuries do not necessarily establish de minimis force.")) (emphasis in Wilkins).
Although Wilkins and Smith are Eighth Amendment excessive force cases, their reasoning is equally applicable in the Fourth Amendment excessive force context since the Eighth Amendment standard is more onerous. Compare Wilkins, 130 S.Ct. at 1178 (Eighth Amendment is violated when "prison officials maliciously and sadistically use force to cause harm... [in violation of] contemporary standards of decency.") with Graham v. Connor, 490 U.S. 386, 395, 109 S.Ct. 1865, 104 L.Ed.2d 443 (1989) (Fourth Amendment prohibits the "unreasonable" use of force). If, absent a physical injury, a prison guard may still be liable for using excessive force against a prisoner, it follows that a police officer may still be liable for using excessive force against a person at liberty. See Michael Avery, David Rudovsky, & Karen Blum, Police Misconduct: Law and Litigation § 2:19 (2010) ("If the characterization of an injury as de minimis does not bar an Eighth Amendment claim, it seems that it should not bar a Fourth Amendment claim for excessive force for the same reasons.").
Accordingly, the Court rejects Defendants' argument that, as a matter of law, they cannot be liable for the use of excessive force in light of the jury's finding that Plaintiff suffered no injury.
(2)
The Court also rejects Defendants' argument that it would not be clear to a reasonable officer in Defendants' position that they could be liable for using excessive force absent any injury to Plaintiff. See Reedy v. Evanson, 615 F.3d 197, 224 (3d Cir.2010) (qualified immunity analysis asks "`whether the right was clearly established... in light of the specific context of the case....' A right is clearly established if `it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted.'") (quoting Saucier v. Katz, 533 U.S. 194, 201, 121 S.Ct. 2151, 150 L.Ed.2d 272 (2001)).
Sharrar v. Felsing was decided in 1997. 128 F.3d 810 (3d Cir.1997). In that case, the Third Circuit affirmed this Court's grant of summary judgment to various police officers on excessive force claims. Sharrar, 128 F.3d at 822. However, the Court of Appeals did criticize this Court's excessive force analysis for "focus[ing] *694 only on the presence vel non of physical injury." Id. The Court explained, "[w]e do not agree that the absence of physical injury necessarily signifies that the force has not been excessive." Id.
Thus, since at least 1997, the law with respect to Fourth Amendment excessive force claims has been clear: the presence or absence of a physical injury is but one relevant factor to consider in the Fourth Amendment excessive force analysis. See id. ("other relevant factors include the possibility that the persons subject to the police action are themselves violent or dangerous, the duration of the action, whether the action takes place in the context of effecting an arrest, the possibility that the suspect may be armed, and the number of persons with whom the police officers must contend at one time."). An officer in Defendants' position at the time of Plaintiff's arrest in 2007 could not have reasonably believed that he could be liable for excessive force only if his use of force caused a physical injury.
Contrary to Defendants' assertions, Gilles v. Davis, 427 F.3d 197 (3d Cir.2005), is not at odds with Sharrar, and does not compel a different result. In Gilles, the Third Circuit held that "the facts alleged constitute insufficient evidence as a matter of law for excessive force by handcuffing," and affirmed the district court's grant of summary judgment on the ground of qualified immunity to the defendant-appellee Officer Davis. 427 F.3d at 208. The only evidence in the record to support the excessive force claim was Gilles's own testimony that "he complained of pain to unidentified officers who allegedly passed the information to Davis." Id. The other evidence in the record was undisputed videotape footage of the arrest in which "Gilles demonstrated no expression or signs of discomfort at the time he was handcuffed." Id.
Gilles distinguished the facts of Kopec v. Tate, 361 F.3d 772 (3d Cir.2004), where a claim of excessively tight handcuffs survived summary judgment. The Court emphasized that the plaintiff in Kopec had alleged permanent nerve damage for which he received medical treatment for over a year, whereas Gilles did not "seek or receive medical treatment after [his arrest]." Gilles, 427 F.3d at 208.
Unlike Defendants, the Court does not interpret Gilles's discussion of Kopec as establishing a special legal standard requiring a physical injury for claims of excessive force by handcuffing. Rather, Gilles and Kopec, read together, and in light of Sharrar,[9] are simply an application of the principle that the presence or absence of physical injury is probative evidence of whether the force used was excessive. Thus, in Kopec, the severity of the injury alleged was sufficient evidence from which a reasonable juror could find that the force used was excessive; whereas in Gilles, the absence of such evidence, along with the absence of any other evidence of excessive force (except Gilles's alleged complaint to unidentified officers) required judgment as a matter of law for Officer Davis. In short, this Court interprets Kopec and Gilles together as standing for the proposition that a severe injury from handcuffs can support a finding of excessive force, and in the absence of an injury, some other evidence, such as "obvious visible indicators of [] pain," Gilles, 427 F.3d at 208, will be required. Interpreting Gilles to hold that a physical injury will always be required to sustain a claim of excessive force by handcuffing is, in this Court's view, overly broad.
*695 Accordingly, the Court concludes that in 2007, the law with respect to claims of excessive force by handcuffing, was clear: officers may violate a person's Fourth Amendment right to be free from excessive force even in the absence of physical injury. Defendants are therefore not entitled to qualified immunity.
IV.
For the above-stated reasons, Defendants' Motion to Alter the Judgment will be denied. An appropriate Order accompanies this Opinion.
ORDER DENYING DEFENDANTS' MOTION TO ALTER THE JUDGMENT (Docket # 40)
This matter having appeared before the Court upon Defendants' Motion to Alter the Judgment pursuant to Fed.R.Civ.P. 59(e), the Court having considered the submissions of the parties, for the reasons set forth in an Opinion issued by this Court on even date herewith, which findings of fact and conclusions of law are incorporated herein by reference, and for good cause appearing;
IT IS on this 7th day of December, 2010,
ORDERED THAT:
Defendants' Motion to Alter the Judgment (Docket # 40) is hereby DENIED.
NOTES
[1] The jury found no liability as to Defendant Jacobi. The instant Motion does not implicate the judgment as to him. Unless otherwise indicated, in this Opinion the Court uses "Defendants" to refer to Defendants Smyth and Zippilli only.
[2] Neither Smyth nor Zippilli (nor Plaintiff) could remember which officer placed the handcuffs on Plaintiff.
[3] Plaintiff also claimed that Officer Zippilli used excessive force when he took Plaintiff down to the ground in order to subdue him before the handcuffs were placed on him.
[4] The Court used the Third Circuit's model "Integrated Instruction and Special Verdict Form: Section 1983 ClaimExcessive Force (Stop, Arrest or other `Seizure')," which is included as Appendix One of the Third Circuit's Model Civil Jury Instructions, available at http://www.ca3.uscourts.gov/civiljury instructions/toc_and_instructions.htm.
[5] Defendants did not file any motions pursuant to either Fed.R.Civ.P. 12(b)(6) or 56. At trial Defendants moved for judgment as a matter of law pursuant to Fed.R.Civ.P. 50(a) as to Plaintiff's claim for punitive damages but not as to the issues raised here.
[6] The bracketed portion of the charge is not included in the Model Instructions. The Court added that portion, with the parties' consent, at the charge conference.
[7] The Court gave this instruction to the jury. (See Joint Trial Exhibit C-5).
[8] 503 U.S. 1, 112 S.Ct. 995, 117 L.Ed.2d 156 (1992).
[9] Kopec relied upon Sharrar. See Kopec, 361 F.3d at 777.
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 02-30269
Conference Calendar
GODFREY OKECHUKU OBIOZOR,
Petitioner-Appellant,
versus
WARDEN, FEDERAL CORRECTIONAL INSTITUTION OAKDALE; UNITED
STATES OF AMERICA,
Respondents-Appellees.
--------------------
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 01-CV-1175
--------------------
August 21, 2002
Before HIGGINBOTHAM, DAVIS, and PARKER, Circuit Judges.
PER CURIAM:*
Godfrey Okechuku Obiozor, federal prisoner # 59498-079,
appeals the district court’s denial of his habeas petition that
invoked 28 U.S.C. § 2241. Obiozor argues that the district court
erred in determining that his Apprendi v. New Jersey, 530 U.S.
466 (2000), claim did not meet the criteria for bringing a claim
pursuant to the “savings clause” of 28 U.S.C. § 2255.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 02-30269
-2-
In order to file a 28 U.S.C § 2241 petition pursuant to the
“savings clause” of 28 U.S.C. § 2255, the petitioner must show
that 1) his claims are based on a retroactively applicable
Supreme Court decision which establishes that the petitioner may
have been convicted of a nonexistent offense and 2) his claims
were foreclosed by circuit law at the time when the claims should
have been raised in his trial, appeal, or first 28 U.S.C. § 2255
motion. Reyes-Requena v. United States, 243 F.3d 893, 904 (5th
Cir. 2001). This court has not decided whether an Apprendi claim
meets the first prong of the Reyes-Requena test.
However, that issue need not be addressed in this case
because Apprendi does not apply to Obiozor’s case. On the count
to which Obiozor pleaded guilty, the indictment specifically
alleged the involvement of in excess of one kilogram of heroin.
Obiozor’s sentence does not violate Apprendi because the 210-
month term of imprisonment and the five-year supervised release
term to which he was sentenced were within the statutory maximum
for his offense. United States v. Keith, 230 F.3d 784, 787 (5th
Cir. 2000), cert. denied, 531 U.S. 1182 (2001); see 21 U.S.C.
§ 960(b)(1)(A) and 18 U.S.C. §§ 3581, 3583.
This court will not consider the issue whether Obiozor’s
guilty plea was knowingly and voluntarily entered into because it
was raised for the first time in this appeal. See Leverette v.
Louisville Ladder Co., 183 F.3d 339, 342 (5th Cir. 1999).
AFFIRMED.
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320 N.W.2d 95 (1982)
211 Neb. 677
Charles L. GLEESON, Appellant,
v.
Chris F. FRAHM and Olga K. Frahm, husband and wife, Appellees.
No. 43773.
Supreme Court of Nebraska.
May 28, 1982.
Jon A. Sedlacek, Blair, for appellant.
Gregory P. Drew, Blair, for appellees.
Heard before KRIVOSHA, C. J., WHITE, and HASTINGS, JJ., and BROWER and EMPSON, District Judges.
*96 EMPSON, District Judge.
This is an action for specific performance. On July 31, 1978, the defendants, Chris F. Frahm and Olga K. Frahm, executed for consideration an option, which is in pertinent part as follows: "KNOW ALL MEN BY THESE PRESENTS: That . . . [Frahms] hereinafter referred to as First Party ... in consideration of the sum of One Dollar and other good and valuable consideration ... paid ... by ... second party . . . hereby agree to hold, until the 1st day of January, 1980, 12:00 o'clock A.M.,. . . subject exclusively to the order of the said second party or his, her or their assigns, the following described property to wit: [property described] or to transfer and convey the said property by warranty deed... at any time within the time above prescribed, to the said second party or to such person or persons as he ... may direct, at and for the price of One Thousand Two Hundred and Fifty (1,250) Dollars per acre payable on the following terms: 25% down payment, balance payable in ten (10) annual installments bearing interest at the rate of 8% per annum ....
....
"... if there should be any delay on the part of the first party in perfecting the title to the above property for more than thirty (30) days, after notice shall have been given of the election of the holder of this option to purchase the aforesaid property, then, and in that event, the holder of this option shall have the right to cancel this option, and upon the exercise of such right of cancellation, shall receive back the consideration paid for this option . . . ." The option was assigned to the plaintiff, Charles L. Gleeson.
On December 28, 1979, Gleeson mailed to the Frahms a document entitled "Acceptance of Option to Purchase," which is in pertinent part as follows: "I, Charles L. Gleeson, as Assignee ... do under a certain option agreement made by you on the 31st day of July, 1978, for the purchase of the property described as follows: [property described] hereby elect to exercise such option to purchase, upon the terms as contained in said option agreement and do direct that you transfer and convey said property by Warranty Deed ... to myself, Charles L. Gleeson and Richard J. Gleeson, as tenants in common.
"Please deliver abstract of title to the real estate certified to date, to my attorney. . . ." The document, received by the Frahms on December 29, 1979, neither contained nor was accompanied by any payment or specific offer of payment of any kind. Gleeson has never offered the Frahms any payment and the Frahms have never taken any steps to convey the property.
No further action was taken by either party until about the middle of January 1980, when Gleeson stopped by the Frahms' home to ask about fencing the property. Chris Frahm told him to go see their attorney, who told Gleeson the sale would not be made. This lawsuit resulted.
The Frahms' answer to Gleeson's petition alleged that the option was not exercised by Gleeson because the "downpayment" required was not tendered or paid before the option expired. They have defended throughout on that basis, and the trial court, upon that same theory, sustained the Frahms' motion to dismiss at the close of Gleeson's case.
The nature of an option has been stated by this court as follows: " ` "An option to purchase real estate is a unilateral contract by which the owner of the property agrees with the holder of the option that he has the right to buy the property according to the terms and conditions of the contract. By such agreement the owner does not sell the land, nor does he at the time contract to sell. He does, however, agree that the person to whom the option is given shall have the right at his election or option to demand the conveyance in the manner specified." ` " Commuter Developments & Investments, Inc. v. Gramlich, 203 Neb. 569, 573, 279 N.W.2d 394, 396 (1979); Phillips Petroleum Co. v. City of Omaha, 171 Neb. 457, 106 N.W.2d 727 (1960). This definition gives rise to and is implicit in such cases as *97 Master Laboratories, Inc. v. Chestnut, 154 Neb. 749, 49 N.W.2d 693 (1951), and State Securities Co. v. Daringer, 206 Neb. 427, 293 N.W.2d 102 (1980), which hold that the exercise of an option to buy or sell real estate must be unconditional and in accordance with the offer made. Those holdings, in turn, spring from long-standing principles of contract law that the acceptance of any offer, to result in a contract, must be absolute, unconditional, and unqualified. See Roberts v. Cox, 91 Neb. 553, 136 N.W. 831 (1912).
The parties may contract to the effect that full or partial performance by the holder of the option is required to exercise the option. If they do so, the contract remains a unilateral one after the option is exercised, that is, the holder having performed, only the owner remains bound to perform. If they do not so contract, the holder may exercise by promising to perform, in which case the contract becomes bilateralboth parties are bound by their promises to perform the contract. Where the contract specifies the required manner of acceptance, the holder must conform. Where the manner of acceptance is not specified, the holder may exercise by promising to perform what the option requires of him. Restatement (Second) of Contracts § 32 (1981). The option contract in this case does not specify any particular manner of exercise or acceptance.
It is significant that the contract gives the Frahms 30 days to perfect title after notice of election of Gleeson to purchase. It is more significant that upon the Frahms' failure to perfect title, Gleeson shall "receive back" not the downpayment but the "consideration paid for this option," i.e., "One Dollar and other good and valuable consideration." The Frahms' contention that proper exercise of the option required a downpayment before the Frahms had displayed good title is untenable. Gleeson's letter of acceptance, couched in the words of the option contract itself, is a clear exercise of the option, by which Gleeson became bound to pay the price upon the Frahms' showing of good title and their offer of a warranty deed.
The judgment is reversed and the cause is remanded to the District Court for further proceedings.
REVERSED AND REMANDED FOR FURTHER PROCEEDINGS.
WHITE, Justice, dissenting.
I dissent. The terms of the option require a downpayment of 25 percent at the time the option is exercised. Since no downpayment was received by January 1, 1980, the option expired. I would have sustained the District Court's order dismissing the plaintiff's petition.
I am authorized to state that BROWER, D. J., joins in this dissent.
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April2, 1973
3s. Harry B. Xelton, Director Opinion No. Ii-24
Texas National Guard Armory Board
Kest
_ Austin
- Station
-_-_ _ _concerning
i3Z: Questi0r.s ._ -
Aus tic, Texas 78763 award of bid for con-
structicn of an armory
and other work '
Dear Mr. Xelton:
You advise, and we accept, as the facts of this natte.r that:
(1) your Board called for competitive bids fcr tlieconstiuc-
tion of an AZ~oq ar.da shop (OMS) at Fort SaaaBocstsn:
(2) Eie Invite-;
,-on for Sids cosltainedthe Lcllowing para-
graph:
"The right is reserved, as the interest of the
require, to reject any and all bids,
State ir.ay
to waive any informality ir.bids received, and
'-0accepz c: reject any and all items of -my
Did, il~l~ess
the Edder qualified such bid h-7
specific IAirataon.";
(3) The Instructions to Bidders, attached to 'theirmitation,
advised:
"Tinecon?leted form shall show no erasures,
alteraticzs, aualifications, or additior.al
'y kind whatsoever."
material of an
(4) The Specifications read in part:
-"The Owner desires to award all work unrierone
contract &it reserves the right to award two
(for ~rr.orywork and for OHS work) if it is
necessary. The breakdown of costs by Sid it-as
and Alterzates is prmarily ror cost acc?uncinT
prpcses ."
p. 104
..
- :
Mr. Harry B. itelton, page 2 (H-24)
8:
(5) Prior
to the bid opening, one of the bidders had a teie- .
phone conversation with the Supervisor of Construction for the ?ro- )
ject, in which he was instructed that if his bid wzre qualified in
any manner, as by conditioning it on the award of both jobs, it
would be rejected, and that the shop was a 100% federally funded
project which would be awarded to the low bidder "irrespective of
the bid on the armory.y That bidder thereafter stimitted an un-
qualified bid.
(6) The low bidder on the combination of the projects condi-
tioned his bid on the award of all items. Another bidder, whose
bid was not so conditioned, was lower on the shop item.
YOU have asked:
"1. . . . can the Armory Board consider a bid
which was qualified by the insertion of the sen-
tence which indicated the bid must be aczegted
wi+h the contingency that all bid items Se awar-
ded?"
In Texas Eiahway Commission v. Texas Association of Steel
Importers, 372 S.N.2d 525 (Tex. 1963) , the Supreme Court cited
with approval a staternestin Sterrett v. Bell, 240 S.X.2d 516,
520 (Tex.Civ.App. 1951 no writ), settrng forth the requirements
and purposes of competitive bidding:
"'Competitive bidding' requires due advertise-
ment, giving opportunity to bid, and cor.tem?lates
a bidding . . . upon the same thing. It requires
that all bidders be placed upon the same plane of
equality and that.they each bid upon the same terms
and conditions involved in all the items and parts
of the contract, and that the proposal specify as
to all bids the same, or substantially similar
specifications. Its purpose is to stimulate
competition, prevent favoritism and secure the
best work and materials at the lowest practica-
ble urice. for the best interests and benefits
of the taxpayers and the property owners. 'There
can be no competitive bidding in a legal sense
where the terms of the letting of the ccntract
prevent or restrict competition, ravor a contrac-
tor or material man, or increase the cost of the
work or of the materials or other items going
into the project.Y
p. 105
w--. Harry 9. Xelton, page 3 (H-24)
.
The bid documents here, when read together, are ambiguous.
One contemplates the allowance of quaiified or 1im:ltedbids.
Another prohibits qualifications or reservations of bids. still
others could be construed as contemplating three different bids
(fo: both buildings: for the Armory work: and for 023swork), rx-
cept for the indication that cnly a single bid encamnassing both
jobs was expected: ". . . The brsakdown. . . is primarily for
cost accounting. . ."
The bid documents leave to conjecture the requirements gov-
erning the bids and only by happenstance would all interested
bidders arrive at a corn.-onconclusion regarding t!!eir xneankg.
Under those circumstances, we do not believe the procedure re-
sulted in competitive bidding in a legal sense, because the
ambiguity of the bid letting docuxxentsprevented effective cow
petition. This is not a case where no harm or ineuualitv :e-
suits. Cf. iiaralson v. City of Dallas, 14 S.W.2d j45 (T;x.Civ.
Apa. Dallas, 1929, writ dism.): Attorney General Opinion X-990
(1971).
1~ our opinion, none of the bids su3mitted can be considered
competitive, and none should be accepted. Texas Eiqhwav Cozxnissior:
v. Taxas Association of Steel Imnorzers, 372 S.W.2d 525 ITex. 1963);
Sterretr v. Sell, 240 S.i?.id 516 (Tex.Civ.App. 1951, no writ);
Sqerior Incinerator CO. of Texas V. Tom?kins, 37 S.W.2d 391 (Tex.
Civ.+q. Dallas, 19311, aff'd 54 S.w.2d 102 (Tex.Comm. 1933);
64 i-3 hr2a, Public Works and'contracts, 553, et seq.; 10 :!cQuilliz,
3xici3al Cxooratioxs, 1956 Rev.Zd., $29.52, p. 373.
Ke do not reach your second question contingently stititted
UPC?.an affirmative answer =o the first Guestion:
Mbiguous invitations and instructions for com-
petitive bids which ieave bidding requirements to ccn-
jecture prevent competitive bidding. Bids submitted
in response thereto should not be accepted.
Very truly yours,
Attorney General of Texas
p. 106
.
Mr. Barry B. Kelton, page 4 (H-24)
APPROVED:
3”. YOX, Fiist A
Opinion Comittee ,
p. 107
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42 So.3d 377 (2010)
STATE of Louisiana
v.
David LEE.
No. 2010-KK-1742.
Supreme Court of Louisiana.
July 29, 2010.
Writ granted. Based on the objective information available to the officers at the time of the defendant's arrest, it was reasonably probable under the totality of the circumstances that a crime had been or was in the process of being committed and that the defendant was directly or indirectly involved in the commission of that crime. Accordingly, the ruling of the district court granting in part the defendant's motion to suppress the oral and written statements made post-arrest is reversed, and the case is remanded to the district court for further proceedings.
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356 N.W.2d 877 (1984)
218 Neb. 475
STATE of Nebraska, Appellee,
v.
Thomas L. ABRAHAM, Appellant.
No. 84-166.
Supreme Court of Nebraska.
October 12, 1984.
*878 James Martin Davis of Dolan, Davis & Gleason, Omaha, for appellant.
Paul L. Douglas, Atty. Gen., and Lynne R. Fritz, Asst. Atty. Gen., Lincoln, for appellee.
KRIVOSHA, C.J., and BOSLAUGH, WHITE, HASTINGS, CAPORALE, and SHANAHAN, JJ.
CAPORALE, Justice.
Defendant, Thomas L. Abraham, appeals from the conviction, following a bench trial, and jail sentence of 4 months on the charge of being in possession of a controlled substance, to wit, cocaine. In this companion case to State v. Brennen, 218 Neb. 454, 356 N.W.2d 861 (1984), decided this day, Abraham questions the validity of the interceptions of certain telephonic communications and of the search warrant. We affirm.
This case arises out of the same investigation and orders authorizing the interception of telephonic communications discussed in Brennen, supra. Although Abraham was not mentioned in the affidavit, or amendment thereto, underlying those orders, he was discovered through the interceptions authorized by them. The issues which Abraham raises with respect to the validity of the interceptions are the same issues which were raised in Brennen, supra. Having determined that the orders in Brennen were lawful, it follows that the interceptions of Abraham's conversations under those orders were also lawful.
The sole question remaining, therefore, is that raised by Abraham's claim that there was not sufficient probable cause to issue a warrant for the search of Abraham's residence and person.
The affidavit offered in support of the application for the search warrant incorporated the information offered in support of the interceptions of telephonic communications. The former document establishes that in February of 1982 a confidential informant advised a police sergeant that Abraham, of a particular address in Omaha, was a cocaine dealer. That officer independently investigated the information about Abraham provided by the informant and found it to be accurate. The informant, wired with an electronic device, then went to Abraham's residence where he engaged in a conversation with Abraham, which was overheard by the investigating officer. According to that officer, the conversation he overheard indicated that Abraham was in fact a cocaine distributor who *879 was willing to deliver cocaine. Those documents also establish that the defendant in Brennen, supra, contacted Abraham's residence by phone in January of 1982. Telephone conversations on March 14 and 15, 1982, among Brennen and others, including Abraham and one Linda, reveal that Brennen had a supply of cocaine he was preparing to deliver. Linda contacted Brennen on March 14 to get "one of them things." Brennen advised Linda to call back later. On March 15 telephone conversations took place between Brennen and Abraham wherein Brennen told Abraham that he, Brennen, would come to Abraham's residence that evening. Police officers followed Brennen to Abraham's residence. After a period of time the two were followed to a bar which had been part of the ongoing drug investigation. The search warrant was then obtained on March 15.
As will be seen from the discussion which follows, the totality of the foregoing circumstances supports a finding of probable cause to believe that cocaine was present at Abraham's residence. There was also probable cause to believe that Brennen delivered said substance to Abraham at that location shortly before the warrant was issued. There further existed probable cause to believe Abraham was currently distributing cocaine and to believe that the cocaine remained at his residence.
That being so, we need not determine at this time whether any provision of the Nebraska Constitution requires something more with respect to search warrants than does the fourth amendment to the U.S. Constitution, as recently interpreted by the U.S. Supreme Court in United States v. Leon, ___ U.S. ___, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984), and Massachusetts v. Sheppard, ___ U.S. ___, 104 S.Ct. 3424, 82 L.Ed.2d 737 (1984). In those cases the U.S. Supreme Court held that the fourth amendment does not require, during the prosecution's case in chief, the exclusion of evidence obtained by law enforcement officers in an objectively reasonable reliance upon a search warrant issued by an impartial magistrate, but which is later found to be invalid.
Following the lead of the U.S. Supreme Court in Illinois v. Gates, 462 U.S. 213, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983), Nebraska adopted a "totality of the circumstances" analysis for probable cause determinations with respect to search warrants. State v. Gilreath, 215 Neb. 466, 339 N.W.2d 288 (1983); State v. Arnold, 214 Neb. 769, 336 N.W.2d 97 (1983); State v. Robish, 214 Neb. 190, 332 N.W.2d 922 (1983). Under that standard the duty of this court is only to ensure that the magistrate had a substantial basis for concluding that probable cause existed. State v. Gilreath, supra. Probable cause is a reasonable suspicion founded on articulable facts. State v. Robish, supra. In evaluating the showing of probable cause necessary to support the issuance of a search warrant, only the probability, and not a prima facie showing, of criminal activity is required. State v. Stickelman, 207 Neb. 429, 299 N.W.2d 520 (1980). Moreover, a search warrant may be issued for a location where it is probable that the property described would be found. State v. LeBron, 217 Neb. 452, 349 N.W.2d 918 (1984).
As noted earlier, this case falls within the above-cited principles for finding probable cause to issue a search warrant; the warrant was validly issued.
The record failing to sustain Abraham's various assignments of error, the conviction and sentence are affirmed.
AFFIRMED.
GRANT, J., not participating.
SHANAHAN, Justice, dissenting.
As expressed in the dissent registered in the companion case, State v. Brennen, 218 Neb. 454, 356 N.W.2d 861 (1984), there has been an invalid wiretap. Since the "totality of the circumstances" is predicated on the invalid wiretap in State v. Brennen as the foundation for the search *880 warrant in this case, the search warrant regarding Abraham is invalid.
WHITE, J., joins in this dissent.
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T.C. Summary Opinion 2013-59
UNITED STATES TAX COURT
LORENZO MARQUISE COOPER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11245-12S. Filed July 22, 2013.
Lorenzo Marquise Cooper, pro se.
Christopher D. Bradley and John W. Sheffield III, for respondent.
SUMMARY OPINION
BUCH, Judge: This case was heard pursuant to section 7463 of the Internal
Revenue Code in effect when the petition was filed.1 Under section 7463(b), the
Unless otherwise indicated, all section references are to the Internal
1
Revenue Code in effect for the year in issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
-2-
decision to be entered in this case is not reviewable by any other court, and this
opinion may not be treated as precedent for any other case.
In 2010 Lorenzo Cooper supported a minor child, T.P.2 On his 2010
Federal income tax return, Mr. Cooper claimed a dependency exemption deduction
for T.P.; he also elected head of household status and claimed both the child tax
credit and the earned income tax credit. The Internal Revenue Service (IRS)
determined that Mr. Cooper was not entitled to either tax credit, that he was not
entitled to head of household status, and that he was not entitled to a dependency
exemption deduction for T.P. The IRS issued a notice of deficiency on February
6, 2012, and on May 7, 2012, Mr. Cooper timely filed a petition with the Court
under section 6213(a).
Respondent has conceded that Mr. Cooper was entitled to a dependency
exemption deduction for T.P. and to head of household filing status. After those
concessions, the issues remaining for decision are: (1) whether Mr. Cooper is
entitled to the child tax credit for T.P. and (2) whether Mr. Cooper is entitled to
the earned income tax credit for T.P. Because T.P. was not a “qualifying child” in
2010, the Court must decide each of these issues in favor of respondent.
It is the policy of the Court to refer to a minor by his or her initials. See
2
Rule 27(a)(3).
-3-
Background
Mr. Cooper timely filed his 2010 Federal income tax return. On that tax
return, he claimed head of household filing status and claimed the child tax credit,
the earned income tax credit, and a dependency exemption deduction for T.P., who
is a minor. T.P. has no biological relation to Mr. Cooper. During 2010 T.P. lived
with Mr. Cooper, and Mr. Cooper supported T.P. by paying over half of the
household expenses.
Respondent examined Mr. Cooper’s 2010 income tax return and disallowed
the head of household filing status, the child tax credit, the earned income tax
credit, and the dependency exemption deduction. On February 6, 2012,
respondent issued a notice of deficiency determining a $4,684 increase in Mr.
Cooper’s tax liability as a result of the disallowance. On May 7, 2012, Mr.
Cooper filed a petition challenging respondent’s determinations. He resided in
Georgia at the time he filed his petition.
At the time set for trial, Mr. Cooper appeared. At the call of the case, the
parties presented a stipulation of facts, and Mr. Cooper summarized his anticipated
testimony, which did not expand on the stipulated facts. Respondent orally
-4-
stipulated to the dependency deduction and to head of household filing status. As
a result, the Court accepted this case as fully stipulated.3
Discussion
As a general matter, the Commissioner’s determinations in the notice of
deficiency are presumed correct, and the taxpayer bears the burden of proving an
error.4 Further, income tax deductions are considered a “matter of legislative
grace”, and the burden of proving the entitlement to any claimed deduction or
credit rests on the taxpayer.5 Here, the facts are not in dispute, and all of the
questions to be resolved are questions of law.
I. Qualifying Child
In this case, the availability of the child tax credit and the earned income tax
credit turn on a single question: whether T.P. was a qualifying child of Mr.
Cooper during the year at issue.6
Section 152(c)(1) sets forth five requirements that must be met in order for
an individual to be a qualifying child of a taxpayer.
3
See Rule 122.
4
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
5
Rule 142(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992).
Under facts not present here, one may also be eligible for the earned
6
income tax credit even without a qualifying child. See sec. 32(c)(1)(A)(ii).
-5-
First, the child in question must bear a specific relationship to that
taxpayer.7 That is, the child must be (1) a child of the taxpayer, (2) a descendant
of a child of the taxpayer, (3) a brother, sister, stepbrother, or stepsister of the
taxpayer, or (4) a descendant of a brother, sister, stepbrother, or stepsister of the
taxpayer.8
Second, the child must live with the taxpayer for more than one-half of the
taxable year.9
Third, the child must meet certain age requirements.10 Specifically, the
child must be younger than the taxpayer who is claiming the child as a qualifying
child. Further, the child must be under age 19 or a student under age 24 at the end
of the year.11
Fourth, the child must not have provided over one-half of his or her own
support for the taxable year at issue.12
7
Sec. 152(c)(1)(A).
8
Sec. 152(c)(2).
9
Sec. 152(c)(1)(B).
10
Sec. 152(c)(1)(C).
11
Sec. 152(c)(3).
12
Sec. 152(c)(1)(D).
-6-
Finally, the child must not have filed a joint tax return with a spouse for the
taxable year at issue.13
The parties stipulated that during 2010 T.P. lived with Mr. Cooper, T.P. was
a minor, and Mr. Cooper provided over one-half of T.P.’s support. Although the
record is silent on this point, the Court will assume that T.P., as a minor, did not
file a joint return with a spouse for 2010. However, the parties also stipulated that
T.P. is not Mr. Cooper’s biological child or descendant. If Mr. Cooper had
adopted T.P., then T.P. would have been considered Mr. Cooper’s child and the
specified relationship would exist.14 However, there is no evidence that Mr.
Cooper had adopted T.P. as of the close of 2010, nor is there any evidence that
T.P. met any other part of the relationship test.
As a result, not all five of the requirements are fulfilled, and T.P. was not a
qualifying child under section 152(c).
II. Child Tax Credit
Taxpayers are allowed a credit against their income tax for any qualifying
child for whom the taxpayer was allowed a deduction under section 151, the
13
Sec. 152(c)(1)(E).
14
See sec. 152(f)(1)(B).
-7-
dependency exemption deduction.15 In addition, a portion of this credit can be
refundable if certain conditions are met.16 Again, a qualifying child is defined by
the requirements in section 152(c).17 While respondent has conceded that Mr.
Cooper is allowed a dependency exemption deduction for T.P., even after that
concession T.P. is not a qualifying child under section 152(c). Thus, Mr. Cooper
is not entitled to the child tax credit for the 2010 taxable year.
III. Earned Income Tax Credit
Section 32(a)(1) allows an eligible individual an earned income tax credit to
offset that individual’s tax liability. As is relevant here, an eligible individual is
someone who has a qualifying child for the taxable year.18 Again, the definition of
qualifying child refers to section 152(c).19 And T.P. does not qualify.
It is possible to qualify for the earned income tax credit without any
qualifying children.20 Among other requirements, to qualify for the earned income
15
Sec. 24(a).
16
Sec. 24(d).
17
Sec. 24(c)(1).
18
Sec. 32(c)(1)(A)(i).
19
Sec. 32(c)(3)(A).
20
See sec. 32(c)(1)(A)(ii).
-8-
tax credit without any qualifying children for 2010, a taxpayer’s adjusted gross
income must have been less than $13,460 if not filing jointly. Mr. Cooper’s
taxable income for 2010 exceeded that amount. Thus, he is not entitled to the
earned income tax credit for 2010.
IV. Conclusion
Mr. Cooper should be commended for supporting T.P.; however, the tax law
as written does not allow him the credits he claimed. The Court is bound by the
laws as written and does not have general equitable powers.21
To reflect the foregoing,
Decision will be entered
under Rule 155.
Commissioner v. McCoy, 484 U.S. 3, 7 (1987); Hays Corp. v.
21
Commissioner, 40 T.C. 436, 442-443 (1963), aff’d, 331 F.2d 422 (7th Cir. 1964).
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53 Wn. App. 476 (1989)
768 P.2d 1
RICHARD W. SNEDIGAR, Respondent,
v.
GUERRY HODDERSON, ET AL, Appellants.
No. 21270-2-I.
The Court of Appeals of Washington, Division One.
February 21, 1989.
Valerie A. Carlson, Frederick W. Hyde, and Daniel H. Smith, for appellants Hodderson, et al.
Clara Fraser, pro se.
Thomas S. Wampold, Bovy, Wampold & Munro, and Michelle Pailthorp, for respondent.
Paul Parker and Janet Varon on behalf of National Lawyers Guild and Michael W. Gendler on behalf of the American Civil Liberties Union, amici curiae for appellants.
WINSOR, J.
Defendants, consisting of the Freedom Socialist Party and several of its members (hereinafter collectively referred to as FSP), appeal from an order partially denying FSP's motion for summary judgment, an order compelling discovery, an order striking FSP's answer, an order of default, and a default judgment. We affirm in part and reverse in part.
Richard Snedigar belonged to the Freedom Socialist Party (the Party) from 1974 until September 1980. During *478 that period, the Party was headquartered in Freeway Hall, which it rented from Ivar Haglund. In November 1978, Haglund served the Party with a notice terminating tenancy. The Party declared an emergency and began actively soliciting contributions to a fund established for the purpose of renting or purchasing new headquarters. The Party was able to negotiate rental extensions with Haglund, although threats of eviction continued until at least February 1980.
In response to the 1978 declaration of emergency, Snedigar refinanced his home and in June 1979, contributed $22,500 of the refinancing proceeds to the Party. The Party thanked Snedigar in writing for his contribution to the "Emergency Eviction Fund".
Snedigar actively participated in the search for new headquarters and located properties which he believed were appropriate. The Party rejected each of his recommended purchases. Snedigar became disillusioned and resigned from the Party in September 1980. The Party did not purchase a new facility until 1985.
Snedigar verbally asked a party member for return of his $22,500 contribution in spring 1981, but did not get a direct response. By letter dated July 12, 1983, Snedigar made written demand for return of the contribution. The Party refused his demand.
Snedigar filed a complaint for damages in January 1984. FSP substantially denied Snedigar's claims and counterclaimed against him. FSP then moved for summary judgment of dismissal. The trial court granted FSP's motion as to three of Snedigar's claims, but refused to dismiss Snedigar's breach of contract, void contract, misrepresentation, conditional gift, undue influence, and constructive trust claims.
In March 1985, Snedigar moved for an order compelling discovery. The trial court partially granted his motion, with the provision that FSP "shall not be required to disclose the names of FSP members or contributors." Snedigar subsequently moved to compel compliance with this order. *479 This time the trial court ordered that FSP "shall produce all information previously requested, and requested in the future" (hereinafter the April 1985 order).
This court granted discretionary review of the April 1985 order. By a per curiam opinion filed in September 1985, we held that the April 1985 order was overly broad, and directed the trial court to weigh Snedigar's need for information against the harm to the Party claimed by FSP. The trial court was also directed to conduct in camera hearings, if necessary, and to issue appropriate protective orders.
In October 1985, Snedigar again moved to compel discovery. FSP had refused to comply with the following requests for production of documents:
1. Please provide all minutes of Freedom Socialist Party having to do with the findings, location and search for an alternate to Freeway Hall.
...
2. Please provide all minutes referring to the emergency.
FSP objected to these requests as unconstitutional.
At the hearing on Snedigar's motion, the trial court asked FSP to explain the basis of its objections. FSP asserted that production of the requested minutes would have a "chilling effect" on its constitutional rights in that disclosure would prevent free expression in future meetings. Relying in part on the September 1985 per curiam opinion, the trial court ordered that at a minimum, FSP was to submit the requested minutes to the motions judge, with names deleted, for an in camera inspection.
FSP sought review of this order (hereinafter the October order) both in this court and in the Washington Supreme Court.[1] Although both courts denied review, FSP continued to claim a constitutional privilege and refused to comply with the October order. On Snedigar's motion, the trial court sanctioned FSP for its noncompliance by imposing an *480 order of default and dismissing all defendants' counterclaims. Following an evidentiary hearing, the court entered a default judgment against FSP.
SUMMARY JUDGMENT ORDER
FSP contends the trial court erred in refusing to dismiss Snedigar's contract and tort claims upon FSP's motion for summary judgment. It contends these claims should have been dismissed because: (1) Washington courts lack jurisdiction over the internal affairs of political parties; (2) Snedigar's claims are barred by the statute of limitation; and (3) Snedigar's claims are unsupported by the undisputed facts. We affirm the summary judgment order.
[1] FSP's first contention, that the court lacked jurisdiction over Snedigar's claim, misapprehends the scope of the rule that courts will not interfere in the internal affairs of political parties. Although courts decline jurisdiction over claims concerning a political party's internal or political disputes, there is no question that courts may entertain claims involving a party's legal disputes. Annot., Determination of Controversies Within Political Party, 20 A.L.R. 1035 (1922); accord, Steele v. Johnson, 76 Wn.2d 750, 753, 458 P.2d 889 (1969) ("[t]here is no rule of law ... that prevents a political party from making contracts, nor is there any rule that immunizes them from liability for tortious conduct"). Here, Snedigar has raised contract and tort claims with little apparent relation to FSP's political activities or internal affairs. The trial court therefore properly exercised jurisdiction over Snedigar's claims.
FSP next argues that Snedigar's case should be dismissed because his claims are barred by RCW 4.16.080(4), which imposes a 3-year statute of limitation for claims based on fraud.[2] In actions based on fraud, RCW 4.16.080(4) does not begin to run until the plaintiff learns of, or in the exercise of reasonable diligence should have learned of, the *481 facts which gave rise to the cause of action. RCW 4.16.080(4); e.g., Viewcrest Coop. Ass'n v. Deer, 70 Wn.2d 290, 295, 422 P.2d 832 (1967).
Viewed in the light most favorable to Snedigar, the nonmoving party, the evidence reveals the presence of material, disputed facts concerning when Snedigar discovered the information giving rise to his cause of action, and thus when RCW 4.16.080(4) began to run. The principal allegation underlying Snedigar's claims is that at some point FSP converted the "Emergency Eviction Fund" to a fund devoted to the less pressing purpose of finding better headquarters. The record does not clearly establish when Snedigar discovered that this alleged conversion occurred. Discovery could have been as early as September 1980, when Snedigar resigned from the Party, or as late as July 1983, when Snedigar made written demand for return of his contribution. The presence of this material, factual issue precludes summary judgment of dismissal on statute of limitation grounds. Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982).
Third, FSP contends that it was error not to dismiss Snedigar's complaint because the undisputed facts do not support his claims. A review of the record supports the trial court's decision not to dismiss Snedigar's action on this basis. The record contains facts from which a reasonable trier of fact could infer that Snedigar was entitled to return of his contribution under either a theory of constructive trust, or a theory of undue influence.
We affirm the order of partial summary judgment.
OCTOBER 1985 DISCOVERY ORDER
FSP's principal contention on appeal is that the October 1985 discovery order infringed on its constitutionally protected rights of association, privacy, and free speech. The allegedly unconstitutional order required FSP to submit minutes concerning the search for "an alternate to Freeway Hall", and concerning the "emergency", for in camera *482 inspection. The order permitted FSP to delete any names appearing in the minutes submitted.
A succinct analysis of case law addressing the application of First Amendment privileges to discovery disputes is set out in Wilkinson v. FBI, 111 F.R.D. 432 (C.D. Cal. 1986). Citing NAACP v. Alabama ex rel. Patterson, 357 U.S. 449, 2 L.Ed.2d 1488, 78 S.Ct. 1163 (1958), the Wilkinson court noted that it is settled that a qualified First Amendment privilege to discovery requests does exist. The Wilkinson court described the analysis used in First Amendment privilege cases:
While it is clear that the privilege may be asserted with respect to specific requests for documents raising ... core associational concerns, it is equally clear that the privilege is not available to circumvent general discovery....
... Under this privilege, once a litigant has raised a substantial claim by showing that the discovery request is directed at the heart of a group's protected associational activities, the court is required to subject the request to a higher level of scrutiny. The privilege is qualified, not absolute; therefore, it cannot be used as a blanket bar to discovery. Instead, the Court must apply a balancing test to the dispute at issue, essentially requiring both a heightened degree of relevance to the subject matter of the suit and a showing by the party seeking discovery that it has made reasonable, unsuccessful attempts to obtain the information elsewhere.
(Footnote and citations omitted.) Wilkinson, 111 F.R.D. at 436; accord, Savola v. Webster, 644 F.2d 743, 746 (8th Cir.1981).
Washington courts have not directly addressed First Amendment privileges in a discovery context. However, we have used an analysis similar to that described in Wilkinson to determine whether a reporter's qualified common law privilege against compulsory disclosure of news sources should provide protection from discovery requests. State v. Rinaldo, 102 Wn.2d 749, 754-55, 689 P.2d 392 (1984); Senear v. Daily Journal-American, 97 Wn.2d 148, 155-56, 641 P.2d 1180 (1982).
*483 [2] We adopt the analytical framework of Wilkinson, Rinaldo, and Senear and hold that trial courts should use the approach set out below to decide whether First Amendment privileges preclude or limit disclosure of materials sought through discovery. First, the party asserting the privilege must make an initial showing that disclosure of the materials requested would in fact impinge on First Amendment rights. For example, if it is asserted that disclosure of the requested information would have a chilling effect on speech, organizations ordinarily would be required to allege facts establishing that there is a reasonable probability that disclosure will lead to reprisal or harassment directed against the organization or its members. Cf. Buckley v. Valeo, 424 U.S. 1, 74, 46 L.Ed.2d 659, 96 S.Ct. 612 (1976); Black Panther Party v. Smith, 661 F.2d 1243, 1267-68 (D.C. Cir.1981), vacated, 458 U.S. 1118, 73 L.Ed.2d 1381, 102 S.Ct. 3505 (1982).
Once this preliminary showing of privilege is made, the burden then shifts to the party seeking discovery to establish the relevancy and materiality of the information sought, and to make a showing that reasonable efforts to obtain the information by other means have been unsuccessful. Association for Reduction of Violence v. Hall, 734 F.2d 63, 66 (1st Cir.1984) (the party seeking discovery must make a threshold showing of need amounting to more than "mere speculation"); see also Rinaldo, 102 Wn.2d at 755, 759 (Rosellini, J., concurring in part, dissenting in part).
If this burden is met, it is for the trial court to balance the parties' competing claims of privilege and need. At this stage, the trial court may order an in camera inspection of the requested information to better ascertain the strength of the parties' competing claims, and decide whether, and to what extent, discovery of the requested materials is appropriate. Association for Reduction of Violence, 734 F.2d at 66; cf. Whetstone v. Olson, 46 Wn. App. 308, 311-12, 732 P.2d 159 (1986) (discussing when an in camera *484 hearing is appropriate when an attorney-client privilege is asserted).
In reviewing the October order, we first address whether FSP made the necessary threshold showing that the information sought falls within the protection of the First Amendment, i.e., whether its release would impact the exercise of freedom of speech, freedom of association, or freedom of the press. In so doing, we stress what this case is not: this is not a case in which discovery of membership, contributors, or internal organization is sought. It is not a case in which a hostile government agency or legislative committee seeks information regarding the internal affairs of a minority political party. It is not a case in which FSP's politics or organization are at issue. Rather, this case involves only the discovery of information related to a private party's monetary claim sounding in unjust enrichment and breach of trust.
The majority of cases in which a First Amendment privilege from discovery has been found concern requests for a group's membership list or its list of financial contributors. E.g., NAACP v. Alabama ex rel. Patterson, supra (identity of rank and file members); Federal Election Comm'n v. Machinists Non-Partisan Political League, 655 F.2d 380 (D.C. Cir.) (list of all members and volunteers of "draft-Kennedy" groups), cert. denied, 454 U.S. 897, 70 L.Ed.2d 213, 102 S.Ct. 397 (1981); Savola v. Webster, supra (names and addresses of Minnesota Communist Party members); Adolph Coors Co. v. Wallace, 570 F. Supp. 202 (N.D. Cal. 1983) (identity of members of Solidarity, a political organization comprised exclusively of gay men and lesbian women); Pollard v. Roberts, 283 F. Supp. 248 (E.D. Ark.) (identity of political party contributors and amounts contributed), aff'd, 393 U.S. 14, 21 L.Ed.2d 14, 89 S.Ct. 47 (1968). The discovery requests at issue here differ markedly from those addressed in these cases.
Other cases in which a First Amendment privilege from discovery has been allowed have involved broad, intrusive discovery requests. In Federal Election Comm'n v. *485 Machinists Non-Partisan Political League, supra, the principal case relied on by FSP, the court found a First Amendment privilege protected a political group's internal minutes and other communications concerning its "decisions `to support or oppose any individual in any way for nomination or election to the office of President in 1980'". 655 F.2d at 388. The Machinists court described this information as material representing "the very heart of the organism which the first amendment was intended to nurture and protect: political expression and association concerning federal elections and officeholding." Machinists, at 388. Federal Election Comm'n v. Florida for Kennedy Comm., 681 F.2d 1281 (11th Cir.1982) is also instructive. In that case, the requested information included documents relating to conversations with other political committees, the committees' formation, structure and staff assignments, documents relating to fund raising, travel, internal rules and policies, as well as membership lists. 681 F.2d at 1283 n. 3.
Snedigar's discovery request is considerably less intrusive than those found to impermissibly infringe on constitutional rights in Machinists and Florida for Kennedy, and is far more narrowly drafted. Unlike the requesting party in those cases, Snedigar seeks discovery of only those FSP minutes directly related either to the continuing "emergency" or to the hall search. This information presumably relates to a portion of the Party's day to day business activities, rather than to any form of political expression.
At the trial court level, FSP asserted that production of the requested minutes would have a "chilling effect" on its constitutional rights in that disclosure would prevent free expression in future meetings. However, FSP offered no evidence showing why or how disclosure of the requested information would "chill" free expression.[3] On appeal, FSP *486 made conclusory allegations that disclosure would infringe on free expression because the information sought is "inextricably bound up with discussions of political priorities, goals, strategies, tactics, personnel, and finances". We acknowledge that in some situations this could be a valid concern. In the instant case, however, there is simply no record evidence supporting FSP's allegation.
We hold that FSP did not satisfy its threshold burden of establishing that the particular information sought is constitutionally privileged. We therefore do not reach the sufficiency of Snedigar's showing of relevance. The discovery order of October 1985 is affirmed.
SANCTIONS
FSP next assigns error to the trial court's entry of the order of default and dismissal of counterclaims. This order was entered on Snedigar's motion, as a result of FSP's continuing refusal to comply with the October discovery order.
CR 37(b)(2) permits a trial court to order sanctions when a party or its attorney violates a discovery order. The rule enumerates a variety of sanctions which the trial court may employ in fashioning its order. Generally, the choice of which sanction to employ is within the trial court's discretion. E.g., Rhinehart v. KIRO, Inc., 44 Wn. App. 707, 710, 723 P.2d 22 (1986), review denied, 108 Wn.2d 1008, appeal dismissed sub nom. Rhinehart v. Tribune Pub'g Co., 484 U.S. 805, 98 L.Ed.2d 16, 108 S.Ct. 51 (1987).
*487 [3] The trial court's discretion is not without limits. The rule specifically provides that the order must be "just." CR 37(b)(2). Due process considerations also require that before a trial court dismisses an action or counterclaim, or renders a judgment by default, there must have been "a willful or deliberate refusal to obey a discovery order, which refusal substantially prejudices the opponent's ability to prepare for trial." Associated Mortgage Investors v. G.P. Kent Constr. Co., 15 Wn. App. 223, 228-29, 548 P.2d 558, review denied, 87 Wn.2d 1006 (1976).[4]
Federal courts have made sound rulings concerning imposition of CR 37(b)(2) sanctions. Generally, they have held that when the most severe sanction of default or dismissal is imposed, the trial court should explicitly consider whether lesser sanctions would probably cure the improper behavior and advance the deterrent aspects of CR 37. Batson v. Neal Spelce Assocs., Inc., 765 F.2d 511, 514-15 (5th Cir.1985), aff'd on remand, 805 F.2d 546 (1986); In re MacMeekin, 722 F.2d 32, 35 (3d Cir.1983). Because the choice of sanctions is entrusted to the trial court's discretion, federal courts also require that the reason for imposing a particular sanction be clearly stated on the record so that meaningful review may be had on appeal. MacMeekin, 722 F.2d at 34-36; Quality Prefabrication, Inc. v. Daniel J. Keating Co., 675 F.2d 77, 80 (3d Cir.1982).
We adopt these rulings and hold that when a trial judge chooses one of the harsher remedies allowable under CR 37(b), the reasons for that choice should be clearly stated on the record. We further hold that when the most severe sanction of default or dismissal is ordered, it must be apparent from the record that the trial court explicitly considered whether a lesser sanction would probably have sufficed, and whether it found the Associated Mortgage due process factors to be present.
*488 From the record before the court in the instant case, we cannot determine whether the trial court found the necessary Associated Mortgage factor of prejudice to Snedigar to be present. There is also no indication that the trial court considered any sanction other than default and dismissal. We therefore reverse the order of default and dismissal, and remand to the trial court for consideration of these factors on the record.[5] FSP shall be given an opportunity to comply with the October 1985 discovery order before sanctions are ordered against it.
The summary judgment order and discovery order are affirmed.[6] The default order is vacated, with the trial court directed to reconsider whether the sanctions of default and dismissal are necessary.[7]
COLEMAN, C.J., and REVELLE, J. Pro Tem., concur.
Reconsideration denied May 9, 1989.
Review granted at 113 Wn.2d 1006 (1989).
NOTES
[1] We stayed enforcement of the October 1985 order until FSP's attempts to obtain review of our September 1985 opinion were complete.
[2] Fraud, for purposes of RCW 4.16.080(4), includes innocent misrepresentations as well as intentionally false statements. Western Lumber, Inc. v. Aberdeen, 10 Wn. App. 325, 326-27, 518 P.2d 745 (1973).
[3] FSP recognized its need to make a threshold showing of First Amendment infringement in its memorandum opposing Snedigar's discovery motion, and relied on the affidavit of FSP member Guerry Hodderson to make that showing. The Hodderson affidavit states that FSP members and supporters have, in the past, been subjected to harassment and reprisals as a result of their association with the Party. The trial court's order addressed this concern by permitting FSP to delete names from the minutes at issue.
Following entry of the discovery order, FSP moved for reconsideration and attempted to make a stronger threshold showing of constitutional privilege. In support of that motion, FSP submitted affidavits from members of several other organizations and one of its own members. These affidavits reiterated FSP's argument that the threat of potential disclosure of minutes would have a chilling effect on freedom of expression. None, however, addressed the effect disclosure of the particular minutes requested by Snedigar, with names deleted, might have.
[4] The willfulness factor was clearly present in FSP's deliberate refusal to comply with the October discovery order. Cf. Rhinehart v. Seattle Times Co., 51 Wn. App. 561, 577-78, 754 P.2d 1243, review denied, 111 Wn.2d 1025 (1988).
[5] If the trial court again decides that entry of a default order is appropriate, it may proceed with entry of a default judgment based upon the findings of fact and conclusions of law entered in conjunction with the prior default judgment. We have reviewed the record as it relates to the default judgment hearing, and find no error in the entry of judgment.
[6] The parties to this action have repeatedly attempted to read elements into court rulings that plainly are not present. We therefore add this footnote to make it clear that on remand, FSP may not reopen issues related to the October order or belatedly seek to bolster its showing of constitutional privilege.
[7] Additionally, we note from the record that confusion has ensued from the series of superior court judges who have dealt with this case in the past. We therefore recommend that on remand, the matter be assigned to one judge who will maintain jurisdiction until proceedings are completed in the superior court.
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61 F.3d 910
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.Kiang GOH, Petitioner,v.IMMIGRATION AND NATURALIZATION SERVICE, Respondent.
No. 94-70682.
United States Court of Appeals, Ninth Circuit.
Submitted July 17, 1995.*Decided July 20, 1995.
On Petition for Review of an Order of the Board of Immigration Appeals, No. Api-fht-zrj.
B.I.A.
1
PETITION Denied.
2
Before: FLETCHER, KOZINSKI, and THOMPSON, Circuit Judges
3
MEMORANDUM**
4
Kiang Nge Goh ("Goh"), a native and citizen of the People's Republic of China, petitions pro se for review of the Board of Immigration Appeals' ("BIA") decision affirming the Immigration Judge's ("IJ") decision denying his application for asylum pursuant to 8 U.S.C. Sec. 1158(a), withholding of deportation pursuant to 8 U.S.C. Sec. 1253(h), suspension of deportation pursuant to 8 U.S.C. Sec. 1254(a)(2), registration pursuant to 8 U.S.C. Sec. 1259(a), and adjustment of status pursuant to 8 U.S.C. Sec. 1255(a). Goh contends that the BIA erred by finding that his conviction of statutory rape made him ineligible for relief. We have jurisdiction pursuant to 8 U.S.C. Sec. 1105a(a), and we deny the petition.
5
Goh was convicted on June 17, 1983 of first-degree statutory rape of an 8-year old child and served more than 10 years in prison for his crime. The record reflects that in sentencing Goh the judge departed upward from the sentencing guidelines because of Goh's violation of a "position of trust within family, as minister; [Goh's] deliberate cruelty to victim; age and vulnerability of victim; [Goh's] failure to complete treatment; [and] [Goh's] potential danger to community."
6
An applicant for asylum or withholding of deportation is ineligible for relief if he has been convicted of "a particularly serious crime." See 8 U.S.C. Sec. 1253 (h)(2)(B) (1980); 8 C.F.R. Sec. 208.14(d)(1) (1995). We have approved the BIA's consideration of the nature of the conviction, the type of sentence imposed, and the circumstances and facts underlying the conviction in determining whether the crime was "particularly serious." See Mahini v. INS, 779 F.2d 1419, 1421 (9th Cir. 1986). In this case, these factors support the BIA's finding that Goh was convicted of a "particularly serious crime" and was therefore ineligible for asylum or withholding of deportation. See id.
7
An applicant is ineligible for either registration or adjustment of status if he is an excludable alien under 8 U.S.C. Sec. 1182. See 8 U.S.C. Sec. 1259(a) (registration); Choe v. INS, 11 F.3d 925, 928-29 (9th Cir. 1993) (adjustment of status). An alien convicted of "a crime involving moral turpitude" is excludable under 8 U.S.C. Sec. 1182(a)(2)(A)(i)(I). Because Goh was convicted of a crime involving moral turpitude, see Gonzalez-Alvarado v. INS, 39 F.3d 245, 246 (9th Cir. 1994) (per curiam) (explaining that acts such as statutory rape "involve moral turpitude 'by their very nature"') (citation omitted), he was excludable and therefore ineligible for registration or adjustment of status.
8
The BIA correctly concluded that Goh was statutorily ineligible for suspension of deportation due to the fact that he had been confined to a penal institution for more than 180 days in the last seven years. See 8 U.S.C. Sec. 1101(f)(7) (providing that a person confined as a result of conviction for a period of 180 days or more is statutorily ineligible for a finding of good moral character).
9
To the extent that Goh is attempting to challenge the setting of bond by the INS District Director, we do not have jurisdiction to review discretionary decisions that were made outside of deportation proceedings under section 242(b) of the Immigration and Nationality Act, 8 U.S.C. Sec. 1252(b). See Abedi-Tajrishi v. INS, 752 F.2d 441, 442 (9th Cir. 1985).
10
PETITION FOR REVIEW DENIED.
*
The panel unanimously finds this case suitable for decision without oral argument. Fed. R. App. P. 34(a); 9th Cir. R. 34-4
**
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir. R. 36-3
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 28, 2009
No. 08-31020 Charles R. Fulbruge III
Summary Calendar Clerk
WARREN PALMER, III
Plaintiff - Appellant
v.
BURL CAIN; HERBERT DUNCAN; TROY PORET
Defendants - Appellees
Appeal from the United States District Court
for the Middle District of Louisiana
3:07-CV-461
Before DAVIS, SMITH, and DENNIS, Circuit Judges.
PER CURIAM:*
Warren Palmer, III, an inmate at the Louisiana State Penitentiary at
Angola, filed a 42 U.S.C. § 1983 action against prison officials which the district
court dismissed.
In his brief, Palmer raises two claims. First, he complains about the
manner in which a disciplinary meeting was conducted before he was
transferred to administrative segregation. Second, he argues that 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.
No. 08-31020
magistrate judge improperly granted defendants’ motion for summary judgment
and dismissed his claim that the defendants deprived him of his right to exercise
while confined in administrative segregation.
For the following reasons we affirm the district court’s judgment.
Palmer’s first claim fails because due process is generally not required at
prison disciplinary hearings unless a hardship much more atypical or significant
than Palmer’s 97 days in administrative segregation is imposed. See Sandin v.
Conner, 515 U.S. 472, 483-86 (1995); Hernandez v. Velasquez, 522 F.3d 556, 563
(5th Cir. 2008). On his second claim, a review of the record reveals that the
magistrate judge correctly determined that Palmer failed to exhaust his
administrative remedies on his argument that defendants deprived him of his
right to exercise while confined in administrative segregation.
Accordingly, the district court’s grant of summary judgment is
AFFIRMED.
2
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416 F.2d 251
ZAYRE OF GEORGIA, INC., et al., Appellants,v.The CITY OF MARIETTA et al., Appellees.
No. 26161.
United States Court of Appeals Fifth Circuit.
July 30, 1969.
Rehearing Denied and Rehearing En Banc Denied September 25, 1969.
Hoke Smith, Malcolm H. Ringel, Smith, Cohen, Ringel, Kohler, Martin & Lowe, William T. Johnson, Atlanta, Ga., for Zayre of Georgia, Inc., and S. S. Kresge Co., appellants.
Lawrence B. Custer, Marietta, Ga., for Gibson's Discount Centers, Inc., intervenor; Custer, Brenner & Smith, Marietta, Ga., of counsel.
Berl Tate, Arthur Crowe, Jr., Ben F. Smith, Sol. Gen., pro se, George W. Darden, Marietta, Ga., for appellees.
Before BELL and COLEMAN, Circuit Judges and BOYLE, District Judge.
BELL, Circuit Judge:
1
This is an appeal from the denial of a motion to broaden a preliminary injunction issued by the United States District Court for the Northern District of Georgia.1 We affirm.
2
Appellants, Zayre of Georgia, Inc. and S. S. Kresge Company, both retail department stores,2 initiated this litigation seeking an injunction against the cities of Marietta and Smyrna, Georgia and the Solicitor General of the Cobb Judicial Circuit prohibiting the discriminatory enforcement of the Georgia Sunday closing law, Ga.Code Ann. § 26-6905,3 and the revocation of business licenses on the grounds of alleged violations of the closing law. Appellants alleged that while they were being threatened with prosecution and revocation of their business licenses for remaining open in violation of the statute, other business establishments selling all or some of the items which appellants offered for sale in direct competition with appellants were being allowed to conduct business on Sunday without threat of prosecution or revocation of licenses. It was appellants' contention that such unequal enforcement denied them equal protection of the law as guaranteed by the Fourteenth Amendment to the United States Constitution.
3
On the same day the complaint was filed the District Court issued a temporary restraining order, the pertinent part of which reads as follows:
4
"In the meantime and until further order of this Court the defendants and all persons acting in concert with them, are temporarily restrained from enforcing Section 26-6905 of the Code of Georgia of 1933 in a discriminatory manner and from revoking business licenses by reason of the violation of said Code Section in a discriminatory manner. This restraining order is not intended to prohibit the enforcement of Section 26-6905 of the Code of Georgia of 1933 * * * nor to prohibit the revocation of business licenses by reason of its violation, but rather it orders that such enforcement be on a nondiscriminatory basis * * *."
5
Thereafter, the court entered a preliminary injunction in substantially the same terms as the temporary restraining order previously entered. Appellants moved for further relief. Their idea was that the relief originally sought was not broad enough in that others not in competition with them were being allowed to operate their regular businesses or engage in their regular occupations on Sundays without threat of sanction, while appellants were required to do so at their risk. Accordingly, appellants moved the district court to enlarge and broaden the preliminary injunction already in effect so as to enjoin this alleged form of discrimination. They cited several examples of non-competitive businesses or occupations as to which the statute was not being enforced. Some of these included aircraft manufacturing, real estate, florist, the delivery of newspapers, theaters, funeral directors, and radio stations. The district court denied the motion to enlarge and set out the principal reason for said denial as follows:
6
"This case originally came before this court on the basis of discriminatory enforcement of the statute as between persons similarly situated within Cobb County. This is what was enjoined and all that was enjoined. It is still enjoined. But by their motion to enlarge the plaintiffs do not complain of discriminatory enforcement against them. What they do complain of is non-enforcement against other professions and trades in which plaintiffs are apparently not engaged. There is, of course, a great difference between discriminatory enforcement of a statute and non-discriminatory non-enforcement. So far as appears from their motion, for example, the plaintiffs themselves, if they care to do so, may operate a funeral parlor, a radio station, a pet shop, a florist shop or a business in any of the other categories complained of on the same basis as all other persons.
7
"Such being the situation, it is difficult to see how the plaintiffs have standing to assert the charges contained in their motion."
8
There is no contention that the Sunday closing law is unconstitutional. Cf. McGowan v. Maryland, 366 U.S. 420, 81 S.Ct. 1101, 6 L.Ed.2d 393 (1961), and Two Guys from Harrison-Allentown, Inc. v. McGinley, 366 U.S. 582, 81 S.Ct. 1135, 6 L.Ed.2d 551 (1961). The sole issue presented is whether appellants have standing to assert a denial of equal protection under the facts of the case. We agree with the district court that they do not.
9
Appellants' predicate is the Fourteenth Amendment prohibition against unequal enforcement of statutes or ordinances announced in Yick Wo v. Hopkins, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220 (1886):
10
"* * * Though the law itself be fair on its face and impartial in appearance, yet, if it is applied and administered by public authority with an evil eye and an unequal hand, so as practically to make unjust and illegal discriminations between persons in similar circumstances, material to their rights, the denial of equal justice is still within the prohibition of the constitution."
11
The resolution of the issue in the case before us depends upon the extent to which the principle of Yick Wo is applicable to the facts of this case. Yick Wo involved discrimination based on race between two classes in direct economic competition with one another. Here, after the granting of the preliminary injunction, there could no longer be any inequality of treatment among those in direct economic competition nor is any claimed. Consequently, there is no basis for applying the teaching of Yick Wo in the instant case wherein those allegedly receiving preferential treatment are not in similar circumstances to appellants.
12
In a recent case we found no substantial federal question in a context of alleged disparate treatment of school children not similarly situated. Davis v. Georgia State Board of Education, 5 Cir., 1969, 408 F.2d 1014. We stated:
13
"Basic to any complaint of denial of equal protection must be some showing that the persons or groups being treated differently are similarly situated and that their disparate treatment by the state is either without any rational basis or is based on some invidious factor such as race. * * *" 408 F.2d at 1015.
14
If appellants are contending, as the district court discerned the situation, that they should be immunized from prosecution under the statute unless and until other violators are brought to justice, then their attack also must fail under the circumstances here. A similar argument was rejected by the Supreme Court in Oyler v. Boles, 368 U.S. 448, 82 S.Ct. 501, 7 L.Ed.2d 446 (1962). See also Moss v. Hornig, 2 Cir., 1963, 314 F.2d 89; and United States v. Rickenbacker, 2 Cir., 1962, 309 F.2d 462.
15
In sum, appellants failed to allege a cause of action under the equal protection clause. The federal courts have no general supervisory power over the operation of state and local governments. The federal courts can, of course, afford relief where the equal protection of the law is denied by a state or a local government but such a denial subsumes discrimination. A showing of discrimination rests, in turn, on a difference in treatment as between those similarly situated. The similarity element is missing here.
16
Affirmed.
Notes:
1
On appealability, see Dilworth v. Riner, 5 Cir. 1965, 343 F.2d 226
2
Subsequently, Gibson's Discount Centers, Inc. moved for and was granted leave to intervene as a plaintiff
3
Ga.Code Ann. § 26-6905 reads as follows:
"Any person who shall pursue his business or the work of his ordinary calling on the Lord's day, works of necessity or charity alone excepted, shall be guilty of a misdemeanor."
17
BOYLE, District Judge (dissenting).
18
I respectfully dissent and would, therefore, reverse and remand the case to the District Court with directions to enjoin any discrimination whatsoever in the enforcement of the statute amongst all those pursuing the same or different business or occupations not within the statutory exceptions.
19
The courts of Georgia are the proper courts to pass upon the meaning of a Georgia statute (including any exceptions thereto) and, assuming that the Georgia courts have reasonably interpreted a constitutional statute — and there is no contention to the contrary in this case — no obstacle exists to the fair enforcement of such a statute. It is then up to the authorities charged with the enforcement of State laws to enforce them fairly, as interpreted, until their repeal.
20
While it is generally true that one is not entitled to complain of non-enforcement as to others when a given statute is sought to be enforced against him, it is also true that invidious, purposeful selectivity or discrimination in the enforcement of a statute cannot be squared with the Fourteenth Amendment's mandate of Equal Protection of the Law.
21
An examination of the statute herein involved reveals that by its terms it applies to "any person who shall pursue his business or the work of his ordinary calling." But for its exemption of "works of necessity or charity," it admits of no classifications whatever. Consequently, the statute provides no basis for any differential enforcement outside the area of works of necessity or charity. Accordingly, no support can be found in the statute for enforcement thereof as to one type of business or occupation and non-enforcement as to other covered businesses or occupations. In my view, enforcement in such a manner contravenes the rights of those against whom it is so enforced to equal protection under the law as guaranteed by the Fourteenth Amendment and should be enjoined.
22
While prosecuting authorities have the right, and, indeed, in many instances the duty, to exercise some judgment and discretion in the enforcement of statutes, it is not their prerogative to carve out exceptions to statutes of universal or general application,1 particularly, when such exceptions have been previously explicitly rejected by the courts of the state enacting the statute.
23
The contention was advanced by appellants in support of their motion to enlarge the injunction already issued by the district court that certain businesses and occupations, which the courts of Georgia have held to be subject to the Sunday work prohibition and without the ambit of the statutory exceptions, are being permitted to be conducted on Sunday with impunity while the statute is still being enforced as to petitioners, retail merchants. If this be the case, and the record as presently before us indicates that it is, petitioners are entitled to injunctive relief.
24
The right to engage in one's regular business or occupation is fundamental to our political heritage and our economic philosophy of free enterprise. Any regulation of that right should be not only reasonable on its face in light of the governmental purpose of such regulation, but should be applied with scrupulous equality. It, therefore, appears less than just to close the courthouse doors to appellants on the ground that they have no standing to seek relief from unequal treatment since those in the same business or occupation are subject to the same unequal treatment. To so hold, it seems, reveals a basic misconception of the phrase "similarly situated."
25
Without the excepted classifications, all persons, all businesses, all occupations and all activities are similarly situated in the contemplation of the statute.2
26
Thus, those "similarly situated" in this case are all persons pursuing their regular business or calling, other than in the spheres of charity or necessity. The statute applies to "any person" and, therefore, those "similarly situated," for purposes of this statute, are "all persons" and are those entitled to be treated alike. The fact that a retail merchant is more "similarly situated" with other retail merchants, for example, than he is with a florist or pet shop operator, does not compel the conclusion that the retail merchant and the florist and the pet shop operator are not "similarly situated" so far as this statute is concerned. To hold otherwise is to read Yick Wo v. Hopkins, 118 U.S. 356, 6 S. Ct. 1064, 30 L.Ed. 220 (1886) too narrowly.
Notes:
1
In Zayre of Georgia, Inc. v. City of Atlanta, 276 F.Supp. 892 (N.D.Ga.1967) Judge Lewis R. Morgan, now of this Court, wrote:
"McGowan and Two Guys make it clear that a state can constitutionally effect and maintain Sunday closing laws. These cases also make it clear that the state can choose to create reasonable exceptions, either by legislation or judicial action; however, this Court is of the opinion that neither case stands for the proposition that municipalities may choose to carve out exceptions via selective enforcement of the state statute."
2
The Supreme Court of Georgia in Hennington v. State, 90 Ga. 396, 17 S.E. 1009 (1892), aff'd sub nom. Hennington v. State of Georgia, 163 U.S. 299, 16 S.Ct. 1086, 41 L.Ed. 166 (1896) made the following comments concerning the statute
"It applies alike to all business, vocations, and occupations. It concerns the general policy of the state and all interests, whether agricultural, mechanical, manufacturing, commercial, professional, or what not. It is universal, and rigidly impartial, making no discrimination whatever for or against commerce or anything else. It puts no obstacle in the way of trade or its operations which is not encountered by every other class of worldly business or employment. Nontrading days are nonbusiness days, generally, and nonworking days for all the people. Trade may go when anything else can. It stops only when, and so long as, there is a complete suspension of worldly enterprise and activity. It is required to take no rest which is not appointed for everything else to take."
ON PETITION FOR REHEARING AND PETITION FOR REHEARING EN BANC
PER CURIAM:
The Petition for Rehearing is denied and no member of this panel nor Judge in regular active service on the Court having requested that the Court be polled on rehearing en banc, (Rule 35 Federal Rules of Appellate Procedure; Local Fifth Circuit Rule 12) the Petition for Rehearing En Banc is denied.
BOYLE, District Judge, dissents.
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Extraterritorial Apprehension by
the Federal Bureau of Investigation
In th e ab sen ce o f an in tern atio n a l law vio latio n , a federal d istric t c o u rt will not o rd in a rily
d iv est itself o f ju risd ic tio n in a crim inal case w h e re th e d e fe n d a n t’s p resen c e has been
se cu re d b y his fo rcib le a b d u c tio n from th e te rrito ria l lim its o f a foreign asylum state.
A fo rcib le ab d u ctio n , w h en co u p led w ith a p ro te st by th e asylum state, is a v io latio n o f
in tern atio n al law ; th e re is, h o w e v e r, som e p re c e d e n t th at c o m p licity o f asylum sta te
officials in th e ab d u ctio n co u ld be th e p re d ic a te for a finding o f no actu al v io latio n o f
th e asylum sta te ’s so v e reig n ty .
C iv il liability o n th e p a rt o f th e U n ited S tates o r p a rtic ip a tin g g o v e rn m e n t officials
resu ltin g from a fu g itiv e ’s fo rcib le ap p reh en sio n in a foreign c o u n try w ill d e p e n d on
th e sta tu s o f th e o p e ra tio n u n d er in tern atio n a l law ; liability c o u ld be p re d ic a te d on
th eo ries o f co n stitu tio n al o r co m m o n law to rt, o r on a v iolation o f in tern atio n a l law .
T h e F e d e ra l B ureau o f In v estig atio n has no a u th o rity to a p p re h e n d and ab d u c t a fugitive
residing in a fo reig n sta te w ith o u t th e asylum sta te ’s consent.
In th e ab sen ce o f asylum sta te co n sen t, fed eral officials m ay be su b je ct to ex trad itio n to
th e asylum sta te fo r kid n apping.
March 31, 1980
M EMORANDUM OPINION FOR T H E ATTORNEY G E N ER A L
You have requested that this Office advise you on the implications of
a proposed operation of the Federal Bureau of Investigation (FBI) that
might entail entry of American agents into a foreign country and
forcible apprehension of a fugitive currently residing there. It is to be
assumed that the foreign country (hereinafter “asylum state”) would file
a pro forma protest to the fugitive’s apprehension and return to the
United States. We also assume that the actual apprehension would be
made by FBI agents, although some elements of the local police force
might provide physical surveillance and aid in the neutralization of
bodyguards during the actual apprehension.
The proposed operation raises the following, interrelated legal issues:
the implications of the seizure for the pending criminal prosecutions of
the fugitive, the legal status of the operation under existing treaties and
settled principles of international law, and the possibility of civil liabil
ity on the part of the United States or participating government offi
cials. This operation is unorthodox and, therefore, prompts a number of
legal questions that are of first impression. Although we will discuss all
the above legal questions separately, we think that the fundamental
543
legal issue presented by this operation is under what circumstances does
the FBI, as a matter of United States law, have the authority to make
an extraterritorial apprehension. Although the question is not free from
doubt, we conclude that the FBI only has lawful authority when the
asylum state acquiesces to the proposed operation. Since we are to
assume that a pro forma protest to the operation would be filed, that
fundamental condition would probably not be satisfied here.
I. Implications for Criminal Prosecutions of Extraterritorial
Apprehension that Is Subject of Protest
The Supreme Court has consistently stated “that the power of a
court to try a person for crime is not impaired by the fact that he [has]
been brought within the court’s jurisdiction by reason of a ‘forcible
abduction.’ ” Frisbie v. Collins, 342 U.S. 519, 522 (1952).1 It has rejected
arguments that such abductions constitute violations of the Due Process
Clause, and has reiterated the vitality of this conclusion in a recent
Term. Gerstein v. Pugh, 420 U.S. 103, 119 (1975). Lower courts, par
ticularly the Court of Appeals for the Second Circuit, have suggested,
however, that under some circumstances a federal court might divest
itself of jurisdiction as a result of the manner in which the defendant
was brought before it.
The most sweeping statement of these circumstances is to be found in
United States v. Toscanino, 500 F.2d 267 (2d Cir. 1974). There the
Second Circuit confronted allegations that Toscanino, a citizen of Italy,
was kidnapped in Uruguay by agents in American employ, tortured and
interrogated for 17 days in Brazil with the knowledge of and sometimes
in the presence of United States officials, and finally drugged and put
on a commercial flight to the United States where he was convicted of
narcotics violations.2 Questioning the current vitality of the Ker-Frisbie
1 These propositions are often referred to as the Ker-Frisbie doctrine. In the leading case, Ker v.
Illinois, 119 U.S. 436 (1886), Ker was convicted in the Illinois state courts after being forcibly
abducted in Peru. Formal extradition had been arranged among the Governor of Illinois, the U.S.
Secretary of State, and Peruvian officials, but the individual who was sent to accompany Ker back to
the United States did not present the extradition papers upon arrival in Peru. It was therefore a “clear
case of kidnapping within the confines of Peru.*' Id. at 443. Although the apprehending agent might be
subject to criminal prosecution in Peru, the Court found that American law afforded the apprehended
fugitive no protection.
Frisbie v. Collins, 342 U.S. 319 (1952), involved an interstate abduction. Michigan officers forcibly
seized Collins in Chicago. Acknowledging that the Michigan officers might be subject to prosecution
under the Federal Kidnapping Act, the Court held that as far as Collins was concerned, “due process
o f law is satisfied when one present in Court is convicted of crime after having been fairly apprised of
the charges against him and after a fair trial in accordance with constitutional procedural safeguards.
There is nothing in the Constitution that requires a court to permit a guilty person rightfully convicted
to escape justice because he was brought to trial against his will.’* Id. at 522. See also Mahon v. Justice,
127 U.S. 700, 708 (1888).
2 Toscanino alleged that he was denied sleep and nourishment for days, fed intravenously at
survival levels, forced to walk for hours on end, and kicked and beaten. He claimed his fingers were
pinched by metal pliers; his eyes, nose, and anus washed in alcohol; and his genitals subjected to
electric shock. There had been no attempt by the United States to extradite Toscanino. Toscanino, 500
F.2d at 270.
544
doctrine, the Second Circuit relied on Rochin v. California, 342 U.S.
165 (1952), in concluding that the concept of due process has evolved
such that a court must now “divest itself of jurisdiction over the person
where it has been acquired as the result of the Government’s deliberate,
unnecessary and unreasonable invasion of the accused’s constitutional
rights.” 500 F.2d at 275.3 If on remand Toscanino’s allegations were
proven true, the Second Circuit saw a due process violation inherent in
the bribery of a foreign official, the violence and brutality of the
abduction, the violations of international law, and the failure to attempt
extradition of Toscanino.4
Subsequent Second Circuit cases have read Toscanino narrowly and
other circuits have refused to follow it. In United States ex rel. Lujan v.
Gengler, 510 F.2d 62 (2d Cir.), cert, denied, 421 U.S. 1001 (1975), the
Second Circuit emphasized that Toscanino did not mean that “any
irregularity in the circumstances of a defendant’s arrival in the jurisdic
tion could vitiate the proceedings of the criminal court,” but rather was
concerned with the “cruel, inhuman and outrageous treatment” that
Toscanino allegedly received.5
Thus the court concluded that although Lujan was forcibly abducted
from Bolivia, the lack of any allegation of the type of “shocking
governmental conduct” involved in Toscanino obviated any application
of the rationale of that case. Lujan, 510 F.2d at 66.6 It did, however,
reserve the question whether the fact that an abduction is in violation
of international law requires dismissal of the criminal indictment: either
because such illegal governmental conduct constitutes a violation of
due process or because a federal court should, as a matter of judicial
administration, refuse to be a party to official misconduct. Id. at 68.7
The court perceived no international law violation in Lujan because
there had been no protest by the foreign governments involved.
Id. at 67.
Other circuits have resolutely invoked the Ker-Frisbie doctrine to
dismiss arguments that American courts should divest themselves of
their criminal jurisdiction over a defendant because his presence was
3 The court did not have the benefit of the Supreme Court’s endorsement in Gerstein v. Pugh, 420
U.S. at 119, o f the Ker-Frisbie doctrine.
4 The court of appeals noted that even if the Ker-Frisbie doctrine was still good law, it could make
use of its supervisory power over the district court to upset Toscanino’s conviction in order "to
prevent district courts from themselves becoming ‘accomplices in willful disobedience of law.’ ”
Toscanino, 500 F.2d at 276, quoting McNabb v. United Slates, 318 U.S. 332, 345 (1943). On remand the
district court found that Toscanino's allegations had no basis in fact. United States v. Toscanino, 398 F.
Supp. 916 (E.D. N.Y. 1975).
*510 F.2d at 65 (emphasis in original). See also United States v. Lira, 515 F.2d 68 (2d Cir.), cert,
denied. 423 U.S. 847 (1975) ( Toscanino distinguished because no direct United States involvement in
torture by Chilean police).
6 Lujan, a licensed pilot, alleged that while residing in Argentina, he was hired by an individual to
fly to Bolivia. He claimed that his employer was in fact paid by American agents to lure Lujan out of
Argentina. In Bolivia, Lujan was arrested by Bolivian police who were also allegedly paid by
American agents. He was ultimately put on a plane by Bolivian and American agents and formally
arrested upon his arrival in the United States. Lujan. 510 F.2d at 63.
7 See supra, note 4.
545
procured through a forcible abduction.8 Moreover, a number of those
courts have suggested that jurisdiction should be retained even if the
abduction violates international law.9 We note, however, that there is
apparently no reported case where the abduction was the subject of a
formal diplomatic protest by the asylum state.
It is our opinion that even where an abduction is a technical violation
of international law, a federal district court should not divest itself of
jurisdiction over the fugitive’s criminal prosecution.10 We think this
position is dictated by logic and precedent. In Frisbie, 342 U.S. 522, the
Supreme Court assumed that the conduct of the Michigan authorities
who abducted Collins from Chicago constituted a violation of the
Federal Kidnapping Act. It concluded, however, that the Kidnapping
Act “cannot fairly be construed so as to add to the list of sanctions
detailed a sanction barring a state from prosecuting persons wrongfully
brought to it by its officers. It may be that Congress could add such a
sanction. We cannot.” Frisbie, 342 U.S. at 523. A dismissal remedy for a
violation of international law is even less appropriate. The interests
protected by international law are those of sovereign nations. Any
interest of individuals is at best derivative. See Lujan, 510 F.2d at 67.
By contrast, the Federal Kidnapping Act is unquestionably for the
protection of individuals; yet under the principles of Frisbie, a forcible
8 E.g., United Slates v. Postal, 589 F.2d 862, 865 (5th C ir). cert, denied, 444 U.S. 832 (1979) (arrest
by Coast Guard upon the high seas); United States v. Mariano, 537 F.2d 257, 271-72 (7th Cir. 1976),
cert. denied, 429 U.S. 1038 (1977) (allegations of unlawful arrest in and forcible abduction from Grand
Cayman Island; Toscanino characterized as only departure from Ker-Frisbie doctrine); Waits v.
McGowan, 516 F.2d 203 (3d Cir. 1975) (allegedly illegal removal from Canada to New York); United
States v. Cotten. 471 F.2d 744, 747-49 (9th Cir.). cert, denied, 411 U.S. 936 (1973) (forcible removal
from Vietnam).
There is a standard formulation of the Ker-Frisbie doctrine reiterated in these cases:
It has long been held that due process has been satisfied when a person is apprised of
the charges against him and is given a fair trial. The power of a court to try a person is
not affected by the impropriety of the method used to bring the defendant under the
jurisdiction of the court [citing Ker and Frisbie). Once the defendant is before the
court, the court will not inquire into the circumstances surrounding his presence there.
United States v. Mariano. 537 F.2d at 271.
9 E.g., Postal, 589 F.2d at 873 (“This proposition, the so-called Ker-Frisbie doctrine, is equally valid
where the illegality results from a breach of international law not codified in a treaty"); United States
v. Cadena. 585 F.2d 1252, 1261 (5th Cir. 1978) United States v. Winter, 509 F.2d 975, 984-86 (5th Cir.),
cert, denied. 423 U.S. 825 (1975) (Ker-Frisbie doctrine makes it unnecessary to inquire whether arrest
by Coast Guard within territorial waters of Bahamas violated international law); Autry v. Wiley, 440
F.2d 799, 802-03 (1st C ir), cert, denied. 404 U.S. 886 (1971).
Oftentimes courts simply do not discuss the status of the abduction under international law. E.g..
Marzano, 537 F.2d 257; United States v. Herrera. 504 F.2d 859 (5th Cir. 1974); United States v. Vican,
467 F.2d 452 (5th Cir. 1972), cert, denied. 410 U.S. 967 (1973).
10 Cadena. 585 F.2d at 1261 (“no basis for concluding that violations of these international princi
ples must or should be remedied . . . by dismissal of the indictment unless Fourth Amendment
interests are violated”); Autry v. Wiley. 440 F.2d at 801-02; see also Waits v. McGowan, 516 F.2d 203,
208 (3d Cir. 1975) (“the protections or rights which accrue to the extradited person primarily exist for
the benefit of the asylum nation . . ., whereas plaintiffs complaint alleges violation of rights of citizens
of the demanding nation (The United States of America)*’).
American courts are charged with the vindication of international law principles to the extent those
principles are consonant with American law. The Paquete Habana, 175 U.S. 677, 700 (1900). The thrust
of the abduction cases is that relinquishing criminal jurisdiction is not the means to vindicate those
principles.
546
abduction in violation of that Act does not divest an American court of
jurisdiction.
In sum, we are of the opinion that in the absence of an international
law violation, a federal district court will not ordinarily divest itself of
jurisdiction in a criminal case where the defendant’s presence has been
secured by forcible abduction from the territorial limits of a foreign
asylum state. Nor should it do so where there is an international law
violation. However, since you have advised us that you expect a pro
forma diplomatic protest by the asylum state and that the fugitive’s
prosecution will proceed in the Southern District of New York, it is
necessary to examine the international law implications of this operation
more closely. As we have noted, the Second Circuit has expressly
reserved the question whether a violation of international law should
result in relinquishment of criminal jurisdiction over the suspect.
II. International Law Implications of the Proposed Operation
There is one line of authority in American jurisprudence that does
create an exception to the Ker-Frisbie doctrine. As Congress by statute
can modify the jurisdiction of federal courts, so too can a treaty. Thus
the Supreme Court has held that a treaty can divest federal courts of
jurisdiction in certain circumstances if such was the intent of the docu
ment. Cook v. United States, 288 U.S. 102, 112 (1933); Ford v. United
States, 273 U.S. 593, 610-11 (1927). As the Fifth Circuit recently noted,
for a treaty to have such an effect, it must be self-executing or imple
mented by statute.11
There are two arguably relevent treaties between the United States
and the asylum state that must be considered in this case. They are the
extradition treaty between the two countries and the United Nations
Charter. It is well-established that the existence of an extradition treaty
simpliciter does not defeat U.S. jurisdiction over a fugitive apprehended
outside the extradition mechanism.12 And there is nothing in the terms
of the existing extradition treaty that suggests that this government has
yielded jurisdiction over U.S. nationals who have committed crimes in
this country simply because they obtained refuge in the asylum state.13
The second relevant treaty is the United Nations Charter to which
both the United States and the. asylum state are signatories.
11 Postal, 589 F.2d at 875-76. A treaty does not provide rules of decision for American courts
unless that is the intent o f the document, Le., the treaty is self-executing. Whitney v. Robertson, 124
U.S. 190, 194 (1888); Foster v. Neilson, 27 U.S. (2 Pet.) 253, 314 (1829). Of course, implementing
domestic legislation does provide rules of decision capable of judicial enforcement.
12 Ker, \ 19 U.S. at 444 (1886); Waits v. McGowan. 516 F.2d at 206-08; Lujan. 510 F.2d at 66; United
States v. Sobell. 244 F.2d 520, 524-25 (2d Cir.), cert, denied, 355 U.S. 873 (1957).
13 By its terms it does not constitute an agreement that extradition will be the exclusive means of
obtaining custody o f a fugitive. Nor does it purport to limit the criminal jurisdiction of either
sovereign.
547
All Members shall refrain in their international relations
from the threat or use of force against the territorial
integrity or political independence of any state, or in any
other manner inconsistent with the Purposes of the United
Nations.
U.N. Charter, art. 2, para. 4.
This provision has been at issue in a number o f forcible abduction cases,
including Toscanino and Lujan. The leading precedent on forcible ab
duction’s status under the United Nations Charter is that involving the
apprehension of Adolph Eichmann in Argentina by Israeli agents. A r
gentina objected to the United Nations Security Council, which subse
quently adopted a resolution:
Considering that the violation of the sovereignty of a
Member State is incompatible with the Charter of the
United Nations . . . [and njoting that the repetition of
acts such as that giving rise to this situation would in
volve a breach of the principles upon which international
order is founded creating an atmosphere of insecurity and
distrust incompatible with the preservation of peace . . .
[the Security Council requests] the Government of Israel
to make appropriate reparation in accordance with the
Charter of the United Nations and the rules of interna
tional law .14
Commentators have construed this action to be a definitive construction
of the United Nations Charter as proscribing forcible abduction in the
absence of acquiescence by the asylum state.15
It is our opinion that even if the operation under consideration is
construed to be a violation of the United Nations Charter, the criminal
jurisdiction of American courts is unaffected. We base our opinion on
the grounds that the United Nations Charter is not a self-executing
treaty and that it was not intended by the United States at the time of
ratification to affect the criminal jurisdiction of federal courts. There is
not a great deal of case law on these points. However, as the Fifth
Circuit observed in Postal, 589 F.2d at 876, the self-executing nature of
a treaty is a matter of intent. The broad sweep and hortatory tone of
Article 2 belies any argument that a binding, self-executing limitation
on the criminal jurisdiction of American courts is evident in its term s.16
14 Quoted in W. Bishop, International Law 475 n.52 (1962).
15 E.g., Lujan, 510 F.2d at 66-68; Abramovsky & Eagle, U.S. Policy in Apprehending Alleged
Offenders Abroad: Extradition, Abduction, or Irregular Rendition?, 57 Or. L. Rev. 51, 63 (1977); see
Silving, In re Eichmann: A Dilemma o f Law and Morality, 55 Am. J. Int’l L. 307 (1961).
16 See generally, L. Goodrich, E. Hambro & A. Simmons, Charter of the United Nations: Commen
tary and Documents 43-55 (1969).
548
And courts that have considered provisions of the United Nations
Charter have concluded that they are not self-executing.17
It is a more difficult question whether the proposed operation is a
violation of general international law principles, albeit not a violation of
a self-executing treaty. As Judge Kaufmann indicates in his majority
opinion in Lujan, it appears to be the case that a forcible abduction,
when coupled with a protest by the asylum state, is a violation of
international law. Lujan, 510 F.2d at 67. It is regarded as an impermissi
ble invasion of the territorial integrity of another state. Since the
asylum state would hardly attest to the fact that the protest is pro
forma, there is little to be gained in the instant case by characterizing it
as such. Nor do there appear to be any doctrines of self-help or self-
defense applicable in this context.
There may be, however, some precedent in international law for the
argument that complicity of asylum state officials in the abduction robs
the asylum state’s protest of its import under international law. In 1911
the Permanent Court of Arbitration at The Hague declined to order the
return to France of one Savarkar. Savarkar had escaped to France from
a British ship, only to be returned to the British by a French policeman.
The Court of Arbitration found that the French official’s cooperation
avoided any violation of French sovereignty that might otherwise have
occurred.18 Likewise, the complicity of the asylum state’s police in the
proposed operation could be the predicate for a finding of no actual
violation of the asylum state’s sovereignty. One obvious drawback to
this argument is that it forces this government to put in issue the
identity of its asylum state collaborators. We also note that the Court of
Arbitration in the Savarkar case found that the British officials had no
reason to know that the French official was not acting with the ap
proval of the French government. No similar claim of ignorance could
be made about the operation under consideration.
We conclude that the best assumption for purposes of analyzing the
implications of the proposed operation is that although not a violation
of a self-executing treaty, it would violate international law. That sig
nificantly heightens the litigation risks in the Second Circuit, which has
explicitly declined to define the implications of an international law
violation on criminal jurisdiction.
III. Civil Liability
We think the case for obtaining at least the acquiescence of the
asylum state is compelling when the criminal litigation risks are coupled
17 Sei Fujii v. State, 242 P.2d 617, 620 (Cal. 1952) (human rights provisions of U.N. Charter not self
executing); Pauling v. McElroy, 164 F. Supp. 390, 393 (D.D.C.), afJTd, 278 F.2d 252 (D.C. Cir.), cert,
denied. 364 U.S. 835 (1960) (finding other section? of Charter not self-executing).
,a The case is discussed in Lujan, 510 F.2d at 67, and can be found at Judicial Decisions Involving
Questions o f International Law. 5 Am. J. Int’l L. 490, 520 (1911).
549
with the possibility of civil liability.19 Civil liability will turn to a
substantial degree on whether the FBI is authorized to conduct this
operation and that, in our view, will depend on the status of the
operation under international law.
In Ker v. Illinois, the penultimate paragraph in the Supreme Court’s
opinion reads as follows:
It must be remembered that this view of the subject
does not leave the prisoner or the Government of Peru
without remedy for his unauthorized seizure within its
territory. Even this treaty with that country provides for
the extradition of persons charged with kidnapping, and
on demand from Peru, Julian [the party who abducted
Ker], could be surrendered and tried in its courts for this
violation of its laws. The party himself would probably
not be without redress, for he could sue Julian in an
action of trespass and false imprisonment, and the facts set
out in the plea would without doubt sustain the action.
W hether he could recover a sum sufficient to justify the
action would probably depend upon moral aspects of the
case which we cannot here consider.
119 U.S. at 444.
As the above quotation indicates, the question of civil liability is
certainly an open one, as is the criminal liability of the apprehending
agents and others under asylum state law. We discuss criminal liability
in Part IV below.
There appear to be three potential civil liability theories: constitu
tional violations by American agents, common law torts committed by
American agents (i.e., false imprisonment), and violation of international
law. The potential defendants are the federal government and individ
ual government officials involved in this operation.20
By virtue of the Federal Tort Claims A ct (FTCA), the United States
has waived sovereign immunity with respect to the torts of assault, false
imprisonment, and false arrest. 28 U.S.C. §§ 2674, 2680(h). The authori
ties are split on whether that waiver includes related constitutional
torts.21 There is, however, unanimous, albeit limited, authority that
even for common law torts, the FTC A is not a total waiver of sover
eign immunity. In the leading case, the Fourth Circuit has held that
19 By “acquiescence" we do not m6an formal endorsement. It is sufficient that the asylum state
agree not to protest the apprehension.
20 Those who authorize, direct, participate in, or ratify the operation are potentially liable.
21 Compare Norton v. United Stoles* 581 F.2d 390 (4th Cir.), cert, denied, 439 U.S. 1003 (1978), with
Birnbaum v. United States, 588 F.2d 319 (2d Cir. 1978). Birnbaum, however, did not have to consider
the effects o f the 1973 amendments to the FTCA. We think that the best assumption in light of those
amendments is that the FTCA does waive sovereign immunity for damage actions predicated on
Fourth Amendment violations. Boger, Gitenstein & Verkuil, The Federal Tort Claims Act Intentional
Torts Amendment: An Interpretative Analysis, 54 N.C. L. Rev. 497 (1976).
550
immunity that is available to government officers sued in their personal
capacities can also be asserted by the government when it is sued in
their stead under the FTC A .22 Therefore, the key to analyzing the
potential for civil liability is to determine whether government officials
involved in this operation would enjoy either an absolute or qualified
immunity if sued individually for damages.
The Supreme Court has held that federal officials have a qualified
immunity from damage actions in cases of constitutional torts, and
that immunity at least that great governs common law torts.23 Qualified
immunity will be available for the proposed operation if it is within the
outer limits of the FBI’s authority and is conducted in good faith with a
“ ‘reasonable belief in the validity of the arrest and search and in the
necessity for carrying out the arrest and search in the way the arrest
was made and the search was conducted.’ ” 24 For reasons stated below,
we think those conditions are satisfied only if the operation is con
ducted with the acquiescence of the asylum state.
Law enforcement officers are acting beyond the “outer limits” of
their authority when they act beyond their jurisdiction.25 As the instant
operation is presently conceived, the FBI and its agents are likely to be
found not acting within these jurisdictional bounds because U.S. agents
have no law enforcement authority in another nation unless it is the
product of that nation’s consent. We have on prior occasions counseled
that the FBI has lawful authority under United States law to conduct
investigations in a foreign country provided those investigations relate
to a matter within the statutory jurisdiction of the FBI. While no
statute explicitly authorizes the FBI to conduct investigations outside of
the United States, 28 U.S.C. § 533(1) contains no geographical restric
tions and its general authorization—to detect and prosecute crimes
against the United States—would appear to be broad enough to sanc
tion activity toward this end no matter where it was undertaken. But
we have coupled that opinion with the recommendation that any oper
ations strictly adhere to local law and function with the knowledge and
at least tacit approval of the country involved. We think any argument
that § 533 gives the FBI authority to make forcible arrests anywhere in
the world is at best tenuous; the sounder interpretation is that its
authority is limited, like that of the United States generally, by the
sovereignty of foreign nations. As we indicated in Part II, the asylum
22 Norton, 581 F.2d at 394-97; see Daniels v. United States, 470 F. Supp. 64 (E.D.N.C. 1979).
**Butz v. Economou, 438 U.S. 478, 506-08 (1978) (holding that only a qualified immunity is
available for most constitutional torts); Barr v. Matteo, 360 U.S. 564 (1959) (absolute immunity
available for some common law torts); see Expeditions Unlimited, Aquatic Enterprises, Inc. v. Smith
sonian Institution, 566 F.2d 289 (D.C. Cir. 1977), cert, denied, 438 U.S. 915 (1978); Granger v. Marek,
583 F.2d 781, 784 (6th Cir. 1978).
24Norton v. United States, 581 F.2d at 393 (quoting Bivens v. Six Unknown Named Agents o f Federal
Bureau o f Narcotics, 456 F.2d 1339, 1348 (2d Cir. 1972)).
Bates v. Clark, 95 U.S. 204, 208-10 (1877) (no official immunity for seizure not made in
Indian country because relevant statute only authorized seizure in Indian country). Bates and similar
cases are discussed approvingly in Butz v. Economou. 438 U.S. at 489-95.
551
state’s sovereignty would be “violated” for purposes of subsequent
litigation if it filed a formal protest.
Our conclusion regarding the scope of § 533 is dictated by two
distinct but related lines of analysis. A conventional statutory construc
tion rule regarding the scope of an official’s authority states that where
a statute imposes a duty, it authorizes by implication all reasonable and
necessary means to effectuate such duty. Given the target’s fugitive
status and the inadequacy of extradition,26 it can be forcefully argued
that this operation is necessary if the FBI is to carry out its law
enforcement mission under § 533. However, the reasonableness of the
operation is questionable if it violates international law or United States
law. All methods of rendition outside the traditional extradition mecha
nism have received substantial criticism from international law special
ists and in academic journals. The tenor of these remarks is that such
extraordinary means of apprehension undermine international order and
breed disrespect for the traditional means of fostering cooperation and
arbitrating disputes among nations.27 Judges in abduction cases have
expressed concern that such extraordinary apprehensions denigrate the
rule^)f law in the name of upholding it.28 We think that concern, when
coupled with a U.S. or international law violation, may well lead courts
to conclude that the activity lies beyond the jurisdiction of the FB I.29
The opinion of Chief Justice Marshall in The Schooner Exchange v.
McFaddon, 11 U.S. (7 Cranch) 116, 136 (1812) suggests a second ap
proach to defining the limits of the FB I’s jurisdiction under § 533. The
FB I’s power cannot extend beyond those of the United States. The de
jure authority of the United States is necessarily limited by the sover
eignty of other nations:
26We are assuming that it can be established that extradition is an inadequate means of apprehension
in this case. We emphasize here the importance o f an ability to make such a showing.
11 E.g.. M. Bassiouni, International Extradition and World Public Order 121 -201 (1974); and sources
cited supra, note 16.
28Although he concurred in the result in Lira. 515 F.2d at 73, this concern prompted Judge Oakes
to observe: “To my mind the Government in the laudable interest of stopping the international drug
traffic is by these repeated abductions inviting exercise of [the court's] supervisory power in the
interest of the greater good of preserving respect for law.” See also. Toscanino. 500 F.2d at 276.
29 It should be noted that this is to argue that the FBI has the authority to violate the local law of
another country as long as that country does not object. We think three doctrines, although none is
addressed directly to the question under consideration, conjoin to support this conclusion.
First, the “act of state” doctrine evinces “judicial deference to the exclusive power of the Executive
over conduct o f relations with other sovereign powers” and “precludes any review whatever of the
acts of the government of one sovereign State done within its own territory by the courts of another
sovereign State." First National City Bank v. Banco Nacional de Cuba, 406 U.S. 759, 763, 765 (1972)
(opinion of Rehnquist, J.). We think that to say the FBI had no authority to apprehend the fugitive,
despite the acquiescence of the asylum state, because such apprehension was in violation of local law
is in fact to judge the actions of the asylum state—here its failure to enforce arguably applicable local
law. Second, it is tantamount to giving an individual the right to dispute a nation’s conception of its
own sovereign interests in violation of the principle that only the sovereign has standing to assert and
construe its interest. Third, there is the maxim that the penal laws of a foreign country are not
enforced in the courts of this country, but must be enforced in the place where the violation occurs.
Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 413-14 (1964).
552
The jurisdiction of the nation within its own territory is
necessarily exclusive and absolute. It is susceptible of no
limitation not imposed by itself. Any restriction upon it,
deriving validity from an external source, would imply a
diminution of its sovereignty to the extent of the restric
tion, and an investment of that sovereignty to the same
extent in that power which could impose such restriction.
All exceptions, therefore, to the full and complete
power of a nation within its own territories, must be
traced up to the consent of the nation itself. They can
flow from no other legitimate source.
11 U.S. (7 Cranch) at 136.
In short, both lines of analysis suggest that in the absence of asylum
state consent, the FBI is acting outside the bounds of its statutory
authority when it makes an apprehension of the type proposed here—
either because § 533 could not contemplate a violation of international
law or because the powers of the FBI are delimited by those of the
enabling sovereign. Once the “authority” hurdle is surmounted, how
ever, we think that the other parts of the good faith defense are readily
met. There is ample probable cause and a number of outstanding bench
warrants.
Assuming the operation goes forward without asylum state consent,
it is necessary to examine more closely the civil liability theories that
may be put forward by the fugitive. There are two constitutional
arguments available to him. The first is that he is subject to an unrea
sonable search and seizure in violation of the Fourth Amendment. The
second is the Fifth Amendment due process argument based on the
logic of Toscanino. The Bill of Rights does apply to actions of Ameri
can officials directed at American nationals overseas,30 and it is our
view that the proposed operation would have some Fourth Amendment
problems due to the absence of asylum state consent.
The standard Fourth Amendment requirement for an arrest is that it
be based on probable cause. Beck v. Ohio, 379 U.S. 89, 91 (1964);
Gerstein v. Pugh, 420 U.S. at 111-12. “[WJhile the Court has expressed
a preference for the use of arrest warrants when feasible . . . , it has
never invalidated an arrest supported by probable cause solely because
the officers failed to secure a warrant.” Id. at 113. Here we have
warrants and probable cause. The Fourth Amendment problem stems
instead from the FBI’s lack of statutory authority for an extraterritorial
apprehension that has not been sanctioned by the asylum state.
Where federal officials act without explicit statutory authority, the
validity of an arrest in this country turns on whether it meets the
30 Reid v. Covert 354 U.S. 1, 5-6 (1957); Berlin Democratic Club v. Rumsfeld, 410 F. Supp. 144,
160-61 (1976).
553
standards for a valid citizen’s arrest under state law.31 If a court
extrapolated that reasoning to the international context, the pertinent
question would be the standards for a citizen’s arrest in the asylum
state.32 The rule in the asylum state is that “[a]ny person may, with or
without warrant or other legal process, arrest and detain another
person who has committed a felony.” Presumably this is a reference to
domestic felonies; otherwise the statute would authorize arrests for
crimes that are not punishable in domestic courts and are not the
subject of an extradition order. Thus we think this asylum state statute
could not afford to U.S. officials authority to arrest for U.S. felonies
within the asylum state’s territory. So in the absence of asylum state
consent and the § 533 authority to arrest that comes with it, the fugitive
has a plausible Fourth Amendment claim. In contrast, for reasons stated
in Part I of this memorandum to support the conclusion that, in the
absence of the brutality alleged in Toscanino, there is no due process
violation warranting divestment of jurisdiction, we conclude that there
would be no Fifth Amendment violation warranting a civil remedy.
We do not view a violation of international law as a legally sufficient
independent basis for a civil action. The reason is the distinct compass
of international law. Last February the Fifth Circuit observed in the
analogous context of a vessel seizure:
Since 1815 it has been established that redress for im
proper seizure in foreign waters is not due to the owner
or crew of the vessel involved, but to the foreign govern
ment whose territoriality has been infringed by the
action.33
The fugitive lacks standing to pursue the violation of international
law.34
The final potential bases for civil liability on the part of the federal
government and individual federal officials are the common law torts of
false imprisonment, false arrest, assault and battery. And to the question
of liability must be added the question of forum.
S1 See United States v. D i Re. 332 U.S. 581. 589-92 (1948); Alexander v. United States. 390 F.2d 101
(5th Cir. 1968); United States v. Viale. 312 F.2d 595, 601 (2d Cir ), cert, denied. 373 U.S. 903 (1963).
38 O f course, a court could also conclude that federal agents do not have any citizen's arrest
privileges in the asylum state and therefore cannot avail themselves of citizen arrest standards to argue
the validity of the seizure.
33 United States v. Conroy. S89 F.2d I2S8, 1268 (5th Cir. 1979); see also The Richmond. 13 U.S. (9
Cranch) 102. 103 (1815).
34 Nor does the international law argument add to the fugitive's potential Fourth Amendment
claims, except to the extent that it delimits the statutory authority of the FBI. As the Fifth Circuit has
noted:
W hether the search and seizure were Fourth-Amendment-unreasonable must be estab
lished by showing that interests to be served by the Fourth Amendment were violated,
and not merely by establishing the violation of general principles o f international law.
Cadena. 585 F.2d at 1264.
We note that by its terms the Federal Kidnapping Act is inapplicable in the context o f the proposed
operation. It pertains to abductions “within the special maritime and territorial jurisdiction o f the
United States.’* 18 U.S.C. § 1201(aX2). But see Toscanino, 500 F.2d at 276.
554
Although a civil suit in the asylum state against U.S. officials is
theoretically possible, it is an unlikely course for the fugitive to take
because of the obvious logistical problems, the fact the United States
would not be amenable to suit there, and difficulties the asylum state
courts would have in obtaining personal jurisdiction over individual
government officers. It is much more likely that any action for common
law torts would be instituted in the United States, and we think such an
action could be maintained in this country.
According to private international law, injuries to a person or per
sonal property of another are transitory and the right to redress follows
the defendant to foreign lands.35 This principle has been recognized in
the United States.36 All that is necessary is that the defendant be found
within a jurisdiction in this country. The law to be applied is normally
that of the site of the tortious conduct—the asylum state in this
case 37—although we think American law would still govern the ques
tion of immunity.38 It is always possible that the fugitive would be
nonsuited because a court regards the cause of action as repugnant to
the policies of the forum state. But the dicta in Ker about damage
actions make that result less certain,39 and we think that in the absence
of an immunity defense the United States and individual federal officials
could be held liable for false imprisonment.
The law of the place of the tort also usually governs the damage
award.40 Exemplary damages are available under English common law,
and consequently asylum state law, as are damages for nervous
shock.41 By their very nature, the size of such awards is impossible to
predict; we can only advise that exemplary damages would not be
available in an action against the United States.42 Although there is no
precedent on point, we think that it is unlikely that an American court
would be receptive to an argument that a fugitive should be compen
35 See, e.g.. G. Cheshire, Private International Law 240-42 (1965).
See. e.g.. Slater v. Mexican National R.R. Co.. 194 U.S. 120 (1904); Schertenleib v. Traum. 589
F.2d 1156, 1165 (2d Cir. 1978); Mobil Tankers Co. v. Mene Grande Oil Co.. 363 F.2d 611, 615 (3d Cir ),
cert, denied. 385 U.S. 945 (1966).
37 See generally, G. Cheshire, Private International Law 240-57 (1965); M. Hancock, Torts in the
Conflict of Laws 54-63 (1942); Restatement (Second) of the Conflict of Laws §§ 10, 145 (1969). Of
course, this is not an ironclad rule and the government would be free to argue that a suit between a
U.S. citizen and his government created a sufficient nexus with the American forum to dictate the
application of its tort liability principles. But those principles are unlikely to vary sufficiently to make
a difference in the outcome.
38 Although state law may govern the cause ®f action, federal courts have applied a uniform federal
rule in determining whether the defendant enjoys official immunity. Barr v. Matteo, 360 U.S. 564, 569-
76 (1959). There is no justification for departing from that rule because the cause of action arises under
foreign law.
39 Appellate courts have had divergent views on what forum the Supreme Court had in mind when
it alluded to damage actions in Ker, 119 U.S. at 444. Compare Waits v. McGowan, 516 F.2d at 207 n.7
(damage actions in state courts) with United States ex rel. Lujan v. Gengler, 510 F.2d at 64-65 n.3
(damage actions in foreign courts).
40 See G. Cheshire, Private International Law 602-04 (1965); M. Hancock, Torts in the Conflict of
Laws 113-120 (1942); Restatement (Second) of Conflict of Laws §§ 10, 145, 171 (1969).
41 H. Street, The Law of Torts 114-17, 440 (1976).
42 28 U.S.C. §2674; see. e.g.. Johnson v. United States, 547 F.2d 688, 690 n.5 (D.C. Cir. 1976).
555
sated for his lost opportunity to evade the lawful processes of the
United States. Such an argument suggests a personal “right of asylum,”
a right explicitly rejected in Ker, and the argument could be properly
rebuffed as against the public policy of the forum. Also injunctive
relief, ordering that the fugitive be returned to the asylum state, is
squarely inconsistent with Ker. We note that there is no provision for
indemnification of government officials held liable in an action for false
imprisonment.43
IV. Criminal Liability and the Importance of Asylum State Consent
The importance of asylum state consent is perhaps most dramatically
highlighted by the possibility that federal officials may be extraditable
to the asylum state for kidnapping.44 A number of abduction cases,
including Ker, have discussed this possibility.45 The only effective
safeguard against the diplomatic embarrassment and personal anxiety an
extradition request would create is a prior agreement with the asylum
state that no extradition request will be made.
In sum, asylum state consent appears pivotal to the success of the
operation, both as a matter of litigation and public perception. A formal
diplomatic protest w6uld force the Second Circuit to decide whether to
divest the district court of its criminal jurisdiction as a result of the
international law violation. It would make an immunity claim in any
civil action difficult to maintain as well as provide the fugitive with a
strong argument that the operation violated his Fourth Amendment
rights. It would present the possibility of an embarrassing extradition
request. Finally, in the current international climate, this country can ill
afford an operation that would permit others to argue that the United
States does not respect international law. We advise that you not
authorize the operation without the asylum state’s tacit consent.
V. Miscellaneous Considerations
If an apprehension is to be made, we recommend that it be made in
the same manner as any professional arrest: with expedition, minimum
43 Torts Branch Monograph, Damage Suits Against Federal Officials, Department of Justice Repre
sentation, Immunity 10-11 (Nov. 1978).
44 Art. 3, para. 7 of the extradition treaty between the United States and the asylum slate lists
kidnapping and false imprisonment as extradition offenses. The penal code of the asylum state
provides:
A person is guilty of kidnapping—
(1) who unlawfully imprisons any person, and takes him out of the jurisdiction of the
court, without his consent; or
(2) who unlawfully imprisons any person within the jurisdiction of the court, in such
a manner as to prevent him from applying to a court for his release or from discover
ing to any other person the place where he is imprisoned, or in such a manner as to
prevent any person entitled to have access to him from discovering the place where he
is imprisoned.
45 E.g., Lujan, 510 F.2d at 64-65 n.3; Villareal v. Hammond, 74 F.2d 503, 505-06 (5th Cir. 1934);
Collier v. Vaccaro, 51 F.2d 17, 20-21 (4th Cir. 1931).
556
restraint, and with full sensitivity to the fugitive’s physical needs and
constitutional rights. We would recommend that the fugitive be in
formed of his rights and the presence of outstanding warrants immedi
ately upon his apprehension in the the asylum state and again immedi
ately within the territorial confines of the United States. Even if the
fugitive waives his rights, we recommend that there be no attempt at
interrogation until the fugitive is within the territorial limits of the
United States.
As far as the participation of asylum state nationals is concerned, we
make the following observations: Insofar as foreign nationals are acting
at the behest or direction of this government, they will be regarded as
American agents by the courts. If they take action outside the ambit of
that agency relationship, e.g., resort to torture, this government may
successfully maintain that it was not a party to that action.46 But this
does not militate in favor of using asylum state nationals because FBI
agents are not likely to engage in improper conduct in the first place.
We think that the use of foreign nationals raises more questions of
strategy than of law. Only if foreign nationals, without U.S. direction
or compensation, deposited the fugitive on American soil would the
legal problems in this memorandum be obviated by their presence.
John M. H arm on
Assistant Attorney General
Office o f Legal Counsel
<a Eg.. Lira. 515 F.2d at 70-71.
557
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322 N.W.2d 206 (1982)
Grace M. BUSSE, etc., Respondent,
v.
QUALITY INSULATION COMPANY, et al., Relators,
Quality Insulation Company, et al., Respondents,
McArthur Insulation Company, et al., Respondents,
Hickory Insulation Company, et al., Respondents,
Armstrong Cork & Supply Co., et al., Respondents,
Paul W. Abbott Insulation Company, and unknown, Respondents,
Federal Army Cartridge Corp., et al., Respondents,
Asbestos Products Company, et al., Respondents,
Edward H. Anderson Insulation Co., et al., Respondents,
Brand Insulation Company, et al., Defendants, and
Equitable Life Assurance Society, intervenor, Respondent, and
State Treasurer, Custodian of the Special Compensation Fund, Respondent.
No. 81-768.
Supreme Court of Minnesota.
July 23, 1982.
Jardine, Logan & O'Brien and Mark A. Fonken, St. Paul, for relators.
Paul J. Louisell, Duluth, for Busse.
Donovan, McCarthy, Crassweller, Larson & Magie, Duluth, for Quality Insulation Co., et al.
*207 Patrick D. Reilly, St. Paul, for McArthur Insulation Co., et al.
Ochs, Larsen, Klimek & Peterson and Bonnie Peterson, Minneapolis, for Hickory Insulation Co., et al.
Meagher, Geer, Markham, Anderson, Adamson, Flaskamp & Brennan and Steven C. Eggimann, Minneapolis, for Armstrong Cork & Supply Co., et al.
Jeanne E. Knight, Minneapolis, for Paul W. Abbott Insulation Co.
Eugene W. Hoppe, St. Paul, for Federal Army Cartridge Corp., et al.
Chadwick, Johnson & Bridell and Paul Vallant, Minneapolis, for Asbestos Products Co., et al.
Cousineau, McGuire, Shaughnessy & Anderson and Fred Simon, Minneapolis, for Edward H. Anderson Insulation Co., et al.
Briggs & Morgan and Michael H. Streater, St. Paul, for Equitable Life Assurance Soc.
Warren Spannaus, Atty. Gen., and Thomas G. Lockhart, Sp. Asst. Atty. Gen., St. Paul, for State Treasurer, Custodian of the Special Compensation Fund.
Considered and decided by the court en banc without oral argument.
TODD, Justice.
Karl Busse died of lung cancer related to asbestos exposure and cigarette smoking. He had been employed by several employers over a period of years and had been exposed to asbestos fibers during that time. The Workers' Compensation Court of Appeals upheld the compensation judge's finding that Quality Insulation, the last employer, and the insurer on the risk were fully liable for benefits although the employee had only limited exposure to asbestos during this last two months of employment. We reverse.
The employee, Karl Busse, had been employed for many years as a "pipe coverer." This job involved the application of asbestos-laden insulating material to high and low pressure steam and water pipes and other equipment. Busse began to work with asbestos materials in the 1940's and worked steadily for many different employers until June 20, 1976, when he became disabled. Busse worked for his last employer, Quality Insulation Company, for only one year, June 15, 1975 through June 20, 1976, the date of his disability. During that one year period, Lakeland Fire and Casualty Company (Lakeland), the relator-insurer, was on the risk for only two months, April 21, 1976 through June 20, 1976.
Karl Busse died of lung cancer on October 31, 1977, at the age of 66. His widow, Grace Busse, subsequently filed a claim for dependency benefits. On December 19, 1980, the Workers' Compensation judge awarded full dependency benefits to Mrs. Busse. Although medical testimony established that Karl Busse's lung cancer was likely caused by many years of high level asbestos exposure, the judge found the employee's exposure from April 21, 1976 to June 17, 1976, while employed at Quality Insulation, "was a substantial contributing factor to the advancement of the employee's progressive lung disease," and awarded the benefits against Quality Insulation and its insurer, Lakeland. The court of appeals upheld that finding.
The issues raised on appeal are:
1. Whether there is sufficient evidence to support a finding that Karl Busse's exposure to asbestos from April 21, 1976 to June 17, 1976 was a substantial contributing cause of his death from lung cancer.
2. Whether the compensation court erred by refusing to vacate a settlement entered into between Grace Busse and third party tortfeasors.
1. Generally, in occupational disease cases, the last employer for whom the employee is working when he or she becomes disabled is solely responsible for compensation, and apportionment is allowed only in rare cases in which the medical testimony permits a precise allocation of liability among the several employers. See Robin v. Royal Improvement Co., 289 N.W.2d 76 (Minn.1979); Michels v. American Hoist & Derrick, 269 N.W.2d 57 (Minn. *208 1978). In Halverson v. Larrivy Plumbing & Heating Co., 322 N.W.2d 203 (Minn.1982), however, we held that the last employment must have been a substantial contributing cause of the employee's disability or death from the occupational disease. The compensation court found that Karl Busse's exposure to asbestos from April 21, 1976 to June 17, 1976, while employed by Quality Insulation, was a substantial contributing cause of his death from lung cancer.
During the last year that he worked, Karl Busse was employed by Quality Insulation Company, an insulation business operated by his son, Richard. During that one-year period, Lakeland Fire and Casualty Co. was Quality Insulation's insurer for only two months, beginning April 21, 1976 and continuing through Karl Busse's last day of work, June 17, 1976. On appeal, relators argue that it is both "absurd and ludicrous" to attach 100% of the liability for Workers' Compensation Benefits to an insurer on the risk for two months at the end of a 30 plus year work history of asbestos exposure. We agree that the evidence does not support a finding that Busse's employment during that time was a substantial contributing cause.
Beginning in about 1973, asbestos products were virtually discontinued as an insulating material, and products such as polyurethane and fiberglass were substituted as insulating materials. The evidence in this case establishes that during the two month period in question, all of the insulation that Karl Busse applied was asbestos free. Busse's only exposure to asbestos laden materials from April 21 to June 17, 1976 came during "patch and repair jobs" when he was required to remove old asbestos insulation from pipes and equipment. Richard Busse testified that his father experienced the most extensive asbestos exposure during the first week in June when he spent 16 to 20 man hours tearing old asbestos insulation off a large oven at the 3M Company plant. Karl Busse suffered at least one other exposure to asbestos during the two-month period while removing old asbestos insulation from a fan housing. Richard Busse estimated that the time required to tear off and clean up the insulation was approximately two hours. The evidence indicates that Karl Busse experienced approximately 25 hours of asbestos exposure during the time when Lakeland was on the risk.
The medical evidence in this case included the testimony of three internists, Dr. Richard Woellner, Dr. Mark Johnson, and Dr. John Shrontz. Dr. Woellner testified that Karl Busse's exposure to asbestos between April 27 and June 17, 1976 was not a substantial contributing cause of the lung cancer that caused his death. Dr. Woellner stated that he reached this conclusion for two reasons:
A: One is on the basis of the evidence. He didn't have a significant amount of asbestos exposure during that period of time. Secondly, the lag time between asbestos exposure and the development of cancer is known to be a very long period of time, and this would not be a close enough period of time or this was too close a period of time, I am sorry.
Q: Is there any number of months or years lag time as a minimum that you could give us for the development of lung cancer from asbestos exposure?
A: Again, it is difficult to say. In the neighborhood of five to ten or more years.
Dr. Johnson testified in his deposition that even substantial daily exposure to asbestos during the period in question would not have been a substantial contributing cause of Karl Busse's lung cancer. The decision of the Court of Appeals can be affirmed only based upon the medical testimony of Dr. John Shrontz, testimony that was equivocal, inconsistent and confusing.
Dr. Shrontz first testified, in answer to a lengthy hypothetical question, that Karl Busse's exposure to asbestos between April and June of 1976 was not a significant contributing cause of Busse's death from lung cancer:
Q. Now Doctor, again, zeroing in on this particular period of time that I was talking about, from April 21, 1976 to *209 June 20 of '76, I would like you to assume that evidence has been offered in this case to indicate that there were two specific periods of time that Mr. Karl Busse was involved in removing old insulation before applying these new non-asbestos laden materials and old materials that he was removing did contain asbestos, although we're not so certain of the quantities, that one of these periods of time was on May 21 of 1976, at which time Karl Busse was involved with removing old insulation for the pipe fitters and doing some repair on insulation on a fan housing. Assume that although it's not yet in evidence, the testimony will be that the process of removing the old insulation and cleaning it up would have taken four hours; in addition, there was a separate longer exposure when Karl Busse was involved in removing old insulation from the top of a large oven at the 3M Company. The oven measured somewhere from 40 to 50 feet long and 30 feet wide. Those are the approximate dimensions. And that the first step in replacing that insulation was to remove the old insulation. That there was some kind of a canvas backing over the top of this that had to be removed. Then the asbestos insulation could be picked up in chunks and thrown over the edge, that a broom would have to be used to sweep off the top of the oven and after that, shovel and broom would have to be used to make clean up the mess before the new products could be installed.
And I want you to assume that the evidence will be that the total time of removing the old insulation, sweeping it up, cleaning it up so that the old insulation was out of the area was two full working days or a total of 16 hours.
Now, if you assume that the only exposure that Mr. Busse Karl Busse had to asbestos products during the period of time from April to June of '76, was a total of 20 to 24 hours of actual work time exposure, do you have an opinion as to whether or not such a limited period of exposure as compared with the exposure of the many years in the past such as the history he gave you, would have been a significant contributing cause to Mr. Karl Busse's respiratory problems and his death?
A. Yes. In my opinion, the period of time that he worked from April of 1976 to June, 1976 as you've described it, was not a significant factor in the cause of his death or his respiratory problems. In other words, his exposure to asbestos over that period of time did not aggravate his lung disease significantly nor did it contribute to his death.
However, during cross-examination Shrontz was asked whether a "couple days" of asbestos exposure between September 1975 and June 1976 would have been a significant factor in the development of Karl Busse's lung disease, and he answered:
A. I think that if he spent two or three days working with asbestos by tearing it off pipes that could indeed be a significant exposure at that period in time in relation to his death.
Q. What regard would you feel that would be a significant exposure?
A. Because he developed cancer of the lung as a result of exposure to asbestos and as a result of cigarette smoking. He developed cancer of the lung sometime after 1975 and the exposure that he had in 1975, if it were two to three days, eight hours a day of tearing filler or tearing asbestos off pipes may very well have contributed to the development of his lung cancer.
Shrontz then testified that if Busse had worked only "a few hours patching on one occasion", that such an exposure would not have been a "significant contribution." Finally, Dr. Shrontz testified that if Karl Busse had been removed from the workplace in 1975, Busse probably still would have died from lung cancer at the time that he actually did die:
Q: If we assume that just for an example, a man who had similar circumstances, had asbestosis as of 1975, say *210 he quit working in the industry, would he have developed that cancer?
A: If he had stopped working in 1975?
Q: Yes.
A: Probably.
Q: And what would would it have caused his death at the same time that he died?
A: Probably.
Q: Yes. But you just testified that the exposure during that period aggravated or accelerated his death; is that correct?
A: I said that I felt that any exposure more than one day could or was significant.
Q: Okay.
A: You're trying to pin me down on something that I can hardly be pinned down on. I mean, we're talking about hourly exposures and it kind of makes me a little angry because I don't think there's any way to answer this and be perfectly right. (emphasis added).
Dr. Shrontz's testimony is obviously contradictory. While he testified that 20 to 24 hours of exposure would not have significantly contributed to Karl Busse's death, he also stated that two or three days, 8 hours a day, of patch and repair work asbestos exposure "may very well have contributed to the development of his lung cancer." He then testified that even had Karl Busse experienced no exposure during all of 1976, Busse probably still would have died of lung cancer in October of 1977.
In reviewing the Workers' Compensation Court of Appeal's decision to uphold the compensation court's finding, we must determine whether the finding is based on credible evidence and it must not be disturbed unless it is manifestly contrary to the evidence. Lockwood v. Tower Terrace Mobile Homes, 279 N.W.2d 51, 53 (Minn. 1979). Based upon our examination of the record, we conclude that the finding that Busse's employment by Quality Insulation was a substantial contributing cause of his death is not supported by the evidence.
2. Because Quality Insulation is not liable for workers' compensation benefits, the issue Quality raises regarding the Naig settlement between Grace Busse and the asbestos manufacturers need not be addressed.
The decision of the Workers' Compensation Court of Appeals is reversed and the matter is remanded for further proceedings in accordance with this opinion.
PETERSON, J., took no part in the consideration or decision of this case.
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195 F.3d 761 (5th Cir. 1999)
ANGELA PARISH, Plaintiff-Appellant.v.DAVID FRAZIER, Individually and as Attorney for Medical Credit Service, Inc., Also Known as Merchants Collection Service; MEDICAL CREDIT SERVICE, INC., also known as Merchants Collection Service, Defendants-Appellees.
No. 98-60476Summary Calendar
UNITED STATES COURT OF APPEALS, Fifth Circuit
October 13, 1999
[Copyrighted Material Omitted]
Stephen Joseph Maggio, Gulfport, MS, for Plaintiff-Appellant.
William V. Westbrook, III, Bryant, Clark, Dukes, Blakelee, Ramsay & Hammond, Gulfport, MS, for Defendant-Appellees.
Appeal from the United States District Court for the Southern District of Mississippi.
Before DAVIS, EMILIO M. GARZA, and DENNIS, Circuit Judges.
PER CURIAM:
1
Angela Parish appeals the district court's order granting the defendants' motion for summary judgment and denying her motion for leave to amend her complaint. For the reasons that follow, we affirm.
I.
2
Parish sued the defendants for Fair Debt Collection Practices Act (FDCPA) violations. Parish's suit was predicated on a collections complaint the defendants filed against her to recover a debt Parish allegedly owed Memorial Hospital at Gulfport ("Memorial"). Defendants maintain that defendant Medical Credit Service ("MCS") had a written contract with Memorial to collect debts for unpaid services. After Parish failed to pay Memorial the amount set forth in an itemized bill for treatment she received at Memorial, her account was forwarded to MCS for collection. When MCS failed to obtain payment from Parish, defendant Frazier filed a collection complaint in state court. Parish filed a motion to dismiss on grounds that the complaint was barred by the applicable statute of limitations. According to defendants, that motion is still pending. Defendants filed a motion for summary judgment on Parish's complaint, which the district court granted. After the defendants filed their summary judgment motion, Parish sought to amend the instant complaint to allege improper fee splitting and unauthorized practice of law by the defendants. The district court denied this motion. On appeal Parish complains of the district court's order granting summary judgment and its order denying her motion to amend the complaint.
II.
3
We first address the district court's denial of Parish's motion for leave to amend her complaint. On appeal, we review the denial of such a motion for abuse of discretion. Gregory v. Mitchell, 634 F.2d 199, 203 (5th Cir. 1981). Under Federal Rule of Civil Procedure 15(a), leave to amend "shall be freely given when justice so requires." However, leave to amend "is by no means automatic." Little v. Liquid Air Corp., 952 F.2d 841, 845-6 (5th Cir. 1992); Addington v. Farmer's Elevator Mutual Insur. Co., 650 F.2d 663,666 (5th Cir. 1981); Layfield v. Bill Heard Chevrolet Co., 607 F.2d 1097, 1099 (5th Cir. 1979). The decision "lies within the sound discretion of the district court." Little, 952 F.2d 841, 846.
4
The district court found that allowing Parish to amend would unduly prejudice the defendants by increasing the delay and by expanding the allegations beyond the scope of the initial complaint. See Little, 952 F.2d 841, 846; Addington, 650 F.2d 663, 667; Layfield, 607 F.2d 1097, 1099; Ferguson v. Roberts, 11 F.3d 696, 706-7 (7th Cir. 1993). Also, it found that the seven month delay between the filing of the original complaint and the motion for leave to amend could have been avoided by due diligence, as plaintiff could have raised the additional claims in her complaint or at least sought to amend at an earlier time. See Layfield, 607 F.2d 1097, 1099. Plaintiff bears the burden of showing that delay was due to oversight, inadvertence or excusable neglect, and the district court found thatParish made no such showing. Gregory, 634 F.2d 199, 203; see also Little, 952 F.2d 841, 846.
5
As the district court noted, we more carefully scrutinize a party's attempt to raise new theories of recovery by amendment when the opposing party has filed a motion for summary judgment. Little, 952 F.2d 841, 846 and n. 2; see also Addington, 650 F.2d 663, 667; Freeman, 381 F.2d 459, 469-70. Parish filed her motion to amend on the same day defendants filed their motion for summary judgment. The district court found that Parish's attempt to broaden the issues would likely require additional discovery and another motion for summary judgment, which would unduly prejudice the defendants and raise concerns about seriatim presentation of facts and issues.
6
The district court did not abuse its discretion in denying the motion to amend.
III.
7
Next, we address the district court's grant of the defendants' motion for summary judgment. Parish appeals two aspects of the district court's order. First, she alleges that the court erred in granting the motion on the question of whether defendants violated the FDCPA, 15 U.S.C. 1692 et seq, by suing on a time barred debt. Second, she alleges that the court erred in granting the motion on the question of whether defendants violated 1692e of the FDCPA by using a "false, deceptive, or misleading" practice in attaching to their collections complaint a sworn affidavit that the debt had been assigned, when in fact there was no assignment.
A.
8
We review an appeal from a summary judgment de novo. River Production Co., Inc. v. Baker Hughes Production Tools, Inc., 98 F.3d 857, 859 (5th Cir. 1996); McMurtray v. Holladay, 11 F.3d 499, 502 (5th Cir. 1993). Summary judgment is proper when the evidence shows that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. F.R.Civ.P. 56(c).
B.
9
In support of her first argument, Parish cites the three year statute of limitations for a suit to collect on an account, and points out that defendants sued almost four years after the action accrued. Miss. Code Ann. 15-1-29 (Parish actually cites Miss. Code Ann. 11-53-81, but presumably meant to cite 15-1-29).
10
We agree with the district court that the suit by defendants was not time barred because of the applicability of Miss. Code Ann. 15-1-51 and Miss. Const. Art. 4, 104. Miss. Code Ann. 15-1-51 and Miss. Const. Art. 4, 104 provide that the statute of limitations in civil cases does not run against the state, its political subdivisions, or municipal corporations thereof. Here, the underlying debt was owed to Memorial, a "community hospital" existing under Miss. Code Ann. 41-13-10 et seq. As such, Memorial is a subdivision of the State of Mississippi within the meaning of Miss. Const. Art. 4, 104 and Miss. Code Ann. 15-1-51, and the statute of limitations would be inoperative against it. Enroth v. Memorial Hospital at Gulfport, 566 So.2d 202, 206 (Miss. 1990). Under Miss. Code Ann. 19-3-41(2) and 21-17-1, even if a collection agency or attorney is retained to collect a debt, the debt is still "owed" to the municipality.
11
Thus, we agree with the district court that because the debt was owed to a governmental entity, the statute of limitations did not run and the debt remains due and payable under Miss. Code Ann. 15-1-51. As such, the suit by defendants against Parish was not time barred. Defendants did not violate the FDCPA on this basis.
C.
12
We next address Parish's second argument that the court erred in grantingthe motion on the question of whether defendants violated the FDCPA 15 U.S.C. 1692e by using a "false, deceptive, or misleading" practice in attaching to their collections complaint a sworn affidavit that the debt had been assigned, when in fact there was no assignment.
13
The district court found that 1692e(11) was not applicable, by its express terms, to a complaint or pleading. Also, even if the section were applicable, the district court found that there would have been no violation. Likewise, the court found no violation of 1692e(12) (even assuming it applied) because the record clearly indicates that the relationship between Memorial and the defendants was that of creditor and debt collector. We agree.
14
The attachments to the collections complaint in question expressly indicate that Parish's debt was assigned "for collection" only and authorize the defendants to take legal action on behalf of Memorial as Memorial's agents, not in their own right. Further, the contract between Memorial and the defendants also specifies that the debt was assigned only for collection and that any amounts collected by the defendants were to be paid in full to Memorial. Thus, Memorial clearly retained control and ownership of the debt owed by Parish. The sworn affidavit was not misleading, and does not constitute a violation of the FDCPA 1692e by the defendants.
IV.
15
For the above reasons, we AFFIRM the judgment of the district court.
16
AFFIRMED.
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104 F.Supp. 102 (1952)
LOVE
v.
UNITED STATES.
No. 50454.
United States Court of Claims.
Decided April 8, 1952.
*103 Harold Robert Love, pro se.
Gordon F. Harrison, Washington, D. C., James R. Browning, Acting Asst. Atty. Gen., for defendant.
Before JONES, Chief Judge, and LITTLETON, WHITAKER, MADDEN and HOWELL, Judges.
JONES, Chief Judge.
Plaintiff sues for back salary on five claims for various periods between December 27, 1944, and September 19, 1947, and for salary from that date until the time of his restoration to government service. It does not appear that plaintiff has been restored to service prior to the filing of this petition.
Prior to December 27, 1944, plaintiff, a veteran, was employed by the War Department as cost accountant and auditor. Plaintiff's first claim here, which we shall designate Claim A, is based on an alleged illegal suspension from that position from December 27, 1944, to April 2, 1945. This petition was filed on December 6, 1951. Claim A is therefore barred by the six year statute of limitations, Title 28, United States Code, § 2501. This statute is jurisdictional in nature, United States v. Wardwell, 172 U.S. 48, 52, 19 S.Ct. 86, 43 L.Ed. 360; and was not tolled during the period this claim may have been under consideration by an administrative agency. Tan v. United States, Ct.Cl., 102 F.Supp. 552; Ylagan v. United States, 101 Ct.Cl. 294.
Plaintiff's other claims may be described briefly as follows:
B. Salary differential between Grade CAF-8 and CAF-11 for a period beginning July 13, 1947, apparently until August 20, 1947, based upon an alleged illegal demotion;
*104 C. Salary from July 16, 1947, through July 23, 1947, to cover a period of alleged unlawful suspension;
D. Salary from August 5, 1947, through September 19, 1947, to cover a period of alleged unlawful suspension; and
E. Salary from September 19, 1947, onward, based on alleged illegal dismissal.
Claims C, D, and E are barred by the decision of this court in Love v. United States, 98 F.Supp. 770, 119 Ct.Cl. 486, certiorari denied, 342 U.S. 866, 72 S.Ct. 106, involving the same parties and substantially the same issues. Plaintiff's claim in that suit was that his dismissal in September 1947 was procedurally defective. Plaintiff on April 2, 1945, had received an appointment as a Cost Analyst, Grade CAF-11. By letter dated July 11, 1947, he was notified of his proposed discharge and of his suspension without pay, effective July 16, 1947, for a period of five days (the period covered by Claim C here) pending action on the proposed discharge. He made written reply to the charges against him, and on August 4, 1947, was notified of an adverse decision thereon. The same notice suspended plaintiff for 30 days effective at the close of business on August 5, 1947 (the first part of the period covered by Claim D here), and stated that he would be discharged effective at the close of business on September 4, 1947. This court held that plaintiff was discharged effective September 4, 1947, and that in every respect his discharge was procedurally correct. He was therefore denied recovery. 98 F.Supp. 770, 119 Ct.Cl. 486.
Plaintiff claimed recovery in the former suit in this court only for the period September 19, 1947, to the date of his restoration to service (the period covered by Claim E here). For reasons best known to plaintiff he had a separate suit pending in the United States District Court for the Western District of Kentucky involving the period September 4 to September 19, 1947, which suit has since been voluntarily dismissed. Plaintiff was discharged effective, however, on September 4, 1947. Right to recover for salary from September 4, 1947, to September 19, 1947, must necessarily stand or fall with right to recover for the period thereafter, beginning with September 19, 1947. It was finally adjudicated in the previous suit in this court and the United States Supreme Court denied certiorari that the discharge was not illegal and that plaintiff had no right to recover for salary for the period beginning September 19, 1947. He therefore has no right to recover for salary for the period September 4 to September 19, 1947 (the remainder of the period covered by Claim D here).
The facts and events upon which plaintiff bases his Claims C, D, and E were all part of the procedure by which plaintiff's separation and discharge were effected. Those facts and events were directly involved and thoroughly considered in the previous case. The procedure was expressly held to be in no respect defective. The issues upon which Claims C, D, and E depend have been directly adjudicated. In contradiction to plaintiff's statement, plaintiff has very definitely had his day in court, and he failed to show the merit of his contentions. It would be a complete waste of time of the court and of the litigants to retry the various issues. The claims designated C, D, and E must therefore be dismissed.
Although the findings in the previous case briefly touched upon facts relative to plaintiff's Claim B here for alleged wrongful demotion there was no liability therefor asserted or adjudicated in that case. It does not appear that the demotion was a part of the chain of events effecting plaintiff's discharge or that plaintiff is now estopped from asserting his claim. The Government's attorney stated on page 59 of the record of the hearing before the commissioner in the previous case that:
"* * * [the demotion] has no relevancy to the particular case we are now trying, namely, his separation whether it was legal or illegal, what were the procedures followed, and what was the result."
Defendant's motion to dismiss Claim B must therefore be denied. Claim B is for salary differential between the Grades CAF-8 and CAF-11 for the period beginning *105 July 13, 1947. The propriety of his suspensions without pay from July 16 through July 23, 1947, and from August 5, 1947, until the time of his discharge, has already been determined. If upon further proceedings it should be determined that plaintiff is entitled to recovery under Claim B, that recovery must be limited, therefore, to exclude those periods of suspension without pay.
There is one further contention in this case which it is deemed advisable to discuss, involving procedure under rules recently promulgated by this court. This case is presently before us upon defendant's motion to dismiss. No answer has yet been filed. The motion sets up defenses based upon the statute of limitations and the doctrine of res judicata. It is plaintiff's contention that such defenses are not properly before the court, and that under the rules of the court such defenses must be raised by answer.
To support this contention plaintiff relies upon Rule 16(b), 28 U.S.C. which provides that
"Every defense, in law or fact, to a claim for relief in any pleading, * * shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion: (1) lack of jurisdiction of the subject matter or the person, and (2) failure to state a claim upon which relief can be granted. * * *"
It is plaintiff's contention that the defenses here asserted cannot properly be considered by the court upon motion, since neither one falls within the exceptions under Rule 16 (b).
The latest revision of the rules of this court dates from May 15, 1951. Substantial portions of these rules have been derived from the Federal Rules of Civil Procedure for the United States District Courts. (See Title 28, United States Code, section 2071, and Reviser's Notes thereto, for "the broad rule-making power * * to prescribe complete and uniform modes of procedure" of this and other federal courts. Cf. id., section 2072, the enabling act for the FRCP.) To this extent the practice and interpretation of the federal rules in the district courts may be considered by this court in the application of its own rules, together with its own experience and the special circumstances adhering to the Court of Claims.
With respect to the defense of limitations, since under our Rule 9(e) (the counterpart of FRCP 9(f)) time is material
"for purposes of testing the sufficiency of a pleading, a motion to dismiss because the statute of limitations has run may be utilized, without supporting affidavits, whenever the time alleged in the statement of claim shows that the cause of action * * * has not been brought within the statutory period." [2 Moore's Federal Practice (2d ed.) par. 9.07. See also id., par. 12.10.]
Add to this the additional factor that the applicable statute of limitations in this court is jurisdictional in nature, United States v. Wardwell, supra, and there can be no doubt of the propriety of raising the defense of limitations by a motion to dismiss.
With respect to the defense of res judicata, it is an affirmative defense under Rule 15(b) and is properly asserted by answer. Such is the ordinary practice under the FRCP. 348 Bloomfield Avenue Corp. v. Montclair Mfg. Co., D.C., 90 F. Supp. 1020, 1021. Under the federal rules the defense of res judicata has also been raised by motion, however, and where substantive rights of the parties have not been endangered thereby the manner of raising the defense has not been considered controlling. Id. See also Hartmann v. Time, Inc., 3 Cir., 166 F.2d 127, 1 A.L.R. 2d 370, where res judicata was asserted in a motion for summary judgment, and in which the court noted that a defense of this kind may be raised either by motion to dismiss or by the answer.
Plaintiff's rights in the instant case have been in no way endangered by the procedure herein, and he has had full opportunity *106 for briefing and oral argument. The arguments having been fully considered, there is no legitimate end to be served in delaying the disposition of the case. Accordingly we believe that plaintiff's objections that the court cannot now consider these defenses are without merit.
It may be noted that one objective of the federal rules, and of the revised rules of this court, is to encourage quick presentation of defenses and objections, and to limit successive motions which prolong such presentation.
Except perhaps in the rare instance where a petition would show on its face such defense, where a defendant seeks determination of the defense of res judicata prior to the filing of the answer, the better procedure in this court would appear to be by way of motion for summary judgment under Rule 51, rather than by motion to dismiss under Rule 16(b) and equally so with other affirmative defenses requiring matter outside the pleadings, where there is no genuine issue as to material fact.
It is true that where a motion to dismiss under Rule 16(b) for failure to state a claim presents matter outside the pleadings the court in its discretion may treat the motion as one for summary judgment under Rule 51. It is also true that the court in its discretion may exclude such matter and may deny the motion. It is clear then that the motion should in the first instance be one for summary judgment under Rule 51. On a true motion for summary judgment thus labelled and filed in accordance with Rule 51 the court has no such discretion, and it will receive and consider all such matter outside the pleadings if otherwise properly presented. Moore, id., par. 12.09.
Of course summary judgment will be entered only where there is no genuine issue as to material fact, and where the moving party is entitled to judgment as a matter of law.
Defendant's motion to dismiss the plaintiff's petition will be granted except as to the matter contained in Claim B. The case will be referred to a Commissioner of this court for the purpose of taking testimony. The evidence to be adduced will be limited to testimony and documents relating to Claim B. It is so ordered.
HOWELL, MADDEN, WHITAKER and LITTLETON, Judges, concur.
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509 S.E.2d 378 (1998)
235 Ga. App. 313
BREWER
v.
SCHACHT et al.
No. A98A0945.
Court of Appeals of Georgia.
November 17, 1998.
Certiorari Denied March 5, 1999.
*380 Deedra M. Brewer, Douglasville, for appellant.
Thurbert E. Baker, Attorney General, Christopher A. McGraw, Assistant Attorney General, for appellees.
*379 SMITH, Judge.
This litigation appears before us for the second time. In its first appearance in Professional Practices Comm. v. Brewer, 219 Ga.App. 730, 466 S.E.2d 651 (1995), we affirmed the trial court's denial of defendants' motion for summary judgment. We now affirm the trial court's grant of defendants' renewed summary judgment motion, for the reasons stated below.[1]
A complete and detailed recitation of the facts giving rise to this litigation is given by the federal district court in Brewer v. Purvis, 816 F.Supp. 1560 (M.D.Ga.1993), aff'd, 44 F.3d 1008 (11th Cir.1995). The Professional Practices Commission ("PPC") was created by the State of Georgia to investigate state-certified teachers and other "professional educators," former OCGA § 20-2-792(2), concerning certain violations of state law pertaining to educators or education, the commission's ethics code, and state and local board rules, regulations, or standards. Former OCGA § 20-2-796.[2] The PPC investigated an incident at Cedar Shoals High School in which a student's grades allegedly were changed to enable him to play football. At that time, Brewer was a teacher and head football coach at the school. Brewer v. Purvis, supra at 1563. Appellee Good, an associate director of the PPC, wrote a report recommending that Brewer's teaching certificate be suspended and appellee Schacht, executive director of the PPC, presented that report to the Clarke County School District in an open meeting.[3]Id. at 1566-1567. This action by Brewer followed.
Brewer originally filed a state court complaint under 42 USC § 1983 against the Clarke County School District, its superintendent, the Georgia High School Association and its executive director, the PPC, Schacht, and Good. Professional Practices Comm. v. Brewer, supra at 731, 466 S.E.2d 651. The action was removed to the United States District Court for the Middle District of Georgia, which granted summary judgment on some issues and allowed some claims to continue in federal court. Brewer v. Purvis, supra at 1580. The district court then remanded to the state court Brewer's claims *381 against the PPC and against Schacht and Good in their official capacities only, on the basis of Eleventh Amendment immunity. Id. at 1571. The PPC, Schacht, and Good then moved for summary judgment in the Athens-Clarke County Superior Court.
In Professional Practices Comm. v. Brewer, supra, this Court reversed in part and affirmed in part the trial court's denial of summary judgment to the PPC, Schacht, and Good. While holding that the trial court improperly denied summary judgment on any claim asserted under 42 USC § 1983, we affirmed the denial of summary judgment on the remaining state law tort claims because appellees failed to raise the issue below. Id. at 732, 466 S.E.2d 651. On remand, appellees renewed their motion for summary judgment on the state law claims, and Brewer also moved for summary judgment. In two orders, the trial court denied Brewer's motion and granted summary judgment to appellees.
1. In ruling on appellees' motion for summary judgment, the trial court relied upon OCGA § 9-12-40 and the earlier rulings of the federal district court. In resolving this appeal, we must first consider the scope and effect of the district court's earlier rulings and its remand of the state law claims. The district court relied upon Georgia's Eleventh Amendment immunity to determine that it lacked subject-matter jurisdiction over the claims against the PPC, Brewer v. Purvis, supra at 1569, and that Schacht and Good were also entitled to immunity in their official capacities. Id. at 1570. It therefore remanded those claims to the Clarke County Superior Court. Id. at 1571. The district court reserved ruling on the claims against Schacht and Good in their individual capacities and directed Brewer to submit an additional brief on the subject. Id. In a subsequent order, the district court granted summary judgment on this issue, noting that in its previous opinion it held "that Brewer had not been deprived of his property interests without due process of law in his teaching position and that he did not have a property interest in his coaching position." The district court also noted that "[t]he only other potential property interest that the Plaintiff has is his teaching certificate. That interest, however, is the subject of Plaintiff's claims against the PPC and Good and Schacht in their official capacities, which were remanded to the state court."
In granting summary judgment, the trial court relied upon the findings of the district court, citing OCGA § 9-12-40: "A judgment of a court of competent jurisdiction shall be conclusive between the same parties and their privies as to all matters put in issue or which under the rules of law might have been put in issue in the cause wherein the judgment was rendered until the judgment is reversed or set aside." "The law of res judicata and collateral estoppel is somewhat confusing, primarily due to our failure to clearly and consistently distinguish the two separate doctrines. The former, also known as claim preclusion, requires a plaintiff to bring all his claims against a party (or its privies) arising out of a particular set of circumstances in one action; while the latter, sometimes called issue preclusion, prevents relitigation of an issue already litigated by the parties (or their privies). In other words, under the doctrine of res judicata, a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action. Under the doctrine of collateral estoppel, on the other hand, the second action is upon a different cause of action and the judgment in the prior suit precludes relitigation of issues actually litigated and necessary to the outcome of the first action." (Citations and punctuation omitted.) Sorrells Constr. Co. v. Chandler Armentrout & Roebuck, P.C., 214 Ga.App. 193-194, 447 S.E.2d 101 (1994).
The trial court was correct in holding that issues decided in the federal action cannot be relitigated in this action against Schacht and Good or their employer, the PPC. "Privies are in law so connected with a party to the judgment as to have such an identity of interest that the party to the judgment represented the same legal right." Langton v. Dept. of Corrections, 220 Ga.App. 445, 446(1), 469 S.E.2d 509 (1996). In Langton, we affirmed a grant of summary judgment to the Department of Corrections and *382 several of its employees, relying upon the collateral estoppel effect of an earlier finding, involving Langton's claim for unemployment benefits, that she had been terminated for cause: "Inasmuch as the defendants include the DOC and its privies, the trial court properly granted summary judgment." Id. While a servant ordinarily is not in privity with a master, "a master has privity with his servant and can claim the benefit of an adjudication in favor of the servant[.] [Cit.]" Gilmer v. Porterfield, 233 Ga. 671, 674(2), 212 S.E.2d 842 (1975). Also, Brewer has alleged that the PPC, Schacht, and Good were parties to a conspiracy against him, and "[c]o-conspirators are considered to be in privity for purposes of res judicata. [Cits.]" Mclver v. Jones, 209 Ga.App. 670, 672(a), 434 S.E.2d 504 (1993). And claims against Schacht and Good in their official capacities are the equivalent of suits against the PPC, the governmental entity that employed them. Franklin v. Gwinnett County Pub. Schools, 200 Ga. App. 20, 26(3), 407 S.E.2d 78 (1991). Accordingly, the district court's determinations with regard to Brewer's property interest claims in his coaching and teaching positions are binding upon Brewer in this litigation with Schacht, Good, and their master in privity, the PPC, and the trial court correctly gave collateral estoppel effect to the district court's findings.
2. As the district court correctly observed, the remaining issue is Brewer's property interest in his teaching certificate. "Both the Georgia and Federal Constitutions prohibit the state from depriving `any person of life, liberty, or property, without due process of law.'" (Footnote omitted.) Atlanta City School Dist. v. Dowling, 266 Ga. 217, 218, 466 S.E.2d 588 (1996). "[0]nce the State issues a professional license, such as the teaching license at issue in this case, its continued possession may become essential to the pursuit of a livelihood. Suspension of issued licenses thus involves state action that adjudicates important property interests of the licensees. In such cases, the licenses are not to be taken away without that procedural due process required by the Fourteenth Amendment." (Citations and punctuation omitted.) Gee v. Professional Practices Comm., 268 Ga. 491, 493(1), 491 S.E.2d 375 (1997).
In this case, as in Gee, the statutory scheme "more than satisfies the requirements of procedural due process." Id. "In cases such as this, due process requires that some form of a hearing must be held before one is finally deprived of their property interest in a professional license." Id. But Brewer's teaching certificate was never revoked or even suspended. After the hearing required by procedural due process, the hearing tribunal of the PPC declined to impose the recommended suspension. Because the review process not only was available but redressed any procedural due process deprivation that Brewer may have suffered, he cannot maintain this claim. Dowling, supra at 219, 466 S.E.2d 588; see also Rogers v. Ga. Ports Auth., 183 Ga.App. 325, 328(2), 358 S.E.2d 855 (1987).
3. Brewer also contends that he may maintain a claim for deprivation of a state constitutional liberty interest on the basis of injury to his reputation. The rule governing such claims in the United States Court of Appeals for the Eleventh Circuit has been adopted by this Court: "Under federal law, a plaintiff can recover for a deprivation of reputational liberty upon proof of the following elements: (1) a false statement (2) of a stigmatizing nature (3) attending a governmental employee's discharge (4) made public (5) by the governmental employer (6) without a meaningful opportunity for employee name clearing. Buxton v. City of Plant City, Fla., 871 F.2d 1037, 1042-43 (11th Cir.1989). [Cit.]" (Punctuation omitted.) Maxwell v. Mayor &c. of Savannah, 226 Ga.App. 705, 710(3), 487 S.E.2d 478 (1997). In Rogers, supra at 328(2), 358 S.E.2d 855, this Court applied this rule to a liberty interest claim.[4] As the trial court correctly observed, appellees here were not Brewer's employers. Brewer contends that *383 a reputational liberty claim is not confined to a statement made by a governmental employer in connection with a discharge, citing a single authority from another federal circuit that has not adopted the Eleventh Circuit rule. But the Eleventh Circuit has declined to expand the limits of its test for a reputational liberty claim into areas generally governed by state tort law. A recent decision makes clear that a false statement made by a government official with intent to drive a non-employee plaintiff out of business, even if it results in injury to reputation and employment prospects, "may well be a tort, but it is not a violation of the right to due process of law." Cypress Ins. Co. v. Clark, 144 F.3d 1435, 1438 (11th Cir.1998). Because appellees were not Brewer's employers, Brewer has failed to show the required elements of a reputational liberty claim.
4. (a) We next consider the trial court's grant of summary judgment, based upon the statute of limitation, on Brewer's defamation claims. To the extent that Brewer's claims seek damages for injury to reputation, we agree with the trial court that such claims are barred by the applicable statute of limitation. Actions for injuries to the reputation must be brought "within one year after the right of action accrues." OCGA § 9-3-33. Brewer's complaint was not filed until February 7, 1991, more than one year after the PPC's report was submitted in an open meeting on February 1,1990.
Brewer argues that the cause of action did not arise until injury occurred. This contention was considered and rejected in Cunningham v. John J. Harte Assoc., 158 Ga.App. 774, 282 S.E.2d 219 (1981). "[A]ctions for injuries to the reputation, such as those asserted by the plaintiff in the instant case, must be brought within one year from the date of the alleged defamatory acts regardless of whether or not plaintiff had knowledge of the act or acts at the time of their occurrence." (Citations and punctuation omitted.) Id. at 775, 282 S.E.2d 219. The trial court correctly granted summary judgment on Brewer's defamation claims.
(b) To the extent that Brewer's claims seek damages for tortious interference with his employment contract, the one-year statute of limitation for defamation actions is inapplicable, even if the interference allegedly was accomplished through defamation. Lee v. Gore, 221 Ga.App. 632, 634-635, 472 S.E.2d 164 (1996). But this does not end our analysis. To state a claim for tortious interference with employment, Brewer must show "the existence of an employment relationship, interference by one who is a stranger to the relationship, and resulting damage to the employment relationship. In addition, it must be shown that the alleged intermeddler acted maliciously and without privilege." (Citations omitted.) Id. at 634, 472 S.E.2d 164. Any claim for tortious interference with Brewer's employment must fail because, as the trial court correctly found, appellees' actions were privileged under OCGA § 51-5-7.
The portion of that Code section relevant here states: "The following communications are deemed privileged: (1) Statements made in good faith in the performance of a public duty." While the privileges provided in OCGA § 51-5-7 are ordinarily asserted in defense to a defamation claim, they may also be asserted as a defense to a claim for tortious interference with contractual relations. NationsBank v. SouthTrust Bank of Ga., 226 Ga.App. 888, 892(1)(A)(1), 487 S.E.2d 701 (1997) (applying OCGA § 51-5-7(3)).
As noted above, the PPC and its employees acting in their official capacity were authorized by statute to investigate alleged violations of law, rules, regulations, or standards by certified teachers. They also were authorized to present their report and recommendations to the Clarke County School District under former OCGA § 20-2-797(a).
In order to overcome this privilege, Brewer must show actual malice in making the statements. Kitfield v. Henderson, Black & Greene, 231 Ga.App. 130, 132(2), 498 S.E.2d 537 (1998) (privilege under OCGA § 51-5-7(3)). Although Brewer asserts that appellees did not act in good faith, he "has not pointed to specific evidence giving rise to a triable issue." (Citation and punctuation omitted.) Fly v. Kroger Co., 209 Ga.App. 75, 78(2), 432 S.E.2d 664 (1993) *384 (good faith statement in performance of public duty under OCGA § 51-5-7(1)). Unsupported inferences or conjecture regarding a defendant's motivation do not suffice to show malice. Cohen v. Hartlage, 179 Ga.App. 847, 851-852, 348 S.E.2d 331 (1986) (libel). This is particularly true when the defendant testifies affirmatively that he did not know the plaintiff before conducting the investigation. Id. Both Schacht and Good testified that they had no personal or professional knowledge of or relationship with Brewer before the investigation began. Brewer therefore has failed to show the elements of a claim for tortious interference with contract.
5. Finally, Brewer complains that the trial court erred in entering its own order rather than merely reducing to writing a verbal ruling made at the motion hearing by a predecessor trial judge before his retirement.[5] But that verbal ruling was never reduced to writing, and it is axiomatic that "what the judge orally declares is no judgment until the same has been reduced to writing and entered as such. [Cits.]" Tyree v. Jackson, 226 Ga. 690, 694(2), 177 S.E.2d 160 (1970).
Judgment affirmed.
JOHNSON, P.J., and HAROLD R. BANKE, Senior Appellate Judge, concur.
NOTES
[1] A trial court has discretion to consider a second motion for summary judgment after having previously denied summary judgment. Etheridge v. Fried, 183 Ga.App. 842(1), 360 S.E.2d 409 (1987).
[2] OCGA §§ 20-2-790 through 20-2-800 were repealed by Ga. L. 1998, p. 750, effective July 1, 1998.
[3] After a full evidentiary hearing, a hearing tribunal of the PPC declined to impose a suspension but instead recommended a public reprimand.
[4] In Rogers,. the plaintiff asserted only state law claims seeking reinstatement and supplemental salary payments. Neither that opinion nor the case's earlier appearance, Ga. Ports Auth. v. Rogers, 173 Ga.App. 538, 327 S.E.2d 511 (1985), indicates whether Rogers's liberty interest was asserted on federal or state constitutional grounds.
[5] That ruling granted in part and denied in part appellees' motion for summary judgment.
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22 F.3d 300
Boreland (Emanuel)v.Superintendent Vaughn, Lt. Evans, Clark (Mary Ann), Lehman(Joseph), Commonwealth of Pennsylvania (Attorney General)
NO. 93-1272
United States Court of Appeals,Third Circuit.
Mar 28, 1994
Appeal From: E.D.Pa.,
Reed, J.
1
AFFIRMED.
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169 F.Supp.2d 1318 (2001)
Helen HUFF, Plaintiff,
v.
William A. HALTER,[1] Acting Commissioner of Social Security, Defendant.
No. Civ.A. 00-0665-CB-M.
United States District Court, S.D. Alabama, Southern Division.
April 2, 2001.
Byron A. Lassiter, Booker & Lassiter, P.C., Mobile, AL, for plaintiff.
Patricia Nicole Beyer, U.S. Attorney's Office, Mobile, AL, for defendant.
ORDER
BUTLER, Chief Judge.
After due and proper consideration of all pleadings in this file, and a de novo determination of those portions of the Recommendation *1319 to which objection is made, the Recommendation of the Magistrate Judge made under 28 U.S.C. § 636(b)(1)(B) is adopted as the opinion of this Court.
It is ORDERED that the decision of the Commissioner be AFFIRMED and that this action be DISMISSED.
REPORT AND RECOMMENDATION
MILLING, United States Magistrate Judge.
In this action under 42 U.S.C. 1383(c)(3), Plaintiff seeks judicial review of an adverse social security ruling which denied a claim for Supplemental Security Income (hereinafter SSI). The action was referred for report and recommendation pursuant to 28 U.S .C. § 636(b)(1)(B). Oral argument was heard on March 19, 2001. Upon consideration of the administrative record, the memoranda of the parties, and oral argument, it is recommended that the decision of the Commissioner be affirmed, that this action be dismissed, and that judgment be entered in favor of Defendant William A. Halter and against Plaintiff Helen Huff on all claims.
This Court is not free to reweigh the evidence or substitute its judgment for that of the Secretary of Health and Human Services, Bloodsworth v. Heckler, 703 F.2d 1233, 1239 (11th Cir.1983), which must be supported by substantial evidence. Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971). The substantial evidence test requires "that the decision under review be supported by evidence sufficient to justify a reasoning mind in accepting it; it is more than a scintilla, but less than a preponderance." Brady v. Heckler, 724 F.2d 914, 918 (11th Cir.1984), quoting Jones v. Schweiker, 551 F.Supp. 205 (D.Md.1982).
Plaintiff was born April 1, 1951. At the time of the administrative hearing, Huff was forty-seven years old, had completed an eleventh-grade education (Tr. 93-94), and had previous work experience as a sitter for the elderly (Tr. 83). In claiming benefits, Plaintiff alleges disability due to seizure disorder, systemic hypertension, alcoholic cardiomyopathy, and chronic degenerative arthritis (Tr. 20).
The Plaintiff protectively filed an application for SSI on September 8, 1994 (Tr. 105-08). Benefits were denied following a hearing by an Administrative Law Judge (ALJ) who determined that although she could not return to her past relevant work, she was capable of performing specific sedentary jobs (Tr. 13-24). Plaintiff requested review of the hearing decision (Tr. 12) by the Appeals Council, but it was denied (Tr. 5-7).
Plaintiff claims that the opinion of the ALJ is not supported by substantial evidence. Specifically, Huff alleges that: (1) The ALJ did not properly consider the opinion and conclusions by her treating physician; (2) the ALJ posed an incomplete hypothetical to the vocational expert (hereinafter VE); and (3) she is unable to perform the jobs which the ALJ said she was capable of performing (Doc. 11).
Plaintiff's first claim is that the ALJ did not accord proper legal weight to the opinions, diagnoses and medical evidence of Plaintiff's physician. It should be noted that "although the opinion of an examining physician is generally entitled to more weight than the opinion of a non-examining physician, the ALJ is free to reject the opinion of any physician when the evidence supports a contrary conclusion." Oldham v. Schweiker, 660 F.2d 1078, 1084 (5th Cir.1981);[2]see also 20 C.F.R. § 404.1527 (2000).
*1320 In making this claim, Huff references the opinions of Dr. Nohammed Nayeem with regard to her pain (Doc. 11, pp. 5-11). Even more specifically, Plaintiff challenges the ALJ's use of Nayeem's pain evaluation from September 11, 1996 rather than the one more recently submitted (cf. Tr. 270-71, 353).[3] On the 1996 form, the treating physician indicated that Huff did not have "any significant degree" of pain, that physical activity would increase her pain some "but not to such an extent as to prevent adequate functioning," and that her pain medications might limit her to some degree but would not cause serious problems (Tr. 270-71). On the more recent form, completed nearly two years later, Nayeem stated that Plaintiff's pain would keep her from adequately performing work activities; he indicated no change in the effect her medications would have on her performance (Tr. 353). The Court notes that the new form does not allow the physician to evaluate the relationship between physical activity and pain. Id.
The Court notes Huff received very little medical treatment between September 11, 1996 and August 11, 1998. Plaintiff was admitted to Vaughn Regional Medical Center for two days on October 9, 1997 for an "acute onset seizure disorder due to lack of compliance with medication;" secondary diagnoses referenced heart and alcohol problems (Tr. 329; see generally Tr. 324-40). Plaintiff was also seen at Vaughn Thomas Medical Center during 1997-98 and though she complained of pain, there was no confirmation of it by the physicians (Tr. 346-51).
The Court finds that the medical evidence does not support increased pain as indicated by Nayeem and asserted by Huff. The two physical capacity evaluations completed by the treating physician on the same dates as the pain evaluations show no significant difference in ability (cf. Tr. 269; 356). Defendant argues, and frankly the Court agrees, that the more recent physical capacities evaluation actually demonstrates that Plaintiff had more ability than she did two years earlier, for the most part (Doc. 12, pp. 5-6).
Huff asserts that "it is not unreasonable to assume that Ms. Huff's pain increased during that time span" of two years (Doc. 11, p. 10). The Court notes that while the assumption may not be unreasonable, the objective medical evidence does not support it. Furthermore, the Court completely fails to understand what difference Huff's changing her alleged onset date makes with regard to the relationship between Dr. Nayeem's opinions and the objective medical evidence (see Doc. 11, p. 10). While the Court agrees that the ALJ's observations of Plaintiff at the hearing do not provide support for his opinion (Doc. 11, p. 11), the lack of medical evidence does. In short, Plaintiff has not demonstrated that her pain increased to the degree indicated by Dr. Nayeem's reports. This claim is of no merit.
Huff next claims that the ALJ posed an incomplete hypothetical to the VE (Doc. 11, pp. 11-12). Because Plaintiff's argument relies on arguments made in the first claim, the Court will not discuss this second claim, finding that it, too, lacks merit.
Huff next claims that she is unable to perform the jobs which the ALJ said she was capable of performing (Doc. 11, pp. 12-14). Plaintiff specifically argues that the VE identified certain jobs as being within her abilities though, according to the Dictionary of Occupational Titles *1321 (DOT), those jobs require abilities and skills which she does not possess.
The Eleventh Circuit Court of Appeals has specifically held "that when the VE's testimony conflicts with the DOT, the VE's testimony `trumps' the DOT." Jones v. Apfel, 190 F.3d 1224, 1229-30 (11th Cir.1999), cert. denied, 529 U.S. 1089, 120 S.Ct. 1723, 146 L.Ed.2d 644 (2000). In reaching this decision, the Jones Court noted that the DOT states that it is not a comprehensive source of information and that it should be supplemented with local job information. Id.
This Court has also examined the DOT and notes that, contrary to Plaintiff's argument, two of the three jobs identified by the VE are unskilled positions. See Dictionary of Occupational Titles xiii (4th ed.1991) at 739.687-182 (table worker or spotter; sedentary; unskilled) and 713.687-018 (final assembler (optical goods); sedentary; unskilled). While one of the three suggested positions was considered to be semi-skilled work, see DOT at 713.687-022 (inspector (optical goods); sedentary), the VE clearly identified at least two jobs which exist in significant numbers in the national economy. Huff's claim is of no merit.
Plaintiff has raised thee different claims in bringing this action. All are without merit. Upon consideration of the entire record, the Magistrate Judge finds "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Perales, 402 U.S. at 401, 91 S.Ct. 1420. Therefore, it is recommended that the Secretary's decision be affirmed, see Fortenberry v. Harris, 612 F.2d 947, 950 (5th Cir.1980), that this action be dismissed, and that judgment be entered in favor of Defendant Kenneth S. Apfel and against Plaintiff Helen Huff on all claims.
MAGISTRATE JUDGE'S EXPLANATION OF PROCEDURAL RIGHTS AND RESPONSIBILITIES FOLLOWING RECOMMENDATION AND FINDINGS CONCERNING NEED FOR TRANSCRIPT
1. Objection. Any party who objects to this recommendation or anything in it must, within ten days of the date of service of this document, file specific written objections with the clerk of court. Failure to do so will bar a de novo determination by the district judge of anything in the recommendation and will bar an attack, on appeal, of the factual findings of the magistrate judge. See 28 U.S.C. § 636(b)(1)(C); Lewis v. Smith, 855 F.2d 736, 738 (11th Cir.1988); Nettles v. Wainwright, 677 F.2d 404 (5th Cir. Unit B, 1982)(en banc). The procedure for challenging the findings and recommendations of the magistrate judge is set out in more detail in SD ALA LR 72.4 (June 1, 1997), which provides that:
A party may object to a recommendation entered by a magistrate judge in a dispositive matter, that is, a matter excepted by 28 U.S.C. § 636(b)(1)(A), by filing a "Statement of Objection to Magistrate Judge's Recommendation" within ten days after being served with a copy of the recommendation, unless a different time is established by order. The statement of objection shall specify those portions of the recommendation to which objection is made and the basis for the objection. The objecting party shall submit to the district judge, at the time of filing the objection, a brief setting forth the party's arguments that the magistrate judge's recommendation should be reviewed de novo and a different disposition made. It is insufficient to submit only a copy of the original brief submitted to the magistrate judge, although a copy of the original brief may be submitted or referred to and incorporated into the brief in support of the *1322 objection. Failure to submit a brief in support of the objection may be deemed an abandonment of the objection.
A magistrate judge's recommendation cannot be appealed to a Court of Appeals; only the district judge's order or judgment can be appealed.
2. Transcript (applicable where proceedings tape recorded). Pursuant to 28 U.S.C. § 1915 and Fed.R.Civ.P. 72(b), the magistrate judge finds that the tapes and original records in this action are adequate for purposes of review. Any party planning to object to this recommendation, but unable to pay the fee for a transcript, is advised that a judicial determination that transcription is necessary is required before the United States will pay the cost of the transcript.
March 19, 2001.
NOTES
[1] William A. Halter became Acting Commissioner of Social Security on January 20, 2001. Pursuant to Rule 25(d)(1) of the Federal Rules of Civil Procedure, William A. Halter should be substituted, therefore, for Commissioner Kenneth S. Apfel as the Defendant in this suit. No further action need be taken to continue this suit by reason of the last sentence of section 205(g) of the Social Security Act, 42 U.S.C. § 405(g).
[2] The Eleventh Circuit, in the en banc decision Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981), adopted as precedent decisions of the former Fifth Circuit rendered prior to October 1, 1981.
[3] The more recent form is undated, though Huff asserts that it dates from August 11, 1998 (Doc. 11, p. 7); the ALJ concurs with that conclusion (Tr. 21). The Court notes that that date post-dates the most recent hearing by four days (see Tr. 79).
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Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/09/2017 09:12 AM CST
- 149 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
STATE EX REL. COUNSEL FOR DIS. v. HALSTEAD
Cite as 298 Neb. 149
State of Nebraska ex rel. Counsel for Discipline
of the Nebraska Supreme Court, relator, v.
Rodney A. H alstead, respondent.
___ N.W.2d ___
Filed November 3, 2017. No. S-16-774.
1. Disciplinary Proceedings: Appeal and Error. Because attorney disci-
pline cases are original proceedings before the Nebraska Supreme Court,
the court reviews a referee’s recommendations de novo on the record,
reaching a conclusion independent of the referee’s findings.
2. Disciplinary Proceedings. To determine whether and to what extent
discipline should be imposed in a lawyer discipline proceeding, the
Nebraska Supreme Court considers the following factors: (1) the nature
of the offense, (2) the need for deterring others, (3) the maintenance of
the reputation of the bar as a whole, (4) the protection of the public, (5)
the attitude of the offender generally, and (6) the offender’s present or
future fitness to continue in the practice of law.
3. ____. The propriety of a sanction must be considered with reference to
the sanctions imposed in prior similar cases.
4. ____. Cumulative acts of attorney misconduct are distinguishable from
isolated incidents, therefore justifying more serious sanctions.
Original action. Judgment of suspension.
Julie L. Agena, Assistant Counsel for Discipline, for
relator.
Thomas J. Anderson, P.C., L.L.O., for respondent.
Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy,
K elch, and Funke, JJ.
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298 Nebraska R eports
STATE EX REL. COUNSEL FOR DIS. v. HALSTEAD
Cite as 298 Neb. 149
Per Curiam.
INTRODUCTION
This is an attorney discipline case in which the only ques-
tion before this court is the appropriate sanction. Rodney A.
Halstead admitted to authoring and filing annual guardianship
reports containing false statements over a period of 6 years.
The referee recommended that Halstead be suspended from
the practice of law for 1 year with other conditions set forth in
more detail below. Because this is a serious offense which was
repeated year after year, we adopt the referee’s recommenda-
tion and enter a judgment of suspension.
BACKGROUND
Halstead was admitted to the practice of law in the State of
Nebraska on September 25, 1991. At all relevant times, he was
engaged in the practice of law in Omaha, Nebraska.
Grounds for Attorney Discipline
In August 2009, Halstead was appointed permanent guardian
of an incapacitated adult (the ward). He was required to file
annual reports on the condition of the ward and, among other
items, list the ward’s current address and indicate how many
times and on what dates he saw the ward in the past year.1
Halstead filed these mandatory reports with the county court
for 6 consecutive years, 2010 through 2015.
However, each report contained information which Halstead
knew to be false. In annual reports filed in 2010 and 2011,
Halstead handwrote virtually identical responses: “I have seen
[the ward] about once a month [and] check via phone more
often.” Then, in 2012, his typical response changed and he
handwrote, “I have been kept updated mostly by telephone.”
Halstead handwrote this same response in his 2013 and 2014
report. Finally, in his 2015 report, Halstead replied in short-
hand and handwrote, “updated by telephone.” In fact, Halstead
had not visited the ward or spoken to anyone at the ward’s
1
See Neb. Rev. Stat. § 30-2628(a)(6) (Reissue 2016).
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STATE EX REL. COUNSEL FOR DIS. v. HALSTEAD
Cite as 298 Neb. 149
assisted living facility since 2009. If he had, he would have
learned that the ward had moved out of the assisted living
facility in 2011. Halstead learned of the ward’s actual where-
abouts only after a court-appointed visitor found the ward at
another address and reported Halstead’s neglect to the court.
Formal Charges
On August 15, 2016, Counsel for Discipline of the Nebraska
Supreme Court filed formal charges against Halstead, alleg-
ing that he violated his oath of office as an attorney and Neb.
Ct. R. of Prof. Cond. §§ 3-501.1, 3-501.3, 3-501.4(a)(2),
3-503.3(a)(1) and (a)(3), and 3-508.4(a) and (c). Halstead
admitted to these allegations in his answer, and we sustained
Counsel for Discipline’s motion for judgment on the pleadings
limited to the facts. We then appointed a referee for the taking
of evidence limited to the appropriate discipline.
R eferee’s R eport
After an evidentiary hearing, the referee reported his find-
ings of fact and recommendations for the appropriate sanction.
The report indicated that Halstead understood the seriousness
of his misconduct. Specifically, it stated that Halstead was
“direct and not evasive,” that he “appeared genuinely uncom-
fortable and remorseful,” and that it “appeared that his guilt
and regret were sincere.” It further stated that Halstead admit-
ted to authoring and filing false reports year after year, but
that he denied deliberately trying to mislead the court. Instead,
Halstead maintained, “I believed that I was reporting his cur-
rent condition as I knew it at the time.” The referee concluded
that Halstead was not deliberately misleading the court for the
purpose of covering up anything, but noted, “[H]is very lack
of purpose is what is most troubling about the repeated neglect
and the repeated false filings.”
The referee found that Halstead’s repeated violation of
the Rules of Professional Conduct in the same way over an
extended period of time was a strongly aggravating factor.
This factor was made worse by the mandatory annual report-
ing requirements.
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STATE EX REL. COUNSEL FOR DIS. v. HALSTEAD
Cite as 298 Neb. 149
The referee also identified certain mitigating factors. Such
factors included the fact that Halstead was fully cooperative
with Counsel for Discipline, that Halstead had no prior disci-
plinary issues, that Halstead’s actions did not result in harm to
the ward, that Halstead had an extensive community service
record, and that Halstead understood the gravity of his offense
and was sincerely remorseful. Halstead offered 22 letters in
support from other attorneys in the community. However, the
referee gave no weight to these letters, because none of the
writers were aware of the actual charges against Halstead or
otherwise explained what may have been the cause of the
neglect or the false reporting.
With respect to the sanctions to be imposed, and giv-
ing weight to these aggravating and mitigating factors, the
referee recommended that Halstead be suspended from the
practice of law for 1 year. He also recommended that prior to
readmission, Halstead be required to satisfactorily complete
continuing legal education credits in legal ethics and office
management. Finally, the referee recommended a period of
supervision upon Halstead’s readmission and a prohibition on
accepting guardianship or conservatorship appointments for a
period of time.
ASSIGNMENT OF ERROR
Halstead takes exception to the referee’s recommended sanc-
tion but does not challenge the truth of the referee’s findings.
Therefore, the only question before this court is the appropri-
ate discipline.
STANDARD OF REVIEW
[1] Because attorney discipline cases are original proceed-
ings before this court, we review a referee’s recommendations
de novo on the record, reaching a conclusion independent of
the referee’s findings.2
2
State ex rel. Counsel for Dis. v. Gast, 296 Neb. 687, 896 N.W.2d 583
(2017).
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STATE EX REL. COUNSEL FOR DIS. v. HALSTEAD
Cite as 298 Neb. 149
ANALYSIS
[2] To determine whether and to what extent discipline
should be imposed in a lawyer discipline proceeding, the
Nebraska Supreme Court considers the following factors: (1)
the nature of the offense, (2) the need for deterring others, (3)
the maintenance of the reputation of the bar as a whole, (4)
the protection of the public, (5) the attitude of the offender
generally, and (6) the offender’s present or future fitness to
continue in the practice of law.3 The first four factors call for
a serious sanction in response to Halstead’s actions and inac-
tions, and they are important considerations in assessing the
last two factors.
Halstead violated several disciplinary rules, including a rule
which describes the special duties of attorneys in their role as
officers of the court to protect the integrity of the adjudicative
process.4 This rule sets forth a duty of candor such that “[a]
lawyer shall not knowingly . . . make a false statement of fact
or law to a tribunal or fail to correct a false statement of mate-
rial fact or law previously made to the tribunal by the lawyer.”5
Violation of this rule is a serious offense, and repeated viola-
tion indicates indifference to an attorney’s important legal
obligations and fitness for the practice of law.6
[3] In addition to the above six factors, the propriety of a
sanction must be considered with reference to the sanctions
imposed in prior similar cases.7 The referee relied upon prior
cases in which the attorney misconduct involved filing an affi-
davit in court containing allegations known to be false,8 lying
to a court and to the Department of Veterans Affairs to aid a
3
Id.
4
See § 3-503.3, comment 2.
5
§ 3-503.3(a).
6
See § 3-508.4, comment 2.
7
See State ex rel. Counsel for Dis. v. Gast, supra note 2.
8
See State ex rel. NSBA v. Zakrzewski, 252 Neb. 40, 560 N.W.2d 150
(1997).
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STATE EX REL. COUNSEL FOR DIS. v. HALSTEAD
Cite as 298 Neb. 149
client,9 notarizing and filing documents without being in the
presence of the signer,10 knowingly filing a false easement,11
and neglecting a client’s case and altering a court document.12
The sanctions in those cases all involved periods of suspension
ranging from 1 to 2 years.
[4] Conversely, Halstead argues that cases resulting in pub-
lic reprimand are more appropriate for comparison to his
misconduct. He cites to cases in which the attorney miscon-
duct involved simultaneously representing two clients who
had conflicting and adverse interests in the same or similar
transaction13 and failing to timely manage and resolve probate
matters.14 However, these cases did not involve a violation of
the duty of candor to a tribunal. Furthermore, these cases each
involved isolated incidents of attorney misconduct whereas
Halstead’s misconduct included repeat violations over 6 years.
And cumulative acts of attorney misconduct are distinguish-
able from isolated incidents, therefore justifying more seri-
ous sanctions.15 As a result, we do not agree that these cases
are comparable.
The referee relied on appropriate cases for the purpose of
determining a proportionate sanction for Halstead’s offense.
The serious nature of the offense and the fact that it was
repeated year after year with no explanation suggests that
Halstead is indifferent to the special duties he owes the court
9
See State ex rel. NSBA v. Scott, 252 Neb. 698, 564 N.W.2d 588 (1997).
10
See State ex rel. Counsel for Dis. v. Mills, 267 Neb. 57, 671 N.W.2d 765
(2003).
11
See State ex rel. Counsel for Dis. v. Rokahr, 267 Neb. 436, 675 N.W.2d
117 (2004).
12
See State ex rel. Counsel for Dis. v. Gilner, 280 Neb. 82, 783 N.W.2d 790
(2010).
13
See State ex rel. Counsel for Dis. v. Peppard, 291 Neb. 948, 869 N.W.2d
700 (2015).
14
See State ex rel. Counsel for Dis. v. Connor, 289 Neb. 660, 856 N.W.2d
570 (2014).
15
See id.
- 155 -
Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
STATE EX REL. COUNSEL FOR DIS. v. HALSTEAD
Cite as 298 Neb. 149
as an officer of the legal system. And neglect of these respon-
sibilities compromises the integrity of the legal profession and
the public interest which it serves.
We recognize that Halstead fully cooperated with the
Counsel for Discipline, had practiced for many years, and had
no previous disciplinary history. And we have considered the
other mitigating factors identified by the referee. But the duty
of candor to the tribunal lies at the heart of an attorney’s role
as an officer of the court. And this was no slip of the tongue.
The falsehoods were made in writing and were repeated from
year to year.
Therefore, upon our de novo review of the record, this court
determines that Halstead should be suspended from the prac-
tice of law and required to comply with the other requirements
set forth below.
CONCLUSION
Halstead’s exception with regard to the recommended sanc-
tion is overruled. Halstead is hereby suspended from the prac-
tice of law for a period of 1 year, effective immediately, and,
before applying for reinstatement, he must complete continu-
ing legal education credits in legal ethics and office manage-
ment. After the period of suspension, Halstead may apply
for reinstatement upon a showing of his fitness to practice
law and compliance with all requirements. Upon reinstate-
ment, Halstead shall be subject to a 1-year probation, during
which time he shall not accept guardianship or conservator-
ship appointments.
Halstead shall comply with Neb. Ct. R. § 3-316 (rev. 2014),
and upon failure to do so, he shall be subject to punishment
for contempt of this court. Halstead is directed to pay costs
and expenses in accordance with Neb. Rev. Stat. §§ 7-114 and
7-115 (Reissue 2012) and Neb. Ct. R. §§ 3-310(P) (rev. 2014)
and 3-323(B) within 60 days after an order imposing costs and
expenses, if any, is entered by this court.
Judgment of suspension.
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258 F.2d 352
Glen TITUS, Appellant,v.THE SANTORINI and Sigalas and Kulukundis, its claimants, Appellee.
No. 15592.
United States Court of Appeals Ninth Circuit.
Aug. 5, 1958.
Peterson, Possi & Lent, Frank H. Possi, Gerald H. Robinson, Portland, Or., for appellant.
Wood, Matthiessen, Wood & Tatum, Erskine B. Wood, John R. Brooke, Portland, Or., for appellees.
Before FEE, CHAMBERS and HAMLEY, Circuit Judges.
CHAMBERS, Circuit Judge.
1
On February 5, 1955, Titus, a longshoreman, was injured on the deck of the S. S. Santorini as it lay at the dock in Coos Bay, Oregon, taking on a load of lumber. At the moment he was acting as hatch tender. As the load came up in the slings attached to the hook, both a preventer wire and a rope guy broke. Each was fastened to the upper end of the starboard boom and to the vessel's rail to give stability to the boom. As a result the winch tender naturally lost most of his control over the boom and the load in the slings. Titus got away from the load, but in doing so he slipped and suffered a bad break at his right ankle. He was an employee of the Independent Stevedoring Company which was connected with the ship and its owners only by its contract of employment. Passing over his compensation rights existing by virtue of his employment, he brought this suit in admiralty alleging negligence and unseaworthiness.
2
At the conclusion of the trial, the trial judge indicated his intention to rule in favor of Titus as libellant. After the case was briefed by counsel the court reversed itself and entered findings of fact for the defendant.1
3
It is now the law that a longshoreman does not have to be at sea to take advantage of unseaworthiness (if that caused his injury) and he doesn't have to be a seaman to obtain the benefits of the rule. See Seas Shipping Co. v. Sieracki, 328 U.S. 85, 66 S.Ct. 872, 90 L.Ed. 1099.
4
McAllister v. United States, 348 U.S. 19, 75 S.Ct. 6, 99 L.Ed. 20, laid to rest the right of appellate courts to try admiralty cases de novo, a prerogative which had been little used anyway in recent years.
5
But still this court must examine the facts to determine if the ruling was clearly erroneous. There is no suggestion in the proof that the flight of Titus when the wire and rope broke was ill-advised or that he acted unreasonably in the emergency. Possibly there was evidence upon which the trial court could have found unseaworthiness and therefore for Titus. But the trial court did not do so. Perhaps it might have done so if it had disbelieved some of the defense witnesses.
6
This court sitting on appeal a long distance from Coos Bay and without witnesses cannot announce what the cause of the breaking was. But from the evidence it believes it can put the possible causes in categories.
7
First, the wire and rope could have broken because they were inherently too small to do the job. They could have broken because they previously had been damaged or were worn out. They could have broken because of some latent defect in the manufacture. And they could have broken because of some negligence in the method of their installation. But there was evidence which the court accepted (and made findings thereof) that the wire and rope were newly installed the day before, were in good condition and had great margins of safety in their tensile strength; that there was no latent or patent defect upon subsequent examination of the wire at its point of breaking; and that the method of installation, if not the best approved method, did not contribute to the breaking.
8
Second, there was the possibility that the rope and wire broke because of some defect in the winch equipment. Appellant's witnesses were positive there was nothing wrong in the design or operating condition of the winches.
9
Third, there was the possibility that the winch was improperly operated or the loading was improperly done by a fellow longshoreman at the instant when the breaking occurred. In this field, the outlawed practice of winch operators 'tightlining' their cables and producing in unusual strain on the wires and lines is the most typical. But there are others. There was no direct evidence that the loading was conducted in any way but in a skillful manner. But if the causation of the break was in this third category, negligence at the moment of a fellow longshoreman, the ship would not be liable.2
10
Fourth, only to complete the group of possible causes, it may be mentioned that some mysterious outside force may have clipped wire and rope. All would agree this did not happen.
11
In this case appellant, as did appellee, devoted much attention to the wire, but appellant devoted little attention to the rope.3 The rope, said the experts, was more than adequate for the normal stress under normal operation with the load here involved.4 The guy rope and the preventer wire apparently supplemented each other and did not perform independent functions. Whether the boom and load would have gone out of control if only the wire or the rope had broken is not clear. But this simultaneous breaking was an arresting circumstance, one that could not help but cause a trial judge to wonder. Certainly this coincidence would cause a court to question whether there were latent defects in the manufacture of both the rope and the wire.
12
There is one possibility overlapping perhaps between our second and third groups of causes which the parties do not sharply point up. There was testimony (and possibly the knowledge thereof is in the general domain not requiring experts) that excessive stress may be applied to wire (here stretching) which is released before the wire breaks, yet leaves the wire so weakened that a later less powerful pull when applied will cause the wire to break at a point far below the wire's rated tensile strength. One may assume the same rule of physics is applicable to rope.
13
Suppose the wire and rope were weakened by negligent or willful misconduct of the longshoremen's crew, either yesterday or an hour ago. Wouldn't that defect have to be charged to the ship as unseaworthiness?5 The court had ultimately satisfied itself that appellant's theories of causation were untenable. Further, it came up with an abiding doubt as to what caused breaking. So the question just posed does not arise and will have to be answered in this circuit in another case.
14
This court is not convinced that the instantaneous acts of a follow longshoreman rendering the equipment unseaworthy and injury to the longshoremen are chargeable to ship as unseaworthiness.6 If this be characterized as slicing the law too fine, one may counter with an illustration. Suppose a longshoreman throws a match in a bucket of gasoline on the deck. The result is an explosion which simultaneously and immediately renders the ship unseaworthy and injures the second longshoreman. Would the ship be held on its implied in law warranty of seaworthiness for the injury to the second longshoreman?
15
Practically, the trial court having eliminated other causes,7 it was left with one likely cause (uncertain in time of origin) of the breaking of the preventer wire and the rope guy: overstressing in the loading operation at Coos Bay either at the time the rope broke, or a prestressed, preweakening earlier in the day which later caused the breaking under pressure which was lower than would have been required to accomplish the breaks if the rated strengths of the wire and rope had been maintained.
16
Appellant has a strong argument when he points to the sentence in the court's opinion8 as follows: 'There was some suggestion that the break could have been caused by tight lining-- one winch pulling against the other until the force exerted was greater than the strength of the wire causing it to give way. It should be noted that this was only a suggestion; there is no evidence in the record that such was the case.' One should note that this comment does not eliminate other mishandling of the equipment. Further, the opinion as a whole shows that the court (devoting almost its sole attention to the wire to the exclusion of the rope, as did counsel) was expressing an abiding belief that appellant had not proved what caused the breaking other than that it had been shown that 'the force exerted on it was greater than its breacking strength.' The court was impressed with the ship's evidence which negatived most of the possible causes of breakage.
17
But the opinion cannot help the libellant because when rather full findings were made seven weeks later their function was to supersede the opinion, thenceforward the opinion having no more standing than random observations made by a trial judge in the course of a trial. It may be that the Supreme Court decisions will reach the point where the shipowner is liable for unseaworthiness based upon the very act of a fellow longshoreman which causes the injury, but it does not appear that the Supreme Court has gone that far. It would seem that unseaworthiness must be a pre-existing condition.9 Perhaps, the preexistence will be held to be ever so short. One cannot say. But this question must await a different case. The court did not find facts requiring the problem to be answered.
18
Permeating the trial court's decision and findings is the final conviction that on the morning of February 5 the ship supplied the stevedoring company with good and adequate, as of then, equipment. But it was unable to find on what day or what time of day the overstraining occurred which eventually produced the break. This court cannot solve the mystery, but certainly the simultaneous breaking of the wire and the rope, each rated strong enough to do the whole job, at the time of the injury, does give cause for pause, does make one doubt that there was a prestressing of both wire and rope, almost but not quite to the breaking point of each, at some prior time.10
19
As above indicated, it is possible that if the court had decided from all the circumstances here that the rope and wire must have been preweakened, its decision would have had a rational basis. But in this court's view it had also the choice of concluding that the handling of the last load caused the break or the choice of being honestly unconvinced as to when the rope and wire were first weakened-- thus a failure of proof.
20
This court is fully mindful of its decision in Petterson v. Alaska S.S. Co., 205 F.2d 478, 479. There a snatch block was being used in the gear lifting the cargo. The block broke with resulting injury to Petterson. The trial court found that the block was used in a 'customary and usual manner' and that it 'was of a type ordinarily and customarily used and proper for the use to which it was being put upon the occasion in question.' The whole opinion proceeds on the basis of the initial statement, 'while being put to a proper use, * * * the block broke.' And, it is significant that the case says, 'There was no proof as to the condition of the block prior to its use other than what may be implied from the accident.'11 Thus, it was permisible to infer that the block was defective when the day started. Here the fact situation was different and, in the end, Titus came out without the helpful fact findings which Petterson had.
21
But in the light of McAllister v. United States, supra, Petterson must be hereafter approached with a caveat. The author of Petterson at page 479 says: 'But an admiralty appeal is a trial de novo, * * *, and this court may make its own inferences from the facts as found where it does not upset the finding based upon the credibility of witnesses.' So, in Petterson starting with some few findings favorable to appellant, it may have been adding its own expertise, which by McAllister is no longer permitted.
22
The trial court on the facts here had the privilege of being honestly puzzled as to causation. Without a conviction that the accident happened because of a definite condition for which the appellee was to blame, it had no duty to find for the injured stevedore.
23
The decree is affirmed.
1
The findings of fact, conclusions of law, and decree were entered March 1, 1957
2
Freitas v. Pacific Atlantic Steamship Company, 9 Cir., 218 F.2d 562
3
The rope guy is nowhere mentioned in the pretrial order
4
This was contradicted by a fellow stevedore
5
See Grillea v. United States, 2 Cir., 232 F.2d 919
6
This concept is very clearly expressed by Circuit Judge Learned Hand at page 922 of the Grillea decision
7
One should remember that circumstances which one feels one must accept may upset in the end direct testimony which, at the time of its reception, appeared to be wholly reliable
8
The opinion was filed January 8, 1957, D.C., 152 F.Supp. 63-65
9
The concept that the negligence producing unseaworthiness must precede in the apparatus) to establish a pre-existing the appareatus) to establish a pre-existing condition seems to be the underlying basis for a rationalization of Manhat v. United States, 2 Cir., 220 F.2d 143, although neither the majority or minority opinions address themselves sharply to the point of whether enough time had elapsed to result in unseaworthiness as was done by Judge Hand in Grillea
10
One point on which the evidence is bare is this: As to the wire and ropes there was testimony as to the tensile strengths of each. These ratings were based on a direct pull. It would seem that in the lifting of the ton or ton and a half load of lumber there would have been some factor of leverage increasing the pull beyound that of a vertical direct pull. How much such leverage might increase the strain, no one has told us. The responsibility for that point was on him who had the burden of proof
11
In Petterson's case the ownership of the block was never solved, only its use. When it broke, it fell into the water and was not recovered. Also, in Petterson, from libellant's standpoint, the amount of stress on the gear in the normal operation of lifting the load of lumber up over the deck load before lowering through the hatch to the hold was better developed. There is naturally more stress on the gear when the load has to be lifted up and over a deck load
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THE THIRTEENTH COURT OF APPEALS
13-19-00373-CR
Rigoberto Olivarez Silva Jr.
v.
The State of Texas
On Appeal from the
370th District Court of Hidalgo County, Texas
Trial Cause No. CR-2639-16-G
JUDGMENT
THE THIRTEENTH COURT OF APPEALS, having considered this cause on
appeal, concludes the appeal should be DISMISSED. The Court orders the appeal
DISMISSED in accordance with its opinion.
We further order this decision certified below for observance.
October 31, 2019
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108 F.3d 1376
NOTICE: 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.Arthur J. BURTON, Plaintiff-Appellant,v.Barbara BOCK, et al., Defendants-Appellees.
No. 96-1574.
United States Court of Appeals, Sixth Circuit.
March 18, 1997.
E.D. Mich., No. 95-71689; Avern Cohn, Judge.
E.D.Mich.
AFFIRMED.
Before: WELLFORD, RYAN, and DAUGHTREY, Circuit Judges.
ORDER
1
Arthur J. Burton, a pro se Michigan prisoner, appeals a district court order granting the defendants' motion to dismiss this civil rights suit for failure to state a claim. Fed.R.Civ.P. 12(b)(6). This case has been referred to a panel of the court pursuant to Rule 9(a), Rules of the Sixth Circuit. Upon examination, this panel unanimously agrees that oral argument is not needed. Fed.R.App.P. 34(a).
2
Bringing this action under 42 U.S.C. § 1983, Burton named the Assistant Deputy Warden and a Resident Unit Manager at the Saginaw Correctional Facility, and two correctional officers at the Baraga Maximum Facility, in their individual capacities. Burton alleged that his due process rights were violated when the defendants transferred him to protective segregation without a prior hearing, and when they did not return him to the general population upon his request.
3
A magistrate judge considered the claims on the merits and recommended granting the defendants' motion to dismiss the complaint under Fed.R.Civ.P. 12(b)(6). The magistrate judge relied, principally, on the Supreme Court's holding in Sandin v. Conner, 115 S.Ct. 2293, 2298-2300 (1995), when he concluded that the defendants had not violated Burton's due process rights. Upon review of Burton's objections, the district court adopted the magistrate judge's rationale, and dismissed the complaint.
4
On appeal, Burton argues that the Supreme Court's holding in Sandin is unconstitutional and he challenges the retroactive application of Sandin to his case. Burton also states that the district court "disregarded" his equal protection claim.
5
This court concludes that the district court properly granted the defendants' motion to dismiss Burton's complaint for failure to state a claim. Whether the district court correctly dismissed a suit pursuant to Rule 12(b)(6) is a question of law subject to de novo review. LRL Properties v. Portage Metro Hous. Auth., 55 F.3d 1097, 1103 (6th Cir.1995).
6
Burton had no constitutional right to placement in any particular section within a prison, or to any particular security classification. Hewitt v. Helms, 459 U.S. 460, 468 (1983); Montanye v. Haymes, 427 U.S. 236, 242 (1976); Meachum v. Fano, 427 U.S. 215, 222 (1976). Moreover, Burton had no protected liberty interest in remaining free from temporary administrative segregation, because the defendants' decision to place Burton in protective segregation for longer than he expected did not result in an "atypical and significant hardship" in relation to the ordinary incidents of prison life. Sandin, 115 S.Ct. at 2300. Contrary to Burton's argument, the holding in Sandin applies retroactively to his case. See Harper v. Virginia Dep't of Taxation, 509 U.S. 86, 96-98 (1993).
7
If the district court erroneously "disregarded" Burton's equal protection claim, as Burton argues, this error was harmless. See Pilgrim v. Littlefield, 92 F.3d 413, 417 (6th Cir.1996). It is incumbent upon one asserting an equal protection claim to prove the existence of some purposeful discrimination. McCleskey v. Kemp, 481 U.S. 279, 292 (1987). Because Burton did not allege or attempt to show that the defendants intentionally discriminated against him because of membership in any protected class, this claim is meritless and could not have survived the defendants' motion to dismiss. Purisch v. Tennessee Technological Univ., 76 F.3d 1414, 1424 (6th Cir.1996) (quoting Henry v. Metropolitan Sewer Dist., 922 F.2d 332, 341 (6th Cir.1990)). Because Burton can prove no set of facts in support of his claims that would entitle him to relief, the complaint was properly dismissed under Rule 12(b)(6). LRL Properties, 55 F.3d at 1100-1101.
8
Accordingly, the district court's order granting the defendants' motion to dismiss for failure to state a claim is affirmed. Rule 9(b)(3), Rules of the Sixth Circuit.
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143 Ariz. 45 (1984)
691 P.2d 1073
STATE of Arizona, Petitioner,
v.
SUPERIOR COURT of the State of Arizona, In and For the COUNTY OF PIMA, and the Honorable William L. Scholl, a Judge thereof, Respondent, and Gene SIMMONS, Mary Miller, Glen Ethington, Jerry Collier, Real Parties in Interest.
No. 17679-SA.
Supreme Court of Arizona, In Banc.
November 21, 1984.
Reconsideration Denied January 8, 1985.
*46 Frederick S. Dean, Tucson City Atty. by Frank W. Kern, III, Deputy City Atty., Tucson, for petitioner.
Michael L. Altman, Tempe, and Law Offices of Kelly C. Knop, P.C. by Kelly C. Knop, Tucson, for real parties in interest.
CAMERON, Justice.
This is a special action brought by the State from a decision of the Superior Court of Pima County affirming the granting of defendants' motion to dismiss the complaints against them. We have jurisdiction pursuant to Art. 6, § 5 of the Arizona Constitution.
We must decide the following issue: Were the sobriety checkpoints conducted by the Tucson Police Department between 9 December 1983 and 31 December 1983 constitutional?
The facts follow. The Tucson Police Department set up a series of sobriety checkpoints between 9 and 31 December 1983. The stops were constructed and operated according to an extensive command directive compiled by the Commander of the Traffic Enforcement Division. The checkpoints were not to be set up on main, high traffic volume arteries. The directive provided that a driver would first encounter a sign saying "Reduce Speed Ahead." Approximately two hundred feet from the sign would be another sign saying "Speed Limit Twenty Five Miles Per Hour." Another hundred feet away a sign stated "Sobriety Checkpoint Ahead." A coning pattern was placed eight hundred feet further away to divert traffic. If there were any side streets before the coning pattern, a No-Turn sign would be placed in front of the street. After the cones there would be a "Prepare to Stop" sign and two hundred feet from that would be a stop sign. A police officer would approach the car and ask the driver to pull up to a second officer. This first officer would shine a flashlight into the car to determine whether the driver or passenger had any weapons. The second officer would then ask the driver to produce his driver's license. He would also shine a light into the car to look for open containers and observe the driver closely for signs of intoxication and would be permitted to ask him such questions as "where have you been tonight" and "what do you think about checkpoints." If the officer had no basis for believing that the driver *47 was intoxicated, the driver would be permitted to proceed. The entire process took anywhere from five to twenty seconds. If the driver seemed to be impaired the officer would ask him to proceed into a predesignated parking area where he would be asked to perform a field sobriety test.
The police were also prepared for drivers attempting to avoid the roadblock. A chase officer would follow any driver making a turn prior to the initial reduce speed ahead sign for one mile. If any traffic violations or problems were noted that would warrant a stop under normal circumstances, a stop would be made to check for impairment. The same procedure would occur for a person who drove safely through the roadblock but refused to talk with the officers. If a driver made a turn at a No-Turn sign, a chase officer would stop the driver to check for signs of intoxication. No citations were issued for traffic violations such as driving with an expired license. Rather, the driver would be informed of the violation and advised to correct the deficiency.
Defendants Gene Simmons, Mary Miller, Glen Ethington and Jerry Collier were stopped pursuant to these checkpoints and arrested for Driving Under the Influence of Intoxicating Liquor, A.R.S. § 28-692. They each filed a motion to dismiss, alleging that the checkpoints were unconstitutional. The four motions were consolidated for hearing and granted by the Municipal Court judge (the trial court). The state appealed to the Pima County Superior Court, Ariz. Const. Art. 6, § 16 and A.R.S. § 12-124, and the trial court ruling was affirmed. We accepted jurisdiction because the case presents an issue of statewide importance.
The issue of the propriety of roadblocks has been before us before. In State ex rel. Ekstrom v. Justice Court, 136 Ariz. 1, 663 P.2d 992 (1983) we examined a series of roadblocks conducted by the Department of Public Safety. We held that because the police were given a "not insubstantial amount" of discretion and the state was unable to demonstrate that roadblocks were more effective in apprehending drunk drivers than traditional methods, those sobriety checkpoints were unconstitutional. Justice Feldman, in his concurrence, listed those procedures that he felt were constitutionally required. He focused primarily on the need for a plan formulated or approved at the executive level that would provide standards concerning time, place, number of officers and procedures concerning how the stops should be conducted. Advance publicity in the media was also suggested. Id. at 9, 663 P.2d at 1000.
It appears that the suggestions made by Justice Feldman in his concurrence in Ekstrom, supra, were followed by the Tucson Police Department. A command directive was compiled by the Commander of the Traffic Enforcement Division, Lieutenant Davis, concerning the procedures to be followed at the roadblocks. Copies were distributed to all personnel who would be participating at the checkpoints. The directive outlined what the officers were supposed to say to drivers of stopped cars and how the officers should react in various situations. The location of each stop was also selected by Lieutenant Davis. He reviewed statistics compiled by the police department concerning the location of alcohol related collisions and chose sites within approximately a square mile of where the highest percentage of such accidents had occurred.
Press releases were issued before the first three roadblocks were conducted. For the other roadblocks, information was given to the community relations unit, which then transmitted it to the public through radio, television and newspaper advertisements. These announcements, which were issued from one to three days in advance of each roadblock, stated that stops would be conducted in the City of Tucson.
The question is whether these procedures did, in fact, satisfy the fourth amendment's proscription against unreasonable searches and seizures. U.S. Const. amend. IV. That amendment is implicated because roadblock stops are considered seizures. United States v. Martinez-Fuerte, *48 428 U.S. 543, 96 S.Ct. 3074, 49 L.Ed.2d 1116 (1976). Although the Supreme Court has never squarely addressed this issue, it has indicated that in certain instances brief detentions made without any quantum of suspicion would be permissible. In Martinez-Fuerte, supra, the Court upheld the use of a fixed checkpoint stop near the border of Mexico to search for illegal aliens. Later the Supreme Court stated in a case involving a random stop made by the police to check for license and vehicle registrations that:
This holding does not preclude the state of Delaware or other States from developing methods for spot checks that involve less intrusion or that do not involve the unconstrained exercise of discretion. Questioning of all oncoming traffic at roadblock-type stops is one possible alternative.
Delaware v. Prouse, 440 U.S. 648, 663, 99 S.Ct. 1391, 1401, 59 L.Ed.2d 660, 673-74 (1979) (footnote omitted). The United States Supreme Court subsequently laid down a "balancing of interests" test to evaluate certain distinct types of official action. Three factors must be weighed: "the gravity of the public concerns served by the seizure, the degree to which the seizure advances the public interest, and the severity of the interference with individual liberty." Brown v. Texas, 443 U.S. 47, 50-51, 99 S.Ct. 2637, 2640, 61 L.Ed.2d 357, 362 (1979).
In the instant case, the first factor, the gravity of the public concern, clearly weighs in favor of the state. The state, at the suppression hearing, indicated that it used the sobriety stops to deter people from driving while impaired. The trial court found that this constituted a "unique governmental interest." We agree. Drunk driving has become a problem of epidemic proportions not only in Arizona but throughout the country. See State v. Deskins, 234 Kan. 529, 536, 673 P.2d 1174, 1181 (1983) ("It is obvious, without resort to the record or otherwise, that the problem of the drunk driver is one of enormous magnitude affecting every citizen who ventures forth upon the streets and highways."); State v. Coccomo, 177 N.J. Super. 575, 582, 427 A.2d 131, 134 (1980) ("No one can deny the State's vital interest in promoting public safety upon our roads by detecting and prosecuting drunk drivers."). Drunk drivers are responsible for approximately seventy deaths a day. Allstate, The Drunk Driver May Kill You. The state should and must act to protect drivers from the havoc wreaked by the mixture of alcohol and gasoline. Roadblocks, properly maintained and publicized, not only apprehend the drinking driver, but inhibit others who might be tempted to drive while drinking.
The second prong of the test is the degree to which the seizure advances the public interest. The trial judge, at the suppression hearing, found that the state had not made it over this hurdle. The court focused on the statement made by the Commander of the Traffic Enforcement Division that "in doing a check point operation you will end up with about half of the amount of the arrests that the same officer deployed in the field would produce." The court held that by making this statement the state had in effect "stipulated itself out of court." In so holding, the trial judge relied on the statement we made in Ekstrom that "[i]f there is an adequate method of enforcing the drunk driving statute, there is no pressing need for the use of an intrusive roadblock device." Ekstrom, 136 Ariz. at 5, 663 P.2d at 996.
We find this reliance on Ekstrom misplaced. In Ekstrom, supra, the state argued that the roadblock was useful in arresting drunk drivers. The state was unable, however, to prove that checkpoints were more successful than traditional methods. In the instant case the sobriety stops were intended primarily for deterrence. The police anticipated that people would feel that the chances of detection were increased by the checkpoint and would be less inclined to drink and drive. The state offered evidence not only that it was successful toward this end but that there was no less intrusive alternative. It introduced statistics that the percentage of *49 injuries that were alcohol related from September to December of 1983 was between 9 and 11.5. From 1 December to 8 December this percentage was also 11.5. That number fell to 8 percent after the roadblock was instituted. This drop is particularly significant in light of the fact that a high percentage of alcohol related accidents traditionally occur in December. Furthermore, the police had been unable to effectuate this significant a drop in the percentage of alcohol related collisions by the more traditional method of increasing the number of patrol officers trained in detecting intoxicated drivers.
The difference between the Kingman roadblocks and the Tucson roadblocks was that in Kingman the efforts resulted in fewer drunk drivers being removed from the road than normal, routine patrols by the same number of patrolmen would have effected. In other words, the intrusion did not result in benefit to the public. In Tucson, the intrusion justified the effort as the drunk driving accident rate went down as a result of the roadblocks and the attendant publicity. We believe the public interest was advanced by these roadblocks.
Lastly, we must examine the severity of the interference with individual liberty. In assessing this factor, the Supreme Court has outlined certain considerations it finds important. First, there is the degree of the "objective intrusion": the stop itself, the questioning, and the visual inspection. Martinez-Fuerte, supra, at 558, 96 S.Ct. at 3083, 49 L.Ed.2d at 1128. In the instant case, the stops lasted from five to twenty seconds. The officers did not make a full blown search of the car but merely shined a flashlight into the passenger area to ensure that no one inside was carrying a weapon and to look for open containers of alcohol. Questioning was minimal. The officers were only permitted to ask one or two questions in order to determine whether the driver was intoxicated. Thus the objective intrusion was minimal.
The United States Supreme Court has also examined the subjective intrusion: the generating of concern or fright on the part of lawful travelers. Id. at 559, 96 S.Ct. at 3083, 49 L.Ed.2d at 1129. It found this to be at a minimum in cases where the police were given little discretion and motorists knew or were able to obtain knowledge of the reason for the roadblock and its location. Id. In the case at bar, the police had little discretion. Motorists were given advance warning that checkpoint stops would be conducted and why. Although drivers were not told of the exact location of the stops, we do not find this critical. Advance notice of the exact location is not an absolute necessity for DWI roadblocks. See Jones v. State, 36 Cr.L. 2004 (Fla.Ct.App. 10/3/84); Commonwealth v. McGeoghegan, 389 Mass. 137, 143, 449 N.E.2d 349, 353 (1983). Publishing the exact spot of the checkpoint would lessen the deterrent effect. Motorists, aware of where they would be stopped, would simply avoid those locations. Additionally, because there were signs at each stop indicating that it was a sobriety checkpoint, drivers were aware of the purpose for the stop and if they had not been drinking would have little cause for concern. Cf. State v. Deskins, supra, at 541, 673 P.2d at 1185 (numerous conditions and facts concerning intrusion to the motorist must be considered but not all need to be favorable to the state).
Given the gravity of the problem, a compelling need for the state to take strong action against drunk drivers, and the minimal intrusion created by these stops, we hold the stops in this case passed constitutional muster.
The order of the Pima County Superior Court is reversed and the cases are remanded for proceedings consistent with this opinion.
HOLOHAN, C.J., GORDON, V.C.J., and FELDMAN, J., concur.
NOTE: Justice Jack D.H. Hays did not participate in the determination of this matter.
| {
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164 Ariz. 558 (1990)
795 P.2d 201
In the Matter of a Member of the State Bar of Arizona, David Allen MYERS, Respondent.
No. SB-89-0037-D.
Supreme Court of Arizona, En banc.
July 26, 1990.
Kenneth D. Freedman and Paul Bender (pro hac vice), Phoenix, for respondent.
Fennemore Craig, P.C. by John G. Ryan, Jeffrey A. Grabowski and Harriet L. Turney, Chief Counsel, State Bar of Arizona, Phoenix, for Disciplinary Com'n.
OPINION
FELDMAN, Vice Chief Justice.
David A. Myers (respondent) appeals from the Disciplinary Commission's (Commission) recommendation that he be publicly censured for his failure to appear on his client's behalf at an immigration hearing. We have jurisdiction under Rule 53(e), Ariz. R.Sup.Ct., 17A A.R.S. Respondent argues that he did not violate any provisions of the *559 Code of Professional Responsibility[1] with which he was charged, so that no discipline is appropriate.
FACTS
On September 9, 1985, the State Bar received a letter from Chief Immigration Judge William R. Robie stating that respondent had "failed to notify his client of the time and place of a hearing on his asylum application [and] [a]s a result, neither the alien nor his counsel was present at the hearing." The hearing had taken place almost one year before, on September 19, 1984.
After reviewing Judge Robie's letter and the facts concerning the occurrence, the Probable Cause Panel issued an informal reprimand on January 6, 1986. Because respondent requested a formal hearing pursuant to Rule 53(b)(4), the reprimand was withdrawn and the following formal complaint was filed:
COUNT ONE
Respondent improperly represented his client by failing to notify him of the scheduled deportation hearing date or undertake any legal activity on his behalf, thereby intentionally failing to [seek] the lawful objectives of his client in violation of Disciplinary Rule 7-101(A)(1).
COUNT TWO
Respondent, throughout the time during which he represented his client, intentionally neglected a legal matter entrusted to Respondent in violation of Disciplinary Rule 6-101(A)(3).
COUNT THREE
Respondent, throughout the time during which he represented his client, intentionally prejudiced the rights of his client in violation of Disciplinary Rule 7-101(A)(3).
Complaint, filed Apr. 24, 1986 (emphasis added).
Respondent filed a motion to dismiss on November 5, 1986. The State Bar filed a motion for judgment on the pleadings on December 22, 1986. Hearing Committee 6C convened on February 28, 1987 and granted the State Bar's motion. The Committee recommended public censure. Hearing Committee Recommendation of Discipline, filed Apr. 13, 1987. Respondent timely filed his objections with the Commission. By order filed October 30, 1987, the Commission remanded to a hearing committee so a hearing could be conducted.
A hearing was convened before Hearing Committee 6G (Committee) on November 2, 1988. The Committee took evidence, deliberated, and concluded as follows:
The Committee finds that there is insufficient evidence that Respondent violated any canon of ethics as charged. The Committee therefore recommends dismissal of this matter.
Hearing Committee Report, filed Dec. 21, 1988.
The Commission reviewed the case. Bar counsel waived his presence and authorized respondent's counsel to present to the Commission his view that the decision of the Committee be upheld and affirmed. The Commission declined to do so. See Commission Report, filed Mar. 2, 1989. It rejected the Committee's recommendation that the complaint against respondent be dismissed. Instead, it concluded, based on its belief that clear and convincing evidence existed, that:
*560 1. Respondent failed to act diligently in representing his client by failing to notify him of a scheduled [deportation] hearing and by failing to appear himself at the time and place scheduled for the hearing, thereby failing to seek the lawful objectives of his client, in violation of DR 7-101(A)(1).
2. Respondent neglected a legal matter entrusted to him by failing to appear at the time of the scheduled deportation hearing, in violation of DR 6-101(A)(3).
3. Respondent failed to notify his client or to appear himself before the Immigration Court, prejudicing the rights of his client, in violation of DR 7-101(A)(3).
Commission Report (emphasis added). The Commission recommended that respondent be publicly censured.
Respondent timely filed an appropriate objection in this court. See Rule 53(e).
DISCUSSION
We review the record as the ultimate finder of fact. See In re Nefstead, 163 Ariz. 518, 789 P.2d 385 (1990). Nonetheless, we give deference and serious consideration to the findings of the Committee and Commission. In re Pappas, 159 Ariz. 516, 518, 768 P.2d 1161, 1163 (1988). Before we impose discipline, we must be persuaded by clear and convincing evidence that respondent committed the violations with which he was charged. Id.
It is true respondent did not appear at the hearing scheduled before the immigration judge, Hon. John T. Zastrow, on September 19, 1984. We approve, however, the conclusion the Committee evidently reached after hearing testimony: respondent's failure to appear could not be attributed to either a lack of desire or effort to serve his client. Respondent testified at the hearing that he had been unaware the client had been released on bail due to the efforts of another lawyer. Respondent attempted to locate his client, but was unable to find either his address or telephone number. The evidence supports the conclusion that respondent had no way to notify his client of the hearing date or to procure his appearance at the hearing before the immigration judge. No intentional failure to notify his client can be inferred from these facts.
The record also clearly supports the conclusion that respondent believed it was in his client's best interests that he not make an appearance without the client. Respondent believed if he appeared alone, he could not obtain asylum status for his client. Therefore, his appearance would not benefit his client and might harm him because, respondent believed, by entering an appearance for the client, he might subject him to the jurisdiction of the immigration court and possible deportation. This was a risk respondent did not wish to take because, after researching the issue, he thought the notice of hearing, served only on him and not on the client, was fatally defective from a jurisdictional standpoint.[2] The State Bar argues that respondent was wrong in these legal positions. Respondent admits that, in retrospect, he may have handled the situation differently, but avows that at the time, after only four months of practice in a highly technical area of the law, he felt his position was strategically correct and legally *561 justifiable as in the best interests of his client.
In our view, the case does not turn on whether respondent was correct in his legal position, but whether he had a good faith belief in that position, based on some tenable legal argument. Considering the confusing nature of the procedural rules in immigration court at the time respondent made his decision, we accept, as the Committee must have, that his legal arguments are defensible. The fact that respondent's legal conclusions may have been incorrect does not indicate that, as charged, he intentionally failed to advance his client's lawful objectives in violation of DR 7-101(A)(1), intentionally neglected a legal matter in violation of DR 6-101(A)(3), or intentionally prejudiced his client's rights in violation of DR 7-101(A)(3).
Although respondent intentionally failed to go to the hearing, no evidence exists to support the idea that he did so because he abandoned his client or knowingly neglected his client's welfare. Rather the record convinces us, as it evidently convinced the Committee, that he thought by not appearing he would be helping his client. Compare In re Cardenas, 164 Ariz. 149, 791 P.2d 1032, (1990); In re Anderson, 163 Ariz. 362, 788 P.2d 95 (1990). He attempted to locate and identify the client, researched his legal position, and made a good faith decision that his appearance was unnecessary and perhaps would even be detrimental to his client's legal position. While there is a possibility that respondent mismanaged the case, there is no evidence he did so knowingly or intentionally, or that he abandoned his client's interests. The evidence in this case, at most, points to an incorrect legal judgment, mistake of law, or improper strategy. We do not equate such matters with knowing or intentional derelictions of a lawyer's duty to his client that should warrant discipline.[3]
The conclusion that respondent sought only to help his client is not only compelled by the specific facts in this record, and the lack of any fact from which to infer intent to abandon, neglect, or lack of concern, but is supported by the entire factual context. Respondent, an ordained clergyman, has devoted his professional life, if not his whole life, to attempting to help unfortunate Central American aliens charged with immigration violations. He lives among them, he works among them, he confines his legal practice to their problems, and, to all intents and purposes, works on a pro bono basis. These circumstances, of course, would not in any way excuse a violation of the Code; in our view, however, they certainly militate against a finding that respondent would intentionally abandon or neglect his clients.
In his commendable efforts to advance the position of the Commission, bar counsel suggests that in not entering an appearance at the immigration hearing, respondent may have failed to fulfill his obligations to that court. We do not reach any conclusions on that issue. First, the record before us does not establish that respondent acted improperly. There is evidence that respondent may, indeed, have informally notified the judge that he was not going to appear and may have explained the reasons for his decision. Transcript of Proceedings Before Disciplinary Committee 6G, Nov. 2, 1988, at 172. Second, and more important, respondent was not charged with any violation of his obligation to the immigration court. Respondent may not *562 be charged with one violation and then, without opportunity for hearing or presentation of evidence, be disciplined for another. In re Riley, 142 Ariz. 604, 609, 691 P.2d 695, 700 (1984). In Riley, we construed the United States Supreme Court opinion in In re Ruffalo, 390 U.S. 544, 88 S.Ct. 1222, 20 L.Ed.2d 117 (1968), which held that a lawyer has the right to procedural due process in State Bar proceedings. Riley had been charged with a number of ethical violations. At his hearing, evidence was presented that indicated he had violated other ethical canons. The State Bar accordingly amended its complaint. We held such amendment did not violate procedural due process guaranteed in Ruffalo because respondent had ample time and opportunity to respond. In this case, no amended complaint was filed and respondent has not been given any opportunity to respond to the allegations of misconduct for which the dissent wishes to hold him responsible.
Bar counsel also suggests that respondent's behavior when he first defended himself against the charges filed with the State Bar was less than exemplary. We agree. Without in any way approving some of the language or methods respondent employed in his initial pro se defense against the charges, we think it obvious, however, that most of the improprieties can be attributed either to respondent's inexperience (especially in responding to the disciplinary process), or (and perhaps in a larger degree) to the emotions engendered by the political and moral controversy surrounding the immigration policies involving those seeking asylum from the troubles in Central America. Finally, we note on this point, as well, respondent was not charged with violating DR 7-106(C)(6), which states that a lawyer shall not "[e]ngage in undignified or discourteous conduct which is degrading to a tribunal," and believe his conduct did not rise to the level of a violation in any case. If anything, his conduct merely lends further support to the old adage that "a lawyer who represents himself...."
The dissent makes four points. First, it argues that respondent should not have denied he was the client's attorney. Dissent at 564, 795 P.2d at 207. Doing so "exhibited a lack of knowledge of the attorney-client relationship...." Id. Second, it argues that respondent should not have questioned the competence of the Committee. Id. at 564-566, 795 P.2d at 207-209. Third, it criticizes respondent's reliance "on an unsupported theory of conspiracy." Id. at 566, 795 P.2d at 209. These points all deal with respondent's conduct while he appeared pro se during the disciplinary proceedings.
The answer to this, of course, is that respondent has not been charged with any of these matters but only with three counts of having intentionally neglected his client's interests. In effect, the dissent argues that respondent may be charged with specified offenses and, despite the lack of evidence to support those charges, be found to have committed others that were neither charged nor the subject of any hearing. We reject such a proposition as failing to comport with elemental due process. See Ruffalo.
Finally, the dissent disagrees with a comment in this opinion regarding respondent's obligation to the immigration court. See dissent at 566, 795 P.2d at 209. No doubt this court could impose appropriate discipline on respondent if he had committed improprieties in his appearance before the United States Immigration Court. Before doing so, it would be necessary to charge him with such an offense and to provide him a hearing. See Ruffalo. No such charges were preferred and no such hearing was held. Lacking evidence taken at a hearing on a specified charge, we do not propose to determine whether respondent's conduct in immigration court was proper or improper.
CONCLUSION
We do not accept the Commission's recommendations. We find no clear and convincing evidence that respondent committed the offenses charged in the complaint. The Committee's recommendation is approved. *563 Accordingly, the charges against respondent are dismissed.
GORDON, C.J., and MOELLER, J., concur. CORCORAN, Justice, specially concurring:
Although I agree with the dissent that the record before us shows that respondent's conduct may have been questionable during these proceedings, I join in the conclusion reached by the majority that this record does not contain clear and convincing evidence that respondent committed the ethical violations with which he was charged. Absent this evidence, I agree that the complaint should be dismissed. I write separately, however, to express my concern with the procedural status of this case.
This matter arose from respondent's involvement with a client that began in July 1984 almost 6 years prior to our final resolution of these issues. The hearing at which respondent failed to appear occurred on September 19, 1984. The letter complaining of this conduct was not received by the state bar until nearly a year later. The probable cause panelist did not issue his finding of probable cause and informal reprimand until January 6, 1986. When respondent requested a formal proceeding, the panelist's order was vacated and the formal disciplinary complaint was filed. The first hearing committee met on March 25, 1987. The first disciplinary commission ruling was issued in October 1987; that ruling remanded the matter back to a second hearing committee, which did not hold a hearing until November 2, 1988. The commission met a second time to review the second committee's report on February 11, 1989. It ultimately reached the same conclusions as did the first hearing committee, recommending public censure. After that point, the matter eventually arrived for review in this court. The formal record in this case is one of the largest encountered to date.
I believe that the length of time this matter has been in the disciplinary system more than 5 years is directly related to the extensive use of volunteers in the system. Members of the hearing committees and the disciplinary commission are busy professionals with only sporadic availability to meet and consider these cases. As a result, these matters drag on for years with lengthy delays between procedural steps. I believe that it may be time for this court and the state bar to consider whether it has become necessary for the state bar to hire administrative law judges to hear evidence on an ongoing basis instead of relying on hearing committees that meet only occasionally. It may also be time for the bar to hire more full-time paid bar counsel, rather than rely on volunteer bar counsel with other professional obligations.
Additionally, I believe that the delay in this case results from a convoluted disciplinary process. Perhaps this system can be simplified. See American Bar Ass'n Model Rules for Lawyer Disciplinary Enforcement (August 1989).
I urge the bench and bar to consider resolving these problems to prevent unreasonably long procedural delays like the ones that occurred in this case.
CAMERON, Justice, dissenting.
I regret that I must dissent. A reading of the record in this case indicates that there is a lack of the most basic knowledge of the lawyer-client relationship on the part of the respondent. In addition, his pleadings raise questions about his ability to properly represent his clients. Because respondent's motives are good, does not mean he need not measure up to the ethical standards of the legal profession. A lawyer must be competent before he is benevolent.
The matter is not difficult. Respondent on 19 July 1984 agreed to represent Abel Lucero-Lima accused of illegal entry into the United States. Respondent at that time signed and filed a Form G-28 Notice of Entry of Appearance as an attorney or representative. There were no restrictions as to the scope of his representation. At the initial hearing, respondent not only appeared *564 but waived some of Lucero's rights. Respondent stated:
Your honor, at this time we'd like to make a statement. We would like to concede service of the O.S.C., we would like to waive the readings of rights and explanations as required by law, we'd like to admit the allegations contained in the O.S.C., we will decline to designate a country of deportation at this time.
Respondent also made a motion for an extension of time stating:
Abel Lucero Lima requests this court to extend the time for filing his petition for political asylum to August 6, 1984 from August 3, 1984. The reason for this request is that his attorney was unexpectedly called away on another matter, involving murder, and could not complete the form on time. This is being manifested to the court as the first possible moment after the date the form was due, and said form is being simultaneously submitted.
WHEREFORE, Mr. Lucero requests this court to extend his filing deadline to August 6, 1984.
Later, respondent received a notice of hearing for his client. He made little effort to notify his client. Respondent intentionally did not appear at the hearing. In the absence of both respondent and Lucero, the immigration judge ordered Lucero deported. Lucero's case was appealed by another attorney and the court remanded for a new hearing because of inadequate representation by the respondent. As a result, the chief immigration judge wrote to the state bar stating:
Your attention is invited to the fact that this case was remanded by the Board for further proceedings before the Immigration Judge because counsel for the respondent, whose name appears above, failed to notify his client of the time and place of a hearing on his asylum application. As a result, neither the alien nor his counsel was present at the hearing. The request for asylum was subsequently denied by the Immigration Judge and the alien's attorney had deprived his client of the opportunity to be heard.
What followed was a flurry of filings by the respondent, acting as his own attorney. These pleadings raise questions concerning his professionalism. First, he showed a lack of knowledge of the law in insisting Lucero was not his client. Respondent stated in one of his many pleadings:
ARTICLE 11 (COUNT THREE): a) Mr. Lucero was never counsel's client. b) Mr. Lucero was in a better position as a result of Fr. Myers representation, rather than a worse position. Mr. Lucero gained at least twelve months of freedom from persecution. Counsel did not violate DR 7-101(A)(3). (Prejudice to Client).
For Bar Counsel John G. Ryan to plead to the contrary either manifests gross ignorance of Immigration law and procedures, or constitutes perjury.
Respondent may not have it both ways. Either he represented Lucero or he did not. If he did represent Lucero then Lucero was respondent's client.
Second, respondent contends that the Hearing Committee was incompetent because the members of the Committee were not immigration specialists stating:
2. This committee has made conclusions of law with respect to immigration law. The chairman of this committee has admitted, on the record, that he knows very little about immigration law. I have practiced immigration law extensively and I have never encountered the other two members of this committee in the practice of immigration law. I therefore make a logical presumption that they, also, know very little about immigration law. ER 1.1 of the lawyer's Rules of Professional Conduct, and Canon 1 of the Code of Judicial Ethics state that a lawyer and judge must acquire and maintain professional competence in the areas in which they practice. Here the members of the Committee, one by his own admission, do not have the competence required to judge this case. Therefore they are bound to recuse themselves.
Respondent contends that because the commissioners were not versed in immigration *565 law, they didn't understand that it is normal for a lawyer not to show up at a regularly scheduled hearing without notice. To support this position, respondent called some expert witnesses and filed an affidavit. Their testimony does not support respondent's position, but just the opposite, refute his position. For example, the affidavit of Anne Pilsbury filed by respondent stated:
I, ANNE PILSBURY, being duly sworn do depose and say as follows:
1. I am an attorney licensed to practice law in the District of Columbia and the State of Maine and before various federal district courts, the Second Circuit and the District of Columbia Circuit as well as the U.S. Supreme Court. I have been active in the practice of law since 1975.
2. My background is in general federal civil litigation; however, for the past three and half years I have devoted myself exclusively to providing free legal assistance to Salvadoran and Guatemalan asylum seekers because there is a very grave shortage of attorneys and representatives to assist the large numbers of persons from those countries who are facing deportation proceedings.
3. I have appeared before the immigration judges in the New York City district in connection with over 100 individual cases. I am familiar with all areas of the asylum process as it effects Salvadoran and Guatemalan asylum seekers. I am also the director of a non-profit organization called Central American Legal Assistance located at 240 Hooper Street in Brooklyn, N.Y. 11211. This office tries to provide free legal representation to any Salvadoran or Guatemalan arrested by the INS and who fears persecution if returned to his or her home country.
* * * * * *
6. Because Father David Myers covers the INS detention center, a service that the private bar has never undertaken to do in any part of the country of which I am aware, he comes in contact with a large number of indigent, unrepresented aliens who need help. We have often had the experience here of representing someone in a bond reduction hearing while they are in detention (during which time they may be served with an Order to Show Cause) and then losing track of them after they are bonded out. Although we make every effort to maintain contact, the difficulty many refugees have finding housing and support often means that they will have to change addresses frequently and we will have to write several letters to locate them.
7. It occasionally happens that despite our best efforts we are not able to locate a client who has received a hearing notice which we are aware of because either someone in the office was the obligor of the bond (and by regulation had to be told of the hearing) or because INS sent us a copy of the hearing notice. When this happens it is my practice and the practice of other experienced attorneys and representatives to inform the court by telephone or letter if there is time that we cannot locate the client but I do not go to court to the hearing without my client. That would serve no useful purpose and given the enormous caseload we carry would greatly prejudice my ability to serve the majority of clients with whom I am in contact.
* * * * * *
(Emphasis added.)
Immigration judge McCarrick testified:
Q. Lastly, Judge McCarrick to appear I'm going to seek your opinion here if another lawyer handled the bond aspect of a case, actually setting forth, effectuating the bond, and if this was done prior to the date of the hearing set forth as an example, in Exhibit B-4, the notice of hearing, which I believe is the proper entitlement of this documentation would a lawyer be ethically required, in your opinion, to have to appear at the hearing set forth there?
* * * * * *
THE WITNESS: I can't answer that simply yes or no. I've got to give you *566 some further history. There was a time when attorneys attempted to make limited appearances for bond purposes only, and very often the G-28 would reflect appearance for bond only. As a practical matter, some courts did and some courts did not honor that limited appearance.
I think you'll find the regulations now provide there are no limited appearances, but again, that's only subsequent to 1987. In my view, my personal practice prior to 1987 was that if an individual indicated that they were making a limited appearance on the G-28, they were essentially they essentially stated that they were only coming in for a limited purpose, and as such, in my view I would honor that request.
* * * * * *
It is noted that the complaint to the Arizona Bar was made by the chief immigration judge who, it is presumed, "knows something about immigration law."
Third, in defense of his actions, respondent relies heavily on an unsupported theory of conspiracy. Respondent stated in the pleading:
Let it be clearly stated from the outset that David A. Myers, the respondent, believes this entire action to be brought for the purpose of harassing him because of his devoted service to Central American refugees. It is part of a conspiracy to harass attorneys advocating causes considered undesirable by President Ronald Reagan, Attorney General Edwin Meese III, and Chief Immigration Judge William R. Robie. Unfortunately, the Supreme Court of Arizona, through the State Bar of Arizona, Disciplinary Commission, has become complicit in the conspiracy.
Counsel for Mr. Robie does not address the substantive issues of Fr. Myers' Answer: 1) the entire action is nothing but a political ploy on behalf of Mr. Robie to harass and discredit Fr. Myers in his work for Central Americans. 2) the person it is alleged was injured by Fr. Myers, a) is not a party to the complaint, b) was never a client of David Myers, and c) the only legal issues involved are highly debatable, and should be litigated in the federal court, not the Supreme Court of Arizona Disciplinary Commission. 4) the Board of immigration Appeals found Immigration Judge John T. Zastrow to have erred, not Fr. Myers. 5) the Complaint in this case contains gross misrepresentations of the facts in critical matters, which reflects either manifest incompetence or perjury on the part of Mr. Ryan.
As part of this theory, respondent alleged that the bar counsel's copy of the letter of complaint by Judge Robie contains a hand-written note. Respondent stated:
His Exhibit L includes a notation, not on the originals, as presented to Respondent. In the upper right quadrant of William R. Robie's letter of complaint is hand written what appears to be "Screw David Myers VGa 9/9/85." This accurately states the apparent motivation behind this action.
A careful (or even not so careful) reading of this notation indicates that it reads "screen David Myers."
Respondent further alleges:
The Respondent has even maintained that the purpose of the action itself is to harass him because of his service to Central American refugees, and thus to occupy his time in his defense of himself in the bar committee, which time would otherwise be spent in helping Central American refugees.
I disagree. I find no evidence of a conspiracy to prevent respondent from representing his clients.
Finally, I must respectfully disagree with the statement in the majority opinion which reads as follows:
[R]espondent was not charged with any violation of his obligation to the immigration court. Respondent may not be charged with one violation and then, without opportunity for hearing or presentation of evidence, be disciplined for another ...
Respondent was charged with the following violations of the Code of Professional *567 Responsibility, DR-6-101(A)(3), which reads:
(A) A lawyer shall not:
* * * * * *
(3) Neglect a legal matter entrusted to him.
And DR 7-101(A)(1), and DR 7-101(A)(3) which read:
(A) A lawyer shall not intentionally:
(1) Fail to seek the lawful objective of his client through reasonably available means permitted by law and the Disciplinary Rules, except as provided by DR 7-101(B). A lawyer does not violate this Disciplinary Rule, however, by acceding to reasonable requests of opposing counsel which do not prejudice the rights of his client by being punctual in fulfilling all professional commitments, by avoiding offensive tactics, or by treating with courtesy and consideration all persons involved in the legal process.
(3) Prejudice or damage his client during the course of the professional relationship, except as required under DR 7-102(B).
* * * * * *
These charges applied to respondent regardless of whether the conduct occurred before the Immigration Court, a state court or any other court, state or federal. There was no confusion for respondent as to what the charges were, as his pleadings indicate. There was no due process violation. In re Riley, cited by the majority does not apply. Riley, supra, was a question concerning an amendment of a complaint after the hearing had started. We stated that allowing amendments is constitutional as long as care is taken to assure that respondent has a reasonable time and an appropriate opportunity to respond to the additional charge. In re Riley, 142 Ariz. 604, 609, 691 P.2d at 695 (1984). In the instant case, the respondent knew of this allegation of failure to properly represent his client (Lucero) and he had ample time to prepare his defense.
I would adopt the recommendation of the Commission.
NOTES
[1] The conduct in question occurred prior to the adoption of the Rules of Professional Conduct, Rule 42, Ariz.R.Sup.Ct., 17A A.R.S., effective February 1, 1985. Therefore, former Rule 29(a), Arizona Code of Professional Responsibility, governs respondent's conduct rather than current Rule 42. See Order Deleting Rules 27 Through 49, Of The Supreme Court, And Substituting Amended Rules 27 Through 121, Rules of the Supreme Court, In Their Place, reprinted in 17A A.R.S. at 212 (1988). Because the State Bar commenced proceedings after February 1, 1985, however, the current rules relating to disciplinary procedures govern. Id. References to the Arizona Supreme Court Rules will be cited as "Rule ____" and will refer to the current rules unless otherwise indicated.
[2] Testimony at the hearing by an attorney specializing in immigration law indicated that the practice of sending notice only to attorneys and not to the clients was new at the time and that she shared respondent's concerns about due process. Transcript of Proceedings Before Disciplinary Committee 6G, Nov. 2, 1988, at 24.
Immigration Judge John J. McCarrick testified, describing the law in this area as "Byzantine." Id. at 79. He explained as follows:
The Immigration Court used to be part of the Immigration and Naturalization Service. In about 1982 the Justice Department decided to sever the judicial function of the Immigration Service and house it in a separate agency....
A lot of the regulations that you will see in 8 CFR refer to the service and came into play at the time when the Immigration Department was part of the Service. They don't anymore, but they haven't been amended to reflect the change, so there as a result there is a considerable amount of confusion concerning the regulations that apply to the Court now because they are in they are in language that doesn't relate to the Court itself or refers to the Service.
Id.
[3] We hasten to note that even if we were to deem respondent's conduct "negligent," most decisions and official ABA policy insist that a single instance of "ordinary negligence" is usually not a disciplinary violation. See generally C.W. WOLFRAM, MODERN LEGAL ETHICS at 190 n. 36 (1986) (citing ABA Informal Op. 1273 (1973) (DR 6-101(A)(3)) ("Neglect usually involves more than a single act or omission. Neglect cannot be found if the acts or omission complained of were inadvertent or the result of an error of judgment made in good faith"); see also Florida Bar v. Neale, 384 So.2d 1264, 1265 (Fla. 1980) (Where lawyer discovered theory upon which he might have obtained a larger recovery for his client but then made the mistake of dismissing the action, the court stated that "[t]here is a fine line between simple negligence by an attorney and violation [of Code] that should lead to discipline. The rights of clients should be zealously guarded by the bar, but care should be taken to avoid the use of disciplinary action ... as a substitute for what is essentially a malpractice action.").
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Citation Nr: 1513879
Decision Date: 03/31/15 Archive Date: 04/03/15
DOCKET NO. 07-08 296 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Los Angeles, California
THE ISSUE
Entitlement to a total disability rating based on individual unemployability due to service-connected disabilities (TDIU) prior to September 16, 2011.
REPRESENTATION
Appellant represented by: Disabled American Veterans
ATTORNEY FOR THE BOARD
H. Yoo, Counsel
INTRODUCTION
The Veteran served on active duty from October 2000 to December 2003.
This matter comes before the Board of Veterans' Appeals (Board) on appeal from a May 2005 rating decision by the Department of Veterans Affairs (VA) Regional Office (RO) in Los Angeles, California, wherein the RO adjudicated the issue of entitlement to service connection for posttraumatic stress disorder (PTSD).
In a December 2012 decision, the Board found that a claim for entitlement to a TDIU was raised pursuant to Rice v. Shinseki, 22 Vet. App. 447 (2009). In Rice, the United States Court of Appeals for Veterans Claims (Court) held that a claim for a TDIU due to service-connected disability, either expressly raised by the Veteran or reasonably raised by the record, involves an attempt to obtain an appropriate rating for a disability and is part of the claim for an increased rating. The issue was remanded to provide a notification letter and to adjudicate the issue. Proper development has been completed and this matter is returned to the Board for further consideration. See Stegall v. West, 11 Vet. App. 268 (1998). In addition, as this issue was raised part and parcel to the claim for an increased disability rating for PTSD, the issue of entitlement to a TDIU does not need to be separately appealed.
The Board additionally notes that the Veteran's electronic Virtual VA file has been reviewed in conjunction with the adjudication of the claim currently on appeal.
FINDINGS OF FACT
1. The evidence of record indicates the Veteran was employed as a counselor until September 15, 2011.
2. Prior to September 16, 2011, the Veteran was not rendered unable to obtain or maintain substantially gainful employment as a result of his service-connected disabilities.
CONCLUSION OF LAW
Prior to September 16, 2011, the criteria for TDIU have not been met. 38 U.S.C.A. §§ 1155, 5107 (West 2014); 38 C.F.R. §§ 3.102, 3.340, 3.341, 4.3, 4.15, 4.16, 4.18, 4.19, 4.25 (2014).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
I. The Veterans Claims Assistance Act of 2000 (VCAA)
With respect to the appellant's claim decided herein, VA has met all statutory and regulatory notice and duty to assist provisions. See 38 U.S.C.A. §§ 5100, 5102, 5103, 5103A, 5106, 5107, 5126 (West 2014); 38 C.F.R. §§ 3.102, 3.156(a), 3.159, 3.326 (2014).
Under the VCAA, when VA receives a complete or substantially complete application for benefits, it is required to notify the claimant and his representative, if any, of any information and medical or lay evidence that is necessary to substantiate the claim. See 38 U.S.C.A. § 5103(a) (West 2014); 38 C.F.R. § 3.159(b) (2014); Quartuccio v. Principi, 16 Vet. App. 183 (2002). In Pelegrini v. Principi, 18 Vet. App. 112, 120-21 (2004) (Pelegrini II), the Court held that VA must inform the claimant of any information and evidence not of record (1) that is necessary to substantiate the claim; (2) that VA will seek to provide; and (3) that the claimant is expected to provide.
The notice requirements described above apply to all five elements of a service connection claim: (1) veteran status; (2) existence of disability; (3) connection between service and the disability; (4) degree of disability; and (5) effective date of benefits where a claim is granted. Dingess/Hartman v. Nicholson, 19 Vet. App. 473 (2006).
In the December 2012 remand, the Board requested that the Veteran be provided with notice regarding the TDIU claim and that the Veteran and his representative be provided with a supplement statement of the case (SSOC) if the benefit sought was not granted. As the Veteran and his representative were provided with a standard VCAA notice letter in August 2013, which satisfied the duty to notify provisions, and an October 2013 SSOC, the Board finds that the agency of original jurisdiction substantially complied with the remand orders, and no further action is necessary in this regard. See D'Aries v. Peake, 22 Vet. App. 97, 105 (2008); Dyment v. West, 13 Vet. App. 141, 146-47 (1999) (remand not required under Stegall v. West, 11 Vet. App. 268 (1998), where the Board's remand instructions were substantially complied with), aff'd, Dyment v. Principi, 287 F.3d 1377 (Fed. Cir. 2002).
With respect to the Dingess requirements, although the Veteran was not provided with notice of the effective date and disability rating regulations, because the claim on appeal is denied herein, any question as to the appropriate disability rating or effective date is moot, and there can be no failure to notify prejudice to the Veteran. See Dingess/Hartman v. Nicholson, 19 Vet. App. 473 (2006).
All the law requires is that the duty to notify is satisfied and that claimants are given the opportunity to submit information and evidence in support of their claims. Once this has been accomplished, all due process concerns have been satisfied. See Bernard v. Brown, 4 Vet. App. 384 (1993); Sutton v. Brown, 9 Vet. App. 553 (1996); see also 38 C.F.R. § 20.1102 (2014) (harmless error). In view of the foregoing, the Board finds that the Veteran was notified and aware of the evidence needed to substantiate his claim, as well as the avenues through which he might obtain such evidence, and of the allocation of responsibilities between himself and VA in obtaining such evidence. Accordingly, there is no further duty to notify.
The Board also concludes the VA's duty to assist has been satisfied. The Veteran's service treatment records and VA medical records are in the file. The record indicates VA has successfully attempted to obtain, to the extent possible, all outstanding medical records identified by the Veteran. The Veteran has at no time referenced additional outstanding records that he wanted VA to obtain or that he felt were relevant to the claim.
Although there is no VA examination with an opinion on file regarding the Veteran's functional impairment caused solely by service-connected disabilities, none is required in this case. Such development is to be considered necessary if the information and evidence of record does not contain sufficient competent medical evidence to decide the claim. Because there is evidence of record that the Veteran was employable prior to September 16, 2011, as will be discussed below, a VA examination with an opinion was not necessary. The Board does not know of any additional relevant evidence which has not been obtained.
As stated above, the Board finds there has been substantial compliance with its December 2012 remand directives. The Board notes that the Court has indicated that "only substantial compliance with the terms of the Board's engagement letter would be required, not strict compliance." See D'Aries v. Peake, 22 Vet. App. 97, 105 (2008); see also Dyment v. West, 13 Vet. App. 141, 146-47 (1999) (holding that there was no Stegall (Stegall v. West, 11 Vet. App. 268 (1998)) violation when the examiner made the ultimate determination required by the Board's remand.) Based on the foregoing, the Board finds that the AOJ substantially complied with the mandates of its remands. See Stegall, supra, (finding that a remand by the Board confers on the appellant the right to compliance with its remand orders). Therefore, in light of the foregoing, the Board will proceed to review and decide the claim based on the evidence that is of record consistent with 38 C.F.R. § 3.655 (2014).
As there is no indication that any failure on the part of VA to provide additional notice or assistance reasonably affects the outcome of this case, the Board finds that any such failure is harmless. See Newhouse v. Nicholson, 497 F.3d 1298 (Fed. Cir. 2007). Importantly, the Board notes that the Veteran is represented in this appeal. See Overton v. Nicholson, 20 Vet. App. 427, 438 (2006). The Veteran has submitted argument and evidence in support of the appeal. Based on the foregoing, the Board finds that the Veteran has had a meaningful opportunity to participate in the adjudication of his claim such that the essential fairness of the adjudication is not affected.
II.
The Merits of the Claim
Disability ratings are determined by applying the criteria set forth in VA's Schedule for Rating Disabilities (Rating Schedule), which is based on the average impairment of earning capacity. 38 U.S.C.A. § 1155. Total disability is considered to exist when there is any impairment which is sufficient to render it impossible for the average person to follow a substantially gainful occupation. Total disability may or may not be permanent. 38 C.F.R. § 3.340(a)(1). Total ratings are authorized for any disability or combination of disabilities for which the Rating Schedule prescribes a 100 percent evaluation. 38 C.F.R. § 3.340(a)(2).
A TDIU may be assigned when the disabled person is, in the judgment of the rating agency, unable to secure or follow a substantially gainful occupation as a result of service-connected disabilities. If there is only one such disability, it must be rated at 60 percent or more; if there are two or more disabilities, at least one disability must be rated at 40 percent or more, with sufficient additional disability to bring the combined rating to 70 percent or more. 38 C.F.R. § 4.16(a).
Individual unemployability must be determined without regard to any non-service-connected disabilities or a veteran's advancing age. 38 C.F.R. §§ 3.341(a), 4.19; Van Hoose v. Brown, 4 Vet. App. 361 (1993). The sole fact that a veteran is unemployed or has difficulty obtaining employment is not enough. A high rating in itself is recognition that the impairment makes it difficult to obtain or keep employment, but the ultimate question is whether a veteran is capable of performing the physical and mental acts required by employment, not whether a veteran can find employment. Id. at 361. When reasonable doubt arises as to the degree of disability, such doubt will be resolved in a veteran's favor. 38 C.F.R. § 4.3.
In Faust v. West, 13 Vet. App. 342 (2000), the Court defined "substantially gainful employment" as an occupation that provides an annual income that exceeds the poverty threshold for one person, irrespective of the number of hours or days that a veteran actually works and without regard to a veteran's earned annual income. In Hatlestad v. Derwinski, 5 Vet. App. 524, 529 (1993), the Court held that the central inquiry in determining whether a veteran is entitled to a TDIU is whether a veteran's service-connected disabilities alone are of sufficient severity to produce unemployability. The determination as to whether a total disability rating is appropriate should not be based solely upon demonstrated difficulty in obtaining employment in one particular field, which could also potentially be due to external bases such as economic factors, but rather to all reasonably available sources of employment under the circumstances. See Ferraro v. Derwinski, 1 Vet. App. 326, 331-32 (1991).
In evaluating a veteran's employability, consideration may be given to his level of education, special training, and previous work experience in arriving at a conclusion, but not to his age or impairment caused by non-service-connected disabilities. 38 C.F.R. §§ 3.341, 4.16, 4.19.
Marginal employment is not considered substantially gainful employment and generally is deemed to exist when a veteran's earned income does not exceed the amount established by the United States Department of Commerce, Bureau of the Census, as the poverty threshold for one person. Marginal employment may also be held to exist in certain cases when earned annual income exceeds the poverty threshold on a facts-found basis. Consideration shall be given in all claims to the nature of the employment and the reason for termination. 38 C.F.R. § 4.16(a). Marginal employment, odd-job employment, and employment at half the usual remuneration is not incompatible with a determination of unemployability if the restriction to securing or retaining better employment is due to disability. 38 C.F.R. § 4.17(a).
The Board has thoroughly reviewed all the evidence in the Veteran's claims file and on Virtual VA. Although the Board has an obligation to provide reasons and bases supporting this decision, there is no need to discuss, in detail, the evidence submitted by the Veteran or on her behalf. See Gonzales v. West, 218 F.3d 1378, 1380-81 (Fed. Cir. 2000) (the Board must review the entire record, but does not have to discuss each piece of evidence). The analysis below focuses on the most salient and relevant evidence and on what this evidence shows, or fails to show, on the claim. The Veteran must not assume that the Board has overlooked pieces of evidence that are not explicitly discussed herein. See Timberlake v. Gober, 14 Vet. App. 122 (2000) (the law requires only that the Board address its reasons for rejecting evidence favorable to the appellant).
The Board must assess the credibility and weight of all evidence, including the medical evidence, to determine its probative value, accounting for evidence, which it finds to be persuasive or unpersuasive, and providing reasons for rejecting any evidence favorable to the appellant. Equal weight is not always accorded to each piece of evidence contained in the record; not every item of evidence has the same probative value. When all the evidence is assembled, VA is responsible for determining whether the evidence supports the claim or is in relative equipoise, with the appellant prevailing in either event, or whether a preponderance of the evidence is against a claim, in which case, the claim is denied. See Gilbert v. Derwinski, 1 Vet. App. 49 (1990).
In this case, the Veteran contends that he is unable to secure or maintain substantially gainful employment due to his service-connected disabilities. The Board notes that the period for consideration for TDIU would be limited to the period prior to the grant of the 100 percent schedular rating for PTSD (i.e., prior to September 16, 2011). (A January 2012 rating decision increased the evaluation assigned to PTSD to 100 percent, effective September 16, 2011.) See Green v West, 11 Vet. App. 472, 276 (1998) (holding that, if a 100 percent schedular rating is granted, a veteran is not also entitled to TDIU for the same period).
Prior to September 16, 2011, the Veteran was service connected for two disabilities: PTSD, rated as 50 percent disabling; and status post puncture injury to first web space of the left hand, with a scar, rated as noncompensably disabling. The combined disability rating was 50 percent.
The Veteran does not meet the regulatory schedular rating requirements of 38 C.F.R. § 4.16(a) for consideration for TDIU because, while he has two service-connected disabilities, where at least one disability is rated at 40 percent or more, the combined disability rating is not at least 70 percent.
A TDIU may also be assigned pursuant to the procedures set forth in 38 C.F.R. § 4.16(b) for veterans who are unable to secure and follow a substantially gainful occupation by reason of service-connected disabilities, but who fail to meet the percentage standards set forth in 38 C.F.R. § 4.16(a). Rating boards are required to submit to the Director, Compensation and Pension Service, for extraschedular consideration all cases of veterans who are unemployable by reason of service-connected disabilities, but who fail to meet the percentage standards set forth in
38 C.F.R. § 4.16(a). The Court has clarified that, where a claimant does not meet the scheduler requirements of 4.16(a), the Board has no authority to assign a TDIU rating under 4.16(b) and may only refer the claim to the Compensation and Pension Director for extraschedular consideration. Bowling v. Principi, 15 Vet. App. 1 (2001).
The Board noted in December 2012 that the record contained some evidence suggesting the Veteran may be unemployable, or may have been unemployable for a period prior to September 16, 2011, at least in part due to PTSD. At the April 2009 VA examination, the Veteran reported he was currently employed as a drug and alcohol counselor, and that he had not lost any time from work due to his PTSD symptoms. At the September 2011 VA examination, he stated that he had been terminated from that position because he lost his temper and acted inappropriately. At the September 2011 VA examination, the Veteran also reported that he was currently employed as a maintenance worker.
According to a September 2010 letter from the Veteran's employer at Optimum Performance Institute, the Veteran's work abilities were affected by his PTSD as he had difficulty staying focused and his work ethics were becoming stagnant. The Veteran required frequent breaks due to his increased paranoia and anxiety. He also had difficulty remembering tasks to complete and missed several days of work.
In September 2013, the Veteran submitted an application for increased compensation based on unemployability wherein he stated he was employed as a counselor from June 1, 2007, to September 15, 2011. The Veteran further indicated that on September 16, 2011, he became too disabled to work.
The Board finds that after a careful review of the Veteran's claims file, the weight of lay and medical evidence shows that the Veteran's service-connected disabilities have not rendered him unable to obtain or maintain substantially gainful employment, prior to September 16, 2011. As noted above, it was determined that prior to September 16, 2011, the Veteran did not meet the schedular requirement and that the Veteran was employed.
Although the Board has considered the Veteran's assertions in this appeal, there is no medical evidence indicating that his service-connected disabilities render him unable to obtain or retain substantially gainful employment; therefore, the Board must conclude that the criteria for invoking the procedures of 38 C.F.R. 4.16 (b), for assignment of a TDIU on an extra-schedular basis, are not met.
For these reasons, the Board finds that the weight of the credible evidence demonstrates that the criteria for TDIU have not been met for the period prior to September 16, 2011. As the preponderance of the evidence is against this claim, the benefit of the doubt rule is not for application, and the Board must deny the claim. See 38 U.S.C.A. § 5107(b); Gilbert v. Derwinski, 1 Vet. App. 49 (1990).
ORDER
Entitlement to a TDIU prior to September 16, 2011, is denied.
____________________________________________
BARBARA B. COPELAND
Veterans Law Judge, Board of Veterans' Appeals
Department of Veterans Affairs
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502 F.2d 784
*Prestonv.McGarrity
74-1346
UNITED STATES COURT OF APPEALS Fifth Circuit
9/30/74
1
N.D.Miss.
2
AFFIRMED IN PART, REVERSED IN PART***
*
Summary Calendar case; Rule 18; 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of N
***
Opinion contains citation(s) or special notations
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541 U.S. 966
BURKEv.UNITED STATES.
No. 03-9091.
Supreme Court of United States.
March 29, 2004.
1
C. A. 6th Cir. Certiorari denied. Reported below: 345 F. 3d 416.
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825 F.2d 1111
UNITED STATES of America, Plaintiff-Appellee,v.Charles SHUE, Defendant-Appellant.
No. 86-1242.
United States Court of Appeals,Seventh Circuit.
Argued Sept. 9, 1986.Decided June 30, 1987.
Richard Leng, Barrington, Ill., for defendant-appellant.
Victoria J. Peters, Asst. U.S. Atty., Anton R. Valukas, U.S. Atty., Chicago, Ill., for plaintiff-appellee.
Before EASTERBROOK and RIPPLE, Circuit Judges, and GRANT, Senior District Judge.*
RIPPLE, Circuit Judge.
1
Appellant Charles Shue asks this court to review the order of the district court resentencing him to twenty years imprisonment for his conviction on Count IV of a multicount indictment. Mr. Shue's convictions for Counts I-III of the indictment were reversed by this court because of constitutional error and remanded for retrial; Count IV was affirmed. For the reasons set forth in the following opinion, we affirm the resentencing order of the district court.
2
* Prior Proceedings
A. Trial Court
3
Mr. Shue was convicted in the federal district court by a jury of Counts I-IV of a multicount indictment.1 He was sentenced to five years imprisonment on Count I, twenty-five years imprisonment on Count II, consecutive to the sentence on Count I, and two concurrent five-year terms of probation on Counts III and IV, consecutive to the sentences on Counts I and II.
B. First Appeal
4
Mr. Shue appealed his convictions to this court. United States v. Shue, 766 F.2d 1122 (7th Cir.1985). The court held that the prosecution impermissibly commented on Mr. Shue's post-arrest silence to suggest appellant's guilt on Counts I, II, and III in violation of his due process right to a fair trial. Id. at 1131-32. The prosecution's comments did not, however, taint the appellant's conviction on Count IV. Id. at 1133. The court explicitly affirmed the conviction and sentence on Count IV and reversed and remanded for a new trial the convictions on Counts I, II and III.2 Id. at 1136.
II
Proceedings Under Review
A. District Court Action
5
Following remand, the government filed a motion in the district court to resentence Mr. Shue on the affirmed count. R.138. The district court granted the motion, United States v. Shue, No. 81 CR 362, mem. op. at 1 (N.D.Ill. Dec. 9, 1985) [hereinafter cited as Mem. op.] [Available on WESTLAW, DCT database]; R.147 at 1, and resentenced him to twenty years incarceration on Count IV,3 R. 150, concurrent with a twenty-four-year sentence for armed robbery imposed upon him by the State of Illinois. At the time of resentencing, and at the time that oral arguments were heard in this appeal, Mr. Shue had not been retried on the reversed counts.
B. Rationale of the District Court
6
In granting the government's motion to resentence Mr. Shue, the district court, relying on Pennsylvania v. Goldhammer, 474 U.S. 28, 106 S.Ct. 353, 88 L.Ed.2d 183 (1985);4 United States v. DiFrancesco, 449 U.S. 117, 101 S.Ct. 426, 66 L.Ed.2d 328 (1980);5 and United States v. Covelli, 738 F.2d 847 (7th Cir.), cert. denied, 469 U.S. 867, 105 S.Ct. 211, 83 L.Ed.2d 141 (1984), held that the resentencing did not violate the double jeopardy clause of the fifth amendment. The court, citing North Carolina v. Pearce, 395 U.S. 711, 89 S.Ct. 2072, 23 L.Ed.2d 626 (1969), acknowledged that the double jeopardy clause has been interpreted as protecting an individual against multiple punishments for the same offense. However, the court held that "the same policy interests supported by the Double Jeopardy Clause are not at stake in a situation where reevaluation of a sentence, rather than multiple sentencing, is at issue." Mem. op. at 2. "[T]he Double Jeopardy Clause's 'bar against repeated attempts to convict, with consequent subjection of the defendant to embarrassment, expense, anxiety, and insecurity, and the possibility that he may be found guilty even though innocent' have [sic] little application where a convicted felon's sentence is merely being reevaluated in light of changed circumstances." Id. at 3 (quoting DiFrancesco, 449 U.S. at 136, 101 S.Ct. at 437). The district court asserted that, in Goldhammer, the Supreme Court read its earlier DiFrancesco holding as "consistent with the idea that double jeopardy protections do not bar resentencing of a criminal defendant on affirmed convictions where other convictions and sentences are reversed on appeal." Id. The court found "no conceptual difference between these cases and the present case." Id. at 4. Accordingly, it granted the government's motion to resentence on the affirmed Count IV conviction. Id.
III
Discussion
A. District Court Authority to Resentence
7
The district court was correct in concluding that, despite the unfortunate language of our earlier remand order,6 it had authority to resentence Mr. Shue. The district court was quite right in perceiving that the nature of the proceedings in this court during the first appeal supplied no reason for a deviation from the general rule that, when an appellate court affirms some counts and reverses others, it is open to the district court to resentence in order to effectuate the original sentencing intent. See United States v. Butz, 784 F.2d 239, 241 (7th Cir.1986); United States v. Kuna, 781 F.2d 104, 106 (7th Cir.1986) (Kuna II ); United States v. Jefferson, 760 F.2d 821, 823 (7th Cir.), vacated on other grounds, 474 U.S. 806, 106 S.Ct. 41, 88 L.Ed.2d 34 (1985), on remand, 782 F.2d 697 (7th Cir.1986). But see United States v. Henry, 709 F.2d 298, 305-06 (5th Cir.1983) (en banc).7 Indeed, in Kuna II, this court had previously heard an appeal of the defendant's convictions. The court affirmed the convictions on all counts, but vacated a probation condition attached to one of the counts and remanded to the district court. The language used by the court to remand was: "[W]e vacate the condition of probation and remand for resentencing." United States v. Kuna, 760 F.2d 813, 820 (7th Cir.1985) (Kuna I ). On remand, the district court resentenced Mr. Kuna by adjusting his entire sentence package. Mr. Kuna appealed the resentencing, arguing that the district court had no authority to resentence as it did. 781 F.2d at 105-06. This court stated that "[a]lthough the language of Kuna I is less than precise, we can conclude that this court fully intended the district judge to re-evaluate Kuna's entire sentence package." Id. at 106.
8
Like the panel in Kuna II, we are mindful of the Supreme Court's admonition in DiFrancesco that " '[t]he Constitution does not require that sentencing should be a game in which a wrong move by the judge means immunity for the prisoner.' " 449 U.S. at 135, 101 S.Ct. at 436 (quoting Bozza v. United States, 330 U.S. 160, 166-67, 67 S.Ct. 645, 649, 91 L.Ed. 818 (1947)). The practical realities of present sentencing practices require this approach. When a defendant is convicted of more than one count of a multicount indictment, the district court is likely to fashion a sentencing package in which sentences on individual counts are interdependent. When, on appeal, one or more counts of a multicount conviction are reversed and one or more counts are affirmed, the result is an "unbundled" sentencing package. See, e.g., United States v. Thomas, 788 F.2d 1250, 1260 (7th Cir.), cert. denied, --- U.S. ----, 107 S.Ct. 187, 93 L.Ed.2d 121 (1986). Because the sentences are interdependent, the reversal of convictions underlying some, but not all, of the sentences renders the sentencing package ineffective in carrying out the district court's sentencing intent as to any one of the sentences on the affirmed convictions.
9
Thus, despite the previous panel's failure to vacate explicitly the sentencing package and remand for resentencing, we hold that the district court had the authority to reevaluate the sentencing package in light of the changed circumstances and resentence the defendant to effectuate the original sentencing intent. Moreover, as we shall discuss in the following paragraphs, there can be no question that such resentencing does not violate the double jeopardy clause or the due process clause. See Kuna II, 781 F.2d at 106.
B. Double Jeopardy
10
The fifth amendment guarantee against double jeopardy "has been said to consist of three separate constitutional protections. It protects against a second prosecution for the same offense after acquittal. It protects against a second prosecution for the same offense after conviction. And it protects against multiple punishments for the same offense." Pearce, 395 U.S. at 717, 89 S.Ct. at 2076. It is the last of these protections that is implicated when a defendant is resentenced after a successful appeal in which convictions on some of multiple counts are reversed and others are affirmed.
11
In Pennsylvania v. Goldhammer, 474 U.S. 28, 106 S.Ct. 353, 88 L.Ed.2d 183,8 the Supreme Court held that, in accordance with DiFrancesco9 and Pearce, the double jeopardy clause did not bar resentencing on counts that were affirmed on appeal when a sentence of imprisonment on another count was vacated. "Indeed, a resentencing after an appeal intrudes even less upon the values protected by the Double Jeopardy Clause than does a resentencing after retrial." 106 S.Ct. at 354. Yet, Mr. Shue argues that he has a legitimate expectation of finality in his sentence and that this bars the district court from resentencing him. He relies on United States v. Jones, 722 F.2d 632 (11th Cir.1983), which held that, where the defendant (who had not appealed his conviction or sentence) had begun to serve his sentence, he had a legitimate expectation as to the duration of the sentence that was protected by the double jeopardy clause. Id. at 638. The Jones court stated that "unless the statute explicitly provides for sentence modification, as in DiFrancesco, or the defendant knowingly engages in deception, a sentence may not be altered in a manner prejudicial to the defendant after he has started serving the sentence." Id. at 638-39.
12
Mr. Shue's reliance on Jones is unpersuasive. As the Fourth Circuit noted in United States v. Bello, 767 F.2d 1065 (4th Cir.1985), the majority opinion in DiFrancesco, "undercut[ ] the basis for any general rule that the Double Jeopardy Clause precludes a sentence increase once the defendant has commenced serving the sentence." Id. at 1069. The Bello court pointed out that DiFrancesco "focused on whether the defendant held a legitimate 'expectation of finality' as to the original sentence, in order to determine whether increasing the sentence later was tantamount to multiple punishment." Id. at 1070. Certainly, there can be no expectation of finality in a sentence originally imposed when the convicted and sentenced defendant exercises his right to appeal. Cf. Bello, 767 F.2d at 1070. Where the defendant challenges one of several interdependent sentences (or underlying convictions) he has, in effect, challenged the entire sentencing plan. See United States v. Busic, 639 F.2d 940, 947 (3d Cir.), cert. denied, 452 U.S. 918, 101 S.Ct. 3055, 69 L.Ed.2d 422 (1981). Consequently, he can have no legitimate expectation of finality in any discrete portion of the sentencing package after a partially successful appeal. Indeed, since DiFrancesco, this court has consistently held that, in multicount convictions, there is no double jeopardy bar to enhancing the sentence on one or more counts that are affirmed on appeal in order to fulfill the sentencing intent of the trial judge when other counts are reversed. See United States v. Paul, 783 F.2d 84, 87 (7th Cir.1986); Kuna II, 781 F.2d at 106; Covelli, 738 F.2d at 862.
13
Here, there is no question that the resentencing to twenty years imprisonment was within the legitimate expectations of Mr. Shue. The original sentences imposed on all four counts of which Mr. Shue was convicted were clearly interdependent; they comprised a sentencing package. When that sentencing package was "unbundled" because of a successful appeal of some, but not all, of the counts of the multicount conviction, the double jeopardy clause does not bar resentencing on the affirmed count so long as the new sentence conforms to statutory limits10 and effectuates the district court's original sentencing intent. See Kuna II, 781 F.2d at 106. His legitimate expectation could be only that, if successful on appeal, he would not be given a greater sentence than that previously imposed as punishment for appealing his conviction. See Pearce, 395 U.S. 711, 89 S.Ct. 2072, 23 L.Ed.2d 656.
C. Due Process
14
Mr. Shue also argues that the government is attempting to penalize him for exercising his right to appeal. Appellant cites Blackledge v. Perry, 417 U.S. 21, 94 S.Ct. 2098, 40 L.Ed.2d 628 (1974), as condemning this sort of "prosecutorial vindictiveness." We find, however, no indication of vindictiveness in the district court's resentencing. Indeed, the appellant's sentence has been reduced, rather than increased, on resentencing.
15
The Supreme Court held in Pearce that the due process clause prevents a trial court judge from imposing a greater sentence on a defendant after a successful appeal of a conviction and retrial unless the judge gives as reasons "objective information concerning identifiable conduct on the part of the defendant occurring after the time of the original sentencing proceeding." 395 U.S. at 726, 89 S.Ct. at 2081. Unless such reasons are given, the trial judge must resentence according to the original sentencing intentions. Paul, 783 F.2d at 87-88; see Kuna II, 781 F.2d at 106. This court has held that the proscription of Pearce applies to resentencing after vacation of an illegal sentence, as well as to resentencing after retrial. Paul, 783 F.2d at 88 (citing Jefferson, 760 F.2d at 825).
16
Pearce, however, does not apply to the facts of this case. Although Mr. Shue argues that his sentence has been enhanced and that the government is trying to penalize him for exercising his right to appeal, the new sentence does comply with the original sentencing intent of the district court as articulated in its memorandum opinion granting the government's motion to resentence Mr. Shue: "Defendant Shue was originally sentenced on Count IV in the context of a lengthy prison sentence in the companion convictions which have since been reversed. In the absence of the other convictions, Shue, a master and recidivist criminal as shown at trial and as documented in the presentence reports, would not have been sentenced to probation." Mem. op. at 4. Accordingly, appellant's due process challenge to his resentencing fails.
D. Sentencing on the Counts to be Retried
17
According to the information available to this court, Mr. Shue has not been retried on the counts that were previously reversed. If the government elects to retry and the defendant is found guilty, there will be ample opportunity to explore the limits on the sentencing judge at that time. Today, we need only hold that redistribution of the original sentence over the remaining count to effectuate the original sentencing intent was not a violation of the double jeopardy clause or the due process clause.
Conclusion
18
For the reasons set forth in this opinion, the order of the district court resentencing Mr. Shue is affirmed.
19
AFFIRMED.
*
The Honorable Robert A. Grant, Senior District Judge for the Northern District of Indiana, is sitting by designation
1
Mr. Shue was convicted of conspiracy (Count I), attempted bank robbery (Count III) and two counts of bank robbery (Counts II and IV). The jury acquitted the appellant on one count of bank robbery (Count V), and the court directed a verdict of acquittal as to another count of bank robbery (Count VI)
2
The court stated: "For the foregoing reasons, the conviction and sentence on Count IV are affirmed. The convictions on Counts I, II, and III are reversed and remanded for the new trial which they merit." United States v. Shue, 766 F.2d 1122, 1136 (7th Cir.1985)
3
The twenty-year sentence on Count IV (bank robbery) is within the statutory limit provided by 18 U.S.C. Sec. 2113(a) for the offense
4
In Pennsylvania v. Goldhammer, 474 U.S. 28, 106 S.Ct. 353, 88 L.Ed.2d 183 (1985), the Supreme Court of the United States reversed the Supreme Court of Pennsylvania's holding that the double jeopardy clause barred resentencing of the defendant on counts that were affirmed on appeal by the state when the sentence of imprisonment on another count was vacated. The Court pointed out that the rationale of the Supreme Court of Pennsylvania in so holding was inconsistent with United States v. DiFrancesco, 449 U.S. 117, 101 S.Ct. 426, 66 L.Ed.2d 328 (1980). See infra note 5 (describing DiFrancesco ). The Court stated that in DiFrancesco
[w]e noted that the decisions of this Court "clearly establish that a sentenc[ing in a non-capital case] does not have the qualities of constitutional finality that attend an acquittal." ... In North Carolina v. Pearce, ... we held that a court could sentence a defendant on retrial more severely than after the first trial. Any distinction between the situation in Pearce and that in DiFrancesco is " 'no more than a conceptual nicety.' " ... Indeed, a resentencing after an appeal intrudes even less upon the values protected by the Double Jeopardy Clause than does a resentencing after retrial.
106
S.Ct. at 353-54
5
United States v. DiFrancesco held that the double jeopardy clause is not violated when the government seeks review in a federal court of appeals of a defendant's sentence under the dangerous special offender provision of the Organized Crime Control Act of 1970. See 18 U.S.C. Secs. 3575, 3576. The Second Circuit had held that "to subject a defendant to the risk of substitution of a greater sentence, upon an appeal by the government, is to place him a second time 'in jeopardy of life or limb.' " United States v. DiFrancesco, 604 F.2d 769, 783 (2d Cir.1979). The Supreme Court disagreed, stating, inter alia, that "the pronouncement of a sentence has never carried the finality that attached to an acquittal," 449 U.S. at 133, 101 S.Ct. at 435, and that "[t]he Double Jeopardy Clause does not provide the defendant with the right to know at any specific moment in time what the exact limit of his punishment will turn out to be," id. at 137, 101 S.Ct. at 437
6
See supra note 2
7
In United States v. Henry, 709 F.2d 298 (5th Cir.1983) (en banc), the court overturned a district court's increase of the legal part of a sentence to compensate for a vacated illegal sentence (under Rule 35 of the Federal Rules of Criminal Procedure) because the court of appeals had not previously vacated the legal sentence. "The Fifth Circuit ... indicated that if it had intended to allow the district court discretion to increase the legally imposed sentence, it would have expressly vacated it." United States v. Jefferson, 760 F.2d 821, 824 (7th Cir.), vacated on other grounds, 474 U.S. 806, 106 S.Ct. 41, 88 L.Ed.2d 34 (1985), on remand, 782 F.2d 697 (7th Cir.1986) (citing Henry, 709 F.2d at 304). Research revealed only the Henry case making this distinction between a vacated and a non-vacated sentence. In light of Kuna II's liberal construction of this court's disposition in Kuna I, precise language vacating an entire sentencing package is not required to vest jurisdiction in the district court when part of a criminal judgment is affirmed and part is reversed on appeal
8
See supra note 4
9
See supra note 5
10
Here, there is no question that the new sentence in Count IV complies with the statutory limit for that offense. See supra note 3; North Carolina v. Pearce, 395 U.S. 711, 720, 89 S.Ct. 2072, 2078, 23 L.Ed.2d 656 (1969)
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Case: 18-11354 Document: 00515101497 Page: 1 Date Filed: 09/03/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 18-11354 September 3, 2019
Lyle W. Cayce
UNITED STATES OF AMERICA, Clerk
Plaintiff-Appellee
v.
ELI TREVINO MUNGIA,
Defendant-Appellant
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 5:09-CV-97
USDC No. 5:95-CR-17-1
Before DENNIS, HAYNES, and DUNCAN, Circuit Judges.
PER CURIAM: *
Eli Trevino Mungia, federal prisoner # 26371-077, filed a Federal Rule
of Civil Procedure 60(b)(4) motion filed in his criminal proceedings, in which
he argued that the judgment denying his 28 U.S.C. § 2255 motion was void
based upon the ineffective assistance of his federal habeas counsel. The
district court denied his Rule 60(b) motion and denied him a certificate of
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 18-11354 Document: 00515101497 Page: 2 Date Filed: 09/03/2019
No. 18-11354
appealability (COA). Mungia moves for a COA and for leave to proceed in
forma pauperis (IFP) on appeal.
To the extent that Mungia challenges the district court’s denial of his
Rule 60(b) motion in the context of his criminal proceedings, he is appealing
from a “meaningless, unauthorized” motion that the district court lacked
jurisdiction to consider. United States v. Early, 27 F.3d 140, 141-42 (5th Cir.
1994). Because an appeal on this ground lacks arguable merit, it is
DISMISSED, see 5TH CIR. R. 42.2, and a COA is DENIED as unnecessary, see
28 U.S.C. § 2253(c)(1)(B).
To the extent that the district court’s denial of a COA implicates
Mungia’s prior civil postconviction proceedings and Mungia seeks a COA to
appeal the district court’s denial of his Rule 60(b) motion in that context, he
has not made the requisite showing for a COA. See Miller-El v. Cockrell, 537
U.S. 322, 327 (2003); see also Gonzalez v. Crosby, 545 U.S. 524, 531-32 & n.5
(2005); 28 U.S.C. § 2244(b)(1). Accordingly, a COA is DENIED. Mungia’s
motion for leave to proceed IFP on appeal is also DENIED.
Mungia has previously been warned that frivolous, repetitive, or
otherwise abusive filings would invite the imposition of sanctions. See United
States v. Mungia, No. 18-10004 (5th Cir. Dec. 10, 2018) (unpublished); In re
Mungia, No. 16-10307 (5th Cir. June 21, 2016) (unpublished). Mungia is again
WARNED that the continued filing of frivolous, repetitive, or otherwise
abusive attempts to challenge his convictions and sentences in this court or
any court subject to this court’s jurisdiction will invite the imposition of
sanctions, including dismissal, monetary sanctions, and possibly denial of
access to the judicial system.
2
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People v Crosby (2017 NY Slip Op 04502)
People v Crosby
2017 NY Slip Op 04502
Decided on June 8, 2017
Appellate Division, Third Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided and Entered: June 8, 2017
107652
[*1]THE PEOPLE OF THE STATE OF NEW YORK, Respondent,
vJAMES D. CROSBY, Appellant.
Calendar Date: April 27, 2017
Before: Peters, P.J., Garry, Devine, Mulvey and Aarons, JJ.
Pamela B. Bleiwas, Ithaca, for appellant.
Eliza Filipowski, District Attorney, Ithaca (Andrew J. Bonavia of counsel), for respondent.
Mulvey, J.
MEMORANDUM AND ORDER
Appeal from a judgment of the County Court of Tompkins County (Rowley, J.), rendered March 20, 2015, convicting defendant following a nonjury trial of the crimes of manslaughter in the second degree (two counts), assault in the second degree, assault in the third degree and reckless driving.
At about 5:00 p.m. on December 31, 2013, Samantha Aarnio was driving on State Route 34/96 in the Town of Newfield, Tompkins County when, without warning, an oncoming Chevrolet Monte Carlo operated by defendant came out of a curve, crossed the double solid yellow line, entered Aarnio's lane and crashed head-on into her Jeep. The force of the impact caused the Jeep to overturn and come to rest in a field along the highway. The collision resulted in the deaths of Aarnio's 67-year-old mother-
in-law and a 19-year-old passenger in defendant's vehicle, as well as in multiple injuries to Aarnio, her husband and defendant. A six-count indictment charged defendant with manslaughter in the second degree (two counts), assault in the second degree, assault in the third degree, reckless endangerment in the second degree and reckless driving. Following a nonjury trial, County Court dismissed the charge of reckless endangerment in the second degree and convicted defendant of the remaining charges. County Court sentenced defendant to prison terms of 4 to 12 years for each conviction of manslaughter in the second degree, four years in prison with three years of postrelease supervision for the conviction of assault in the second degree, one year in jail for the conviction of assault in the third degree and six months in jail for the conviction of reckless driving, with the sentences to run concurrently. Restitution was also [*2]ordered. Defendant appeals.
Defendant contends that the trial evidence was legally insufficient and that the verdict was against the weight of the evidence, specifically with regard to the element of recklessness. Although we find that defendant failed to preserve his argument regarding legal sufficiency for appellate review, in reviewing defendant's argument that the verdict is against the weight of the evidence, which does not require preservation (see People v Hebert, 68 AD3d 1530, 1531 [2009], lv denied 14 NY3d 841 [2010]), "we necessarily evaluate whether the elements of the challenged crimes were proven beyond a reasonable doubt" (People v Scippio, 144 AD3d 1184, 1185 [2016], lv denied 28 NY3d 1150 [2017]). As to the weight of the evidence, where a different verdict on each of the counts would not be unreasonable, we "must, like the trier of fact below, 'weigh the relative probative force of conflicting testimony and the relative strength of conflicting inferences that may be drawn from the testimony'" (People v Bleakley, 69 NY2d 490, 495 [1987], quoting People ex rel. MacCracken v Miller, 291 NY 55, 62 [1943]). "Although the appellate court must review the evidence in a neutral light, great deference is accorded to the fact-finder's opportunity to view the witnesses, hear the testimony and observe demeanor [a]nd, as relevant here, the appropriate standard for evaluating a weight of the evidence argument on appeal is the same regardless of whether the finder of fact was a judge or a jury" (People v Race, 78 AD3d 1217, 1219-1220 [2010] [internal quotation marks, brackets and citations omitted], lv denied 16 NY3d 835 [2011]).
Since the parties stipulated to proof of the death and physical injury elements of manslaughter in the second degree, assault in the second degree and assault in the third degree, and that defendant's vehicle constituted a dangerous instrument within the meaning of Penal Law § 120.05 (4) if driven recklessly, the only issue to be addressed is, as identified by defendant, his culpable mental state. Specifically, defendant contends that, absent proof of dangerous speeding at the moment of impact, his driving cannot be considered to constitute recklessness under the Penal Law. Each of the manslaughter and assault charges required proof that defendant acted recklessly when causing either death or injury to these victims (Penal Law §§ 120.00 [2]; 120.05 [4]; 125.15 [1]). "A person acts recklessly with respect to a result or to a circumstance described by a statute defining an offense when he [or she] is aware of and consciously disregards a substantial and unjustifiable risk that such result will occur or that such circumstance exists. The risk must be of such nature and degree that disregard thereof constitutes a gross deviation from the standard of conduct that a reasonable person would observe in the situation" (Penal Law § 15.05 [3]).
The People's proof included not only the circumstances at the moment of impact, but extensive eyewitness testimony recounting defendant's almost maniacal operation of his car for a several-mile stretch of this twisting, winding country road until he emerged from a curve, swerving completely into Aarnio's lane of travel. At a point four miles south of the collision, and only a few minutes prior thereto, defendant's vehicle was recognized by a friend, Ashton Sutfin, in another car. Sutfin observed the Monte Carlo heading north on Route 34/96, trailing a group of four vehicles. He saw it make successive passes of all four vehicles within only an eighth of a mile, first passing a truck on a curve and then slamming on the brakes after defendant reentered his lane to avoid a rear-end collision with the car in front of him. He also estimated the Monte Carlo's speed at 50 to 60 miles per hour going over a blind hill in a stretch that had a recommended speed limit of 40 miles per hour. Defendant's behavior was so alarming that Sutfin phoned the passenger in defendant's car to angrily ask him why "they" were driving in this manner.
James Maphis, who was driving a box truck in a northerly direction along this road, was [*3]passed by defendant in a no passing zone while defendant was going approximately 70 to 75 miles per hour. Maphis saw the Monte Carlo fishtail across the double solid yellow line as it returned to the northbound lane and saw it pass two more vehicles and return to its lane just moments before another vehicle approached from the opposite direction. Erick White testified that he saw the Monte Carlo approach in his rearview mirror, noticing that it had dramatically passed two cars behind him, and then pull in very close to the rear end of his vehicle. The Monte Carlo passed White and another car ahead, in a no passing zone, while heading up a blind hill. Catherine Kraus was also driving in the northbound lane. Kraus testified that she saw the Monte Carlo pass in no passing zones and saw it pass her with an oncoming car approaching. She hit her brakes to allow the Monte Carlo to swerve back into the northbound lane, narrowly avoiding a collision with the oncoming car. Daniel Lawrence, whose driveway is located approximately 500 feet from the site of the crash, testified that he first heard the sound of "tires moving faster than normal." He looked out the window and saw the Monte Carlo traveling down the hill in front of his home, noting that it was moving faster than he had ever seen a vehicle travel there, "about twice" as fast as normal traffic. A few seconds later, he heard the sound of the collision.
The People also presented the testimony of State Police accident reconstructionist Travis Webster. He estimated the speed of the Jeep at 40 to 45 miles per hour and the speed of the Monte Carlo at 84 to 90 miles per hour at the moment of impact. Because Webster used a "throw equation"[FN1] to calculate the Jeep's speed, County Court rejected his opinion on that point. Defendant presented the testimony of accident reconstructionist William Fischer. He opined that the Monte Carlo was traveling between 51 and 59 miles per hour, and the Jeep was traveling at 26 miles per hour. In rebuttal, the People presented another State Police accident reconstructionist in support of Webster's "throw equation." As conflicting expert testimony was offered as to the range of speed of the vehicles, County Court found that the experts could not establish at what speeds the vehicles were traveling at the time of the collision. However, it accepted Webster's conclusion that this was a high speed collision.
We first reject defendant's contention that the eyewitnesses' testimony regarding his driving maneuvers along that four-mile route were remote and, therefore, irrelevant to his mental state at the moment of impact, and instead find that the testimony is probative of "risk-creating" behavior (People v Cabrera, 10 NY3d 370, 377 [2008]; see People v Briskin, 125 AD3d 1113, 1120 [2015], lv denied 25 NY3d 1069 [2015]). We also find that County Court had ample basis to conclude that, absent proof of any other contributing factors,[FN2] the excessive speed of the Monte Carlo was the cause of defendant's inability to keep it from crossing over into the opposite lane.
In determining defendant's subjective perception or non-perception of the risk of harm, the trier of fact must examine the objective evidence of the surrounding circumstances (see People v Licitra, 47 NY2d 554, 559 [1979]; see also People v Briskin, 125 AD3d at 1119). To constitute recklessness, these circumstances must show that "the defendant engage[d] in some blameworthy conduct contributing to that risk; and that the defendant's conduct amount[s] to a gross deviation from how a reasonable person would act" (People v Asaro, 21 NY3d 677, 684 [2013] [internal quotation marks and citations omitted]). We find that excessive speed, [*4]combined with the loss of control after several incidents of dangerous passing and fishtailing in the moments prior to the collision, amply demonstrate "the kind of seriously blameworthy carelessness whose seriousness would be apparent to anyone who shares the community's general sense of right and wrong" (People v Cabrera, 10 NY3d at 377 [internal quotation marks, brackets and citations omitted]). In effect, defendant was using "a public road as his personal drag strip" (People v Asaro, 21 NY3d at 685), and, as such, this constitutes sufficient proof of criminal recklessness (id.).
Since the proof establishes that defendant created the risk by his affirmative actions, it likewise confirms that he consciously disregarded that risk. "[D]eferring to County Court's opportunity to view the witnesses, hear the testimony and observe demeanor," as we must (People v Olsen, 124 AD3d 1084, 1087 [2015] [internal quotation marks and citations omitted], lv denied 26 NY3d 933 [2015]), we conclude that the weight of the evidence supports the element of recklessness in each of the Penal Law convictions. We likewise find that this evidence constituted ample proof that defendant drove "in a manner which unreasonably interfere[d] with the free and proper use of the public highway, or unreasonably endanger[ed] users of the public highway" as required for his conviction of reckless driving pursuant to Vehicle and Traffic Law § 1212.
Finally, we discern no reason to disturb the sentence imposed by County Court. The concurrent prison sentences of 4 to 12 years for the convictions of manslaughter in the second degree, which are within the permissible statutory range and less than the maximum of 5 to 15 years (see Penal Law § 70.00 [2] [c]; [3] [b]), reflect the magnitude of defendant's crimes. Having reviewed the record, we discern neither an abuse of discretion nor any extraordinary circumstances warranting a reduction of the sentence in the interest of justice (see People v Burnett, 93 AD3d 993, 994 [2012]; People v Evans, 81 AD3d 1040, 1041-1042 [2011], lv denied 16 NY3d 894 [2011]).
Peters, P.J., Garry, Devine and Aarons, JJ., concur.
ORDERED that the judgment is affirmed.
Footnotes
Footnote 1: A "throw equation" is a methodology employed to estimate vehicle speed based upon the ejection of an object due to vehicle impact.
Footnote 2: It was undisputed that there was light snow falling, with no accumulation of snow on the highway.
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NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2009-7101
ROBERT W. SCROGGINS,
Claimant-Appellant,
v.
ERIC K. SHINSEKI, Secretary of Veterans Affairs,
Respondent-Appellee.
Robert W. Scroggins, of Shreveport, Louisiana, pro se.
William P. Rayel, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, for respondent-appellee. With
him on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson,
Director, and Kirk T. Manhardt, Assistant Director. Of counsel on the brief were Michael
J. Timinski, Deputy Assistant General Counsel, and Amanda R. Blackmon, Attorney,
Office of the General Counsel, United States Department of Veterans Affairs, of
Washington, DC.
Appealed from: United States Court of Appeals for Veterans Claims
Judge Ronald M. Holdaway
NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2009-7101
ROBERT W. SCROGGINS,
Claimant-Appellant,
v.
ERIC K. SHINSEKI, Secretary of Veterans Affairs,
Respondent-Appellee.
Appeal from the United States Court of Appeals for Veterans Claims in 08-
2255, Judge Ronald M. Holdaway.
____________________________
DECIDED: January 6, 2010
____________________________
Before LOURIE, LINN, and MOORE, Circuit Judges.
PER CURIAM.
DECISION
Robert Scroggins appeals from the decision of the United States Court of
Appeals for Veterans Claims (“the Veterans Court”) dismissing his appeal based on a
lack of final decision from the Board of Veterans’ Appeals (“the Board”). Scroggins v.
Shinseki, No. 08-2255, 2009 U.S. App. Vet. Claims Lexis 381 (U.S. App. Vet. Cl.
Mar. 18, 2009). Because Scroggins’ appeal does not raise any issue within our
jurisdiction, we dismiss.
BACKGROUND
On July 3, 2008, Scroggins filed a notice of appeal at the Veterans Court seeking
review of Board decisions dated June 27, 2008 and June 30, 2008. The Veterans Court
had no record of a final Board decision and issued an order to show cause, requiring
Scroggins to explain why the court should not dismiss his appeal. In response,
Scroggins stated that he was appealing the August 1988 effective date of a total
disability rating due to individual unemployability. His statements indicated that his
claim had been denied by the regional office of the Department of Veterans’ Affairs (“the
VA”), but that he had not obtained a decision from the Board. Typically, decisions from
the VA regional office must be appealed to the Board within the time frame prescribed
by regulation. See 38 C.F.R. § 20.302. Following a final decision from the Board, a
veteran may appeal to the Veterans Court. Because the Board had not issued a final
decision in this case, the Veterans Court dismissed Scroggins’ appeal.
Scroggins timely appealed to this court. Our jurisdiction in appeals from the
Veterans Court rests on 38 U.S.C. § 7292.
DISCUSSION
The scope of our review of a Veterans Court decision is limited by statute. See
38 U.S.C. § 7292. Under § 7292(a), we may review a decision by the Veterans Court
with respect to the validity of “any statute or regulation . . . or any interpretation thereof
(other than a determination as to a factual matter) that was relied on by the [Veterans]
Court in making the decision.” Absent a constitutional issue, we may not review
challenges to factual determinations or challenges to the application of a law or
regulation to facts. Id. § 7292(d)(2).
2009-7101 2
Scroggins essentially argues that the VA failed to explain its procedures fully or
provide him with enough guidance or assistance. However, in addition to the fact that,
as the Veterans court held, he has no final decision from the Board from which he can
appeal to that court, he raises no challenge in this court to the decision of the Veterans
Court based on “the validity of a statute or regulation, or the interpretation of a
constitutional or statutory provision or a regulation.” Livingston v. Derwinski, 959 F.2d
224, 226 (Fed. Cir. 1992). Thus, we have no authority to consider the appeal. Id. We
therefore must dismiss Scroggins’ appeal.
COSTS
No costs.
2009-7101 3
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FILED
United States Court of Appeals
Tenth Circuit
June 22, 2015
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
CRYSTAL CASTILLO; LISA
GARELL; ANGELA GAYTAN;
DANA REEDER; NANCY
ROBINSON,
Plaintiffs - Appellees,
No. 14-6050
v.
CHARLOTTE DAY, in her individual
capacity,
Defendant - Appellant,
and
ANTHONY BOBELU, also known as
Tony Bobelu; RUSSELL
HUMPHRIES; BUD DOLAN; RUBY
JONES-COOPER; JOHN LARSEN;
JAMES SMITH; MARY PAVLISKA,
in their individual capacities,
Defendants.
_______________________________
CRYSTAL CASTILLO; LISA
GARELL; ANGELA GAYTAN;
DANA REEDER; NANCY
ROBINSON,
Plaintiffs - Appellees,
v. No. 14-6051
MARY PAVLISKA, in her individual
capacity,
Defendant - Appellant,
and
CHARLOTTE DAY; ANTHONY
BOBELU, also known as Tony
Bobelu; RUSSELL HUMPHRIES;
BUD DOLAN; RUBY JONES-
COOPER; JOHN LARSEN; JAMES
SMITH, in their individual capacities,
Defendants.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
(D.C. NO. 5:12-CV-00448-HE)
Kevin L. McClure, Assistant Attorney General, Office of the Attorney General for
the State of Oklahoma, Oklahoma City, Oklahoma, for Defendant-Appellant
Charlotte Day.
David W. Lee (Emily B. Fagan with him on the briefs), Lee Law Center, P.C.,
Oklahoma City, Oklahoma, for Defendant-Appellant Mary Pavliska.
Derek S. Franseen (Micky Walsh with him on the briefs), Beeler, Walsh & Walsh,
P.L.L.C., Oklahoma City, Oklahoma, for Plaintiffs-Appellees.
Before GORSUCH, MURPHY, and MORITZ, Circuit Judges.
MURPHY, Circuit Judge.
-2-
I. Introduction
Plaintiffs are five women who were formerly incarcerated at the Hillside
Community Corrections Center (“Hillside”) in Oklahoma City, Oklahoma. They
filed a 42 U.S.C. § 1983 action against multiple defendants, alleging they were
sexually abused and harassed in violation of the Eighth Amendment’s prohibition
against cruel and unusual punishment. Plaintiffs’ complaint named fifteen
defendants, including Defendant-Appellant Charlotte Day and Defendant-
Appellant Mary Pavliska, both of whom were guards at Hillside during the
relevant period. Plaintiffs alleged Day and Pavliska were aware of the abuse and
did nothing to prevent it.
The claims against several defendants were dismissed without prejudice.
The remaining defendants, except the alleged perpetrator Anthony Bobelu, moved
for summary judgment. The district court granted summary judgment to all
movants except Day and Pavliska. The district ruled a jury could conclude from
the evidence presented that Day and Pavliska were deliberately indifferent to a
known substantial risk of serious harm to the Plaintiffs. In this interlocutory
appeal, Day and Pavliska argue the district court erred by ruling they were not
entitled to qualified immunity. Exercising jurisdiction pursuant to 28 U.S.C.
§ 1291, we dismiss Day’s appeal for lack of jurisdiction and affirm the denial of
qualified immunity as to Pavliska.
-3-
II. Background
The district court’s order contains a comprehensive discussion of the
background facts involving all defendants. We focus only on the background
facts relevant to the appellate arguments raised by Day and Pavliska. Although
the facts are largely undisputed, the district court properly adopted the Plaintiffs’
account if the parties’ versions differed. Scott v. Harris, 550 U.S. 372, 378
(2007).
Day and Pavliska were employed by the Oklahoma Department of
Corrections and worked at Hillside. The Plaintiffs were all incarcerated at
Hillside from February 2008 until August 2009. As part of an off-site prison
work program, Plaintiffs performed landscaping work and grounds maintenance at
the Oklahoma Governor’s Mansion (the “Mansion”). While Plaintiffs were at the
Mansion their off-site supervisor was Anthony Bobelu, the Mansion’s
groundskeeper. No guard from Hillside remained with Plaintiffs during their off-
site assignment.
Plaintiffs allege that Bobelu and Russell Humphries, a cook at the Mansion,
harassed and sexually assaulted them. Plaintiff Reeder alleges Bobelu began
sexually harassing her in October 2007. She testified that Bobelu sexually
assaulted her on multiple occasions, and Bobelu and Humphries raped her on
April 22, 2008. Reeder alleges on January 13, 2009, the day she was released
from DOC custody, Bobelu forced her to engage in oral sex by threatening to
-4-
have her release date delayed. Plaintiff Garell testified that Bobelu raped her in
December 2008, February 2009, and April 2009. Plaintiff Robinson worked at
the Mansion until December 2008. She testified Bobelu made sexual advances
and directed inappropriate sexual remarks toward her. Plaintiff Gaytan testified
that Bobelu made sexual advances and touched her inappropriately. The dates of
the incidents involving Gaytan are not clear from the evidence presented.
Plaintiff Castillo testified she worked at the Mansion in April and May 2009.
During that time, Bobelu made inappropriate comments, propositioned her, and
fondled her.
The specific allegations against Day and Pavliska relate to their knowledge
of the sexual misconduct and assaults alleged by Plaintiffs. Plaintiff Reeder
testified she told Pavliska on January 12, 2009, that she had been sexually abused
by Bobelu and Humphries. Reeder admitted she did not provide any details of the
assaults but stated she used the phrase “sexual abuse.” According to Reeder,
Pavliska told her to return to her dorm and she never heard anything else about
the report she made to Pavliska. To the best of Reeder’s knowledge, Pavliska did
not refer her complaint to anyone. Pavliska testified she reported the
conversation to Day, but Day denies being told.
Plaintiff Garell testified she told Pavliska in February 2009 there were
“things going on at the governor’s mansion that shouldn’t be going on” and “he
was doing things that he shouldn’t be doing.” Pavliska told Garell “to be quiet”
-5-
or she would only cause problems for herself. Although Garell did not refer to
Bobelu by name when she spoke to Pavliska, she testified she believed Pavliska
knew both that Bobelu was involved and that the conduct involved sexual assault
because Pavliska told her other inmates had made similar reports to her.
Garell also testified she had a discussion with Day about Bobelu and a
former inmate named Callie Johnson who was released from incarceration in July
2008. Plaintiffs have asserted Johnson had a sexual relationship with Bobelu that
began during her incarceration and continued after her release. According to
Garell, when Day picked the inmates up from the Mansion shortly after Johnson’s
release, Day asked her, “So, are you the new Callie Johnson? Are you going to
have sex with him, too?” Day also told the inmates seated in the van she knew
“there [were] things going on at the governor’s mansion and she wanted [the
inmates] to tell her about it.” Garell testified she was “kind of shocked” and did
not respond to Day’s comments.
Plaintiffs filed their original complaint on April 24, 2012, and their
amended complaint on August 15, 2012. Claims were raised against Day and
Pavliska only in their individual capacities. Both defendants moved for summary
judgment, asserting they were entitled to qualified immunity. Day argued the
facts, considered in the light most favorable to Plaintiffs, were insufficient to
show she had any knowledge of the alleged misconduct of the perpetrators.
Pavliska made a similar argument, and also asserted Plaintiffs’ allegations of
-6-
harassment and abuse, even if true, did not amount to a constitutional violation.
The district court denied both motions and these interlocutory appeals followed.
III. Discussion
A. Appellate Jurisdiction
The denial of summary judgment is ordinarily not appealable. Ortiz v.
Jordan, 562 U.S. 180, 188 (2011). The Supreme Court, however, has “recognized
a limited exception to the categorization of summary-judgment denials as
nonappealable orders” applicable when a defendant has asserted a qualified
immunity defense. Id. “[I]mmediate appeal from the denial of summary
judgment on a qualified immunity plea is available when the appeal presents a
purely legal issue . . . . However, instant appeal is not available . . . when the
district court determines that factual issues genuinely in dispute preclude
summary adjudication.” Id. (quotation omitted). Thus, while this court “lack[s]
jurisdiction to review the district court’s rulings on the sufficiency of the
evidence, we nevertheless may determine whether a given set of facts violates a
clearly established constitutional right.” Riggins v. Goodman, 572 F.3d 1101,
1107 (10th Cir. 2009) (citation omitted). “Insofar as we have jurisdiction to
review the denial of a qualified-immunity motion for summary judgment, our
review is de novo.” Deutsch v. Jordan, 618 F.3d 1093, 1099 (10th Cir. 2010).
-7-
B. Appeal No. 14-6050 - Charlotte Day
“[A] prison official cannot be found liable under the Eighth Amendment for
denying an inmate humane conditions of confinement unless the official knows of
and disregards an excessive risk to inmate health or safety . . . .” Farmer v.
Brennan, 511 U.S. 825, 837 (1994). Day moved for summary judgment, asserting
she was entitled to qualified immunity because Plaintiffs’ evidence was
insufficient to show she knew of any excessive risk to Plaintiffs’ health or safety.
Day argued the evidence failed to show she knew any of the Plaintiffs were being
sexually harassed, sexually assaulted, or raped. According to Day, she first
learned of the Plaintiffs’ allegations when she saw a television news story
exposing Bobelu’s romantic relationship with ex-inmate Callie Johnson. At that
time, Bobelu had already been removed from his job at the Mansion. Day
disputed she asked Plaintiff Garell, “So, are you the new Callie Johnson? Are
you going to have sex with him, too?” However, she argued that even if Garell’s
testimony is true, the most that could reasonably be inferred from the comment
was that she knew Bobelu and an ex-inmate began a consensual sexual
relationship after the inmate was released from incarceration. Thus, according to
Day, the undisputed facts show she had no knowledge of any sexual misconduct
at the time it was occurring.
The district court rejected Day’s argument, disagreeing with Day that her
comment to Garell about Callie Johnson could only be interpreted to mean Day
-8-
was asking about a post-incarceration consensual relationship. The court also
pointed to other evidence from which a jury could conclude Day knew about
inappropriate conduct at the Mansion while Bobelu was employed there.
Specifically, the court referenced Reeder’s testimony that she told defendant
Pavliska she had been sexually abused at the Mansion and Pavliska’s testimony
that she reported this conversation to Day. According to the district court,
Pavliska’s testimony alone “is enough to create a fact question for the jury as to
whether Day was deliberately indifferent to a known substantial risk of serious
harm to the Hillside inmates.”
In her appellate briefing, Day challenges the district court’s sufficiency
determination, arguing she had “no knowledge of any facts of a substantial risk of
harm to any of the Plaintiffs from which she could have known that she would be
violating the Plaintiff’s Eighth Amendment rights.” Although Day attempts to
characterize the issue on appeal as Plaintiffs’ failure to assert a violation of a
constitutional right under clearly established law, her argument is limited to a
discussion of her version of the facts and the inferences that can be drawn
therefrom. Thus, Day’s argument is actually a challenge to the district court’s
conclusion Plaintiffs presented sufficient evidence to survive summary judgment. 1
1
Day’s appellate brief contains a lengthy discussion of supervisor liability,
arguing the mens rea standard applicable when a plaintiff asserts an Eighth
Amendment claim based on supervisory liability is not clearly established. Even
Day acknowledges this argument is wholly irrelevant, prefacing her discussion
(continued...)
-9-
As such, this court lacks jurisdiction to review her appeal at the interlocutory
stage. See Gray v. Baker, 399 F.3d 1241, 1247-48 (10th Cir. 2005) (dismissing
an interlocutory appeal from the denial of summary judgment based on qualified
immunity because the “arguments involve[d] the district court’s determinations of
evidence sufficiency”). Accordingly, Day’s appeal is dismissed for lack of
appellate jurisdiction. 2
C. Appeal No. 14-6051 - Mary Pavliska
1. Qualified Immunity
Unlike Day, Pavliska presents an appellate argument over which we do
have jurisdiction. She asserts Plaintiffs cannot establish a violation of their
Eighth Amendment rights based on the facts they have alleged.
In her motion for summary judgment, Pavliska admitted that “an inmate has
a constitutional right to be secure in her bodily integrity and free from attack by
1
(...continued)
with the statement: “Assuming this Court ignores the fact that Plaintiffs did not
sue Day in her supervisory capacity . . . .” Day’s appellate brief also contains an
irrelevant discussion of the continuing violation theory, claiming the district court
erred by applying the continuing violations doctrine to deny her qualified
immunity because application of that doctrine to Plaintiffs’ claims is not clearly
established. This argument is puzzling in light of the district court’s
unchallenged conclusion that “Day did not move for summary judgment on the
ground that plaintiffs’ claims were barred by the statute of limitations.”
2
Plaintiffs have not argued this court lacks jurisdiction to hear Day’s
appeal. This court, however, has an independent obligation to examine its own
jurisdiction at every stage of the litigation. Devon Energy Prod. Co. v. Mosaic
Potash Carlsbad, Inc., 693 F.3d 1195, 1208 n.10 (10th Cir. 2012).
-10-
prison guards.” Hovater v. Robinson, 1 F.3d 1063, 1068 (10th Cir. 1993). She
likewise admitted that the sexual assault of an inmate by a guard is a violation of
the inmate’s Eighth Amendment rights. See Smith v. Cochran, 339 F.3d 1205,
1212 (10th Cir. 2003) (holding an inmate’s allegations of rape satisfy the
objective component of an Eighth Amendment excessive force claim because
“[s]exual abuse is repugnant to contemporary standards of decency”). She
argued, however, that she was entitled to qualified immunity because (1)
Plaintiffs did not allege she affirmatively violated their constitutional rights, (2)
she could not have failed to protect Plaintiffs from alleged constitutional
violations because the conduct of Bobelu and Humphries does not rise to the level
of a constitutional violation, and (3) she did not have actual knowledge of the bad
acts of Bobelu and Humphries. The district court rejected each of these
arguments. 3
When a defendant moves for summary judgment on the basis of qualified
immunity, the burden shifts to the plaintiff to demonstrate, on the facts alleged,
that (1) the defendant violated her constitutional or statutory rights, and (2) the
right was clearly established at the time of the alleged unlawful activity. Pearson
v. Callahan, 555 U.S. 223, 232 (2009). If the plaintiff cannot meet either part of
3
The district court, however, granted summary judgment to Pavliska as to
the claims raised by Plaintiff Robinson, concluding Robinson’s claims were time-
barred. Defendant Day did not move to dismiss Robinson’s claims as time-
barred.
-11-
this burden, the defendant is entitled to qualified immunity. Swanson v. Town of
Mountain View, 577 F.3d 1196, 1199 (10th Cir. 2009).
As to the first part of their burden, Plaintiffs assert Pavliska violated their
Eighth Amendment right to be free from sexual harassment and physical assault
while incarcerated at Hillside by failing to take reasonable measures to abate the
risk they faced from Bobelu and Humphries. “[I]t is clearly established that a
prison official’s deliberate indifference to sexual abuse by prison employees
violates the Eighth Amendment.” Keith v. Koerner, 707 F.3d 1185, 1188 (10th
Cir. 2013). “[A] prison official may be held liable under the Eighth Amendment
for denying humane conditions of confinement only if he knows that inmates face
a substantial risk of serious harm and disregards that risk by failing to take
reasonable measures to abate it.” Farmer, 511 U.S. at 847; id. at 844 (“[P]rison
officials who actually knew of a substantial risk to inmate health or safety may be
found free from liability if they responded reasonably to the risk, even if the harm
ultimately was not averted.”). Plaintiffs allege Pavliska’s own failure to
reasonably respond to a substantial risk of serious harm to them violated their
Eighth Amendment rights. Pavliska, however, argues she cannot be liable for the
actions of Bobelu and Humphries because she did not actively participate in the
sexual harassment and abuse alleged by Plaintiffs and she had no official
authority over Bobelu or Humphries. As we understand her position, she argues a
prison guard can never be liable under the Eighth Amendment when
-12-
unconstitutional acts are committed by another guard unless the perpetrator was
her subordinate. 4
More than three decades ago, this court held that the Eighth Amendment
imposes a duty on prison officials to protect prisoners from violence at the hands
of other inmates. Ramos v. Lamm, 639 F.2d 559, 572-74 (10th Cir. 1980). In
Hovater v. Robinson, the county sheriff was accused of failing to protect female
inmates from a prison guard who was sexually assaulting them. 1 F.3d at 1064.
Although this court affirmed the grant of qualified immunity to the sheriff based
on his lack of knowledge, we stated “a prison official’s failure to protect an
inmate from a known harm may constitute a constitutional violation.” Id. at 1068
(relying on Santiago v. Lane, 894 F.2d 218, 225 (7th Cir. 1990), in which the
Seventh Circuit held that “where it can be inferred that an institutional employee
should have realized that there was a strong likelihood of an attack that employee
can be held liable for violating the Eighth Amendment” (quotation omitted)).
4
Relying on authority from other circuit courts of appeals, Pavliska also
argues she cannot be held liable under a theory of bystander liability because
Plaintiffs do not claim she was present when any of the alleged sexual assaults
occurred. See Whitley v. Hanna, 726 F.3d 631, 646 (5th Cir. 2013) (holding
bystander liability “will not attach where a [state actor] is not present at the scene
of the constitutional violation”). To the extent Pavliska’s arguments could be
construed as addressing either supervisory or bystander theories of liability, they
are misplaced because Plaintiffs’ claims are not premised on either theory. See
Dodds v. Richardson, 614 F.3d 1185, 1199 (10th Cir. 2010) (holding a defendant-
supervisor is not responsible for constitutional violations under a theory of
supervisory liability unless the plaintiff can demonstrate, inter alia, “the
defendant promulgated, created, implemented or possessed responsibility for the
continued operation of a policy”).
-13-
More recently, we reversed the grant of qualified immunity to prison officials in a
§ 1983 civil rights suit alleging employees of the Colorado Department of
Corrections knew an inmate had been physically assaulted by members of a prison
gang but failed to protect him from future harm. Howard v. Waide, 534 F.3d
1227, 1234 (10th Cir. 2008) (involving claims “prison officials acted with
deliberate indifference to a known substantial risk of serious harm”). This court’s
precedent confirms Plaintiffs’ position that a prison guard’s failure to take
reasonable steps to protect an inmate from a known risk of sexual abuse by
another prison guard 5 can be a violation of the Eighth Amendment. 6 Accordingly,
we reject Pavliska’s argument that a prison guard who knows of, yet fails to
reasonably respond to, a risk of harm created by another guard can only be liable
if the perpetrator is a subordinate.
5
“[P]ersons to whom the state delegates its penological functions, which
include the custody and supervision of prisoners, can be held liable for violations
of the Eighth Amendment.” Smith v. Cochran, 339 F.3d 1205, 1215-16 (10th Cir.
2003).
6
Pavliska briefly argues for the first time in her appellate brief that it was
not clearly established that a prison guard can violate an inmate’s Eighth
Amendment rights by failing to report sexual abuse perpetrated by another guard
over which she has no official authority. See Estate of Booker v. Gomez, 745
F.3d 405, 411 (10th Cir. 2014) (“To determine whether the right was clearly
established, we ask whether the contours of a right are sufficiently clear that
every reasonable official would have understood that what he is doing violates
that right.” (quotation omitted)). Because this argument was not presented to the
district court, it is not developed and we will not address it. Salazar v. Butterball,
LLC, 644 F.3d 1130, 1142 n.8 (10th Cir. 2011).
-14-
Pavliska makes one additional challenge to the denial of qualified
immunity. Because “only the unnecessary and wanton infliction of pain
implicates the Eighth Amendment,” a prison official must act with “deliberate
indifference to inmate health or safety” to violate the inmate’s constitutional
rights. Farmer, 511 U.S. at 834 (quotation omitted). Deliberate indifference has
both an objective and a subjective component. Callahan v. Poppell, 471 F.3d
1155, 1159 (10th Cir. 2006). A plaintiff can meet her burden under the objective
component by showing the harm she suffered was sufficiently serious. Id. In her
motion for summary judgment, Pavliska argued the conduct of Bobelu and
Humphries, while inappropriate and “despicable,” was not sufficiently serious to
constitute a constitutional violation. 7 Thus, she further argued, any failure on her
part to protect Plaintiffs could not, itself, be a constitutional violation.
On appeal, Pavliska has abandoned her argument that Plaintiffs have failed
to allege a cognizable deliberate indifference claim based on allegations they
were sexually harassed and assaulted by Bobelu and Humphries, conceding “the
objective component is not at issue.” Cf. Smith, 339 F.3d at 1212 (holding an
7
Pavliska made this argument as to the claims raised by Plaintiffs Castillo
and Gaytan but the district court rejected it. Although this court has previously
stated that not all sexual harassment by prison guards is “the sort of violence or
threats of violence cognizable in the conditions of confinement cases the
[Supreme Court] has addressed,” Adkins v. Rodriguez, 59 F.3d 1034, 1037 (10th
Cir. 1995), we have also stated that allegations of verbal harassment of female
prisoners by officers may be cognizable when such harassment is combined with
sexual assaults, Barney v. Pulsipher, 143 F.3d 1299, 1310 n.11 (10th Cir. 1998).
-15-
inmate’s allegations of rape satisfy the objective component of an Eighth
Amendment excessive force claim because “[s]exual abuse is repugnant to
contemporary standards of decency”); Barney v. Pulsipher, 143 F.3d 1299, 1310
n.11 (10th Cir. 1998) (noting allegations of verbal harassment of female inmates
by officers may be cognizable when such harassment is combined with sexual
assaults on the inmates). She contends, however, that Plaintiffs’ evidence is
insufficient to show she acted with deliberate indifference to their health or
safety, focusing on the subjective component of the deliberate indifference
standard which “examines the state of mind of the defendant, asking whether
[she] knew of and disregarded an excessive risk to inmate health or safety.” Al-
Turki v. Robinson, 762 F.3d 1188, 1192 (10th Cir. 2014) (quotation omitted).
“To prevail on the subjective component, the prisoner must show that the
defendant[ ] knew [the prisoner] faced a substantial risk of harm and disregarded
that risk, by failing to take reasonable measures to abate it.” Callahan, 471 F.3d
at 1159 (quotation omitted). Pavliska asserts Plaintiffs’ evidence, at most, shows
she acted negligently. See Giron v. Corr. Corp. of Am., 191 F.3d 1281, 1286
(10th Cir. 1999) (“[D]eliberate indifference is a stringent standard of fault. A
showing of simple or even heightened negligence will not suffice.” (quotations
and citation omitted)). We lack jurisdiction to consider Pavliska’s argument
because it involves a determination of evidence sufficiency and not an abstract
question of law. Behrens v. Pelletier, 516 U.S. 299, 313 (1996)
-16-
(“[D]eterminations of evidentiary sufficiency at summary judgment are not
immediately appealable merely because they happen to arise in a
qualified-immunity case . . . .”). Pavliska, herself, concedes in her appellate brief
that she is challenging the district court’s conclusion “the reports of Garell and
Reeder to Pavliska were sufficient to create a jury question as to whether Pavliska
violated their rights.” See Bass v. Richards, 308 F.3d 1081, 1086 (10th Cir. 2002)
(“Those portions of the summary judgment denial . . . which involve a
determination of evidence sufficiency . . . are not appealable.” (citing Johnson v.
Jones, 515 U.S. 304, 313 (1995)). She summarizes her argument as follows:
“[T]he facts in this case did not prove the subjective component of the Eighth
Amendment’s deliberate indifference standard.” The question of what Pavliska
subjectively knew is a question of fact. Farmer, 511 U.S. at 842. Thus, we have
no jurisdiction to consider this argument.
2. Continuing Violations Doctrine
Finally, Pavliska argues the district court erred by applying the continuing
violations doctrine to Plaintiffs’ claims. She asserts she cannot be liable for any
alleged act that occurred prior to January 12, 2009, the day Reeder approached
her and told her about sexual misconduct at the Mansion. Plaintiffs, however,
concede this point in their opening brief, stating: “Mary Pavliska should be liable
for the violations for failing to act once she became aware of Dana Reeder’s
allegations.” Further, the district court’s ruling against Pavliska’s motion for
-17-
summary judgment was based on its conclusion Reeder’s conversation with
Pavliska put Pavliska on notice of a risk to Plaintiffs. Accordingly, Pavliska’s
argument is irrelevant because the claims asserted against her are based only on
incidents occurring after January 12, 2009.
3. Conclusion
To the extent Pavliska’s appeal raises issues of law, we affirm the denial of
summary judgment by the district court. To the extent her appeal challenges the
district court’s ruling that a jury could conclude she acted with subjective
deliberate indifference, we dismiss the appeal for lack of appellate jurisdiction.
-18-
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 02-3750
___________
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* Southern District of Iowa.
Andrew Norman Overbeck, * [UNPUBLISHED]
*
Appellant. *
___________
Submitted: June 11, 2003
Filed: July 3, 2003
___________
Before MORRIS SHEPPARD ARNOLD, HEANEY and RILEY, Circuit Judges.
___________
PER CURIAM.
Andrew Norman Overbeck pled guilty to one count of Conspiracy to Distribute
Methamphetamine in violation of 21 U.S.C. §§ 841(b)(1)(A) and 846. The district
court1 increased Overbeck’s offense level by two levels pursuant to USSG
§2D1.1(b)(1), for possession of a firearm. Overbeck challenges the application of the
enhancement, arguing that the firearms were intended for hunting and had no
1
The Honorable James E. Gritzner, United States District Judge for the
Southern District of Iowa.
connection or application to his drug offense. Because the district court was not
clearly erroneous in applying the enhancement, we affirm.
The instant offense stemmed from a series of arrests and encounters with law
enforcement that established a conspiracy to distribute methamphetamine from August,
2000, until February, 2001. On January 2, 2001, Overbeck was stopped by Des
Moines police because he was driving a Chevrolet Blazer that matched the description
of a Blazer that had been stolen the prior evening. Overbeck was found to be driving
while barred and arrested. A subsequent search of his vehicle revealed six bottles of
psuedo-ephedrine tablets, pipe fittings, hoses, three shotguns, and $9,000 in cash.
The only issue raised in this appeal is whether the three shotguns found in
Overbeck’s car should count as firearms for the purpose of enhancing his sentence
pursuant to §2D1.1(b)(1)(A). We review a district court’s application of the Sentencing
Guidelines for clear error. United States v. Hayes, 15 F.3d 125, 127 (8th Cir. 1994).
The pertinent guideline language states that “[i]f a dangerous weapon (including a
firearm) was possessed, increase [the offense level] by two levels.” USSG
§2D1.1(b)(1)(A). Application note 3 of the Commentary to §2D1.1 explains: “[T]he
adjustment should be applied if the weapon was present, unless it is clearly improbable
that the weapon was connected with the offense. For example, the enhancement would
not be applied if the defendant, arrested at his residence, had an unloaded hunting rifle
in the closet.”
We have consistently held that in order for §2D1.1(b)(1) to apply, the
government must prove by a preponderance of the evidence that a dangerous weapon
was present when the crimes were committed, and that it was not clearly improbable
that the weapon had some nexus with the criminal activity. See United States v.
Shields, 44 F.3d 673, 674-75 (8th Cir. 1995) (holding enhancement not appropriate
because firearms were seized from defendant’s home thirty-seven days after last
known drug sale occurred); see also United States v. Bost, 968 F.2d 729, 731-33 (8th
-2-
Cir. 1992) (holding enhancement not appropriate because of two and one-half month
lapse between the criminal activity and the discovery of the weapons, and no evidence
that weapons were present when defendant committed charged offense). In a
conspiracy case such as this, “the government must also establish that the weapon was
possessed by the defendant during the period of the conspiracy and that it was
connected to the activity of the conspiracy.” United States v. Harris, 310 F.3d 1105,
1112 (8th Cir. 2002). Determining whether the firearms in a case such as this are
“connected” can become a tricky analysis. The Third Circuit provided a useful tool
when it enumerated four variables that courts can rely upon in determining whether a
weapon could have some nexus with a drug conspiracy. United States v. Drozdowski,
313 F.3d 819 (3d Cir. 2002). Those variables consider: (1) the type of gun used, “with
clear improbability less likely with handguns than with hunting rifles”; (2) whether the
gun was loaded; (3) whether the gun was stored near drugs or drug paraphernalia; and
(4) whether the gun was accessible. Id. at 822.
In this case, three shotguns were present in Overbeck’s vehicle. They were
unloaded, but they were found along with drug paraphernalia necessary to produce
methamphetamine. Although the court could infer a hunting purpose from the nature
of the shotguns, their proximity to drug paraphernalia and their accessibility at least
make it possible they served a dual purpose as tools in Overbeck’s drug trade. Given
our standard of review, we cannot say it was clearly erroneous for the district court to
apply the two-level enhancement.
For the foregoing reasons, we affirm the district court.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
-3-
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325 A.2d 617 (1974)
George NACCI, Individually and as guardian and next friend of Mark Nacci, a minor, Plaintiffs,
v.
VOLKSWAGEN OF AMERICA, INC., a New Jersey corporation, et al., Defendants.
Superior Court of Delaware, New Castle.
September 11, 1974.
*618 Samuel V. Abramo, and E. Leigh Hunt, of Abramo, Hunt & Abramo, Wilmington, for plaintiffs.
Warren B. Burt, and Robert G. Carey, of Prickett, Ward, Burt & Sanders, Wilmington, for defendants Volkswagen of America, Inc. and Volkswagenwerk Akliengesellschaft.
William F. Taylor, of Young, Conaway, Stargatt & Taylor, Wilmington, for defendant Volkswagen Atlantic, Inc.
James T. McKinstry, of Richards, Layton & Finger, Wilmington, for defendant Marie Pittenger.
OPINION ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
TAYLOR, Judge.
This action is to recover for injuries sustained when a minor child riding on a bicycle collided with a Volkswagen stationwagon. The impact of the collision broke the left front parking light of the Volkswagen and caused the tendon in the child's knee to be severed. Plaintiff seeks recovery from the manufacturer of the Volkswagen, Volkswagenwerk Akliengesellschaft [VWAG], a corporation of West Germany, and the American importer of Volkswagens, Volkswagen of America, Inc. [VWoA][1]. These defendants have moved for summary judgment on the ground that the manufacturer's duty with respect to design does not extend to those who collide with the vehicle.
It is undisputed that the Volkswagen was either stopped or going very slowly at the time of the collision.
At the outset, it is important to note that it is not contended that the Volkswagen was not functioning properly at the time of the collision or that the operator was prevented from taking due care in the operation *619 of the vehicle because of some defective design.
Under the law of this State, as it existed prior to adoption of the Uniform Commercial Code, the liability of a seller or manufacturer of a product extended to a person who was not in privity with the seller or manufacturer only where the product was known to the seller to be imminently dangerous to life and limb or was likely to become so when put to its intended use if constructed defectively. Moore v. Douglas Aircraft Co., Del.Super., 282 A.2d 625 (1971). This is true whether the cause of action was founded upon tort or contract. Ciociola v. Delaware Coca-Cola Bottling Company, Del.Supr., 3 Storey 477, 172 A. 2d 252 (1961). This approach has been uniformly applied by the Courts of this State. Gorman v. Murphy Diesel Co., Del.Super., 3 Terry 149, 29 A.2d 145 (1942); Hartford Accident and Indemnity Corp. v. Anchor Hocking Glass Corp., Del.Super., 5 Terry 39, 55 A.2d 148 (1947); Barni v. Kutner, Del.Super., 6 Terry 550, 76 A.2d 801 (1950); Behringer v. William Gretz Brewing Co., Del.Super., 3 Storey 365, 169 A.2d 249 (1961); Kates v. Pepsi Coca Bottling Co., Del.Super., 263 A.2d 308 (1970). Moore specifically rejected (in the absence of legislative action) expansion of the Delaware concept of manufacturer's liability to embody the "strict liability" concept.
The Uniform Commercial Code was adopted effective July 1, 1967.[2] The complaint alleges that the Volkswagen was purchased new in 1969. Neither party contends that the Uniform Commercial Code is not applicable to the facts of this case.
5A Delaware Code Section 2-318 provides that the seller's warranty extends to any natural person who may reasonably be expected to use, consume or be affected by the goods and who is injured by breach of the warranty. The Delaware Study Comment which appears as an annotation following that section of the statute makes it clear that one of the objectives of the section is to effect a departure from the holding of the Delaware Supreme Court in Ciociola v. Delaware Coca-Cola Bottling Co., supra, in which it was held that unless an item was inherently dangerous, a seller or manufacturer would not be liable unless privity of contract existed. Thus, it is not necessary to consider whether the condition complained of and the use of the item at the time would meet the "imminently dangerous" test. "Inherently dangerous" and "imminently dangerous" appear to be used interchangeably.
The implied warranty is that the goods shall be merchantable, i. e., are fit for the ordinary purposes for which such goods are used. 5A Del.C. § 2-314. Under the two sections referred to above, there are two issues which must be determined. The first is whether, under Section 2-318, plaintiff is of the class of persons "who may reasonably be expected ... be affected by the goods ...". The second is whether under Section 2-314, the vehicle was fit for the ordinary purposes for which such vehicle is used.
With respect to the question of whether plaintiff falls within the class of persons who may reasonably be expected to be affected by the automobile, the automobile was intended to be used on the public highways. Other vehicles, of course, also use the public highways. It is not uncommon for motor vehicles using the public highways to come into contact with other vehicles or pedestrians who use the public highways. In case of collision, users of public highways are affected by other motor vehicles which also use the public highways. Accordingly, the Court concludes that plaintiff is within the class of persons who may reasonably be expected to be affected by the motor vehicle. Hence, the requirement of Section 2-318 is met. The same result would flow from the application of tort law where it is said that a *620 manufacturer may be liable to those whom he should expect to be endangered by the probable use of the product. Restatement of Torts 2d, Section 395, Comment i. Even pedestrians and occupants of other vehicles on the highway come within the protective ambit of that concept. Ibid.
The second test, as required by 5A Del.C. § 2-318, is whether the vehicle was fit for the ordinary purposes for which such vehicle is used. The manufacturer must exercise reasonable care to produce a product which does not create an unreasonable risk of causing physical harm to those whom he should expect to be endangered by its probable use. Restatement of Torts 2d, Section 395.[3] One facet of this requirement is that the manufacturer have a formula, plan or design which would produce an article which is safe for its reasonable use. Ibid, comment f.
Obviously, a manufacturer is entitled to latitude in the design of his product. On the other hand, his design must give reasonable consideration to the manner in which the product will be used and its effect upon others. 55 California Law Review 660. This must take into consideration normal usage and occurrences during normal usage and should embody a reasonable design to avoid injury under those circumstances.
In Passwaters v. General Motors Corporation, 8 Cir., 454 F.2d 1270 (1972), the manufacturer was held liable where a passenger on a motorcycle was injured when the motorcycle in passing an automobile which had hub caps bearing propellor-like blades came into contact with, but did not forcefully collide with the automobile. Hatch v. Ford, 163 Cal.App.2d 393, 329 P. 2d 605 (1958), involved a child who ran into a stopped car, striking his eye on the radiator ornament on the car; and Kahn v. Chrysler Corporation, S.D.Tex., 221 F. Supp. 677 (1963), involved a child who was injured when he drove his bicycle into the tail fin of a stopped automobile. It is noted that Passwaters, where recovery was allowed, involved a moving vehicle, while Hatch and Kahn, where the suits were dismissed, involved stationary vehicles. In the present case, the automobile was either stopped or almost stopped at the time it was struck by plaintiff.
A number of tests have been devised to determine whether a particular situation renders an automobile manufacturer liable. The test in Schneider v. Chrysler Motors Corporation, 8 Cir., 401 F.2d 549 (1968), was whether the design of a vent window presented "an unreasonable risk of harm". The test of "high risk of harm" was applied, again by the 8th Circuit, in Passwaters v. General Motors, 8 Cir., 454 F.2d 1270 (1972) involving bladelike fins projecting from hub caps. The phrase "substantial and unreasonable risk of injury" was applied in Pike v. Hough, 2 Cal.3d 465, 85 Cal.Rptr. 629, 467 P.2d 229 (1970). The test "unreasonable risk of injury" was applied in Mickle v. Blackmon, 252 S.C. 202, 166 S.E.2d 173 (1969). Hatch v. Ford, 163 Cal.App.2d 393, 329 P.2d 605 (1958) applied the test of whether there was a "reasonably foreseeable hazard". I conclude that the proper test is whether the design has created a risk of harm which is so probable that an ordinarily prudent person, acting as a manufacturer, would pursue a different available design which would substantially lessen the probability of harm.
Defendant contends that foreseeability of the hazard is a separate requisite which is not present here. If foreseeability is given the meaning applied in Schneider v. Chrysler, supra, namely, the "probability of harm sufficiently serious so an ordinary reasonable person would take precaution to avoid it", it is inherent in the test which I have stated above. If, on the other hand *621 foreseeability merely refers to the ability of a reasonable person to forecast or anticipate that plaintiff's bicycle might crash into the Volkswagen, foreseeability is present because collisions between bicycles and automobiles are sufficiently common-place. Compare Hunter v. Quality Homes, Del.Super., 6 Terry 100, 68 A.2d 620 (1949).
In the present case, defendant's wrong, if any, apparently lies in its failure to equip the Volkswagen with a parking light which was sufficiently shatter-proof that it would not break under the impact of the bicycle's collision, or if it did break, the resultant fragments would not be sufficiently sharp or hard to cause injury. Plaintiff was riding his bicycle downhill toward the Volkswagen. The impact broke the glass of the parking light. Plaintiff's injury occurred when his knee struck the glass of the parking light.
Defendant's liability depends upon whether it had a duty to provide a parking light which would not break under this impact or which would not severely cut his knee if it broke. The subject of liability based upon the question of "crashworthiness" has received much consideration in recent years. 20 Cleveland State Law Rev. 578; 61 Columbia Law Rev. 1401; 55 California Rev. 645; 118 U.Pa.Law Rev. 299; 71 Mich.Law Rev. 1654. There is serious question whether, and under what circumstances, a manufacturer should be held liable for failure to design the exterior of a vehicle or a part of a vehicle which would remain intact when subjected to external force at least in the absence of legislation establishing such requirement. 71 Mich.L.Rev. 1668.
Here, the part of the car involved was a light, an essential item on a car, and not mere ornamentation. Of necessity, the lens had to be made of transparent or translucent material. In general, materials which are transparent or translucent are more fragile. Furthermore, the light did not shatter under normal usage, but shattered under impact with metal. The breakage resulted from external force and the injury did not occur to a user of the vehicle.
The Court concludes that defendant did not breach its duty toward the plaintiff who collided with the Volkswagen. Accordingly, the motion of these defendants for summary judgment is granted.
It is so ordered.
NOTES
[1] An Opinion dealing with the issue of personal jurisdiction over certain defendants in this action appears at 297 A.2d 638.
[2] 55 Del.Laws Ch. 349; it appears as Title 5A of the Delaware Code.
[3] The Court proceeds on the assumption that the duty of the manufacturer does not differ whether tested according to the statute or under the other concepts which have been a basis of manufacturer's liability.
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942 So.2d 934 (2006)
R.W., Mother of A.W., A Child, Appellant,
v.
DEPARTMENT OF CHILDREN AND FAMILIES, Appellee.
No. 5D06-1828.
District Court of Appeal of Florida, Fifth District.
November 14, 2006.
Rehearing Denied December 1, 2006.
Shirley Clark Ayers, Ocala, for Appellant.
Ralph J. McMurphy, Department of Children and Families, Wildwood, for Appellee.
Thomas Wade Young, of Statewide Guardian ad Litem Program, Orlando.
PER CURIAM.
AFFIRMED. See D.D. v. Dep't of Children & Families, 849 So.2d 473 (Fla. 4th DCA 2003) (holding that dependency statute's 30-day time limitation during which to hold an adjudicatory hearing in a dependency case is not mandatory for protection of parent's rights, but directory for protection of child; State's compelling interest to protect well-being of child is paramount to parent's rights, and other sections of dependency statute allow for continuances and extensions when in best interests of child).
GRIFFIN, PALMER and ORFINGER, JJ., concur.
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14 F.3d 598NOTICE: 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.
Ngaire Evelyn VINCENT, Appellant,Alfred J. VINCENT, Plaintiff-Appellant,v.REYNOLDS MEMORIAL HOSPITAL, INCORPORATED: Andrew J. Barger,Md; Kenneth J. Allen; Norman E. Wood, D.O.,Defendants-Appellees.
No. 93-1347.
United States Court of Appeals, Fourth Circuit.
Submitted Nov. 17, 1993.Jan. 19, 1994.
On Petition for Rehearing with Suggestion for Rehearing in Banc.
Ngaire Evelyn Vincent, Alfred J. Vincent, appellants pro se.
Terence Michael Gurley, Schrader, Byrd, Byrum & Companion, Wheeling, WV, for appellees.
Before RUSSELL and MURNAGHAN, Circuit Judges, and CHAPMAN, Senior Circuit Judge.
OPINION
PER CURIAM:
1
Alfred and Ngaire Vincent appealed from the district court order denying their several post-judgment motions. We issued an opinion finding the Vincents' notice of appeal untimely filed. Vincent v. Reynolds Memorial Hosp., Inc., No. 93-1347 (4th Cir. Oct. 13, 1993) (unpublished). The Vincents petitioned for rehearing, contending that their notice of appeal was timely. The record and the Vincents' submissions raise some question as to the timeliness of their notice of appeal. Thus, we grant the petition.* However, we find the Vincents' allegations of error without merit and affirm the district court order.
2
This appeal is one of several that this Court has encountered during the Vincents' lengthy litigation against a hospital where Vincent once worked. Years after this action was brought and after several federal court opinions we affirmed the district court order entering judgment against the Vincents. Vincent v. Reynolds Memorial Hosp., No. 90-1046 (4th Cir. Apr. 19, 1991) (unpublished). The Vincents filed numerous motions and documents after the district court entered judgment, all of which were denied by the district court. The thrust of all the Vincents' filings was to have the district court re-open this litigation on its merits. We have reviewed the Vincents' filings and find, as did the district court, that the Vincents failed to present any ground for revisiting the merits of their case. The district court did not err in denying the Vincents' motions, and we affirm that order. We deny the Vincents' motions for extension of time to amend their petition and for appointment of counsel. 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.
*
The suggestion for rehearing in banc is denied; no poll was requested
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 99-7685
ROMEL ANEMONT,
Petitioner - Appellant,
versus
STEPHEN D. MULLER, Superintendent,
Respondent - Appellee.
Appeal from the United States District Court for the Eastern Dis-
trict of North Carolina, at Raleigh. Malcolm J. Howard, District
Judge. (CA-99-261)
Submitted: March 23, 2000 Decided: March 30, 2000
Before LUTTIG, WILLIAMS, and MICHAEL, Circuit Judges.
Dismissed by unpublished per curiam opinion.
Romel Anemont, Appellant Pro Se. Clarence Joe DelForge, III,
OFFICE OF THE ATTORNEY GENERAL OF NORTH CAROLINA, Raleigh, North
Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Romel Anemont appeals the district court’s order denying re-
lief on his petition filed under 28 U.S.C.A. § 2254 (West 1994 &
Supp. 1999). Because Anemont’s claims are procedurally barred, we
deny a certificate of appealability and dismiss the appeal. See
Teague v. Lane, 489 U.S. 288, 297-98 (1989). We dispense with oral
argument because the facts and legal contentions are adequately
presented in the materials before the court and argument would not
aid the decisional process.
DISMISSED
2
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19 So.3d 926 (2007)
KATHRYN WIMBERLY AND SHANNON MILLER
v.
REX BRIDGES AND HERMINE BRIDGES.
No. 2060996.
Court of Civil Appeals of Alabama.
October 3, 2007.
Decision of the Alabama Court of Civil Appeal Without Published Opinion Dismissed for lack of prosecution.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v. No. 95-7150
TYRONE SIMMONS,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
Terrence W. Boyle, District Judge.
(CA-95-322-5-BO)
Submitted: March 19, 1996
Decided: April 1, 1996
Before MURNAGHAN and LUTTIG, Circuit Judges, and
PHILLIPS, Senior Circuit Judge.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
G. Alan DuBois, Assistant Federal Public Defender, Raleigh, North
Carolina, for Appellant. Janice McKenzie Cole, United States Attor-
ney, Barbara D. Kocher, Assistant United States Attorney, Raleigh,
North Carolina, for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Tyrone Simmons seeks review of the district court's order finding
that he suffers from a mental disease or defect requiring custody of
care or treatment in a suitable facility pursuant to 18 U.S.C. § 4245
(1988). Simmons does not challenge the court's finding that he suf-
fers from a mental disease, and the record is uncontradicted on the
point that he suffers from paranoid schizophrenia. He contends, how-
ever, that the court erred by finding that his disease was so debilitat-
ing that it warranted transferring him to a psychiatric hospital against
his will. He argues that the primary purpose of such institutionaliza-
tion will be to forcibly subject him to psychotropic medication, and
avers that such treatment is unnecessary, relying on the testimony of
Dr. Owens, Simmons's treating psychiatrist, that it is possible to
maintain him in the general population without such medication.
To justify Simmons's involuntary commitment, the Government
had to prove, by a preponderance of the evidence, that he suffers from
a mental disease or defect which requires custody of care or treatment
in a suitable facility. See United States v. Baker, 45 F.3d 837, 840 (4th
Cir. 1995). As with the issue of whether Simmons suffers from a
mental disease, the medical evidence of record is uncontradicted as
to whether Simmons's disease requires custody and treatment in a
psychiatric facility. Both Dr. Owens, and Dr. Royal, a court appointed
psychiatrist, agreed that Simmons needs such treatment. We therefore
find that the district court's determination that the Government car-
ried its burden on this point was not clearly erroneous. See United
States v. Steil, 916 F.2d 485, 487 (8th Cir. 1990) (citing standard of
review).
As for the possibility that Simmons will involuntarily receive psy-
chotropic medication during his commitment, we note that the record
does not disclose that this decision has yet been made. Moreover, the
2
issue was not passed on below, and is improperly raised for the first
time on appeal. See Singleton v. Wulff, 428 U.S. 106, 120 (1976). We
therefore decline to consider this issue.
Accordingly, the order of the district court is affirmed. We dis-
pense with oral argument because the facts and legal contentions are
adequately presented in the materials before the court and argument
would not aid the decisional process.
AFFIRMED
3
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Case: 14-30864 Document: 00513180383 Page: 1 Date Filed: 09/03/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 14-30864 FILED
September 3, 2015
Lyle W. Cayce
KELLY MATHERNE, Clerk
Plaintiff - Appellant
v.
RUBA MANAGEMENT, doing business as IHOP
Defendant - Appellee
---------------------------------------------------
SHARETHA TART,
Plaintiff - Appellant
v.
RUBA MANAGEMENT, doing business as IHOP
Defendant - Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:12-CV-2461 and No. 2:12-CV-2462
Before HIGGINBOTHAM, DENNIS, and HAYNES, Circuit Judges.
PER CURIAM:*
*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: 14-30864 Document: 00513180383 Page: 2 Date Filed: 09/03/2015
Appellants Kelly Matherne and Sharetha Tart worked at an
International House of Pancakes (IHOP) franchise operated by Appellee Ruba
Management in Boutte, Louisiana. Matherne and Tart each worked for about
one month before resigning around the same time. Each subsequently filed
hostile work environment and constructive discharge claims against Ruba
based on allegations of sexual harassment. Their related cases were
consolidated for consideration by a magistrate judge who granted summary
judgment for Ruba on all claims. Appellants challenge the summary judgment
dismissal of their Title VII hostile work environment and constructive
discharge claims. We affirm.
I.
Matherne was hired on March 5, 2012, to work as a server. She worked
her final shift about one month later on the night of April 6, was excused from
work by doctor’s note from April 19 until April 26, and formally resigned on
April 27. Tart was hired on March 14, 2012, to work as a cook and “quit at
about the same time” as Matherne, in early April 2012, having worked for
between three weeks and one month.
As part of new-hire orientation, Ruba employees receive a copy of the
company handbook, which highlights Ruba’s sexual harassment policy and
provides protocol for reporting complaints of sexual harassment. 1 When
1 The handbook provides, in pertinent part:
[Ruba] maintains a strict policy prohibiting harassment based on a person’s
sex . . . This policy prohibits harassment in any form, including verbal, physical
and visual harassment . . . The term “harassment” includes, but is not limited
to, slurs, jokes, and other verbal, graphic or physical conduct relating to an
individual’s . . . sex . . . . Harassment also includes sexual advances, requests
for sexual favors, unwelcome or offensive touching and other verbal, graphic,
or physical conduct of a sexual nature.
If you feel a customer, or anyone with whom you come in contact with while
working, is harassing you in any way you should make your feelings known
Case: 14-30864 Document: 00513180383 Page: 3 Date Filed: 09/03/2015
No. 14-30864
Matherne was hired she received and read a copy of the company handbook.
Although Tart does not recall receiving a copy of the handbook, she was aware
of Ruba’s sexual harassment policy and the protocol for reporting complaints
of sexual harassment.
Matherne claims that during her employment she was sexually harassed
by four Ruba employees 2: Tom (a cook), Melvin (a cook), Rafael (a cook), and
Bob McCormick (her weekend manager). 3 Matherne alleges numerous
instances of physical and verbal harassment by Tom, Melvin, and Rafael.
Matherne also alleges that her weekend manager, McCormick, made several
harassing comments of a sexual nature. Although Matherne did not report
McCormick’s comments to anyone, she did complain to various members of
Ruba’s management team about some of the cooks’ actions. Tart claims that
she was physically and verbally harassed by Manuel (a cook) and verbally
harassed by another unnamed coworker. Tart reported the unnamed coworker
to management and she complained about Manuel to “a female manager.” Both
immediately. You should report harassment to your supervisor, the personnel
manager, or the store manager. There is no single person to whom you must
report your complaint. If you see or hear that any other team member has been
harassed, you should report that harassment also . . .
All harassment complaints will be investigated, and when appropriate,
corrective action, including disciplinary action, will be taken . . .
Do not assume that [Ruba] is aware of your problem. It is your responsibility
to make known your complaints and concerns so that they may be addressed
and resolved. If you have reported harassment and are dissatisfied in any way
with the action taken, immediately report your dissatisfaction to a higher
authority.
2 In most cases the parties identify the alleged harassers by first name only, without
reference to surname. We do the same where necessary.
3 Matherne also alleges harassment by a fifth Ruba employee, Manuel (a cook), see
Appellants’ Brief at 9-10, but she did not raise any claim about Manuel in proceedings below.
Matherne has waived any argument regarding Manuel. See LeMaire v. La. Dep’t of Transp.
& Dev., 480 F.3d 383, 387 (5th Cir. 2007) (“[A]rguments not raised before the district court
are waived and cannot be raised for the first time on appeal.”).
3
Case: 14-30864 Document: 00513180383 Page: 4 Date Filed: 09/03/2015
No. 14-30864
Matherne and Tart also allege that they saw physical harassment or overheard
verbal harassment directed at other female coworkers. 4 They reported some of
this conduct.
Charlotte Owen served as the weekday manager for Matherne and Tart.
Owen was aware of Matherne’s complaints. Matherne requested that Owen
record her reports of harassment by Tom and Melvin in “the book”— a company
log in which managers record reports of harassment and other comments
during each shift. Owen recorded Matherne’s complaints and reviewed video
footage from surveillance cameras installed in the restaurant, which did not
reveal any actionable conduct. Matherne later came to Owen to follow up on
whether Owen had recorded Matherne’s complaints, which Owen had done.
Matherne repeated her complaints about verbal harassment by Melvin and he
was given a formal warning for “disrespectful communication towards [a] co-
employee.”
Lisa Garrison was the general store manager for the Boutte IHOP
location. She also relieved McCormick as the weekend manager about one
week before Matherne and Tart resigned. On April 6, 2012, Garrison received
a report from the manager on duty that Matherne had complained that Rafael
had tried to kiss her. Upon learning of the incident, Garrison came to the
Boutte location and reviewed the surveillance video footage, which did not
reveal any actionable conduct. Garrison interviewed Matherne and Rafael
separately and subsequently “reduced Rafael’s work schedule and transferred
him to a different shift so that he and Matherne would not work together.”
Around the same time, Garrison became aware that Tart had also
complained of sexual harassment. Garrison reviewed the relevant surveillance
4 We have held “that harassment of women other than the plaintiff is relevant to a
hostile work environment claim.” Hernandez v. Yellow Transp., Inc., 670 F.3d 644, 653 (5th
Cir. 2012) (citing Waltman v. Int’l Paper Co., 875 F.2d 468, 477-78 (5th Cir. 1989)).
4
Case: 14-30864 Document: 00513180383 Page: 5 Date Filed: 09/03/2015
No. 14-30864
video footage, which did not reveal any actionable conduct. She also
interviewed Tart, the alleged harassers, and other employees. At Tart’s
request, Garrison moved her to a different shift so that she would no longer
have to work with the alleged harassers. Garrison also conducted a full-staff
employee meeting during which she discussed Ruba’s prohibition against
sexual harassment and required all employees to watch an educational video
about workplace sexual harassment.
Matherne and Tart subsequently resigned from their respective
positions and each filed suit against Ruba in federal district court, alleging
sexual harassment and constructive discharge under Title VII of the Civil
Rights Act of 1964, as well as violations of various Louisiana state laws. Their
cases were consolidated and transferred to a magistrate judge at the parties’
consent. After a hearing, the magistrate judge granted summary judgment to
Ruba on all claims. Matherne and Tart jointly appeal that decision to this
court.
II. Standard of Review
We review a grant of summary judgment de novo. 5 Summary judgment
is proper if there is no genuine dispute as to any material fact and the moving
party is entitled to judgment as a matter of law. 6 A genuine dispute of material
fact means that “the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” 7 We view the evidence in the light most
favorable to the nonmovant. 8 “We may affirm a grant of summary judgment
based on any rationale presented to the district court for consideration and
5Royal v. CCC & R Tres Arboles, L.L.C., 736 F.3d 396, 400 (5th Cir. 2013).
6Fed. R. Civ. P. 56(a).
7 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
8 Amigo Broad., LP v. Spanish Broad. Sys., Inc., 521 F.3d 472, 479 (5th Cir. 2008)
(citation omitted).
5
Case: 14-30864 Document: 00513180383 Page: 6 Date Filed: 09/03/2015
No. 14-30864
supported by facts uncontroverted in the summary judgment record.” 9
III. Discussion
Appellants challenge the summary judgment dismissal of their hostile
work environment and constructive discharge claims under Title VII. 10
Appellants assert that the magistrate judge erred in concluding that, as a
matter of law: (1) the alleged harassment did not create a hostile or abusive
work environment; (2) Ruba, once it knew or should have known of the
harassment, did not fail to take prompt remedial action; and (3) neither
Matherne nor Tart was constructively discharged.
A. Hostile Work Environment Claims under Title VII
Title VII makes it “an unlawful employment practice for an
employer . . . to discriminate against any individual with respect to [her]
compensation, terms, conditions, or privileges of employment, because of such
individual’s . . . sex.” 11 The Supreme Court has held that Title VII proscribes
the creation of “a discriminatorily hostile or abusive environment.” 12 To
establish a claim of hostile work environment under Title VII, a plaintiff must
prove:
9 Nola Spice Designs, L.L.C. v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015)
(internal quotation marks omitted).
10 The magistrate judge concluded that the statutory scheme underlying Appellants’
Louisiana state-law claims was “a ‘mirror image’ of Title VII,” and held that the disposition
of Appellants’ federal law claims mandated “the same conclusion as to their state-law” claims.
See R.770 (citing Sims & Brown & Root Indus. Servs., Inc., 89 F. Supp. 920, 925 n.3 (W.D.
La. 1995); Fishel v. Farley, Civ. A. No. 93-480, 1994 WL 90325, at *2 (E.D. La. Mar. 16, 1994);
Benett v. Corroon & Black Corp., 517 So. 2d 1245, 1246-47 (La. Ct. App. 1987)).
Federal Rule of Appellate Procedure 28(a)(5) requires an appellant’s brief to include
“a statement of the issues presented for review.” Issues not raised or argued in the appellant’s
brief may be considered waived and thus will not be noticed or entertained. See In re Tex.
Mortg. Servs. Corp., 761 F.2d 1068, 1073 (5th Cir. 1985). Because Appellants have not
presented an issue regarding the magistrate judge’s holding as to their state law claims, they
have waived any appeal from the summary judgment dismissal of those claims.
11 42 U.S.C. § 2000e-2(a)(1).
12 Harris v. Forklift Sys., Inc., 510 U.S. 17, 21 (1993).
6
Case: 14-30864 Document: 00513180383 Page: 7 Date Filed: 09/03/2015
No. 14-30864
(1) she belongs to a protected group; (2) she was subjected to
unwelcome harassment; (3) the harassment complained of was
based on sex; (4) the harassment complained of affected a term,
condition, or privilege of employment; and (5) the employer knew
or should have known of the harassment in question and failed to
take prompt remedial action. 13
Title VII does not reach “conduct that is merely offensive”—it proscribes
only “an environment that a reasonable person would find hostile or abusive.” 14
“[S]imple teasing, offhand comments, and isolated incidents (unless extremely
serious) will not amount to [actionable discrimination].” 15 “For sexual
harassment to be actionable, it must be sufficiently severe or pervasive to alter
the conditions of the victim’s employment and create an abusive
environment.” 16 Reviewing courts must consider “all the circumstances,” which
may include “the frequency of the discriminatory conduct; its severity; whether
it is physically threatening or humiliating, or a mere offensive utterance; and
whether it unreasonably interferes with an employee’s work performance.” 17
Core to this inquiry is whether a reasonable person in the plaintiff’s position
would find the work environment hostile or abusive. 18
Finally, “it matters whether a harasser is a ‘supervisor’ or simply a
coworker.” 19 In Vance, the Supreme Court defined a “supervisor” for Title VII
purposes as an employee “empowered by the employer to take tangible
employment actions against the victim.” 20 We have held that where the alleged
13 Royal v. CCC & R Tres Arboles, L.L.C., 736 F.3d 396, 401 (5th Cir. 2013) (internal
quotation marks and alteration omitted).
14 Harris, 510 U.S. at 21.
15 Faragher v. City of Boca Raton, 524 U.S. 775, 788 (1998) (internal quotation marks
and citation omitted).
16 Meritor Sav. Bank, FSB v. Vinson, 477 U.S. 57, 67 (1986) (internal quotation marks
and alteration omitted).
17 Faragher, 524 U.S. at 787-88 (internal quotation marks omitted).
18 Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 81-82 (1998).
19 Vance v. Ball State Univ., 133 S. Ct. 2434, 2439 (2013).
20 Id.
7
Case: 14-30864 Document: 00513180383 Page: 8 Date Filed: 09/03/2015
No. 14-30864
harasser is a supervisor “the employee need only satisfy the first four
elements” discussed above in making her prima facie case of hostile work
environment. 21 In such cases however, “if no tangible employment action is
taken”—as here—“the employer may escape liability by establishing, as an
affirmative defense”: (a) that it “exercised reasonable care to prevent and
correct any sexually harassing behavior,” and (b) “that the plaintiff
unreasonably failed to take advantage of the preventative or corrective
opportunities that the employer provided.” 22
1.
Appellants’ arguments on appeal go to the fourth and fifth prongs of our
hostile work environment analysis. The magistrate judge concluded that
Appellants failed to meet either of these prongs as a matter of law. We need
not decide whether the magistrate judge erred in concluding that the alleged
sexual harassment was not sufficiently severe or pervasive to create a hostile
work environment under the fourth prong because Appellants have not shown
a genuine dispute as to whether Ruba took prompt remedial action once it
knew, or should have known, of the harassment in question—the fifth prong.
Because Appellants cannot meet this necessary element of the prima facie case,
their hostile work environment claims fail as a matter of law.
2.
We pause to remind that we have held that where the alleged harasser
is a supervisor a plaintiff need not satisfy the fifth prong of the hostile work
environment analysis. 23 In this case, however, none of the alleged harassers
qualify as a supervisor as that term is defined in Vance. It is undisputed that
21 Watts v. Kroger Co., 170 F.3d 505, 509 (5th Cir. 1999).
22 Vance, 133 S. Ct. at 2439 (citing Faragher, 524 U.S. at 807; Burlington Indus., Inc.
v. Ellerth, 524 U.S. 742, 765 (1998)).
23 Watts, 170 F.3d at 509.
8
Case: 14-30864 Document: 00513180383 Page: 9 Date Filed: 09/03/2015
No. 14-30864
the cooks—Tom, Melvin, Rafael, and Manuel—are non-supervisor coworkers.
Although neither Appellant alleged harassment by a “supervisor” in her initial
complaint, 24 Appellants refer to the fifth alleged harasser, McCormick, as
Matherne’s “weekend manager.” 25 Even assuming, without deciding, that
Appellants have not waived this argument, the record could not support a
reasonable conclusion that McCormick qualified as Matherne’s “supervisor”
under Vance.
There is no indication that McCormick had the power “to take tangible
employment action[]” against Matherne—to “hire, fire, demote, promote,
transfer, or discipline” 26 her. The record indicates that McCormick had some
leadership responsibilities, including control over “the book,” where managers
“would make comments . . . if anything went wrong.” Even so, the Court held
in Vance that mere “leadership responsibilities” and “the authority to assign
[job responsibilities]” 27 are insufficient to place an employee in the “unitary
category of supervisors” with authority to cause “a significant change in
employment status.” 28 “Because there is no evidence that [Ruba] empowered
[McCormick] to take any tangible employment actions against [Matherne],” 29
Matherne is not relieved of her burden under the fifth prong as to her claim
regarding McCormick.
3.
Turning to the fifth prong, Appellants must prove that Ruba “knew or
should have known of the harassment . . . and failed to take prompt remedial
24Both alleged, “[a]mong other matters . . . [harassment] by a co-employee.”
25 See, e.g., Appellants’ Brief at 4, 10-12. Only Matherne alleges harassment by
McCormick.
26 See Vance, 133 S. Ct. at 2439.
27 See id. at 2449-50.
28 Id. at 2443 (internal quotation mark omitted).
29 Id. at 2454.
9
Case: 14-30864 Document: 00513180383 Page: 10 Date Filed: 09/03/2015
No. 14-30864
action.” 30 This they cannot do. The record before us cannot support a
reasonable jury finding in Appellants’ favor on this prong as a matter of law.
As an initial matter, in many cases Appellants did not make their complaints
known to Ruba at all. For example, Matherne did not report McCormick’s
comments to anyone. She presents no argument that Ruba should have known
about McCormick’s comments even though she raised no complaint. She
therefore cannot show that Ruba knew or should have known of the alleged
harassment by McCormick in the first place, much less whether Ruba failed to
adequately respond.
Where Appellants did make reports, the record indicates that Ruba
responded promptly and with sufficient remediation. Appellants allege they
complained to Ruba management about harassment by Tom, Melvin, Rafael,
and Manuel. With regard to Tom and Melvin, Owen recorded Matherne’s
complaints and reviewed surveillance video footage, which did not validate
Matherne’s allegations. After Matherne repeated her complaints about Melvin
he was given a formal warning. With regard to Rafael, Garrison made an in-
person visit to the restaurant immediately upon learning of the alleged
incident. She reviewed surveillance video footage, which did not validate
Matherne’s allegations. She also interviewed Matherne and Rafael separately.
Garrison then “reduced Rafael’s work schedule and transferred him to a
different shift so that he and Matherne would not work together.” With regard
to Manuel, Garrison interviewed Tart and Manuel and, at Tart’s request,
transferred Tart to a different shift to separate her from Manuel. In addition
to these actions, Garrison conducted a sexual harassment education program
30 Royal v. CCC & R Tres Arboles, L.L.C., 736 F.3d 396, 401 (5th Cir. 2013) (internal
quotation mark omitted).
10
Case: 14-30864 Document: 00513180383 Page: 11 Date Filed: 09/03/2015
No. 14-30864
with the entire staff that among other things required all employees to watch
an educational video about workplace sexual harassment.
These facts, which are uncontroverted in the summary judgment record,
demonstrate that Ruba took prompt remedial action once it knew, or should
have known, of the alleged harassment. The magistrate judge properly granted
summary judgment to Ruba on Appellants’ hostile work environment claims.
B. Constructive Discharge
Appellants also challenge the summary judgment dismissal of their
constructive discharge claims. “To prove constructive discharge, a party must
show that ‘a reasonable party in his shoes would have felt compelled to
resign.’” 31 Constructive discharge requires a greater degree of harassment
than that required to establish a hostile work environment claim. 32 In
determining whether a reasonable employee would have felt compelled to
resign, we have considered whether the following factors are present:
(1) demotion; (2) reduction in salary; (3) reduction in job
responsibilities; (4) reassignment to menial or degrading work; (5)
reassignment to work under a younger supervisor; (6) badgering,
harassment, or humiliation by the employer calculated to
encourage the employee’s resignation; or (7) offers of early
retirement or continued employment on terms less favorable than
the employee’s former status. 33
Having carefully reviewed the record, we conclude that none of these
factors are present in this case. Neither Appellant was reassigned to menial or
degrading work, nor was either subjected to badgering or harassment designed
31 Dediol v. Best Chevrolet, Inc., 655 F.3d 435, 444 (5th Cir. 2011) (quoting
Benningfield v. City of Houston, 157 F.3d 369, 378 (5th Cir. 1998)).
32 Benningfield, 157 F.3d at 378.
33 Brown v. Kinney Shoe Corp., 237 F.3d 556, 566 (5th Cir. 2001) (alteration and
citation omitted).
11
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to encourage her resignation. 34 In fact, it appears that Ruba offered reasonable
ameliorative solutions in both cases that each Appellant voluntarily rejected
by choosing to resign.
IV.
The judgment of the magistrate judge is AFFIRMED.
34 Cf. Haley v. Appliance Compressor LLC, 391 F.3d 644, 651-52 (5th Cir. 2004)
(denying constructive discharge claim even despite arguable presence of badgering and
harassment calculated to encourage employee’s resignation and collecting cases in which this
court has affirmed summary judgment grants to employers on constructive discharge claims
even where at least some of the Brown factors were present).
12
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415 F.Supp. 1206 (1976)
STATE OF MARYLAND et al., Plaintiffs,
State of California, Intervenor,
v.
F. David MATHEWS et al., Defendants.
Civ. A. No. 75-63.
United States District Court, District of Columbia.
May 14, 1976.
*1207 *1208 Charles A. Miller, Robert N. Sayler, Homer E. Moyer, Jr., John Michael Clear, Covington & Burling, Washington, D. C., for plaintiffs.
Evelle J. Younger, Atty. Gen., Sacramento, Cal., Elizabeth Palmer, Asst. Atty. Gen., John W. Klee, Jr., Deputy Atty. Gen., San Francisco, Cal., for plaintiffs and intervenor.
Rex E. Lee, Asst. Atty. Gen., Earl J. Silbert, U. S. Atty., Ann. S. DuRoss, Asst. U. S. Atty., David J. Anderson and Alexis Panagakos, Attys., Dept. of Justice, for defendants; St. John Barrett, Robert P. Jaye, Michael M. Cook, Attys., Dept. HEW, Washington, D. C., of counsel.
OPINION
JUNE L. GREEN, District Judge.
This is an action brought by thirteen states, one county and one intervening state[1] against F. David Mathews, successor Secretary of Health, Education and Welfare (HEW) and the administrator, Social and Rehabilitation Service in HEW. Plaintiffs, all participants in the Aid to Families with Dependent Children (AFDC) program, seek to have the HEW regulation contained in 45 C.F.R. § 205.41 published at 40 Fed. Reg. 32954 on August 5, 1975, declared invalid.
Plaintiffs assert that they do not question HEW's right to set quality controls. What is contested is HEW's authority to establish a percentage of financial disallowance by regulation and the reasonableness of the specific percentages imposed. The challenged regulation provides for the withholding of federal financial participation under the AFDC program when erroneous payments to AFDC recipients exceed prescribed tolerance levels of 3% of payments to ineligibles and 5% of overpayments. The case is presently before the Court on the defendants' motion to dismiss or in the alternative for summary judgment, and the plaintiffs' cross-motion for summary judgment.
For a more complete understanding of the issues raised by the parties, a brief background of the program is necessary.
The AFDC program, one of several income maintenance programs under the original Social Security Act of 1935, provides federal matching funds in specified amounts to states to support payments to plan recipients and to cover a percentage of administrative expenses. 42 U.S.C. §§ 603(a), 1301(a)(8). To participate, a state must submit a plan which meets criteria established by federal statute and the plan must be approved by the Secretary of HEW. 42 U.S.C. § 602.
The regulations at issue are the department's efforts to effectuate quality control and to facilitate corrective action. Under the regulations the states are required to implement a system by which a prescribed number of sample AFDC cases are selected during a six-month period. An investigation is then made to determine whether each case was correctly paid. The figures regarding the number of overpayments, underpayments[2] and payments to ineligibles are projected to the universe of all AFDC grants within each state during the period. The difference between each state's percentage of payments to ineligibles and as overpayments which exceed the tolerance levels of 3% for ineligibles and 5% for overpayments *1209 set by the challenged regulation will be converted into a dollar figure and constitute the federal financial participation (FFP) withholding.
The purported basis offered by the defendants for the selection of the respective percentage sanctions is a study made by Westat where intensive in-depth investigations were made of a sample of recipients under AFDC.
The Westat report[3] states, however, "It was mutually agreed that Westat's evaluation was to be of the systems without regard to the potential use of QC as a sanctioning tool . . .".
Further, in discussing the percentage tolerances for overpayments, the report states,[4]
"5b. The current 5% level for overpayments does not seem to be achievable under present circumstances. Westat recommends that this level be changed to 9% as a temporary national tolerance. This level is also rigorous under present conditions . . .".
These comments were made despite a March 20, 1973 memorandum from HEW's Director of Division of Program Evaluation to the Acting Commissioner of the Assistance Payments Administration (APA) in HEW, which states as follows:
"In view of the fiscal disallowance policy requiring zero tolerance, DeGeorge and Cohen were apprehensive that the Westat report might include statements to the effect that this goal was unreasonable. As a result Joel Cohen, Tom Scarlett, Harris and I had a number of meetings with Westat to ensure that they limited their observations to the terms of the contract and did not offer opinions on the `proposed' use of QC for fiscal disallowances. They agreed to do this.
The importance of this approach is that Mr. Cohen did not want our legal case weakened by one of our own consultants stating that QC should not be used in this manner or zero tolerance is an impossibility."[5]
For an understanding of what is involved in each application filed in each state under AFDC, the following is quoted from the affidavit of Bill B. Benton, Jr.[6] Mr. Benton is an expert in the field of social and economic policies in welfare matters with special emphasis on quality control and error corrections.
"The eligibility determination process works in the following way. A prospective recipient must complete and sign an application for public assistance. In so doing an applicant must respond to 100 or more inquiries, the answers to each of which may affect the applicant's eligibility or the correct amount of the assistance payment. In addition, an applicant is commonly required to satisfy various other requirements, such as registering for the WIN program (a federally-established work training program), registering at the State Employment Service, providing information concerning an absent parent and/or the amount of child support payments, if any, etc. Many of the factors called for in the application process involve interpretations or judgments by the eligibility worker. For example, the eligibility worker must decide what of the applicant's expenses are `work related', what portion of the applicant's rent is properly allocated to the assistance unit, what portions of the applicant's income are `regular' income, how child support or other benefit payments should be allocated among various children, etc.
"In addition, the eligibility worker must, on the basis of the information supplied, make numerous calculations in determining eligibility and the correct amount of the assistance payment. Basically, the level of assistance is a function of an applicant's need and resources compared against an existing state standard. The usual first step is the determination of the applicant's income. This must *1210 take into account the value of in-kind income as well as income in cash form. The latter must be broken down between earned income, support payments, other benefits and unearned income because each of these categories is treated differently in determining eligibility or the amount of payment.
"Once income is determined it must be divided into regular and irregular income. Those figures must then each be converted to a monthly figure. As a general rule, applicants do not have a steady fixed monthly income; they may be reimbursed on a daily basis, they may work at irregular intervals, etc. Accordingly, the conversion to a monthly rate is itself a complicated arithmetic process. Once this conversion is made, the eligibility worker must determine what portions of that income are non-countable under federal regulations. (Examples of non-countable income are scholarships, income from certain work training programs, income earned under the Older Americans Act, etc.) Often some portion of the monthly income figure is exempt and some portion not exempt. As to that portion of an applicant's income that is not exempt, the eligibility worker must then make computations as required under income disregard regulations.
"Perhaps the most difficult of all the calculations the eligibility worker is required to make involve income disregards. For example, certain types of income are subject to a flat $5 per month disregard. Even this basic disregard, however, is subject to exception; and amendments to Title IV establish a new formula to be used in lieu of the flat $5 disregard in areas of child support. This, however, will be true for one year only. A different amount of Social Security benefits is disregarded under federal regulations. Likewise in computing the amount of an applicant's resources to determine if her assets are in excess of the maximum allowable, some assets are disregarded entirely. Certain portions of the value of some liquid assets are disregarded under the regulations; other portions of the value of fixed assets are disregarded. However, the amount of value to be disregarded will vary, depending upon the use to which the asset is put. For example, a client's automobile is excluded altogether as a resource if it is used to obtain or retain employment; if, however, the automobile is not used in connection with employment, only a portion of its value is disregarded.
"The most complicated of all the disregard calculations arise under the earned income disregard regulations. Whether this disregard applies at all is not easy to know. It depends on whether an initial determination or a payment recomputation is involved, on the level of earned income of the applicant and others within her assistance unit in each of the preceding four months, and on whether there has been a recent change in employment status or earnings and why. Where this disregard is determined to be applicable the first step is to compute a monthly earned income figure for each person in the assistance unit. This is not easy in those cases where income includes payments under various federal work training or job development programs for some of these payments are counted and some are not. Once the monthly earned income is arrived at, expenses determined to be `work related' are subtracted. Then $30 plus 1/3 of the balance of that figure is disregarded. These deductions are the monthly amount spent for such items as baby-sitting, transportation, Social Security deductions, union dues, retirement contributions, state and federal taxes, lunches, etc. These expenses, which can fluctuate, sometimes on a daily basis, must be tabulated on a monthly basis. The calculations must be made not simply for the head of the household but for each member of the assistance unit with earned income. This includes a child who earns money baby-sitting or a child who has a paper route.
"In addition to income computations, determinations and calculations of the level of need of the applicant must be made. Some states, such as Maryland, *1211 have simplified these computations by the adoption of what is known as a `flat grant' or consolidated standard of need. Under Maryland's flat grant system the only variable is the size of the assistance unit. Some states' `flat grants' include shelter as a variable, and other states have as many as a dozen variables under a `flat grant'. However, flat grants are typically more expensive than individual need determinations because states tend to set the flat grant figures high enough to avoid reducing benefits to most of the recipients under the previous individual determination system.
"Federal regulations do not require flat grants and many states continue to operate under itemized need grants. These require taking into account a large number of factors which affect an assistance unit's level of need, such as rent, living arrangements, insurance, utilities, fuel, clothing, special diets, enrollment in school, etc. These computations can be quite complicated and usually vary from month to month. For example, calculating shelter allowance and utility costs would involve arriving at a monthly rental (many clients pay by the week), proration in instances where shelter is shared, averaging fluctuating utility expenses, determining whether a telephone is `essential', applying a special allowance for a family that lives in public housing, and ascertaining whether rental payments, including internal rental arrangements among members of the family unit, were in fact paid in the amount stated.
"The determination and calculation process described above must be made in the case of each applicant for assistance."
After the initial screening out of ineligibles and a determination having been made that a family is entitled to assistance under AFDC, Federal regulations require a redetermination of eligibility and level of payment of each client at least every six months. Although the rules state at least every six months, the state is penalized under the challenged regulation if it does not determine a change of circumstance and make the change in payment by the end of the second month following the change of circumstance.
The Court will now turn to the issues raised by the parties. Defendants assert that the Court lacks jurisdiction over the subject matter pursuant to 28 U.S.C. § 1346(a)(2); and that the action is not ripe for judicial review, as no withholdings have occurred.
At issue herein is the validity of a regulation enacted in accordance with the Administrative Procedure Act by an agency subject to the Act. The Court, therefore, has jurisdiction pursuant to the Administrative Procedure Act, 5 U.S.C. §§ 701-706. Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859, 874 (D.C.Cir. 1970); and see Pickus v. Board of Parole, 507 F.2d 1107 (D.C. Cir. 1974).
The ripeness argument is similarly without merit since preenforcement review of a regulation has long been recognized. Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967).
As to the merits of the action, defendants have argued that the Act does not authorize federal financial participation to states for erroneous payments since such payments are not made in accordance with the approved state plan. To assure the efficient administration of the Act, however, the Secretary may provide matching funds for erroneous payments in any amount he deems suitable.
The plaintiffs have responded that, whether erroneously made or not, all payments made under the operation of an approved state plan are to be provided federal financial participation. Thus, the promulgation of the regulation in question was inconsistent with the Act, arbitrary, capricious and an abuse of discretion. Furthermore, even if statutory authority exists for such action, the regulation lacks a rational basis, is not reasonable, and therefore is contrary to the law.
The basic provision setting forth the states' right to federal financial participation states in pertinent part:
*1212 "(a) From the sums appropriated therefor, the Secretary of the Treasury shall . . . pay to each state which has an approved plan for aid and services to needy families with children. . . .
"(1) an amount equal to the sum [of a specified proportion] of the total amounts expended during such quarter as aid to families with dependent children under the State plan . . .." 42 U.S.C. § 603(a)(1).
From the statutory language, it can be concluded that payments which are not made properly, pursuant to the approved plan, are not to be matched by federal funds. This interpretation is further reflected in the Act under 42 U.S.C. § 603(b)(2)(B) which provides for the recoupment by the federal government of their proportionate share of an erroneously made payment which is recovered by the state, and by 42 U.S.C. § 604(a)(2) which provides for the withholding of a percentage of federal funds if the state has failed to substantially comply with certain duties in the administration of the plan and is deemed to have acted outside the authority of the plan.
To assure the efficient administration of the Act, which would include the proper allocation of federal funds to states pursuant to 42 U.S.C. § 603, the Secretary has been vested with extensive power to promulgate regulations. 42 U.S.C. § 1302;[7]Serritella v. Engleman, 339 F.Supp. 738, 752 (D.N.J.) aff'd. per curiam, 462 F.2d 601 (3rd Cir. 1972). It is under this authority that the regulation in question was issued.
The standards are clear by which the validity of the challenged regulation is to be tested. The regulation must fall if it is shown to be unreasonable and inconsistent with the Act, or not "reasonably related to the purposes of the enabling legislation." National Welfare Rights Organization, et al. v. Mathews, 533 F.2d 637, 645 (D.C.Cir. 1976), and cases cited therein. Furthermore, the regulation will be held invalid if any of its "provisions were framed in an `arbitrary' or `capricious' manner." Amoco Oil Co. v. Environmental Protection Agency, 501 F.2d 722, 739 (D.C.Cir. 1974); 5 U.S.C. § 553(c) and § 706(2)(A).
The general purpose of the AFDC program is to encourage "the care of dependent children in their own homes or in the homes of relatives by enabling each State to furnish financial assistance and rehabilitation and other services, as far as practicable under the conditions in such State. . . ." 42 U.S.C. § 601. Consistent with this purpose is the overall concept of quality control regulations which would assure that a minimum of erroneous payments will occur and thereby ensure that a satisfactory amount will be available for those who properly qualify as recipients under the state plan. At issue here, however, is the implementation of federal financial withholdings as a means to effectuate quality control.
As previously indicated, under 42 U.S.C. § 603, erroneous payments are payments made outside the state plan. It is recognized, however, that under the existing administrative structure, the elimination of all erroneous payments is totally unrealistic. Comments to 45 C.F.R. 205.40 and 205.41; 40 Fed.Reg. 32956, Tuesday, August 5, 1975. It is agreed, though, that error rates need to be and can be further reduced. The effect of the regulation, therefore, is to define an acceptable level of erroneous payments within which the state will be deemed to be complying with the Act in its administration of its state plan. Consequently, under the Secretary's rulemaking power to assure the efficient administration of the Act, it can be concluded that a regulation establishing a withholding of federal financial participation in a specified amount set by a tolerance level is consistent with the Act. It must also be concluded, however, that the tolerance level set must be *1213 reasonable and supported by a factual basis and not established in an arbitrary or capricious manner. To establish a level under any lesser standard would be to fashion a tool which is inconsistent with the Act in that it does not promote any further efficiency and it prevents the state from furnishing assistance as far as practicable given the conditions in the state.
The defendants have not contested, and the record supports, that the initial establishment of tolerance levels at 3% and 5% was done so arbitrarily with no previous empirical study.[8] As has been set forth in the record, these levels were set because the Secretary felt that they were attainable and were ones which the public would accept. After the initial adoption of the 3% and 5% levels, a study was prepared by Westat Co. Research, Inc.[9] Nonetheless, the defendants now seek to justify the tolerance levels on the basis of the Westat study.
As has been set forth in the initial portions of this opinion, the Westat study was not designed to evaluate the use of tolerance levels as a sanctioning tool. Indeed, defendants expressly desired that Westat not offer any opinions in this regard for fear that the levels would be found inconsistent with their legal position. Therefore, defendants' assertions that this study provides the foundation for the tolerance levels clearly is not supported by the record.
Setting aside the fact that the study was not meant to evaluate the use of tolerance levels as a sanctioning tool, defendants' citation to the study's evaluation of the levels in support of the agency's assertions that the 3% and 5% levels are reasonable is equally misplaced. Both levels were found to be too rigorous as a permanent standard. Additionally, the study indicated that the levels should be set at a number which some states are achieving currently, and which other states can be reasonably expected to reach. According to HEW statistics reflecting case error rates for January-June 1975, only 9 states were meeting the target rate for ineligibles and only 25 states were attaining or were within three percentage points of meeting the target level.[10] For the same period in 1974, only 5 states were in compliance and only 17 were meeting or were within three percentage points of the set level. As to the statistics for overpayments for January-June 1975, only 2 states were within the 5% tolerance level and 8 states were meeting or were within three percentage points of the level. For the same period in 1974, only 1 state met the level, and 3 were meeting or were within three percentage points of the level. In addition, for the above period from 1974 to 1975, the statistics reflect that 19 states increased in their error rate as to ineligibles, and 9 states increased in their error rate as to overpayments.[11] Thus, the levels appear to be set unreasonably low in view of the Westat criteria.
It should also be noted that the substantive shortcomings of the regulation are reflected in its procedural history. Fundamental questions addressed to the agency concerning the foundation of the regulation included "the use of Quality Control for purposes of disallowing Federal funds; states' ability to attain the established tolerance levels for erroneous payments; inclusion of erroneous payments occasioned by `client error' [as opposed to agency error] in state Quality Control samples; and the alleged violation of the Federal-State partnership by the disallowance of Federal financial participation pursuant to the Quality Control program." 40 Fed.Reg. 32954 (August 5, 1975). In the preamble to the final regulation in question, the agency merely indicated that these key concerns were responded to in 1973, and that the agency's position was unchanged. Id.
However, upon reading the 1973 proposed regulation, published as modified 38 Fed. *1214 Reg. 8743 (April 6, 1973), one searches in vain to find any findings or discussion of relevant factors concerning the key questions raised. Thus, not only has the agency been shown to have failed to articulate factors and findings pointing to the substantive basis for the particular levels, but the procedural deficiencies of the regulation are highlighted by this omission. See National Welfare Rights Organization v. Mathews, 533 F.2d 637, 648-49 (D.C.Cir., 1976); 5 U.S.C. § 553(c).
Consequently, in view of the facts that the tolerance levels were arbitrarily established at 3% and 5% without the benefit of an empirical study, and that defendants' reliance on the Westat study is misplaced, both as to the role of the study as providing the basis for the levels and as to the reasonableness of the levels, the Court holds that the regulation as it concerns the 3% and 5% levels was framed in an arbitrary and capricious manner and as an abuse of discretion. It is thereby inconsistent with the Act by unreasonably making funds unavailable to fulfill the purpose of the Act and by preventing the states from furnishing assistance as far as practicable given the conditions of the state, and is therefore invalid.
NOTES
[1] The thirteen plaintiff states are Maryland, Alabama, Connecticut, Hawaii, Idaho, Illinois, Missouri, Nebraska, New Jersey, New Mexico, Oklahoma, Rhode Island and South Dakota. The state of California joined as plaintiff-intervenor. The county is Los Angeles County, California.
[2] Overpayments and underpayments are defined as any payments varying from the proper payment by at least $5.00. 45 C.F.R. 205.40(a)(4) and (5), respectively. No withholding will occur based on failure to meet the tolerance level set for underpayments.
[3] Plaintiffs' Exh. 8, p. 1.
[4] Plaintiffs' Exh. 8, p. 3.
[5] Plaintiffs' Exh. 14.
[6] Affidavit attachment to plaintiffs' motion for summary judgment.
[7] Section 1102 of the Act, 42 U.S.C. § 1302, provides in pertinent part that: "The Secretary . . . shall make and publish such rules and regulations, not inconsistent with this chapter, as may be necessary to the efficient administration of the functions with which the Secretary is charged under this chapter".
[8] Plaintiffs Exhs. 10 and 11.
[9] Plaintiffs' Exh. 5, p. 4.
[10] The term "state" includes the District of Columbia, Puerto Rico and the Virgin Islands. 42 U.S.C. § 1301(a)(1).
[11] Plaintiffs' Exh. 3.
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258 S.W.3d 647 (2008)
Mark SWANK and James J. McCoy, Jr., Individually and in Their Derivative Capacity on Behalf of Automated Marine Propulsion Systems, Inc., Appellants,
v.
Lloyd R. CUNNINGHAM et al., Appellees.
No. 11-06-00172-CV.
Court of Appeals of Texas, Eastland.
March 27, 2008.
Rehearing Overruled May 22, 2008.
*651 Clay Rawlings, Keith Hampton, Hampton & Rawlings, Houston, R. Perry McConnell, David S. O'Neil, O'Neil & McConnell, PLLC, The Woodlands, for Appellants.
Catherine Bukowski Smith, Paul Edward Stallings, Vinson & Elkins L.L.P., Dori Elana Kornfeld, R. Paul Yetter, Douglas S. Griffith, Yetter, Warden & Coleman, L.L.P., Fred Knapp, Jr., Laura B. Rowe, Gregg C. Laswell, Hicks Thomas & Lilienstern, LLP, John B. Wallace, R. Stephen Ferrell, Lyman, Twining, Weinberg & Ferrell, Lori A. Swann, Lloyd R. Cunningham, Cunningham Law Group, Richard L. Flowers, Jr., Kevin Joseph McEvily, McEvily & Flowers, Alan Neil Magenheim, Magenheim & Associates, David Hurst Brown, Brown & Kornegay LLP, Houston, for Appellees.
Panel consists of: WRIGHT, C.J., McCALL, J., and STRANGE, J.
OPINION
TERRY McCALL, Justice.
This is essentially a legal malpractice case brought by Mark Swank and James McCoy, Jr. against their attorneys and other attorneys involved in the underlying case of Swank v. Sverdlin, 121 S.W.3d 785 (Tex.App.-Houston [1st Dist.] 2003, pet. denied). In this cause, Swank and McCoy alleged claims for legal malpractice, breaches of fiduciary duties, conspiracy, conversion, and fraud.
The underlying litigation involved a dispute over control of Automated Marine Propulsion Systems, Inc. (AMPS), a company founded by Anatoly Sverdlin and one in which he initially owned 100% of the stock. In that suit, Sverdlin individually and derivatively on behalf of AMPS sued Swank, McCoy, the directors of AMPS, others who had invested in AMPS, and the law firm for AMPS. After Sverdlin obtained a substantial jury verdict against all of the defendants, Sverdlin settled his individual and derivative claims against Gardere, Wynne, Sewell & Riggs (the law firm that had represented AMPS when the investors loaned it $2 million) and its partner David Jungman (Gardere Wynne). Ultimately, the judgment of the trial court in Swank v. Sverdlin was reversed, and the court of appeals rendered a take-nothing judgment against Sverdlin on all his claims against the non-settling defendants. 121 S.W.3d 785.
In this suit, Swank and McCoy are complaining about the failure of AMPS to receive a portion of the $20 million settlement paid by Gardere Wynne to Sverdlin. Because their complaint rests on an assumption that AMPS had a valid jury verdict against Gardere Wynne, Swank and McCoy must show that they were stockholders of AMPS to maintain their derivative claims. Swank and McCoy had been granted options by Sverdlin on his AMPS stock. They attempted to exercise those options. However, Sverdlin refused to comply with the option contracts, and there is no evidence that Sverdlin ever delivered the AMPS stock to them.
In this cause, the trial court below granted summary judgments in favor of all the appellee attorneys. Because Swank and McCoy have no standing and because, *652 even if they had standing, their claims lack merit, we affirm.
Parties to this Appeal
Appellants, Swank and McCoy, were defendants in the underlying litigation. There are five groups of appellees in this cause: (1) Aubrey Calvin and John L. Verner and their law firm of Calvin, Gibbs & Verner (Calvin Verner) represented Swank and McCoy and some of the other defendants in the underlying litigation; (2) Mike Malone and his law firm of Battle Fowler, L.L.P. (Battle Fowler) were listed as being "of counsel" to Calvin Verner in the underlying litigation; (3) Lloyd R. Cunningham and Marti Batson and their law firm of the Cunningham Law Group and Kevin McEvily, Jr. and Richard L. Flowers, Jr. and their law firm of McEvily & Flowers (the Cunningham Group) represented Sverdlin individually and in his representative capacity on behalf of AMPS in the underlying litigation; (4) Beck, Redden & Secrest (Beck Redden) was substituted as counsel for Swank after the jury reached its verdict in the underlying litigation; and (5) Larry Veselka and Craig Smyser and their law firm of Smyser, Kaplan & Veselka L.L.P. (Smyser Kaplan) were substituted as counsel for McCoy after the jury reached its verdict in the underlying litigation.
Background Facts
Anatoly Sverdlin, an engineer from Russia, established AMPS in Houston to repair diesel marine engines on large ships. Initially, Sverdlin was the sole owner and chief executive officer of AMPS. He subsequently developed and obtained patents for a new fluid control injection system (FCIS), which allegedly improved engine efficiency and lowered costs. Sverdlin then decided to phase out of the engine repair business and concentrate on marketing the new FCIS.
After shifting away from engine repairs, AMPS began to operate at a loss, losing over $125,000 in 1995. Early in 1995, AMPS hired McCoy as vice president of industrial sales and Swank as president. Swank was to develop a business plan to attract investors for AMPS. As an incentive, Sverdlin granted Swank and McCoy options on some of his shares of AMPS's stock. These stock options gave Swank and McCoy an opportunity to each own up to twenty percent of AMPS.
McCoy introduced Sverdlin to an investor, Marvin Chudnoff, who in turn recruited additional investors. Chudnoff and three other individuals created AMPS Investment, L.L.C. AMPS Investment then created L.D.E. Associates, L.L.C. (LDE), which was the entity through which AMPS Investment and Louis Dreyfus Natural Gas Holdings Corp. (LDNGH) invested in AMPS. Jeffrey Sussman of AMPS Investment signed documents as LDE's president. There were lengthy negotiations for AMPS to obtain a $2 million loan from LDE to continue development and marketing of the FCIS. As president of AMPS, Swank often spoke on behalf of AMPS, and he hired Gardere Wynne to represent AMPS in the loan transaction. Sverdlin and his wife, who were the directors of AMPS at the time, signed a statement giving the AMPS board's approval to an initial June 1996 letter agreement for the loan, and later Sverdlin signed the final loan documents. The loan agreement was finalized in September 1996, and it gave LDE the right to choose two of the three directors. LDE chose Chudnoff and Sussman.
Unfortunately, the FCIS did not function as expected. AMPS lost money, and the parties began to disagree on how AMPS should be run. Sverdlin believed *653 that the board of directors had stopped listening to him and that the board was taking control of AMPS, causing it to become unmanageable. Sverdlin threatened to fire Swank and McCoy and take back his patents. Swank and McCoy attempted to exercise their stock options in AMPS,[1] but there is no evidence that Sverdlin ever endorsed or transferred any of his AMPS shares to them. The AMPS board decided that Sverdlin was damaging the company in violation of his employment agreement and terminated his employment in January 1997. AMPS had been operating at a loss. AMPS's net income after taxes in 1996 revealed over half a million dollars in losses. To continue operations, AMPS borrowed additional money directly from LDNGH.
AMPS and LDE obtained a temporary injunction against Sverdlin to keep him away from AMPS and its customers. Sverdlin filed a counterclaim individually and on behalf of AMPS in his derivative capacity seeking declaratory relief and alleging numerous causes of action, including fraud, breach of contract, breach of fiduciary duty, negligence, gross negligence, conspiracy, tortious interference, and usury. Sverdlin also sought declaratory relief that he was the 100% owner of AMPS. Subsequently, the trial court modified the injunction to freeze all of the parties' contractual rights and appointed a receiver to oversee AMPS's operations. The trial court then realigned the parties by making Sverdlin the plaintiff in his individual capacity and in his derivative capacity on behalf of AMPS.
The defendants in the first trial were AMPS, McCoy, Swank, Chudnoff, Sussman, LDNGH, LDE, and Gardere Wynne. Sverdlin, in his individual capacity, sued Gardere Wynne alleging malpractice based on conflicts of interest. Sverdlin also asserted derivative claims against Gardere Wynne but did not sue the firm derivatively for malpractice. Except for Gardere Wynne, which was represented by Fulbright & Jaworski, all of the defendants were represented by Calvin Verner. Battle Fowler was listed as being "of counsel" to Calvin Verner. During the first trial, the Cunningham Group represented Sverdlin individually and in his representative capacity.
After a six week jury trial, the jury awarded approximately $1.5 billion to Sverdlin and AMPS (on Sverdlin's derivative claims). After the verdict but before the judgment was entered, there were a number of changes in the defendants' legal representation:
Calvin Verner withdrew as counsel for Swank, McCoy, Chudnoff, Sussman, and LDNGH.
Beck Redden was substituted as counsel for Swank.
Smyser Kaplan was substituted as counsel for McCoy.
Brendan Sullivan, John Buckley, Jr., and David Keltner were substituted as counsel for LDNGH.
Calvin Verner continued to serve as counsel for LDE and AMPS, and Jack O'Neill was added as counsel for LDE.
AMPS's receiver asked for and received permission to hire Brown, Parker & Leahy as corporate counsel for AMPS. The order was signed on December 29, 1998.
*654 Even though Sverdlin had not pleaded a derivative claim on behalf of AMPS for malpractice against Gardere Wynne, the trial court's charge included a question asking whether Gardere Wynne had committed negligence against AMPS. The jury found that Gardere Wynne had committed negligence against AMPS. Against Gardere Wynne, the jury awarded $24.5 million in damages to Sverdlin individually and $35 million to Sverdlin derivatively on behalf of AMPS as a result of its findings that Gardere Wynne had been negligent. Because there were no pleadings to support the award to AMPS against Gardere Wynne, Lloyd R. Cunningham (Sverdlin's counsel) then filed a trial amendment adding a malpractice claim by AMPS against Gardere Wynne.
Before the judgment was entered, Sverdlin announced that he and Gardere Wynne had reached a settlement in principle. Sverdlin agreed to withdraw the trial amendment that he had filed to add a derivative legal malpractice claim on behalf of AMPS, and AMPS agreed to relinquish all claims against Gardere Wynne. On January 7, 1999, Swank, McCoy, and others filed a joint request for a fairness hearing on the derivative settlement. Before the fairness hearing was held, the court entered an interlocutory judgment on January 13, 1999. The interlocutory judgment denied Sverdlin's trial amendment on behalf of AMPS, approved the settlement of all claims against Gardere Wynne, set aside the jury's answers relating to the conduct of Gardere Wynne, and adjudged that Sverdlin take nothing by his claims against Gardere Wynne. Under the settlement, the entire $20 million was to be paid to Sverdlin individually.
Prior to the trial court's interlocutory judgment approving the settlement, Smyser Kaplan was successful in obtaining an order from the trial court to disregard all of the jury's liability findings against McCoy. However, at the fairness hearing on January 25, Lloyd Cunningham (Sverdlin's counsel) argued that the defendants, which included Swank and McCoy, should not be allowed to object to the fairness to AMPS of any settlement because the jury had found them to be wrongdoers. No one objected to the settlement. Near the end of the fairness hearing, the trial court agreed that the malpractice claim on behalf of AMPS would not have survived and indicated that it would have set aside that verdict in any event. The trial court then found that the settlement between Sverdlin and Gardere Wynne met "all the requirements of substantial fairness" to AMPS and approved the settlement.
The Gardere Wynne settlement agreement required formal ratification by AMPS. Brown, Parker & Leahy, the firm selected by the receiver, prepared the ratification papers and circulated those papers to Sverdlin and the new AMPS directors who had been elected after the trial court judgment was entered. After the trial court had declared that Sverdlin was the 100% owner of AMPS, Sverdlin had appointed a new board of directors and president of AMPS. The new board ratified the settlement and authorized the new president to sign the settlement agreement. The new president then executed the settlement agreement.
After several post-verdict motions and hearings, the trial court disregarded certain jury findings, reduced the verdict to approximately $235 million in damages, returned the patents to Sverdlin, and declared that 100% of AMPS's stock was owned by Sverdlin. On January 25, 1999, the trial court signed a final judgment. The judge of the trial court resigned, and the case was transferred to another trial judge. After further postjudgment hearings, *655 the judgment was reduced to approximately $180 million.
Swank, McCoy, Chudnoff, Sussman, LDE, and LDNGH appealed the $180 million final judgment. McCoy also appealed the trial courts declaratory judgment ruling that awarded Sverdlin 100% ownership of AMPS. Sverdlin in his derivative capacity cross-appealed parts of the judgment that disregarded the jury's findings as to McCoy. The Houston First Court of Appeals reversed the trial court "in all things" and rendered judgment that Sverdlin, individually and on behalf of AMPS, take nothing against the appellants. Swank, 121 S.W.3d 785.
On June 3, 2005, Swank filed this suit in his individual capacity and derivatively on behalf of AMPS against the Cunningham Group, Calvin Verner, Battle Fowler, and Beck Redden (the law firm that substituted as counsel for him after the jury reached its verdict in the underlying litigation). McCoy then intervened suing the Cunningham Group, Calvin Verner, Battle Fowler, and Smyser Kaplan (the law firm that substituted as counsel for him after the jury reached its verdict in the underlying litigation). Swank and McCoy based all of their claims on their asserted 40% interest in AMPS (20% each) and claimed that the attorneys had deprived them of a valuable property right AMPS's $35 million judgment against Gardere Wynne when Sverdlin was allowed to receive the entire $20 million Gardere Wynne settlement and AMPS received none of the settlement proceeds. Swank and McCoy alleged that the "Thirty-Five Million Dollar property interest was a valuable property right of AMPS and, by extension, Swank and McCoy (both 20% shareholders)." They further alleged that their damages included but were not limited to "the loss of AMPS'[s] $35,000,000.00 jury award and [their] interests in the $20,000,000.00 Gardere settlement."
Smyser Kaplan and Beck Redden filed motions for summary judgment. On January 19, 2006, the trial court entered orders granting summary judgment in favor of Smyser Kaplan against McCoy and in favor of Beck Redden against Swank. Later, the Cunningham Group, Calvin Verner, and Battle Fowler filed motions for summary judgment. On May 1, 2006, the trial court signed a final judgment granting summary judgment in favor of the Cunningham Group, Calvin Verner, and Battle Fowler. This appeal by Swank and McCoy followed.
Swank's and McCoy's Claims in this Cause
Swank's and McCoy's claims in this cause relate to the $20 million Gardere Wynne settlement in the underlying litigation. For example, they made the following allegations in their petition:
Each of [the appellee lawyers] breached one or more of the duties they owed to AMPS, Swank, and McCoy (both 20% shareholders in AMPS), in the handling of [Sverdlin's] trial amendment [adding a derivative claim on behalf of AMPS for legal malpractice against Gardere Wynne], the Gardere [Wynne] settlement, the $20 million settlement proceeds, and the application of the credit those [settlement] proceeds allowed.
In Swank and McCoy's appellate brief, they characterize their claims as being based on "acts centered around a $20,000,000 settlement in the prior litigation-significant claims belonging to AMPS were compromised as part of the settlement, but AMPS received none of the proceeds of the settlement." Essentially, Swank's and McCoy's claims boil down to two propositions. First, they assert that AMPS lost its $35 million jury verdict and *656 did not receive any proceeds from the Gardere Wynne settlement because the appellee lawyers either committed negligence or breached their fiduciary duties.[2] Second, they assert that, as 20% shareholders in AMPS, they were damaged because of the damage to AMPS.
In their petition, Swank and McCoy alleged that the Cunningham Group breached its fiduciary duties to AMPS and to them in their capacities as shareholders in AMPS in the following ways: (a) entering into an agreement with Gardere Wynne to settle Sverdlin's individual causes of action for $20 million conditioned upon the Cunningham Group withdrawing AMPS's trial amendment for legal malpractice against Gardere Wynne post-verdict; (b) entering into an agreement with Gardere Wynne to settle Sverdlin's individual causes of action for $20 million conditioned upon the Cunningham Group settling all of AMPS's causes of action against Gardere Wynne; (c) entering into an agreement with Gardere Wynne to settle Sverdlin's individual causes of action for $20 million conditioned upon the Cunningham Group agreeing not to authorize or assign the right to maintain a derivative action against Gardere Wynne on behalf of AMPS; (d) withdrawing AMPS's trial amendment post-verdict thereby discharging AMPS's $35 million jury verdict against Gardere Wynne; (e) failing to protect AMPS, by allowing a settlement credit to be assessed against AMPS for the $20 million received by Sverdlin; (f) failing to protect AMPS's settlement proceeds; (g) failing to protect AMPS's assets; (h) failing to prevent the sale of AMPS's assets; and (i) failing to prevent AMPS's dissolution. Swank and McCoy alleged breach of fiduciary duty claims identical to those listed in (e) through (i) above against Calvin Verner and Battle Fowler. Additionally, Swank and McCoy alleged that Calvin Verner and Battle Fowler breached their fiduciary duties in failing to object to and in failing to prevent the Cunningham Group from undertaking the acts listed in (a) through (d) above. Swank and McCoy made similar breach of fiduciary duty allegations against Beck Redden and Smyser Kaplan.
Swank and McCoy alleged the same acts or omissions as negligence allegations against Calvin Verner, Battle Fowler, Beck Redden, and Smyser Kaplan. Specifically, Swank and McCoy alleged that these four appellees committed negligence in the same respects: (a) affirmatively consenting to the withdrawal of the trial amendment; (b) not objecting to the withdrawal of the trial amendment; (c) not appealing the withdrawal of the trial amendment; (d) not asking the court to hold all or a portion of the proceeds of the Gardere Wynne settlement in the court's *657 registry; (e) failing to ask the court to have all or a portion of the proceeds of the Gardere Wynne settlement held by the receiver; (f) failing to seek a writ of mandamus directing the trial court to hold all or a portion of the proceeds of the Gardere Wynne settlement in the court's registry pending appeal; (g) failing to seek a writ of mandamus directing the trial court to have all or a portion of the proceeds of the Gardere Wynne settlement held by the receiver pending appeal; (h) failing to follow Aubrey Calvin's advice in his memorandum dated January 4, 1999; (i) failing to advise them that the Gardere Wynne settlement proceeds were being diverted away from AMPS; (j) failing to demand that Gardere Wynne not insist on withdrawal of the trial amendment as a condition of settlement; (k) failing to demand that Gardere Wynne place the proceeds of the Gardere Wynne settlement into the court's registry; (l) failing to demand that Gardere Wynne place the proceeds of the Gardere Wynne settlement into the hands of the receiver; (m) failing to demand that the Cunningham Group, the Calvin Group, and the Battle Fowler Group refrain from withdrawing the trial amendment on behalf of AMPS; (n) failing to demand that the Cunningham Group, the Calvin Group, the Battle Fowler Group, and the receiver object to the withdrawal of the trial amendment; (o) failing to demand that the Cunningham Group, the Calvin Group, the Battle Fowler Group, and the receiver file a trial amendment; (p) failing to demand that the Cunningham Group, the Calvin Group, the Battle Fowler Group, and the receiver appeal the withdrawal of the trial amendment; (q) failing to demand that the Cunningham Group, the Calvin Group, the Battle Fowler Group, and the receiver apply for a court order to hold all or a portion of the proceeds of the Gardere Wynne settlement in the court's registry; (r) failing to demand that the Cunningham Group, the Calvin Group, the Battle Fowler Group, and the receiver ask the court to have all or a portion of the proceeds of the Gardere Wynne settlement held by the receiver; (s) failing to demand that the Cunningham Group, the Calvin Group, the Battle Fowler Group, and the receiver seek a writ of mandamus directing the trial court to order that all or a portion of the proceeds of the Gardere Wynne settlement be held in the court's registry; (t) failing to demand that the Cunningham Group, the Calvin Group, the Battle Fowler Group, and the receiver seek a writ of mandamus directing the trial court to have all or a portion of the proceeds of the Gardere Wynne settlement held by the receiver; (u) failing to object to the settlement of all of AMPS's claims; (v) failing to object to the extraction of the settlement credit from AMPS instead of Sverdlin; and (w) failing to fully protect Swank's and McCoy's interests in the application of the settlement credit.
In addition to the above claims, Swank and McCoy alleged that the Cunningham Group converted AMPS's $35 million jury verdict against Gardere Wynne and that Calvin Verner, Battle Fowler, Beck Redden, and Smyser Kaplan conspired with the Cunningham Group to convert the jury verdict. Swank and McCoy also alleged a fraud claim against Lloyd Cunningham in his individual capacity. Based on the alleged breaches of fiduciary duty by all appellee lawyers, Swank and McCoy sought a disgorgement of legal fees paid to the appellee lawyers.
Appellees' Motions for Summary Judgment
The appellee lawyers filed traditional motions for summary judgment. Smyser Kaplan moved for summary judgment on the following grounds: (a) McCoy's derivative claims on behalf of AMPS failed for *658 two independent reasons: (1) because Smyser Kaplan never represented AMPS, McCoy lacked standing; and (2) AMPS's board of directors expressly ratified the settlement; (b) McCoy's "individual" claims failed because the damages he sought to recover belonged to AMPS; (c) McCoy's derivative and individual claims failed because his pleadings and interrogatory answers established that the damages he sought to recover were impermissibly speculative; and (d) McCoy's non-malpractice claims for fee forfeiture and conspiracy failed because they constituted an impermissible attempt to fracture a legal malpractice claim and, alternatively, McCoy's claim for fee forfeiture failed because he paid no fees and his claim for "conspiracy to convert the AMPS verdict" failed because a jury verdict cannot be converted.
Beck Redden moved for summary judgment on the following grounds: (a) Swank's derivative claim on behalf of AMPS failed because Beck Redden never represented AMPS; and (b) Swank did not allege any direct personal damage and, therefore, his individual claim failed. Beck Redden also incorporated by reference into its motion for summary judgment all of Smyser Kaplan's grounds for summary judgment.
The Cunningham Group moved for summary judgment on the following grounds: (a) the statute of limitations barred Swank's and McCoy's claims; (b) Swank and McCoy lacked standing to assert individual or derivative claims against the Cunningham Group for the following reasons: (1) they had no standing to assert individual malpractice and breach of fiduciary duty claims because they were not and had never been in privity with the Cunningham Group; (2) they had no standing to assert derivative claims on behalf of AMPS because they were not and had never been shareholders in AMPS; and (3) they had no standing to assert derivative claims on behalf of AMPS for breach of fiduciary duty by the Cunningham Group because there was no privity between AMPS and the Cunningham Group at the time of the Gardere Wynne settlement; (c) collateral estoppel, ratification, and waiver barred Swank's and McCoy's derivative claims on behalf of AMPS; (d) there was no evidence of any underlying damage to AMPS to support the malpractice jury verdict against Gardere Wynne; (e) Swank's and McCoy's claims failed because their damage and causation theories were fatally speculative as a matter of law; (f) Swank's and McCoy's conversion claim failed because there can be no conversion of a jury verdict; and (g) Swank's and McCoy's fraud claims against Lloyd Cunningham failed because there was no evidence that he made any fraudulent statement upon which they relied to their detriment and because of which they sustained damages.
Battle Fowler moved for summary judgment on the following grounds: (a) Battle Fowler ceased representing any party in connection with the underlying litigation immediately after the jury's verdict on October 27, 1998, and, therefore, it owed no duty to any party thereafter; (b) there was no evidence that Battle Fowler represented any party in connection with the underlying litigation immediately after the jury's verdict on October 27, 1998, and in no event after November 4, 1998, and there was no evidence that Battle Fowler owed any duty to any party thereafter (Battle Fowler also moved for a no-evidence summary judgment on this ground); (c) the statute of limitations barred Swank's and McCoy's claims; (d) there was no evidence of fraudulent concealment on the part of Battle Fowler sufficient to toll the statute of limitations (Battle Fowler also moved for a no-evidence summary *659 judgment on this ground); (e) Swank's and McCoy's claims were barred by the doctrines of res judicata and/or collateral estoppel; (f) Swank's and McCoy's claims were barred by AMPS's ratification of the Gardere Wynne settlement; (g) Swank's and McCoy's damage and causation theories were fatally speculative as a matter of law; (h) neither Swank nor McCoy had standing to bring malpractice or breach of fiduciary duty claims in their individual capacities; (i) Swank's and McCoy's "conspiracy to convert" claims failed because a verdict cannot be converted and because there was no conspiracy; (j) the evidence conclusively established that Battle Fowler was not a part of any alleged conspiracy; (k) there was no evidence that Battle Fowler ever knew of or participated in any alleged conspiracy (Battle Fowler also moved for a no-evidence summary judgment on this ground); and (l) neither Swank nor McCoy could obtain fee disgorgement from Battle Fowler because neither paid any fees to Battle Fowler. Battle Fowler filed a second motion in which it moved for a no-evidence summary judgment on the ground that there was no admissible summary judgment evidence to support an award of damages to Swank and McCoy individually and derivatively on behalf of AMPS.
Calvin Verner moved for a traditional summary judgment on the following grounds: (a) Calvin Verner did not represent Swank or McCoy after December 3, 1998, and, once the directors and shareholders of AMPS retained their own counsel, no party looked to Calvin Verner for legal advice, counsel, or assistance; (b) AMPS's receiver, not Calvin Verner, controlled any derivative claims on behalf of AMPS; (c) the statute of limitations barred Swank's and McCoy's claims; (d) Swank's and McCoy's claims were barred by AMPS's ratification of the Gardere Wynne settlement; (e) Swank's and McCoy's damage and causation theories were fatally speculative as a matter of law; (f) neither Swank nor McCoy had standing to bring malpractice or breach of fiduciary duty claims in their individual capacities; (g) Swank's and McCoy's "conspiracy to convert" claims failed because a verdict cannot be converted and because there was no conspiracy; and (h) neither Swank nor McCoy could obtain fee disgorgement from Calvin Verner because neither paid fees to Calvin Verner. Calvin Verner moved for a no-evidence summary judgment on the grounds that there was no evidence of the following matters: (a) that any defendant's alleged breach of duty was a direct cause of Swank's and McCoy's damages; (b) that Swank and McCoy sustained any damages whatsoever; (c) that the trial court would have sustained any objection made to the Gardere Wynne settlement at the "fairness hearing" in the underlying case; (d) that there was any valid legal basis for an objection to the Gardere Wynne settlement at the "fairness hearing" in the underlying case; (e) that any evidence would or could have been produced at the "fairness hearing" in the underlying case which would or could have affected the outcome of the "fairness hearing"; (f) that Sverdlin would have gone forward with the underlying Gardere Wynne settlement if he had been required to split the money with AMPS; (g) that there was any "conspiracy" between the defendants to deprive AMPS of any monies from the Gardere Wynne settlement; (h) that, had AMPS received proceeds from the Gardere Wynne settlement, there would have been any money left over for any shareholders after AMPS paid its debts to all outstanding creditors; (i) that the FCIS system which was the subject of the underlying case would have ever worked; (j) that the shareholders of AMPS would have reached an agreement *660 on how to spend any portion of the settlement monies; (k) that Swank and McCoy would have ultimately netted any recovery from any hypothetical portion of the Gardere Wynne settlement that AMPS would or could have received; and (l) that Swank and McCoy could have proved the "case within a case" on causation or damages which would have been necessary for them to recover in this legal malpractice case.
Swank and McCoy filed responses to appellees' motions for summary judgment, and the trial court conducted hearings on the motions. The trial court granted summary judgments to all appellees without specifying the ground or grounds upon which it relied in granting the motions. In this appeal, Swank and McCoy present forty appellate issues challenging the trial court's granting of summary judgment to appellees.
Standard of Review
Where, as here, a trial court's order granting summary judgment does not specify the ground or grounds relied upon for its ruling, summary judgment will be affirmed on appeal if any of the summary judgment grounds advanced by the movant are meritorious. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex.2001); Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989). A trial court must grant a traditional motion for summary judgment if the moving party establishes that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. TEX.R. CIV. P. 166a(c); Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex.1991). In order for a defendant to be entitled to summary judgment, it must either disprove an element of each cause of action or establish an affirmative defense as a matter of law. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex.1997). Once the movant establishes a right to summary judgment, the nonmovant must come forward with evidence or law that precludes summary judgment. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678-79 (Tex.1979). When reviewing a traditional summary judgment, the appellate court considers all the evidence and takes as true evidence favorable to the nonmovant. Am. Tobacco Co., 951 S.W.2d at 425; Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985). The appellate court "must consider whether reasonable and fair-minded jurors could differ in their conclusions in light of all of the evidence presented" and may not ignore "undisputed evidence in the record that cannot be disregarded." Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755, 757 (Tex.2007).
We must review a no-evidence summary judgment under the same standard as a directed verdict. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750-51 (Tex.2003). Accordingly, we examine the record in the light most favorable to the nonmovant and disregard all contrary evidence and inferences. Id.; Wal-Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502, 506 (Tex.2002). A trial court must grant a proper no-evidence motion for summary judgment unless the nonmovant produces more than a scintilla of probative evidence to raise a genuine issue of material fact. TEX.R. CIV. P. 166a(i); Wal-Mart, 92 S.W.3d at 506. We may not consider any evidence presented by the movant unless it creates a fact question. Binur v. Jacobo, 135 S.W.3d 646, 651 (Tex.2004).
Standing
The Cunningham Group moved for a traditional summary judgment on the ground that Swank and McCoy lacked standing to assert derivative claims on behalf of AMPS because they were never *661 shareholders in AMPS. Standing is a component of subject-matter jurisdiction, and a plaintiff must have standing to maintain a suit. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445-46 (Tex. 1993); Spurgeon v. Coan & Elliott, 180 S.W.3d 593, 597 (Tex.App.-Eastland 2005, no pet.). Because the Cunningham Group challenged Swank's and McCoy's standing in a traditional summary judgment, we apply the standard of review that applies to traditional motions for summary judgment. Kilpatrick v. Kilpatrick, 205 S.W.3d 690, 700 (Tex.App.-Fort Worth 2007, pet. denied).[3]
A cause of action against one who has injured a corporation belongs to the corporation and not to the shareholders. A corporate stockholder cannot recover damages personally for a wrong done solely to the corporation, even though he may be injured by that wrong. Wingate v. Hajdik, 795 S.W.2d 717, 719 (Tex. 1990). Thus, a shareholder who seeks individual redress based on allegations concerning wrongs done to a corporation lacks standing. Redmon v. Griffith, 202 S.W.3d 225, 233 (Tex.App.-Tyler 2006, pet. denied).
A cause of action for injury to the property of a corporation or for impairment or destruction of its business is vested in the corporation, as distinguished from its shareholders, even though the harm may result indirectly in the loss of earnings to the shareholders. Redmon, 202 S.W.3d at 233. The individual shareholders have no separate and independent right of action for wrongs to the corporation that merely result in depreciation in the value of their stock. Id. As a result, to recover for wrongs done to the corporation, the shareholder must bring the suit derivatively in the name of the corporation so that each shareholder will be made whole if the corporation obtains compensation from the wrongdoer. Id. at 234. However, a corporate shareholder may have an individual action for wrongs done to him where the wrongdoer violates a duty that arises from a contract or otherwise and that is owed directly by the wrongdoer to the shareholder. Such a principle is not so much an exception to the general rule as it is a recognition that a shareholder may sue for violations of his individual rights regardless of whether the corporation also has a cause of action. It is the nature of the wrong whether directed against the corporation only or against the shareholder personally and not the existence of injury that determines who may sue. Id. The American Law Institute distinguishes between derivative actions and direct actions in the following way:
[A] wrongful act that depletes corporate assets and thereby injures shareholders only indirectly, by reason of the prior injury to the corporation, should be seen as derivative in character; conversely, a wrongful act that is separate and distinct from any corporate injury, such as one that denies or interferes with the rightful incidents of share ownership, gives rise to a direct action.
PRINCIPLES OF CORPORATE GOVERNANCE: ANALYSIS AND RECOMMENDATION § 7.01 cmt. c (2005).
In this cause, Swank and McCoy alleged claims in their individual capacities and in their derivative capacities on behalf of AMPS. Swank's and McCoy's claims in *662 this cause arose from (1) the jury's award in the underlying litigation of $35 million derivatively to Sverdlin on behalf of AMPS against Gardere Wynne and (2) the subsequent settlement of Sverdlin's derivative claim on behalf of AMPS against Gardere Wynne in which AMPS did not receive any of the settlement proceeds.
AMPS's claim for negligence against Gardere Wynne belonged to it and not to its shareholders. Wingate, 795 S.W.2d at 719; Redmon, 202 S.W.3d at 233. Swank's and McCoy's claims are based on an alleged injury to AMPS. They assert that, because of the negligence and wrongful conduct of the appellee lawyers, AMPS lost its $35 million jury verdict without receiving anything in return for the loss. Swank and McCoy alleged that the injury to AMPS caused injuries to them because they owned shares of stock in AMPS. However, a shareholder of a corporation who receives an indirect injury by reason of a prior injury to the corporation does not have standing to maintain an individual action for damages. Redmon, 202 S.W.3d at 233; Section 7.01 cmt. c. Because Swank's and McCoy's claims depend on an injury to AMPS, their claims are derivative in nature. Therefore, they lack standing to seek redress in their individual capacities. Redmon, 202 S.W.3d at 233.
We next address whether Swank and McCoy have standing to assert derivative claims on behalf of AMPS. The Cunningham Group presented evidence in support of its summary judgment ground that Swank and McCoy lacked standing to assert derivative claims on behalf of AMPS because they were never shareholders in AMPS. The Cunningham Group's evidence included excerpts from Swank's trial testimony in the underlying litigation, an affidavit of Swank that had been filed in the underlying litigation, and excerpts from Swank's deposition in this cause. Swank's testimony and affidavit established the following facts: (1) that Sverdlin told Swank and McCoy that he would not recognize their stock options; (2) that Sverdlin repudiated the stock options before Swank and McCoy exercised their stock options; (3) that Swank exercised his stock option because Sverdlin had stated that he would not honor the stock option agreements; (4) that Sverdlin represented to Swank that he would refuse to honor the stock options; and (5) that Swank did not know whether Sverdlin ever endorsed a share certificate over to McCoy or him but that Swank believed that Sverdlin never endorsed a stock certificate over to him. Swank's appellate brief in the underlying litigation stated that, "[k]nowing that Sverdlin was trying to fire them, Swank and McCoy exercised their options on January 9, 1997." McCoy's appellate brief in the underlying litigation stated that he exercised his stock option on January 9, 1997. The Cunningham Group's summary judgment evidence established that Sverdlin repudiated the stock options before Swank and McCoy attempted to exercise them. The evidence was sufficient to disprove that Swank and McCoy were shareholders in AMPS; therefore, the summary judgment burden shifted to Swank and McCoy to come forward with evidence that precluded summary judgment. City of Houston, 589 S.W.2d at 678-79.
Swank and McCoy assert that, in the underlying litigation, the Houston First Court adjudicated them to be shareholders in AMPS. Swank and McCoy rely on two statements in the court's opinion. First, the court stated in the "Background" section that "Swank and McCoy exercised their stock options in AMPS." See Swank, 121 S.W.3d at 790. Second, the court stated, while analyzing Sverdlin's tortious interference claim, that "appellants had a *663 financial interest in AMPS, including stock, stock options, and loans." Id. at 801. We note that there were six appellants in the appeal in the underlying litigation. Based on these two statements, Swank and McCoy assert that the court "recognized that [they] were shareholders in AMPS."
In the underlying litigation, Sverdlin sought a declaratory judgment that he owned 100% of the stock in AMPS. Sverdlin did not submit a jury issue relating to his claim that he owned 100% of the stock, and Swank and McCoy did not submit jury issues relating to their claims that they each owned 20% of the stock. However, apparently based on the jury's finding that Swank, McCoy, and three of their codefendants had committed fraud against Sverdlin in connection with "the transaction involving his corporate stock," the trial court entered a declaratory judgment that Sverdlin owned 100% of the stock. The Houston First Court reversed the trial court's judgment and rendered judgment that Sverdlin and AMPS take nothing on their claims. Swank, 121 S.W.3d at 803. However, the court did not address the competing claims to ownership of AMPS's stock in its opinion, and the court did not render judgment that Swank and McCoy each owned 20% of the stock in AMPS.
A reversal of the trial court's declaration that Sverdlin owned 100% of the stock in AMPS is not the same as holding that Swank and McCoy each owned 20% of the stock in AMPS. The reversal of a trial court's judgment completely nullifies it, leaving it as if it had never been rendered other than as to further rights of appeal. In re S.S.G., 208 S.W.3d 1, 3 (Tex.App.-Amarillo 2006, pet. denied); Flowers v. Flowers, 589 S.W.2d 746, 748 (Tex.Civ.App.-Dallas 1979, no writ); King v. Cash, 174 S.W.2d 503, 504 (Tex.Civ.App.-Eastland 1943, no writ). The effect of a reversal of a judgment is to place the parties in the same position that they occupied before the judgment was rendered by the lower court. City of Houston v. Walsh, 27 Tex.Civ.App. 121, 66 S.W. 106, 108 (Tex.Civ.App.1901, writ ref'd); cf. P.V. Int'l Corp. v. Turner, Mason, & Solomon, 700 S.W.2d 21, 22 (Tex. App.-Dallas 1985, no writ) (the effect of setting aside a judgment is to place the parties in the position they occupied before the rendition of judgment). After the Houston First Court reversed the trial court's judgment in the underlying litigation, the parties were in the same position that they were in before the trial court rendered its judgment: Swank and McCoy had tried to exercise their stock options, and Sverdlin had refused to perform his part of the option contract. Swank and McCoy had a breach of contract action to establish that they were shareholders in AMPS.
Swank and McCoy also assert that they presented summary judgment evidence establishing that, after they exercised their stock options, Sverdlin agreed that he would honor their exercise of the options. Specifically, Swank and McCoy relied on minutes from a special meeting of AMPS's board of directors on January 9, 1997. David Jungman of Gardere Wynne, acting as secretary of the meeting, prepared the minutes. Jungman stated the following: "Mr. Swank notified the Board that he and James McCoy had exercised their options to purchase stock in [AMPS] from Mr. Sverdlin. Mr. Sverdlin said that he accepted the exercise of the options and that he would act pursuant to such notifications." Sverdlin's statement that he would act pursuant to the notifications was, at most, a promise to do something in the future. The fact that Sverdlin indicated that he would honor Swank's and McCoy's exercise of their stock options is no evidence *664 that he performed his part of the option contract. There was no summary judgment evidence that Sverdlin ever endorsed any stock over to Swank or McCoy.
Swank and McCoy's summary judgment evidence failed to raise a fact issue on whether they owned stock in AMPS. Therefore, Swank and McCoy lack standing to maintain this suit, and the trial court did not err in granting summary judgment to the Cunningham Group on the ground that Swank and McCoy lacked standing to assert derivative claims on behalf of AMPS. Swank's and McCoy's lack of standing also precludes them from maintaining their claims against the other appellees; therefore, the trial court did not err in granting summary judgment to all appellees based on the lack of standing.[4]
Even assuming that Swank and McCoy were shareholders in AMPS, they would lack standing in their individual capacities to assert claims belonging solely to AMPS. As explained above, Swank's and McCoy's claims are derivative in nature. Texas statutory law specifically provides for shareholder derivative proceedings in TEX. BUS. ORGS.CODE ANN. §§ 21.551-.563 (Vernon Pamph.2007), formerly TEX. BUS. CORP. ACT art. 5.14 (2003).[5] Sections 21.552 through 21.559 set forth a number of procedural requirements for maintaining a derivative action, such as the requirement in Section 21.553 that a shareholder make a written demand on the corporation to take suitable action. Section 21.563 is entitled "Closely Held Corporation" and applies to corporations that have (1) fewer than thirty-five shareholders and (2) no shares listed on a national securities exchange or regularly quoted in an over-the-counter market by one or more members of a national securities association. Section 21.563(b) provides that the procedural requirements for maintaining derivative proceedings set forth in Sections 21.552 through 21.559 do not apply to closely held corporations. Section 21.563(c) provides as follows:
(c) If justice requires:
(1) a derivative proceeding brought by a shareholder of a closely held corporation may be treated by a court as a direct action brought by the shareholder for the shareholder's own benefit; and
(2) a recovery in a direct or derivative proceeding by a shareholder may be paid directly to the plaintiff or to the corporation if necessary to protect the interests of creditors or other shareholders of the corporation.
Swank and McCoy argue that, pursuant to Section 21.563, they have standing in their *665 individual capacities to assert derivative claims belonging to AMPS. Appellees argue that Section 21.563 merely removes the procedural requirements for maintaining a derivative action and, therefore, that Section 21.563 does not confer standing to Swank and McCoy in their individual capacities to assert claims belonging to AMPS. The plain language of the statute does more than remove the procedural requirements for maintaining a derivative action. Section 21.563(b) removes the procedural requirements, and then Section 21.563(c) further provides that the trial court may treat a derivative proceeding as a direct action by the shareholder for the shareholder's own benefit and may award a recovery in a derivative proceeding directly to the shareholder. Thus, under Section 21.563(c), the trial court has discretion to award damages in a derivative proceeding directly to the shareholder.[6] A trial court's decision to treat an action as a direct action under Section 21.563(c) so as to allow recovery to be paid directly to a shareholder plaintiff, as opposed to the corporation, does not mean that the action is no longer a derivative proceeding. See DDH Aviation v. Holly, No. Civ.A.3:02-CV-2598-P, 2005 WL 770595, *4 (N.D.Tex. 2005).
At oral argument before this court, Swank and McCoy relied on Rogers v. Alexander, 244 S.W.3d 370 (Tex.App.-Dallas 2007, no pet.). In Rogers, Daniel Alexander, Leslie Alexander, and Judith Pucci were the three shareholders in Alexander & Pucci, L.L.C. d/b/a Accent Home Health (Accent). Id. at 388. Daniel, Leslie, and Judith brought suit in their individual capacities seeking to recover damages to themselves and damages to Accent. The suit arose out of James Rogers's agreement to invest in Accent. Daniel, Leslie, and Judith alleged various claims against four defendants, including claims of fraud, theft, and breach of fiduciary duty against Rogers. At trial, Rogers's counsel raised an objection that Daniel, Leslie, and Judith lacked standing to assert claims for damages that belonged to Accent. Id. The trial court overruled the objection. Id. The jury awarded substantial damages to Daniel, Leslie, and Judith, and the trial court entered judgment in accordance with the jury's verdict. Id. at 380-81.
On appeal, the Dallas Court of Appeals addressed whether the trial court had erred in allowing Daniel, Leslie, and Judith to proceed with their suit under Article 5.14(L) of the Business Corporation Act (now Section 21.563(c) of the Business Organizations Code). In Rogers, the record showed that Accent's only shareholders were Daniel, Leslie, and Judith. Rogers, 244 S.W.3d at 388. Also, there was no evidence that Accent did not fall within the definition of a closely held corporation under Article 5.14(L). Id. Based on these two circumstances, the court concluded that the trial court had not erred in allowing the shareholders to proceed with the suit under Article 5.14(L). Id.
This case is distinguishable from Rogers. In Rogers, all three of the shareholders in the limited liability company brought the suit, and no disputes existed among the shareholders. In this case, Swank and *666 McCoy each claim to own 20% of the shares in AMPS. Even under this scenario, Sverdlin would own 60% of AMPS. To the extent that Swank and McCoy as shareholders in AMPS would be able to recover damages in this cause, Sverdlin (as a shareholder in AMPS) might also be able to recover damages. Section 21.563(c)(1) of the Business Organizations Code provides that, if justice requires, the trial court has discretion to treat a derivative proceeding brought by a shareholder of a closely held corporation as a direct action brought by the shareholder for the shareholder's own benefit. Section 21.563(c)(2) provides that, if justice requires, the trial court has discretion to allow the recovery in a derivative action to be paid (1) directly to the shareholder or (2) to the corporation if necessary to protect the interests of creditors or other shareholders. The record contains thousands of pages documenting the substantial and longstanding disputes that have existed between Swank and McCoy on the one hand and Sverdlin on the other hand. Under the circumstances in this cause, the trial court could reasonably have concluded (1) that justice did not require it to treat this suit as a direct action and (2) that it would have been necessary that any recovery be paid to AMPS to protect the interests of Sverdlin. Therefore, even if Sverdlin owned only 60% of the stock in AMPS, we conclude that the trial court did not abuse its discretion in refusing to allow Swank and McCoy to proceed with this cause in their individual capacities under Section 21.563(c).
Swank and McCoy lack standing to assert derivative claims on behalf of AMPS against Beck Redden and Smyser Kaplan for an additional reason. After the jury issued its verdict in the underlying litigation, Beck Redden represented Swank and Smyser Kaplan represented McCoy. Beck Redden and Smyser Kaplan did not represent AMPS and, therefore, were never in privity with AMPS. Texas does not recognize a cause of action for legal malpractice asserted by a party not in privity with the offending attorney. Barcelo v. Elliott, 923 S.W.2d 575, 577-78 (Tex.1996); Gamboa v. Shaw, 956 S.W.2d 662, 664 (Tex.App.-San Antonio 1997, no pet.). Because no privity existed between AMPS and Beck Redden or Smyser Kaplan, AMPS had no claim for legal malpractice against Beck Redden and Smyser Kaplan.
Similarly, AMPS's lack of privity with Beck Redden and Smyser Kaplan precludes it from asserting breach of fiduciary duty claims against them. Fiduciary duties arise when an attorney-client relationship is created. Meyer v. Cathey, 167 S.W.3d 327, 330 (Tex.2005); Greene's Pressure Treating & Rentals, Inc. v. Fulbright & Jaworski, L.L.P., 178 S.W.3d 40, 43 (Tex.App.-Houston [1st Dist.] 2005, no pet.). An attorney-client relationship did not exist between Beck Redden or Smyser Kaplan and AMPS. In the absence of an attorney-client relationship, Beck Redden and Smyser Kaplan did not owe fiduciary duties to AMPS, and AMPS could not recover on a breach of fiduciary duty claim against them.
AMPS had no claim for legal malpractice or breach of fiduciary duty against Beck Redden and Smyser Kaplan. Therefore, Swank and McCoy lack standing to assert derivative claims on behalf of AMPS against Beck Redden and Smyser Kaplan.
For the reasons stated above, Swank and McCoy lack standing to assert claims belonging to AMPS in their individual capacities, and they also lack standing to assert derivative claims on behalf of AMPS. Based on Swank's and McCoy's lack of standing, the trial court did not err *667 in granting summary judgment to appellees.
Causation and Damages
Appellees moved for traditional summary judgments on the ground that Swank's and McCoy's causation and damages theories were fatally speculative as a matter of law. To prevail on a legal malpractice claim, a plaintiff must show (1) that the attorney owed the plaintiff a duty, (2) that the attorney breached that duty, (3) that the breach proximately caused the plaintiff's injuries, and (4) that damages occurred. Alexander v. Turtur & Assocs., Inc., 146 S.W.3d 113, 117 (Tex.2004). On a breach of fiduciary duty claim, while a plaintiff need not prove causation to recover disgorgement of fees, the plaintiff must prove causation to recover actual damages. Hoover v. Larkin, 196 S.W.3d 227, 233 (Tex.App.-Houston [1st Dist.] 2006, pet. denied).
The causal nexus requirement is met when a jury is presented with pleading and proof that establishes a direct causal link between the damages awarded, the actions of the defendant, and the injury suffered. Haynes & Boone v. Bowser Bouldin, Ltd., 896 S.W.2d 179, 181 (Tex.1995); Texaco, Inc. v. Phan, 137 S.W.3d 763, 774 (Tex.App.-Houston [1st Dist.] 2004, no pet.). Proximate cause consists of two elements: (1) cause in fact and (2) forseeability. Western Inv., Inc. v. Urena, 162 S.W.3d 547, 551 (Tex.2005). These elements cannot be established by mere conjecture, guess, or speculation. Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 477 (Tex.1995). The test for cause in fact is whether the act or omission was a substantial factor in causing the injury without which the harm would not have occurred. Marathon Corp. v. Pitzner, 106 S.W.3d 724, 727 (Tex.2003).
A party cannot recover damages that are based on speculation or conjecture. Citizens Nat'l Bank v. Allen Rae Invs., Inc., 142 S.W.3d 459, 482 (Tex.App.-Fort Worth 2004, no pet.). Uncertainty as to the fact of legal damages is fatal to recovery. McKnight v. Hill & Hill Exterminators, Inc., 689 S.W.2d 206, 207 (Tex. 1985). Thus, if damages are too remote, too uncertain, or purely conjectural, they cannot be recovered. Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex.1997). When damages are based on "speculation upon speculation," summary judgment is appropriate. Reardon v. LightPath Techs., Inc., 183 S.W.3d 429, 439 (Tex.App.-Houston [14th Dist.] 2005, pet. denied).
Swank and McCoy alleged that the Gardere Wynne settlement resulted in damages to them. Swank and McCoy identified their damage theories in their answers to interrogatories. Swank stated that he sought to recover the following damages:
a. Mark Swank['s] damages consist of 20% of the $35 million AMPS jury verdict, or $7 million.
or,
b. Anatoly Sverdlin settled his $24 million jury verdict for $20 million, with the settlement value equaling about 81% of the Jury Verdict. 81% of AMPS'[s] $35 million Jury Verdict would have an approximate settlement value of $28.35 million. Mark Swank's 20% interest in the AMPS'[s] settlement would therefore have a value of $5.76 million.
or[,]
c. The $20 million Gardere Wynne settlement settled both the Anatoly Sverdlin $24.5 million jury verdict and the AMPS'[s] $35 million Jury Verdict. AMPS['s] proportionate share of the settlement would be 58.8% or approximately $11.76 million. Mark Swank's 20% *668 shareholder interest in AMPS would have an approximate value of $2.35 million.
McCoy stated that he sought to recover the following damages:
Mr. Sverdlin received $20,000,000 in January 1999 for his $24,500,000 verdict against Gardere Wynne. This represents a recovery by Mr. Sverdlin of 82% of his damages against Gardere Wynne. Applying the same percentage of recovery against the $35,000,000 verdict that AMPS received would result in AMPS receiving $28,700,000. It is [McCoy's] position that Mr. Sverdlin should separately forfeit his ill-gotten gain from breaching his fiduciary duty to AMPS. When Mr. Sverdlin's ill-gotten gain of $20,000,000 is added to the value of AMPS'[s] verdict against Gardere Wynne, the resulting figure is $48,700,000.
....
In the alternative and not by way of limitation, [McCoy] seeks the proceeds of the Gardere settlement which should have been allocated, at an absolute minimum, on the basis of AMPS'[s] and Sverdlin's respective recoveries against Gardere Wynne. Mr. Sverdlin received a $24,500,000 verdict against Gardere Wynne. AMPS received [a] $35,000,000 verdict against Gardere Wynne. Accordingly, the minimum AMPS should have received was 59% of the proceeds of the Gardere settlement. Moreover, as soon as Mr. Sverdlin attempted to usurp all of the benefits of the Gardere settlement for his own benefit, which occurred before the settlement was funded, the entire $20,000,000 should have gone to the benefit of AMPS.
Swank and McCoy presented affidavits from Vincent Lee Marable, III, an attorney, in response to appellees' motions for summary judgment. Marable stated that the distribution of the entire $20 million in settlement proceeds directly to Sverdlin was not fair to AMPS or to Swank and McCoy. He also stated that appellees had breached applicable standards of care. Marable also provided "causation" opinions in the affidavits. He stated that the applicable standard of care required Calvin Verner, Battle Fowler, Beck Redden, and Smyser Kaplan to object at the fairness hearing and that, had these appellees adhered to the applicable standard of care, "the disbursement of the $20,000,000.00 settlement funds directly to Sverdlin individually would have been stopped and AMPS'[s] and McCoy's and Swank's rights with respect to the settlement funds would have been preserved." Marable also stated that, "had the Cunningham Group adhered to the standard of care by taking steps to prevent the loss of AMPS'[s] jury verdicts, AMPS'[s] causes of action, and AMPS'[s] assets, AMPS'[s] (and McCoy's and Swank's) rights with respect to the settlement funds, proceeds, and property, would have been preserved."
The summary judgment evidence established the following: (1) that, before the trial of the underlying litigation, Sverdlin did not plead a derivative claim on behalf of AMPS for malpractice against Gardere Wynne; (2) that Sverdlin's counsel, Lloyd Cunningham, did not believe that Gardere Wynne had committed negligence against AMPS; and (3) that Sverdlin did not present any expert testimony on the issue of whether Gardere Wynne had committed negligence against AMPS. However, the trial court submitted a jury question asking whether Gardere Wynne had committed negligence against AMPS. The jury awarded the total of $35 million to AMPS based on the malpractice findings. Sverdlin's counsel, Lloyd Cunningham, then filed a trial amendment adding a malpractice claim by AMPS against Gardere Wynne. *669 Later, Cunningham sought to withdraw the trial amendment because he believed that there was no evidence to support the jury's finding that Gardere Wynne had committed negligence against AMPS. Cunningham explained in his deposition in this cause that the Cunningham Group did not pursue a negligence claim on behalf of AMPS against Gardere Wynne because "[he] honestly didn't see support for that in any of the evidence that [he] had prior to trial." He further explained:
During trial we didn't pursue a claim for negligence against Gardere, Wynne because we hadn't prepared ourselves for that. In fact, we didn't have an expert that testified as to the failure of Gardere, Wynne to meet the standard of care that was necessary to have as a predecessor to a malpractice claim. We had an expert that testified that they failed to meet the standard of care with regard to Sverdlin, but we didn't have that same testimony or similar testimony on behalf of a claim that AMPS might have for negligence.
The summary judgment record supports Cunningham's conclusion because, in the absence of expert testimony that Gardere Wynne had committed negligence against AMPS, there was no evidence to support the jury's finding. See F.W. Indus., Inc. v. McKeehan, 198 S.W.3d 217, 221 (Tex.App.-Eastland 2005, no pet.) (causation in a legal malpractice suit must be proved by expert testimony unless causation is within the jury's common understanding); Zenith Star Ins. Co. v. Wilkerson, 150 S.W.3d 525, 530 (Tex.App.-Austin 2004, no pet.) (expert testimony of an attorney is usually necessary to establish the standard of skill and care ordinarily exercised by an attorney). Given the complex nature of the issues involved in the underlying litigation, expert testimony would have been necessary to establish the standard of care and causation with respect to a malpractice claim by AMPS against Gardere Wynne. Additionally, the trial court stated at the fairness hearing "that Mr. Sverdlin's individual malpractice claims would have been the only claims to to survive the verdict against Gardere Wynne."
Nonetheless, Swank and McCoy assert that AMPS was damaged because it did not share in the Gardere Wynne settlement proceeds. At a hearing on January 13, 1999, the trial court in the underlying litigation considered the Gardere Wynne settlement. At that hearing, Cunningham announced the terms of the settlement agreement. He stated that Gardere Wynne would be making a $20 million payment "in consideration for which we are dismissing request for a trial amendment we had on behalf of AMPS and we are asking the Court to enter a take nothing judgment." Cunningham also stated that Sverdlin would be receiving the $20 million settlement proceeds in his individual capacity and that none of the proceeds would be going to AMPS. Counsel for some of the defendants stated that it was necessary to hold a fairness hearing to determine whether it was fair to AMPS for Sverdlin to take the settlement proceeds and not give any of the proceeds to AMPS. After hearing arguments from counsel, the trial court stated as follows:
Okay. And there was a dispute as to whether or not the options had been properly exercised and used and whether or not he was the sole shareholder or whether or not those options were effective and somebody else was entitled to them. Okay?
We had a 6-week long trial, heard all the evidence, the jury came back and found in favor of the plaintiff. Okay.
Now, is it fair for Mr. Sverdlin to receive the settlement funds that have been offered in the settlement agreement *670 by Gardere Wynne individually or should AMPS and the very individuals that the jury has found whose conduct was egregious in violation of their fiduciary duties, should they benefit from some of those settlement funds? That's the question, isn't it?
The trial court then stated that it would approve the settlement agreement and the allocation set forth in the agreement and that a fairness hearing would be held in the future. On January 13, 1999, the trial court entered a judgment as to Gardere Wynne. In the judgment, the trial court (1) denied the trial amendment relating to AMPS's malpractice claims against Gardere Wynne, (2) approved the Gardere Wynne settlement agreement, (3) set aside the jury's answers relating to the conduct of Gardere Wynne, and (4) adjudged that Sverdlin take nothing by his claims against Gardere Wynne.
On January 25, 1999, the trial court conducted the fairness hearing. After hearing comments from Cunningham, the trial court stated that Sverdlin's individual malpractice claims would have been the only claims to survive the verdict against Gardere Wynne. Counsel for the defendants in the underlying litigation did not make any objections to the settlement. The trial court found that the settlement agreement between Sverdlin and Gardere Wynne met "all the requirements of substantial fairness to the corporation." We note that AMPS's receiver did not object to the settlement and that AMPS's board of directors ratified the settlement.[7]
Swank and McCoy assert that the Cunningham Group should not have withdrawn the trial amendment and that the other appellees should have objected to the Gardere Wynne settlement. Attempting to determine what would have happened-had the Cunningham Group not withdrawn the trial amendment or had the other appellees objected to the settlement-involves uncertainty and pure speculation. For example, a failure to withdraw the trial amendment and any objection to the settlement must be considered in light of the following facts: (1) based on the jury's findings, the trial court declared that Sverdlin owned 100% of the stock in AMPS; (2) grounds did not exist to support an allocation of the settlement proceeds to AMPS because there was no evidence to support the jury's malpractice finding in AMPS's favor against Gardere Wynne; (3) the trial court's statement at the fairness hearing that only Sverdlin's individual malpractice claims against Gardere Wynne would have survived the verdict; and (4) the trial court's framing of the issue at the January 13, 1999 hearing-"[S]hould AMPS and the very individuals that the jury has found whose conduct was egregious in violation of their fiduciary duties, should they benefit from some of those settlement funds?" Given these facts, it is highly speculative to assume *671 that the trial court would have sustained any objection to the settlement or awarded any of the settlement proceeds to AMPS.
Swank and McCoy did not present any summary judgment evidence establishing that a reasonable or valid objection could have been made to the Gardere Wynne settlement or that the trial court would have been required to grant such an objection. Swank's and McCoy's expert, Marable, stated that, had appellees adhered to applicable standards of care, "the disbursement of the $20,000,000.00 settlement funds ... would have been stopped." Marable's affidavits failed to raise a fact issue on causation and damages for at least two reasons. First, the statement that the disbursement of the settlement funds would have been stopped is mere speculation and conclusory. Marable did not provide any facts in his affidavit in support of his claim that the trial court would have stopped the disbursement of the settlement proceeds. Conclusory statements by an expert are insufficient to support or defeat summary judgment. Wadewitz v. Montgomery, 951 S.W.2d 464, 466 (Tex.1997). Second, Marable did not state any facts supporting a conclusion (1) that grounds existed for objecting to the settlement or (2) that grounds existed for awarding a portion of the settlement proceeds to AMPS. Swank and McCoy offered no summary judgment evidence showing that the complained-of conduct of appellees caused any damage to AMPS.
Swank's and McCoy's claims that they were damaged by AMPS's failure to recover part of the proceeds from the Gardere Wynne settlement is based on "speculation upon speculation." To support their damages claims, Swank and McCoy would be required to speculate on the following issues, among others: (1) Would the trial court have considered any objection to the Gardere Wynne settlement in light of the facts (a) that no evidence supported the jury's malpractice finding in favor of AMPS against Gardere Wynne, (b) that, based on the jury's findings, the trial court had determined that Sverdlin owned 100% of the stock in AMPS, and (c) that, based on the jury's findings, the trial court considered Swank, McCoy, and the other defendants to be wrongdoers?; (2) Would the trial court have sustained an objection to the settlement agreement and refused to approve the settlement unless some of the proceeds were allocated to AMPS?; (3) Would Sverdlin have gone through with the settlement if the trial court had allocated a portion of the proceeds to AMPS?; (4) Assuming that the trial court allocated part of the proceeds to AMPS and that AMPS received the proceeds, would AMPS have distributed some part of the proceeds to its shareholders, as opposed to, for example, paying off its creditors or investing the proceeds in the further development of the FCIS system?; and (5) Could Swank and McCoy establish that they were in fact owners of 20% of the shares in AMPS?
Likewise, Swank's and McCoy's alternative claim that they were damaged by AMPS's failure to recover on its jury verdict against Gardere Wynne is based on "speculation upon speculation." Their alternative damages theory is based on a number of speculations, including the following: (1) that the Gardere Wynne settlement, which required a release of AMPS's claims, would have failed for some reason; (2) that the trial court would have upheld AMPS's $35 million verdict against Gardere Wynne even though (a) the trial court had denied AMPS's trial amendment, (b) there was no evidence to support the jury's malpractice finding in favor of AMPS against Gardere Wynne, and (c) the trial court stated that only Sverdlin's individual malpractice claims against AMPS would have survived the verdict; (3) that, if the trial court had entered judgment in the amount of $35 million in favor of AMPS *672 against Gardere Wynne, the court of appeals would not have reversed the judgment even though the court of appeals reversed the trial court's judgment in all respects as to the non-settling defendants, concluding that Sverdlin's damages models were not supported by the evidence; (4) that, if the court of appeals upheld the judgment, AMPS would have recovered some amount of money from Gardere Wynne; (5) that, assuming that AMPS recovered some amount, AMPS would have distributed some part of the proceeds to its shareholders as opposed to (for example) paying off its creditors or investing the proceeds in the further development of the FCIS system; and (6) that Swank and McCoy could establish that they each owned 20% of the shares of stock in AMPS.
Swank's and McCoy's claims that they were damaged as a result of AMPS's failure to share in the proceeds of the Gardere Wynne settlement or AMPS's failure to recover on its jury verdict against Gardere Wynne are based on the above series of speculations. The alleged damages may not be recovered because they are "too remote, too uncertain, or purely conjectural." See Arthur Andersen, 945 S.W.2d at 816.[8]
Because Swank's and McCoy's causation and damages theories were fatally speculative, the trial court did not err in granting (1) traditional summary judgments to the Cunningham Group on Swank's and McCoy's breach of fiduciary duty claims and to Calvin Verner, Battle Fowler, Beck Redden, and Smyser Kaplan on Swank's and McCoy's breach of fiduciary duty and negligence claims. For the same reasons, the trial court did not err in granting summary judgment to the Cunningham Group on Swank's and McCoy's conversion claims; to Calvin Verner, Battle Fowler, Beck Redden, and Smyser Kaplan on Swank's and McCoy's conspiracy claims; and to Lloyd Cunningham on Swank's and McCoy's fraud claims.[9] Additionally, because Swank and McCoy failed to produce more than a scintilla of probative evidence to raise a genuine issue of material fact on their damage claims, the trial court did not err in granting no-evidence summary judgments to Calvin Verner and Battle Fowler on Swank's and McCoy's breach of fiduciary duty, negligence, and conspiracy claims.
Claims for Disgorgement of Fees
A client need not prove actual damages to obtain forfeiture of an attorney's *673 fee for the attorney's breach of fiduciary duty to the client. Burrow v. Arce, 997 S.W.2d 229, 240 (Tex.1999). In Burrow, the Texas Supreme Court cited the proposed RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 49 (Proposed Final Draft No. 1, 1996), which provided that "[a] lawyer engaging in clear and serious violation of a duty to a client may be required to forfeit some or all of the lawyer's compensation for the matter."[10]Id. at 241. The fee forfeiture remedy is based on two ideas. First, a client does not receive the benefit of the bargain if the attorney breaches fiduciary duties owed to the client. Second, fee forfeiture is a deterrent to an attorney breaching fiduciary duties to a client. Id. at 237-38. In some fee forfeiture cases, denying an attorney all compensation would be an excessive sanction because it would give a windfall to the client. Id. at 241-42.
Swank and McCoy seek forfeiture of all fees received by Calvin Verner, Battle Fowler, Beck Redden, and Smyser Kaplan in their representation of Swank and McCoy. Swank and McCoy also seek forfeiture of all fees received by the Cunningham Group in its representation of AMPS. The record demonstrates that Swank and McCoy did not pay any legal fees to Calvin Verner, Battle Fowler, Beck Redden, and Smyser Kaplan. Instead, LDNGH (a codefendant in the underlying litigation) paid Calvin Verner's and Battle Fowler's fees relating to their representation of Swank and McCoy. LDNGH initially paid Beck Redden's and Smyser Kaplan's fees relating to their representation of Swank and McCoy. Later, Smyser Kaplan's fees relating to its representation of McCoy were the subject of a contingency fee agreement. Swank and McCoy did not pay any legal fees to the Cunningham Group in connection with its representation of AMPS.
Because Swank and McCoy did not pay any legal fees to the appellee lawyers, allowing Swank and McCoy to recover them as a fee forfeiture would result in a windfall to them. Equity does not support such a "windfall" result; therefore, fee forfeiture is not an appropriate remedy in this cause. Cf. Tener v. Bracewell, No. 14-00-00442-CV, 2002 WL 15937, *2 (Tex. App.-Houston [14th Dist.] Jan. 3, 2002, no pet.) (not designated for publication) (allowing a client, rather than the insurer that actually paid the legal fees, to recover the fees from the attorney "would not be compensation but a windfall").[11] The trial *674 court did not err in granting summary judgment to appellees on Swank's and McCoy's fee forfeiture claims.
Conclusion
For the reasons set forth above, the trial court properly granted summary judgment to appellees on the following grounds: (1) that Swank and McCoy lack standing to assert their claims; (2) that Swank's and McCoy's causation and damages theories are fatally speculative; and (3) that Swank and McCoy are not entitled to fee disgorgement. Because summary judgment was proper on these grounds, we need not address the merits of the other summary judgment grounds advanced by appellees. We overrule Swank's and McCoy's appellate issues.
This Court's Ruling
We affirm the judgment of the trial court.
NOTES
[1] In its opinion, the Houston First Court of Appeals stated that "Swank and McCoy exercised their stock options in AMPS." Swank, 121 S.W.3d at 790. However, there is no evidence in the record that Sverdlin performed his side of the option contract by delivering stock to them or that there was a judicial declaration that Sverdlin was obligated to perform under the option contracts.
[2] In Swank's and McCoy's second amended petition, which was the live pleading when Smyser Kaplan and Beck Redden filed their motions for summary judgment, they alleged the same twenty-three acts and omissions as grounds for negligence and breaches of fiduciary duty against Beck Redden and Smyser Kaplan. They also alleged the same twenty-three acts and omissions as grounds for negligence against Calvin Verner and Battle Fowler. All twenty-three of the alleged acts and omissions related in some manner to the Gardere Wynne settlement. In essence, Swank and McCoy alleged legal malpractice claims that were based on negligence. Any attempt to recast the negligence allegations as breach of fiduciary duty allegations would constitute an improper fracturing of the legal malpractice claim. See Deutsch v. Hoover, Bax & Slovacek, L.L.P., 97 S.W.3d 179, 189 (Tex.App.-Houston [14th Dist.] 2002, no pet.); Cuyler v. Minns, 60 S.W.3d 209 216 (Tex.App.-Houston [14th Dist.] 2001, pet. denied); Sledge v. Alsup, 759 S.W.2d 1, 2-3 (Tex.App.-El Paso 1988, no writ). However, the outcome of this appeal remains the same whether Swank's and McCoy's claims are characterized as negligence claims, breach of fiduciary duty claims, or both.
[3] When a party challenges jurisdiction by way of a plea to the jurisdiction and the determination of the jurisdictional issue involves an alleged factual dispute, "the trial court reviews the relevant evidence to determine if a fact issue exists," and the "summary judgment standard of proof" is used. Kilpatrick, 205 S.W.3d at 700 (quoting Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227-28 (Tex.2004)).
[4] Appellees Smyser Kaplan, Beck Redden, Calvin Verner, and Battle Fowler did not move for summary judgment on the ground that Swank and McCoy lacked standing because they were not shareholders in AMPS. However, all appellees moved for summary judgment on the ground that Swank and McCoy lacked standing to assert claims belonging to AMPS in their individual capacities.
[5] Swank and McCoy alleged in their pleadings in the trial court that they had standing to maintain AMPS's claims under the prior law found in Article 5.14 of the Texas Business Corporation Act. Section 21.563 of the Business Organizations Code made no substantive changes to Article 5.14(L) of the Texas Business Corporation Act. With the exception of filing fee requirements, the provisions of the Business Organizations Code do not apply until January 1, 2010, to entities formed before January 1, 2006, such as AMPS, unless the entities elect early adoption. See TEX. BUS. ORGS.CODE ANN. §§ 402.001-.005 (Vernon Pamph.2007). Whether or not AMPS elected early adoption of the Business Organizations Code, the analysis is the same because Section 21.563 made no substantive changes to Article 5.14(L). Therefore, we elect to address this issue under the current version of the statute.
[6] Section 21.563(c) is similar to PRINCIPLES OF CORPORATE GOVERNANCE: ANALYSIS AND RECOMMENDATION § 7.01(d) (2005). Section 7.01(d) provides:
In the case of a closely held corporation [§ 1.06], the court in its discretion may treat an action raising derivative claims as a direct action, exempt it from those restrictions and defenses applicable only to derivative actions, and order an individual recovery, if it finds that to do so will not (i) unfairly expose the corporation or the defendants to a multiplicity of actions, (ii) materially prejudice the interests of creditors of the corporation, or (iii) interfere with a fair distribution of the recovery among all interested persons.
[7] Appellees moved for summary judgment on the ground that AMPS's board ratified the settlement agreement. Ratification is an affirmative defense. Land Title Co. of Dallas, Inc. v. F.M. Stigler, Inc., 609 S.W.2d 754, 756 (Tex. 1980). As such, appellees had the summary judgment burden of establishing ratification as a matter of law. Am. Tobacco Co., 951 S.W.2d at 425. A challenged transaction found to be unfair to the corporate enterprise may nonetheless be upheld if ratified by a majority of disinterested directors or the majority of the stockholders. Gearhart Indus., Inc. v. Smith Int'l, Inc., 741 F.2d 707, 720 (5th Cir.1984) (applying Texas law). While appellees did present summary judgment evidence establishing that AMPS's board ratified the settlement, they did not present any summary judgment evidence establishing that the directors who ratified the settlement were "disinterested." Therefore, appellees failed to meet their summary judgment burden of establishing ratification as a matter of law.
[8] We note that the trial court granted special exceptions requiring Swank and McCoy to plead facts and legal theories supporting their claims for damages. Swank's and McCoy's counsel approved as to form and substance the trial court's agreed order on special exceptions. While Swank and McCoy amended their petition after the trial court granted the special exceptions, they did not change their damage theories.
[9] Swank and McCoy alleged that appellees breached their duties in connection with "the application of the credit [that the Gardere Wynne] settlement proceeds allowed." Swank and McCoy did not allege how they were damaged by the manner in which the settlement credit was allocated among the defendants in the underlying litigation. In fact, Swank and McCoy were not damaged by the allocation of the settlement credit. As a result of the court of appeals's judgment in the underlying litigation, neither Swank nor McCoy owed any damages to Sverdlin or AMPS. Thus, the issue of whether Swank and McCoy were entitled to receive credit for the Gardere Wynne settlement was immaterial. Swank and McCoy also alleged that the Cunningham Group breached its fiduciary duty to AMPS by allowing the proceeds from the Gardere Wynne settlement to be used as a settlement credit to offset the amount awarded to AMPS on its breach of fiduciary duty claims. AMPS was not damaged by the offset because the court of appeals rendered judgment that AMPS take nothing by its claims.
[10] For current Restatement provision, see RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS § 37 (2000).
[11] Some of the appellees cite Liberty Mut. Ins. Co. v. Gardere & Wynne, L.L.P., 82 Fed.Appx. 116, 117-21 (5th Cir.2003) (not designated for publication); Bell v. Phillips, No. 14-00-01189-CV, 2002 WL 576036 (Tex.App.-Houston [14th Dist.] Apr. 18, 2002, no pet.) (not designated for publication); and Universal Fleet Leasing, Inc. v. Pope, No. 01-99-01235-CV, 2000 WL 1708515 (Tex.App.-Houston [1st Dist.] Nov. 16, 2000, pet. denied) (not designated for publication), in support of the argument that Swank and McCoy are not entitled to fee forfeiture. Those cases did not involve the precise issue that is before us in this cause. In Liberty Mutual, a client did not seek to recover fees that it had paid to its law firm. Rather, the client sought to recover fees that its former law firm had earned in representing an opponent in a suit, and the fees had been paid by the opponent. The Liberty Mutual court held that the trial court had not erred in refusing to allow the client to recover fees paid by other clients. Liberty Mutual, 82 Fed.Appx. at 121. In Phillips, an attorney was retained on a contingency fee agreement, and the attorney was never paid any fees during his representation of the client. The court held that, because the attorney had not been paid any fees, the client did not have a claim for fee forfeiture. Phillips, 2002 WL 576036 at *8 n. 3. In Pope, the client claimed that he had paid "over $25,000.00 in attorneys fees" to his attorneys. However, the client failed to present any evidence that he had paid any fees in connection with the matter at issue. Therefore, the court held that the client had produced no evidence showing that he was entitled "to a disgorgement of fees paid in connection with this matter." Pope, 2000 WL 1708515 at *3. This cause is distinguishable from Liberty Mutual, Phillips, and Pope because, in this cause, four of the appellee law firms received fees, albeit from another party, in connection with their representation of Swank and McCoy.
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86 F.3d 1159
NOTICE: Eighth Circuit Rule 28A(k) governs citation of unpublished opinions and provides that they are not precedent and generally should not be cited unless relevant to establishing the doctrines of res judicata, collateral estoppel, the law of the case, or if the opinion has persuasive value on a material issue and no published opinion would serve as well.Michael Allan BODFIELD, Appellant,v.Frank X. HOPKINS, Appellee.
No. 95-4174.
United States Court of Appeals, Eighth Circuit.
Submitted: May 15, 1996.Filed: May 23, 1996.
Before BOWMAN, HEANEY, and MORRIS SHEPPARD ARNOLD, Circuit Judges.
PER CURIAM.
1
Michael Allan Bodfield appeals from the order of the District Court1 denying Bodfield's 28 U.S.C. § 2254 petition for a writ of habeas corpus. For reversal, Bodfield, who after a jury trial in state court was found guilty of burglary and of being an habitual criminal, argues that the District Court erred (1) in not finding the evidence against him constitutionally insufficient to support his burglary conviction, and (2) in not finding that a certain communication with the jury constituted prejudicial error and improperly influenced the jury's verdict.
2
Having considered the briefs of the parties and the record on appeal, we conclude that the decision of the District Court is correct and that an extended opinion by this Court would add nothing of substantial value to the opinions already written by the Magistrate Judge and the District Court. Accordingly, the judgment of the District Court is, without further discussion, affirmed. See 8th Cir. R. 47B.
1
The Honorable Warren K. Urbom, United States District Judge for the District of Nebraska, who adopted the report and recommendation of the Honorable David L. Piester, United States Magistrate Judge for the District of Nebraska
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866 F.2d 1
Robert A. ARONSON, Plaintiff, Appellee,v.UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT,et al., Defendants, Appellants.
No. 88-1524.
United States Court of Appeals,First Circuit.
Heard Nov. 1, 1988.Decided Jan. 19, 1989.
Michael E. Robinson, Appellate Staff, Civ. Div., Dept. of Justice, Washington, D.C., with whom John R. Bolton, Asst. Atty. Gen., Frank L. McNamara, Jr., U.S. Atty., and Leonard Schaitman, Appellate Staff, Civ. Div., Dept. of Justice, Washington, D.C., were on brief, for defendants, appellants.
James H. Lesar, Washington, D.C., for plaintiff, appellee.
Before BOWNES, BREYER and SELYA, Circuit Judges.
BOWNES, Circuit Judge.
1
This is an appeal by the United States Department of Housing and Urban Development (HUD) from an award of attorneys fees to Robert A. Aronson under the Freedom of Information Act (FOIA), 5 U.S.C. Sec. 552(a)(4)(E). Aronson and another attorney prosecuted the action in the district court. A third attorney handled the appeal. The district court awarded fees to Aronson, as well as the other two attorneys. There are two issues on appeal: whether attorney fees should have been awarded at all; and, if so, whether Aronson, as a pro se lawyer, is entitled to fees for the time he spent on the case.
I.
2
The facts and issues undergirding this appeal are found in Aronson v. U.S. Dep't of Housing and Urban Dev., 822 F.2d 182 (1st Cir.1987). We recapitulate what is necessary for the questions now before us. Aronson brought an FOIA action against HUD seeking information about individual mortgagors whose mortgages were insured under the National Housing Act and who were entitled to receive reimbursements, known as "distributive shares," from HUD when the mortgage insurance expired. HUD refused to release the information claiming that to do so would result in a "clearly unwarranted invasion of privacy" and that therefore the information was exempt from disclosure under FOIA's "Exemption 6," 5 U.S.C. Sec. 552(b)(6).
3
For present purposes it suffices to say that the "distributive shares" came from insurance premiums paid by lenders who issued and insured the mortgages under the National Housing Act. HUD was obligated by law, 12 U.S.C. Sec. 1711(c), to pay over the "distributive" shares to those to whom it was due. HUD's performance of this obligation was less than satisfactory. In 1981, the Comptroller General reported that as of March 31, 1980, there were 198,000 unpaid "distributive shares" totaling $52 million. The Comptroller General found that HUD did not follow effective procedures for informing mortgagors about applying for their distributive shares, for obtaining mortgagors' addresses or for locating mortgagors whose addresses were unknown.
4
HUD's poor performance record opened up a field for private tracing operations. A private tracer, through a FOIA request, would ask HUD for the names and last known addresses of mortgagors entitled to distributive shares. When the tracer located an eligible recipient, he/she offered to help obtain the amount due in return for a percentage of it. Starting in 1980 HUD gave the information requested to private tracers. It also instituted new and more effective procedures for locating individuals to whom distributive shares were owed, including a one-year search period after the shares had vested. The search period was later expanded to two years.
5
In 1985, HUD's FOIA policy changed. It refused to give information to tracers until the two-year search period had expired. It also applied a two-year period of withholding information as to unclaimed shares that had vested prior to December 31, 1979 and that had become reactivated as a result of a ruling by the Comptroller General that the statute of limitations did not apply to distributive shares. This was the situation when Aronson entered the picture.
6
Aronson was one of the private tracers who had obtained information from HUD in the past. His usual fee was 35 percent of the amount refunded. In January 1986 Aronson made a FOIA request for the entire file of unpaid distributive shares that had vested as of December 31, 1985. Following its new policy, HUD released only the information for shares vesting between December 31, 1979 and December 31, 1983. Aronson brought suit in the district court. The court held that HUD was justified in refusing to disclose information for shares vesting after December 31, 1983 but ordered disclosure of shares vesting before December 31, 1979. Aronson appealed from the decision of nondisclosure as to shares vesting after December 31, 1983. HUD did not appeal.
7
We ruled that HUD's disclosure obligation began after its initial one-year search period expired. We felt that withholding information until the end of the second search year was not justified. We, therefore, held that Aronson was entitled to the information requested for those shares vesting between December 31, 1984 and December 31, 1985. 822 F.2d at 188.
8
Following our opinion, Aronson requested attorney fees, and after a hearing, the district court awarded the requested amount. This appeal ensued.
II.
9
We start our review fully cognizant that "[a]n award of attorney fees under the FOIA is a matter for the sound discretion of the trial court." Education/Instruccion, Inc. v. U.S. Dep't of Housing and Urban Dev., 649 F.2d 4, 7 (1st Cir.1981). This discretion, however, is circumscribed by two generally accepted principles. The first is that a plaintiff is not automatically entitled to an award of attorney fees just because he/she succeeds in obtaining the requested information. Crooker v. U.S. Parole Comm'n, 776 F.2d 366, 367 (1st Cir.1985); Education/Instruccion, 649 F.2d at 7; Crooker v. U.S. Dep't of Justice, 632 F.2d 916, 922 (1st Cir.1980); Blue v. Bureau of Prisons, 570 F.2d 529,533 (5th Cir.1978).
10
The second restraint on the district court's discretion is that it must take into consideration four factors in determining whether attorney fees should be awarded under FOIA. These four factors are: "(1) the benefit to the public, if any, derived from the case; (2) the commercial benefit to the complainant; (3) the nature of the complainant's interest in the records sought; and (4) whether the government's withholding of the records had a reasonable basis in law." Crooker v. U.S. Parole Comm'n, 776 F.2d at 367. See also Cazalas v. U.S. Dep't of Justice, 709 F.2d 1051, 1053 (5th Cir.1983); Aviation Data Serv. v. F.A.A., 687 F.2d 1319, 1321 (10th Cir.1982); Education/Instruccion, 649 F.2d at 7; Crooker v. U.S. Dep't of Justice, 632 F.2d at 922.
11
With this backdrop in place we turn to the district court opinion. The court first found that plaintiff was eligible for attorney fees because he had substantially prevailed in the litigation. Appellant does not question this preliminary conclusion. We find it correct. The court then considered the four factors in determining whether Aronson was entitled to attorney fees. It found that plaintiff's action conferred a significant benefit on the public. In doing so, the court explicitly relied on the following statement from our opinion in the first appeal.
12
It cannot be gainsaid that there is a strong public interest in disclosure when that disclosure would lead to the distribution of refunds that would otherwise have little chance of reaching their rightful owners. HUD recognized this public interest in its pre-1984 policy of releasing information on all eligible mortgagors. It continues to recognize this interest today in its policy of releasing information after the two-year search period. The public interest is manifestly served by the disclosure and consequent disbursement of funds the government owes its citizens. The problem of nondisbursement in this context is dramatized by the alarming figure of $52 million the government had failed to distribute as of March, 1980. The public interest in the release of the information, and in the attendant correction of the problem of nondisbursement, is consistent with FOIA's goals of the exposure of agency action to public inspection and oversight. See Department of Air Force v. Rose, 425 U.S. 352, 360-61, 96 S.Ct. 1592, 1598-99, 48 L.Ed.2d 11 (1976).
13
Aronson, 822 F.2d at 185. Despite the appearance of being self-laudatory, we agree with the district court.
14
The court discussed the second and third factors together: the commercial benefit to the complainant and the nature of the complainant's interest in the records sought. The court found that the potential for commercial personal gain did not negate the public interest served by Aronson's lawsuit. It pointed out that plaintiff was but one of many tracers engaged in ferreting out people to whom HUD owed distributive share funds. The court's findings on factors two and three did not constitute an abuse of discretion. We point out that the failure of HUD to comply reasonably with its reimbursement duty would probably only be disclosed by someone with a specific interest in ferreting out unpaid recipients. This is a case where financial interest serves the public good.
15
Finally, the district court found that the government's withholding of the records did not have a reasonable basis in law. This part of the district court opinion bears quoting.
16
In my opinion, it appears that defendants refused to disclose these records to avoid the embarrassment of public scrutiny that would result from disclosure of the amount of funds HUD failed to distribute. More importantly, though, it is disingenuous for defendants to argue that their withholding of records was colorable when the Court of Appeals held that, while Exemption 6 generally applies to these records, the exemption did not apply to the vast majority of plaintiff's request. The court specifically held that HUD's "expanded search procedures" after the first year were murky and lacking in both definition and merit, and that defendants were justified in withholding records only for the first year after the vesting of shares. Defendants' position was also contrary to the policy established by its prior general counsel. Defendants' withholding of records was ill-conceived and served little purpose other than to frustrate the efforts of Aronson to expose the inefficiencies of HUD's Mortgage Insurance and Accounting office.
17
Although appellant may disagree with this holding, it clearly does not constitute an abuse of discretion. We uphold the district court's finding that due consideration of the four fee factors justifies an award of attorney fees under the pertinent provision of FOIA, 5 U.S.C. Sec. 552(a)(4)(E).
III.
18
Since appellant does not contest the computation of the fees, the remaining issue is whether Aronson may recover fees for his own time as distinct from that of counsel retained by him. The question whether a pro se litigant who is an attorney may recover for the time spent on an FOIA case is one of first impression in this circuit.
19
We begin our analysis by noting that with the exception of the D.C. Circuit1 all of the circuits that have considered the question have held that a non-lawyer pro se litigant is not entitled to attorney fees. Crooker v. U.S. Dep't of Justice, 632 F.2d 916 (1st Cir.1980); Kuzma v. I.R.S., 821 F.2d 930, 931 (2d Cir.1987); Cunningham v. F.B.I., 664 F.2d 383, 384-87 (3d Cir.1981); Barrett v. Bureau of Customs, 651 F.2d 1087 (5th Cir.1981), cert. denied, 455 U.S. 950, 102 S.Ct. 1454, 71 L.Ed.2d 665 (1982); Wolfel v. United States, 711 F.2d 66 (6th Cir.1983); DeBold v. Stimson, 735 F.2d 1037, 1041 (7th Cir.1984); Merrell v. Block, 809 F.2d 639, 642 (9th Cir.1987); Burke v. U.S. Dep't of Justice, 559 F.2d 1182 (10th Cir.1977); Clarkson v. I.R.S., 811 F.2d 1396, 1397 (11th Cir.), cert. denied, 481 U.S. 1031, 107 S.Ct. 1961, 95 L.Ed.2d 533 (1987).
20
As far as we can determine, only three circuits have considered the question of whether lawyers acting pro se in FOIA cases should be awarded attorney fees for their time. In Falcone v. I.R.S., 714 F.2d 646 (6th Cir.1983), cert. denied, 466 U.S. 908, 104 S.Ct. 1689, 80 L.Ed.2d 162 (1984), the court held "that the same reasons which led us, and the majority of the other circuits, to deny attorney's fees to pro se non-lawyer FOIA plaintiffs apply with equal validity to pro se attorney plaintiffs." Id. at 647. The court then enumerated the reasons. First, the award of fees was intended to relieve plaintiffs of the burden of legal costs; a fee award was not intended as a reward for successful claimants or a penalty against the government. This rationale applies to pro se attorneys because no legal costs are incurred. The second reason for denying fees to pro se litigants was to encourage them to seek legal advice before commencing litigation with the hope that legal advice might prevent unwarranted litigation. The court pointed out that an attorney who represents himself might have the requisite legal skills but would probably lack the "detached and objective perspective" necessary to meet the aims of the Act. Id. The final reason for denying pro se fees was to prevent claimants from using the Act to generate fees rather than pursue legitimate personal claims. The court did not feel that Congress intended to subsidize lawyers without clients. Id. at 647-48.
21
In Cazalas v. U.S. Dep't of Justice, 709 F.2d 1051, the Fifth Circuit came to the opposite conclusion. It reasoned that the fee provision served three purposes: (1) as an incentive for private individuals to pursue vigorously claims for information; (2) & (3) as a deterrent and as a punitive measure against the government. In the words of the court: "The fee provision is designed to deter the government from opposing justifiable requests for information under the FOIA and to punish the government where such opposition is unreasonable. These goals apply with equal force where an attorney litigant proceeds pro se." Id. at 1057.
22
In Cuneo v. Rumsfeld, 553 F.2d 1360, 1366 (D.C.Cir.1977), the court held: "In light of the legislative history of section 552(a)(4)(E), a complainant, who is otherwise eligible under that section for an award of attorney fees, should not be denied those fees simply because he happens to be an attorney."
23
Although there are, to our knowledge, no other circuit cases directly on point, we think it helpful to consider fee requests brought under other statutes by pro se lawyer litigants. Duncan v. Poythress, 777 F.2d 1508 (11th Cir.1985), cert. denied, 475 U.S. 1129, 106 S.Ct. 1659, 90 L.Ed.2d 201 (1986), involved a request for attorney fees under 42 U.S.C. Sec. 1988. Relying to some extent on Cazalas, supra, the court noted that a pro se attorney has to spend time and overhead to pursue the case and might not undertake the case without the hope of remuneration. Id. at 1512. In finding that the attorney was entitled to fees, the court pointed out that she had tried to avoid litigation. Id. at 1515.
24
Ellis v. Cassidy, 625 F.2d 227 (9th Cir.1980), also involved a request for fees under 42 U.S.C. Sec. 1988. In this case, however, the pro se lawyers were defendants, not plaintiffs. This weighed heavily in the court's decision awarding fees. It pointed out that the lawyers had to take time out from their practices to prepare and defend the suit against them. Id. at 231. The court also noted in a footnote that fees had been granted to both attorneys and laypersons in FOIA suits. Id. at 230 n. 2.
25
Finally, the Fourth Circuit denied a pro se lawyer fees under the Truth In Lending Act. It held:
26
It is axiomatic that effective legal representation is dependent not only on legal expertise, but also on detached and objective perspective. The lawyer who represents himself necessarily falls short of the latter. We do not think self-representation serves the goals of the Truth-in-Lending Act, and thus we hold that the provisions of Sec. 1640(a)(3) will not be interpreted to allow attorney fees and expenses to plaintiffs who are attorneys and represent themselves.
27
White v. Arlen Realty & Dev. Corp., 614 F.2d 387, 388 (4th Cir.), cert. denied, 447 U.S. 923, 100 S.Ct. 3016, 65 L.Ed.2d 1116 (1980).
28
With due respect to those circuits holding otherwise, we see no good reason for treating pro se lawyers any differently than pro se laypersons. To begin with, we disagree with the Fifth Circuit that the purpose of the fee provision of FOIA is to deter and punish the government for unnecessarily withholding information, see Cazalas, 709 F.2d at 1057. Our reading of the Act is that "Section 552(a)(4)(E) is neither a punishment nor a reward." Crooker v. U.S. Dep't of Justice, 632 F.2d at 921. Moreover, it is difficult to understand how those making the decision to refuse information are punished by the payment of attorney fees out of public funds. The fees do not come out of the pockets of those who obdurately refuse to disclose. As we stated in Crooker, the purpose of the fee section of the Act was to eliminate the obstacle of attorney fees so that all litigants would have access to the courts to pursue their rights under FOIA. Id. at 920.
29
Nor are we impressed by the argument that a pro se lawyer should be awarded fees because of the time he/she must spend on the case. The inference is that the time so spent means the sacrifice of fees he/she would otherwise receive. But a lay pro se must also devote time to the case. If such a litigant is a professional person, such as an author, engineer, architect, etc. the time expended may also result in loss of income. Lawyers are not the only persons whose stock in trade is time and advice.
30
In Crooker, we pointed out that pro se lay litigants are, at times, a hindrance rather than an aid to the judicial process. 632 F.2d at 920. While this may not be as great a problem with pro se lawyers, a lawyer's personal involvement in a case does have a tendency to color his/her judgment. As pointed out in White v. Arlen Realty and Dev. Corp., 614 F.2d at 388, the first casualty of a lawyer representing himself/herself is objectivity. The old adage that a lawyer who represents himself has a fool for a client is rooted firmly in many, many years of experience.
31
One of the reasons for denying fees to a lay pro se is because it does not further FOIA's purposes to allow a litigant to recover for a non-performed service. See Crooker, 632 F.2d at 920. And, as we stated in Crooker, "an award of attorney fees where no services are received is more of a windfall than an incentive to pursue any disclosure rights." 632 F.2d at 921. We think the same reasoning applies to pro se lawyers. We agree with the Sixth Circuit that Congress did not intend "to so subsidize attorneys without clients." Falcone v. I.R.S., 714 F.2d at 648.
32
Finally, we do not think it seemly to treat pro se lawyers differently than pro se lay litigants. Lawyers are an indispensable ingredient in our justice system. The purpose of the FOIA fee section is to encourage persons to use lawyers. We further that purpose by denying fees to all pro se litigants. If we make an exception for pro se lawyers, we not only defy the purposes of fee awards under FOIA, but also appear to be especially solicitous for the economic welfare of lawyers. This is not the type of image that enhances public respect for the bar or judiciary.
33
For the reasons stated, we hold that Aronson was not entitled to fees for the time he spent on the case.
34
AFFIRMED IN PART, REVERSED IN PART.
35
Remanded for recomputation of fees.
36
No fees or costs to be awarded under FOIA or otherwise in consequence of these appellate proceedings.
1
Cox v. U.S. Dep't of Justice, 601 F.2d 1 (D.C.Cir.1979)
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COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
§
BARRY JOE MATHIS, No. 08-08-00011-CR
§
Appellant, Appeal from
§
v. 203rd District Court
§
THE STATE OF TEXAS, of Dallas County, Texas
§
Appellee. (TC # F-0751575-P)
§
OPINION
Barry Joe Mathis appeals his conviction of possession of phencyclidine with intent to deliver.
Appellant entered a plea of guilty before a jury1 and the trial court conducted a unitary proceeding
to determine both guilt and punishment. TEX .CODE CRIM .PROC.ANN . art. 26.14 (Vernon 2009); see
Frame v. State, 615 S.W.2d 766, 767 (Tex.Crim.App. 1981). The jury found Appellant guilty and
assessed his punishment at imprisonment for a term of ten years. We affirm.
FACTUAL SUMMARY
Prior to voir dire and after a lengthy discussion on the record between Appellant, defense
counsel, the prosecutor, and the court, Appellant entered pleas of guilty to four indictments in
exchange for the State’s agreement to abandon the enhancement paragraph in each case and to not
seek a deadly weapon finding. The trial court admonished Appellant about the range of punishment
in each case and informed him that he was not eligible for probation because of his prior felony
1
In a single proceeding, Appellant entered pleas of guilty in four cases, including the instant case.
conviction. Appellant understood the ranges of punishment and he also understood he was ineligible
for probation. Finding that Appellant had entered his guilty plea knowingly and voluntarily, the trial
court accepted the guilty pleas in each case. A jury was selected to assess punishment and both the
State and Appellant introduced evidence relevant to punishment.
Detective Patrick Boyett of the Dallas Police Department and other officers executed a search
warrant at a Dallas residence. Boyett referred to the house as a “trap” or neighborhood crack house
because no one lived in it and it was used for the purpose of selling and using drugs. When Boyett
entered the residence, he saw a co-defendant drop a plate he was carrying and run into a bedroom.
Appellant was sitting on a couch in the living room when the police entered. There was a gun on
the table in front of Appellant and another gun was found in the cushions of the couch. The police
found fifty-three tablets of ecstasy, 1.2 grams of crack cocaine, and 5.8 grams of PCP in the house.
Appellant denied selling drugs from the residence but he cut the grass and picked up lunch
for the people who ran the house. He also took care of the dogs at the residence. As payment for
performing these tasks, he would be given crack cocaine. Appellant knew that the house was a drug
house because both he and his brothers got their drugs there. Despite pleading guilty, Appellant
denied that the guns or drugs found near him were in his care or control, and he denied selling drugs
at the house.
The jury found Appellant guilty and assessed his punishment at imprisonment for ten years.
Appellant filed a timely notice of appeal.
ADMONISHMENTS
In his first point of error, Appellant contends that his conviction should be reversed because
the trial court failed to substantially comply with the admonishment requirements of Article 26.13
of the Code of Criminal Procedure because he was not admonished, orally or in writing, on
deportation issues. Article 26.13 requires court, before accepting a guilty plea, to admonish the
defendant that if he is not a United States citizen, a plea of guilty or nolo contendere may result in
deportation, the exclusion from admission to this country, or the denial of naturalization under
federal law. TEX .CODE CRIM .PROC.ANN . art. 26.13(a)(4). The trial court’s failure to admonish the
defendant of the deportation consequence of a guilty plea is reviewed for harm under Rule 44.2(b)
of the Texas Rules of Appellate Procedure because it is a statutory error rather than a constitutional
error. Fakeye v. State, 227 S.W.3d 714, 716 (Tex.Crim.App. 2007); Aguirre-Mata v. State, 992
S.W.2d 495, 498-99 (Tex.Crim.App. 1999); Carranza v. State, 980 S.W.2d 653, 656
(Tex.Crim.App. 1998). Under Rule 44.2(b), we disregard the error unless it affected Appellant's
substantial rights. Fakeye, 227 S.W.3d at 716.
When applying Rule 44.2(b) to the failure to give an admonition, an appellate court must
determine whether, considering the record as a whole, there is fair assurance that the defendant’s
decision to plead guilty would not have changed had the court admonished him. Fakeye, 227 S.W.3d
at 716; Anderson v. State, 182 S.W.3d 914, 919 (Tex.Crim.App. 2006). The failure to admonish
a defendant of possible deportation consequences of his guilty plea is harmless if he is a United
States citizen because the threat of deportation could not have influenced his decision to plead guilty.
VanNortrick v. State, 227 S.W.3d 706, 709 (Tex.Crim.App. 2007). We cannot assume that a
defendant either is or is not a citizen, but we are authorized to make reasonable inferences from facts
in the record. See Fakeye, 227 S.W.3d at 716-17; VanNortrick, 227 S.W.3d at 710-11.
Appellant testified he was born at Parkland Hospital. When asked by defense counsel
whether he was “raised here in this area,” Appellant replied that he was. At the time of trial,
Appellant lived in a house located in the Oak Cliff area of Dallas, Texas. Appellant explained that
is the same house where he grew up and it is located only one block from the “dope house” where
he was arrested. Other evidence established that the “dope house” is located in Dallas County,
Texas. Finally, a pen packet admitted into evidence reflects that Appellant’s birth place was Dallas
County and identifies his nationality as American. The evidence affirmatively shows that Appellant
is a native-born citizen of the United States. See U.S. Const. amend. XIV, § 1 (declaring persons
born in the United States as citizens); Foster v. State, 817 S.W.2d 390, 392 (Tex.App.--Beaumont
1991, no pet.)(holding that failure to admonish on deportation consequences was harmless because
penitentiary packets of the defendant’s prior convictions listed his place of birth as Harris County,
Texas, and his nationality as “American”). Therefore, the court’s failure to admonish Appellant is
harmless. See VanNortrick, 227 S.W.3d at 709. Point of Error One is overruled.
PLEA NEGOTIATIONS
In Point of Error Two, Appellant asserts that he was denied due process under the Fourteenth
Amendment and due course of law under Article I, Section 19 of the Texas Constitution because the
trial judge abandoned his role as a neutral and detached hearing officer when he became involved
in plea negotiations. Appellant’s brief does not contain any argument or authority related to the
protection provided by the Texas Constitution or explaining how that protection differs from the
protection provided by the United States Constitution. State and federal constitutional claims should
be argued in separate grounds, with separate substantive analysis or argument provided for each
ground. Muniz v. State, 851 S.W.2d 238, 251-52 (Tex.Crim.App. 1993); Heitman v. State, 815
S.W.2d 681, 690-691 n.23 (Tex.Crim.App. 1991). Because Appellant has inadequately briefed the
issue related to Article I, § 19, nothing is presented for our review. See Muniz, 851 S.W.2d at 251-
52; TEX .R.APP .P. 38.1(h).
Due process requires a neutral and detached hearing body or officer. Gagnon v. Scarpelli,
411 U.S. 778, 786, 93 S.Ct. 1756, 1762, 36 L.Ed.2d 656 (1973); Brumit v. State, 206 S.W.3d 639,
645 (Tex.Crim.App. 2006). A reviewing court presumes the trial court was neutral and detached
absent a clear showing to the contrary. Brumit, 206 S.W.3d at 645. Although Texas trial judges are
not expressly prohibited by statute or any rule of law from participating in a plea bargaining session,
the Court of Criminal Appeals has cautioned trial judges to not participate in any plea bargain
agreement discussions until an agreement has been reached between the prosecutor and the
defendant. Perkins v. Third Court of Appeals, 738 S.W.2d 276, 282 (Tex.Crim.App. 1987); Ex parte
Shuflin, 528 S.W.2d 610, 615-17 (Tex.Crim.App. 1975). This suggestion arises because the trial
judge should always avoid the appearance of any judicial coercion or prejudgment of the defendant
since such influence might affect the voluntariness of the defendant’s plea. Perkins, 738 S.W.2d at
282. In the absence of a clear showing to the contrary, we will presume that the trial judge was
neutral and detached. Jaenicke v. State, 109 S.W.3d 793, 796 (Tex.App.--Houston [1st Dist.] 2003,
pet. ref’d). If a trial judge improperly participates in plea negotiations, the error is not reversible
unless the record indicates that the defendant’s plea was involuntary and the result of judicial
coercion. Ex parte Shuflin, 528 S.W.2d at 615.
The indictments in the three drug cases included an enhancement paragraph and the State
filed notice of its intent to seek a deadly weapon finding in two of the three drug cases. As a result,
the minimum sentence in cause numbers F-0669633-P and F-0751575-P would have been fifteen
years. TEX .HEALTH & SAFETY CODE ANN . § 481.112(d)(Vernon Supp. 2009); TEX .PENAL CODE
ANN . § 12.42(c)(1)(Vernon Supp. 2009). An affirmative deadly weapon finding would have
required Appellant to serve at least one-half of his sentence before becoming parole eligible and
would have made him ineligible for mandatory supervision. TEX .CODE CRIM .PROC.ANN . art. 42.12,
§ 3g(a)(2)(Vernon 2006); TEX .GOV ’T CODE ANN . § 508.145(d)(Vernon Supp. 2009); TEX .GOV ’T
CODE ANN . § 508.149(a)(1). The State agreed to drop the enhancement paragraphs and not seek a
deadly weapon finding in exchange for guilty pleas before a jury. This would reduce the minimum
sentence in cause numbers F-0669633-P and F-0751575-P from fifteen years to five years. It would
also change the range of punishment in cause number F-0669632-P from a first degree felony to a
second degree felony. TEX .PENAL CODE ANN . § 12.32 (Vernon 2003); TEX .PENAL CODE ANN . §
12.33. The State’s agreement to not seek a deadly weapon finding would result in Appellant
becoming parole eligible upon the completion of one-fourth of his sentence and he would also be
eligible for mandatory supervision. TEX .GOV ’T CODE ANN . § 508.145(f); TEX .GOV ’T CODE ANN .
§ 508.147 (Vernon 2004).
On the day scheduled for trial and outside of the jury panel’s presence, Appellant’s counsel
discussed with Appellant, on the record, the State’s plea offer and the consequences of accepting or
refusing it. Appellant did not want to plead guilty because the drugs and gun did not belong to him.
Counsel attempted to explain to Appellant that he could be convicted under the law of parties even
if the drugs and gun did not belong to him, but Appellant seemingly did not understand the concept
and reiterated his desire to plead not guilty because he had been indicted for possessing guns and
drugs which were not his. The court granted defense counsel’s request for a recess to speak with
Appellant. After the recess, Appellant persisted in his desire to plead not guilty even though he
would be subject to a minimum sentence of 15 years if found guilty. At that point, defense counsel
stated he was ready for trial. After some discussion between the court and the parties about whether
to begin voir dire that afternoon or wait until the following morning, defense counsel returned to the
subject of the offer made by the State so the record would clearly reflect he had explained to
Appellant the consequences of being found guilty if he rejected the State’s offer and entered a not
guilty plea. Defense counsel expressed his opinion that a jury would probably find Appellant guilty
under the law of parties and it could result in him being incarcerated for the rest of his life.2
Appellant stated he could not plead guilty because the guns and drugs were not his. The trial judge
then told Appellant that based on what he knew about the case from the discussions, he tended to
agree with defense counsel that the jury could convict Appellant under the law of parties. As defense
counsel had done, the court attempted to explain the law of parties to Appellant and the potential
consequences of pleading guilty or pleading not guilty. The prosecutor also interjected her thoughts
about the plea offer. Appellant had originally agreed to testify for the State against a co-defendant
but changed his mind. During discussions with the prosecutor, Appellant related numerous facts
indicating his knowledge of the dope house. The prosecutor told Appellant he could be impeached
with these statements if he testified to the contrary and he could be convicted as a party because the
evidence would show he helped the people who were running the drop house. The prosecutor told
Appellant he had only two choices: plead guilty and ask the jury to give him the minimum sentence
of five years or plead not guilty and a minimum of fifteen years if found guilty. Appellant asked if
he could come back the following day, but the prosecutor said he needed to make a decision that day.
After a brief recess, Appellant decided to enter a plea of guilty before the jury under the terms of the
agreement. When asked by the court whether he had made up his own mind to enter the guilty plea
and Appellant answered affirmatively.
The record does not support Appellant’s claim. When it became apparent Appellant did not
understand the law of parties and how he could be found guilty even if the drugs and gun were not
his, the trial judge attempted to explain the legal concept so he could understand the consequences
of rejecting the plea offer and pleading not guilty. The court did not pressure Appellant to plead
guilty but instead told him it was his decision to make and if he pled not guilty the jury might find
2
Appellant was forty-three years of age at the time of trial.
him not guilty, or the jury might find him guilty and assess his punishment beginning at a minimum
sentence of fifteen years. The record also reflects that Appellant changed his mind about accepting
the plea offer only after consulting privately with defense counsel. During entry of the guilty plea,
Appellant confirmed to the trial court that he had made his own decision to plead guilty and had not
been coerced. Because the record does not show that the trial judge abandoned his role as a neutral
and detached hearing officer or that he coerced Appellant to plead guilty, we overrule Point of Error
Two. See Taylor v. State, No. 05-94-01628-CR, 1996 WL 743765, at *5-6 (Tex.App.--Dallas 1996,
no pet.)(not designated for publication)(rejecting defendant’s claim that guilty plea was involuntary
because trial judge abandoned role as detached and neutral judge by interjecting himself into plea
negotiations and convincing Appellant to accept the plea bargain; record showed that judge
explained to defendant that he had every right to plead guilty before the jury but warned the jury
might assess a life sentence if he did so; defendant changed his mind and accepted the offer after
speaking privately with defense counsel and the record did not show plea was involuntary). The
judgment of the trial court is affirmed.
February 17, 2010
ANN CRAWFORD McCLURE, Justice
Before Chew, C.J., McClure, and Rivera, JJ.
(Do Not Publish)
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IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
NO. WR-84,915-01
EX PARTE KENNIS GATSON, Applicant
ON APPLICATION FOR A WRIT OF HABEAS CORPUS
CAUSE NO. W10-55338-Y(A) IN CRIMINAL DISTRICT COURT NO. 7
FROM DALLAS COUNTY
A LCALA, J., filed a concurring opinion in which J OHNSON and R ICHARDSON, JJ.,
joined.
CONCURRING OPINION
I respectfully concur in this Court’s order that remands this application to the
convicting court. I, however, do not join the Court’s order. For the reasons explained in my
concurring opinion in Ex parte Pointer, I would include language in the Court’s order
advising the habeas court of its statutory obligation to appoint post-conviction counsel to an
indigent pro se habeas applicant if the court determines that the interests of justice require
representation. See Ex parte Pointer, Nos. WR-84,786-01 & WR-84,786-02, 2016 WL
3193254 (Tex. Crim. App. June 8, 2016) (Alcala, J., concurring) (citing T EX. C ODE C RIM.
P ROC. art. 1.051(d)(3) (“An eligible indigent defendant is entitled to have the trial court
Gatson - 2
appoint an attorney to represent him in . . . a habeas corpus proceeding if the court concludes
that the interests of justice require representation”)). Because the Court’s order omits any
reference to this statutory provision that entitles an indigent pro se habeas applicant to
appointed counsel under certain circumstances, I cannot join the Court’s order. Aside from
my disagreement with the language in this Court’s order, I otherwise respectfully concur.
Filed: June 29, 2016
Do not publish
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303 S.C. 439 (1991)
401 S.E.2d 185
Carlton A. SHIELDS, Sr., as Administrator of the Estate of Carlton A. Shields, Jr., Respondent
v.
SOUTH CAROLINA DEPARTMENT OF HIGHWAYS AND PUBLIC TRANSPORTATION, Appellant.
1585
Court of Appeals of South Carolina.
Heard November 5, 1990.
Decided January 7, 1991.
*440 Frank S. Potts and Michael H. Montgomery of Lide, Montgomery & Potts, Columbia, for appellant.
Clifford O. Koon, Jr. of Rogers, Koon, Waters & Thomas, Columbia, for respondent.
Heard Nov. 5, 1990.
Decided Jan. 7, 1991.
GOOLSBY, Judge:
This is a wrongful death action brought by Carlton A. Shields, Sr., as administrator of the estate of Carlton A. Shields, Jr., against the South Carolina Department of Highways and Public Transportation. The administrator's son died when his automobile plunged into a 40-foot-wide, 15-foot-deep washout on a secondary road marked by a single "Road Closed" sign. The Department maintained no barricade between the sign and washout. Shields alleged in his complaint that the Department failed "to follow its own procedures regarding the type and placement of barricades and warning devices relative to hazardous situations in a roadway." The jury returned a verdict in Shields' favor in the amount of $750,000. The trial judge reduced the amount to $250,000. The Department appeals. The questions argued on appeal relate solely to the admissibility of certain evidence. We affirm.
*441 I.
The Department's exception regarding "the introduction [by Shields] of evidence of subsequent repairs, alterations, or precautions taken by the ... Department after the date of the subject accident" affords no basis for reversal of the judgment. We recognize that evidence of subsequent remedial measures is not admissible to prove the conditions existing at the time of an accident. Eargle v. Sumter Lighting Company, 110 S.C. 560, 96 S.E. 909 (1918). Here, however, the trial judge cured his error in allowing evidence of subsequent repairs when he instructed the jury "[not] to consider any changes that were made after [the accident]" and to give the remedial measures undertaken by the Department "no consideration whatsoever." 5 Am. Jur. (2d) Appeal and Error § 807 at 249 (1962); 5A C.J.S. Appeal and Error § 1737 at 1048 (1958); cf. Estridge v. Metropolitan Life Insurance Co., 178 S.C. 310, 182 S.E. 834 (1935) (wherein the Supreme Court upheld a denial of a new trial motion based on improper statements made by counsel where counsel withdrew the statement after objection and the trial court admonished counsel to stay within the record). It is not manifest that the prejudicial effect of the evidence remained despite its exclusion and that the evidence influenced the jury's verdict. 5A C.J.S. supra at 1049; see Boylston v. Armour & Co., 196 S.C. 1, 12 S.E. (2d) 34 (1940) (wherein the Supreme Court held no prejudicial error occurred where evidence admitted over objection was later ruled incompetent and the jury was told to disregard it); cf. Coogler v. Thompson, 286 S.C. 168, 332 S.E. (2d) 215 (Ct. App. 1985) (the jury is presumed to have accepted the trial judge's corrected jury instructions).
II.
The Department argues the trial court committed prejudicial error in allowing the Department's resident maintenance engineer to be examined regarding a statement made by the maintenance engineer in a written report to the Department concerning measures the Department might have taken to prevent the accident in question.
The resident maintenance engineer, who holds a degree in engineering from South Carolina State College, had been employed by the Department for 17 years, and was the official *442 responsible for the maintenance of roads and "protecting the traveling public from dangerous situations" of the type herein involved, routinely prepared a written "specialized accident report" for the Department sometime after the accident. He noted on the report form, which the Department provided, that the accident might have been prevented "[had] more barricades [been] placed closer to the washout." The maintenance engineer offered the conclusion in answer to the question on the form that asked whether there "were any defects in the highway facilities which may have contributed to this accident?"
The Department objected to the admissibility of the written report on which the latter statement appeared, claiming the written report constituted hearsay and "evidence of a subsequent remedial measure." The trial judge disallowed the written report in evidence, stating he would not permit it to be used "for remedial purposes;" however, the trial judge allowed the witness to be examined regarding his preparation of the report "and what he put in it" as to the placement of barricades.
We have serious doubts regarding whether the exception that raises the issue relating to the maintenance engineer's statement, Exception No. 2,[1] preserves the grounds of objection. The exception neither mentions the word "hearsay" nor the words "remedial measure." See Knight v. Lee, 262 S.C. 17, 202 S.E. (2d) 19 (1974) (a question not raised by any exception on appeal will not be considered).
Even if preserved, the hearsay objection is, at most, argued in a conclusory fashion; therefore, the exception purportedly preserving it may be deemed effectively abandoned. Williams v. Leventis, 290 S.C. 386, 350 S.E. (2d) 520 (Ct. App. 1986).
*443 In any case, the introduction of a conclusion contained in a written report through the testimony of the person who prepared it and who was available for cross-examination is not reversible error. See State v. Caldwell, 283 S.C. 350, 351 322 S.E. (2d) 662, 662 (1984) ("[T]he fact that testimony is hearsay is unimportant if the declarant testifies and is available for cross examination."); Clark v. Ross, 284 S.C. 543, 551, 328 S.E. (2d) 91, 97 (Ct. App. 1985) ("[T]he admission in evidence of inadmissible hearsay affords no basis for reversal where the out-of-court declarant later testifies at trial and is available for cross-examination.").
The objection that the challenged statement constituted evidence of a subsequent remedial measure has no merit. The statement does not reflect that the Department carried out a remedial measure at the accident scene after the accident; rather, it simply reflects the opinion by the Department's maintenance engineer that the absence of additional barricades nearer the accident scene at the time of the accident might have constituted a defect in the highway and might have contributed to the accident.
III.
The Department argues the trial court committed prejudicial error in allowing Shields' expert witness to testify over objection that the Department's placement of warning signs and devices on the highway on which Shields was killed "borders on criminal negligence." The Department objected to this testimony and gave as its ground that "[t]he witness does not have the ability to comment on what the law is."[2]See 32 C.J.S. Evidence § 453 at 91 (1964) ("As a general rule, a witness will not be permitted to state a conclusion, or opinion, of law....").
*444 We do not agree with the Department that the expert witness commented "on what the law is" regarding placement of warning signs and devices. Rather than express an opinion on the law, the expert witness merely gave his opinion on an issue of fact, i.e., whether the signs and devices used by the Department on Highway 441 sufficiently warned travelers of the hazards they would encounter in using the highway at that time. Cf. Kirkland v. Peoples Gas Co., 269 S.C. 431, 237 S.E. (2d) 772 (1977) (an expert is not allowed to interpret regulations of the Department of Transportation); In re Estate of Powers, 375 Mich. 150, 134 N.W. (2d) 148 (1965) (an expert may not create new legal definitions and standards on the issue of an individual's incompetency to make a will); Hawkins v. Chandler, 88 Idaho 20, 396 P. (2d) 123 (1964) (a lay witness may not testify concerning the law on the use of flares by wrecker drivers).
Affirmed.
GARDNER, J., concurs.
BRUCE LITTLEJOHN, Acting Judge, dissents in a separate opinion.
BRUCE LITTLEJOHN, Acting Judge, dissenting:
I respectfully dissent and would order a new trial for reasons hereinafter stated. Either one of the grounds on which I rely is sufficient to warrant a retrial. Certainly, the two collectively denied the Highway Department a fair trial.
I.
Witness Anderson, a hunter who frequented the area, testified relative to the area surrounding the place of the accident. Upon redirect examination by counsel for the Plaintiff, Mr. Anderson was asked:
Q. All right, in that case, Mr. Anderson, let me ask you if you ever observed any piles of dirt and barricades that the Highway Department might have put out there after the accident? (Emphasis Added)
MR. MONTGOMERY: Objection, Your Honor.
MR. KOON: Your Honor, he has opened the door.
MR. MONTGOMERY: No, sir.
*445 THE COURT: I will permit it. Objection overruled. Proceed.
Q. After this accident, what kind of steps, if you recall, if you observed it, did the Highway Department take to protect this ravine?
A. After the accident?
Q. Yes, sir?
A. They had put some other kind of barricade closer to the hole.
Q. Right at the hole?
A. No, it wasn't right at the hole, it was Well, I really don't know how far from the hole it was, but it was
Counsel for the Highway Department addressing the Court said: "Your Honor, I have a matter of law I would like to take up with the Court."
The judge replied: "All right, sir, we will argue it at the recess. Proceed, if you would like."
The line of questioning was clearly improper as was later recognized by the Court. The contention of counsel for the Plaintiff that the attorney for the Highway Department had "... opened the door" simply is not substantiated by a review of his cross-examination.
Later on, before any recess, and before the judge could rule on the matter, counsel for the Plaintiff pursued the matter further when Dr. Phillip Wilkins was testifying. He inquired of Dr. Wilkins as follows:
Q. Now, Dr. Wilkins, let me ask you if after the accident you observed any measures taken by the Highway Department to change this
MR. MONTGOMERY: We object, Your Honor.
MR. KOON: Your Honor, they have already opened the door to this area of inquiry. They asked a previous witness about it.
The Court then declared a recess and made the following comment: "Mr. Koon, as you know, changes of condition afterwards is not admissible. Now, what are you basing the fact that it is admissible on?"
Counsel then argues that the door had been opened, whereupon the judge, apparently realizing that the door had not *446 been opened and that the evidence had been improperly sought and allowed, gave a curative instruction. If the door had been opened, as argued by counsel, no curative instruction would have been required.
By reason of the manner the issue was handled, the curative instruction did not overcome the prejudice. Technically, the ground of the objection should have been stated, but apparently counsel interrupted; obviously both the judge and opposing counsel understood the ground.
II.
I agree with counsel for the Highway Department that witness Robert Roberts, an expert as to accident reconstruction, was allowed to testify improperly. He was asked to give his opinion "... as to the sufficiency of the signs and warning devices on Highway 441 before the accident...."
He responded:
A. My opinion was that this signing was grossly inadequate. I mean, I may be going beyond the context of what I should say here, sir, by my opinion was this signing out there borders on criminal negligence on someone's part.
Assuming without deciding that there was involved matters about which expert testimony should be permitted, I think the witness should not have been permitted to denominate the conduct of the Highway Department employees as bordering "... on criminal negligence on someone's part." It can be forcefully argued that members of the jury are just as capable of determining what warnings reasonable prudent employees would have provided as is an expert.
The terms "negligence," "gross negligence," "willfulness," "wantonness" and "recklessness" are well known to the law of torts in this state. Traditionally, "criminal negligence" has neither been alleged nor defined by the trial judges in tort cases. I am unaware of any definition in the statute or in our cases of "criminal negligence" as relate to civil litigation. The term is defined in the case of Commonwealth v. Heck, 341 Pa. Super. 183, 491 A. (2d) 212 (1985), aff'd, 517 Pa. 192, 535 A. (2d) 575 (1987) as follows:
*447 "Criminal negligence" is a breach of duty so flagrant in the circumstances that we may safely indulge the legal fiction that it was committed with actual intent to injure....
Id. at 209, 491 A. (2d) at 225.
Counsel's objection to the statement as being a comment on the law was proper. The testimony, if not a question of law, was at least a comment on a mixed question of law and fact. In no event was the objection sufficiently defective to warrant a denial of a review by this Court.
The witness's testimony might easily be interpreted to infer that the employees of the Highway Department had actual intent to injure. The testimony of this witness reciting "criminal negligence" was emphasized by counsel in closing argument. In my view, the error was prejudicial.
NOTES
[1] Exception No. 2 reads:
The lower court erred by permitting the introduction of the statement completed by Arthur Lathan, an engineer employed by the defendant Department, concerning the measures that might have been taken by said Department which might have prevented the accident because the same was unduly prejudicial; should not have been used as proof of negligence against the defendant Highway Department; and was not properly admissable [sic] in evidence at trial for any other reason.
[2] Although the Department argues on appeal other grounds in addition to the one given at trial for the exclusion of the testimony, it is limited on appeal to the ground assigned at trial. See South Carolina National Bank v. Joyner, 289 S.C. 382, 346 S.E. (2d) 329 (Ct. App. 1986) (an exception raised on appeal must be on the same ground as the corresponding objection in the trial court); Bramlett v. Davis, 289 S.C. 85, 87-88, 344 S.E. (2d) 867, 869 (Ct. App. 1986) ("An evidentiary objection must state the proper grounds for objection; a party who relies on grounds not taken at the trial level will not be deemed to have preserved the issue for appeal.").
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293 F.Supp. 958 (1968)
Rev. C. Herbert OLIVER et al., Plaintiffs,
v.
Bernard E. DONOVAN, Superintendent of Schools for the City of New York, et al., Defendants.
No. 68-C-1034.
United States District Court E. D. New York.
November 26, 1968.
*959 *960 Jeremiah S. Gutman, New York City, Rita Murphy and Morton Stavis, Newark, N. J., for plaintiffs.
J. Lee Rankin, Corp. Counsel, City of New York, New York City, for all defendants except Albert Shanker; John J. Loflin, Jr., New York City, of counsel.
Delson & Gordon, New York City, for Albert Shanker, as individual and official; Ralph P. Katz, New York City, of counsel.
TRAVIA, District Judge.
The plaintiffs bring on this matter by way of order to show cause seeking a temporary restraining order enjoining the defendants from continuing to:
1. take any action to compel the plaintiffs to retain within the School District of Ocean Hill-Brownsville teachers whom the Local Governing Board of the District has determined should be transferred out of the District;
2. station police in and around the Ocean Hill-Brownsville schools to enforce the terms of an agreement made by defendants pursuant to the settlement of a strike declared illegal by the New York Supreme Court; and
3. enforce the suspension and/or removal of principals of the Ocean Hill-Brownsville schools and the unit administrator Rhody McCoy, who have been selected by the community and/or community representatives.
Attached to the motion papers is the affidavit of one of the plaintiffs, Reverend C. Herbert Oliver, and the verified complaint. It is on these papers that the order to show cause was obtained and signed by this Court on October 11th, 1968.
The request for a restraining order as to item number "1" in the order to show cause was withdrawn. Consequently, all issues relating to these teachers have been removed from the case.
The plaintiffs moved to amend their application before the Court to include a request for a temporary restraining order enjoining the defendants, or any of them, from closing J.H.S. 271.
This motion is granted and ordered included in the order to show cause as item number "4".
We shall, therefore, deal with items "2", "3" and "4" in the order to show cause, the complaint and all the papers, exhibits and proceedings had.
In their complaint, the plaintiffs invoke the jurisdiction of this Court under Title 28 U.S.C. §§ 1331, 1343(3) and (4). In addition, they assert the action is authorized by Title 42, U.S.C. §§ 1981, 1983, 1985, 1986 and 1988. They claim the action arises under the 13th and 14th Amendments to the Constitution of the United States. (Par. 12, p. 5, complaint.)
At the outset and after a careful reading of all the papers submitted and the initial argument, there appeared to be a *961 serious question as to this Court's jurisdiction.
A hearing was afforded to the plaintiffs to give them an opportunity to show by testimony and exhibits a basis upon which jurisdiction of this Court could be established.
A study of the complaint shows that paragraphs "1" through "19" are preliminary or conclusory in nature, used to describe the charges, the alleged jurisdiction of the Court and the background of the present dispute leading up to a crippling strike of the City's school teachers and supervisors.
In paragraphs "20" through "24" plaintiffs assert that the dispute came to a head when the Governing Board and Administrator of the Ocean Hill-Brownsville Demonstration School District attempted to transfer 13 teachers and 6 administrators out of the district because of their actions in opposition to school decentralization. As a result of the attempted transfer of the 19 staff members, some 350 teachers in the district remained away from their jobs in sympathy during the last 6 weeks of school in the Spring of 1968. New teachers were recruited over the summer to replace most of those who left their positions in the Spring. By the opening of school in September, 1968 it appeared that approximately 100 of the original 350 wanted to return. The Governing Board, however, requested that these 100 teachers be assigned elsewhere.
Problems relating to these teachers led to a strike.
In paragraph "25" plaintiffs charge defendants Lindsay, Donovan and members of the Central Board of Education, with encouraging, aiding, and giving sanction to the illegal strike of the United Federation of Teachers, and that the teachers have not lost pay as a result of their illegal strike.
In paragraph "26" of the complaint it is alleged the specific demand of the defendant Shanker has been that notwithstanding the determination of the community to rid itself of teachers who took action contrary to the decentralization program and who illegally struck against their children, the Governing Board be compelled to place those teachers in teaching positions in the classrooms of the Ocean Hill-Brownsville District, and in order to compel adoption of his program the defendant Shanker is willing to prevent the functioning of the entire educational system of the City.
In paragraph "27" of the complaint the plaintiffs allege that notwithstanding that it must be acknowledged that any insistence that the said teachers be placed in teaching positions not only is contrary to the wishes of the community but is destructive of any possibility of successful development of the educational program of the Ocean Hill-Brownsville District, the defendants Central Board, Donovan, and Mayor Lindsay have yielded to continued threats of a third illegal strike by the defendant Shanker. Pursuant thereto, the defendants Central Board, Donovan, Mayor Lindsay and Chief of Police have sought to compel the placement of the replaced teachers in classrooms in the Ocean Hill-Brownsville District and, beginning October 7, 1968, have placed over 1,000 policemen in the said District. As a result of all the foregoing, education in the Ocean Hill-Brownsville District is at a standstill.
In paragraph "28" of the complaint the plaintiffs allege as follows:
The adoption of a plan of decentralization and the involvement of the community in the development of a new approach to education was designed to correct the denial of education for the Black and Puerto Rican children of the Ocean Hill-Brownsville District. The defendants have deprived these children of quality education as developed by the Ocean Hill-Brownsville District and have therefore deprived rights guaranteed under the Thirteenth and Fourteenth Amendments to the Constitution of the United States, to wit:
A. The defendants are attempting to impose the terms of an agreement negotiated *962 by the New York Central Board of Education and the United Federation of Teachers, without the participation of the Ocean Hill-Brownsville Governing Board or any other representatives from the local communities of New York City having a stake in quality education through decentralized community control. The agreement itself and the attempt to enforce the agreement were not made to meet any lawful need or purpose, but expressly as a response to a strike declared illegal by the New York Supreme Court. This action was taken by the defendants knowing full well that the consequences thereof would be disruption of education in the Ocean Hill-Brownsville District, and the disruption of decentralization in the entire City of New York.
B. The attempt to impose and enforce the terms of the aforementioned agreement has in fact resulted in the disruption of the school system in Ocean Hill-Brownsville and in the education of the children who attend school in that District, to wit:
(1) Defendants have caused massive numbers of police to be stationed in and around the Ocean Hill-Brownsville schools to enforce the terms of the aforementioned agreement. The police have and are continuing to:
a. deny parents and other members of the community the right to enter the schools;
b. harass, intimidate, molest and arrest members of the community who wish to enter the schools;
(2) At least one school in the district has been closed;
(3) The Local Governing Board and the Unit Administrator, pursuant to a directive issued by the Central Board, have been suspended, thereby denying to plaintiffs the right to run and control schools through representatives of the community;
(4) Principals chosen by the community or its representatives have been suspended and removed from the District's schools pursuant to a directive issued by the Central Board.
C. Defendants' attempt to enforce the agreement, and the actions taken pursuant thereto, are designed to destroy and/or have the effect of destroying the rights of plaintiffs and the class they represent to achieve quality education through a system of decentralized community control of the schools in New York City.
In paragraph "29" plaintiffs assert their basic position, which is, that the 13th and 14th Amendments impose on defendants a duty not to interfere with the development of quality education for Black and Spanish-speaking children of New York and equality of education with White children. And finally, the Amendments also impose an affirmative duty to develop, support and protect quality and equality of education for the Black and Spanish-speaking children of New York.
On the basis of the complaint and the order to show cause, the plaintiffs ask that this Court issue a preliminary and permanent injunction enjoining the defendants, their attorneys, employees and agents, acting individually or in concert from:
(1) engaging in conduct designed to deny and/or having the effect of denying plaintiffs and the class they represent their Thirteenth and Fourteenth Amendment rights to insure quality and equality of education for their children and the children of all minority groups residing in the City of New York;
(2) attempting to impose the terms of a negotiated settlement arrived at between the New York Central Board of Education and the United Federation of Teachers without the participation of the Ocean Hill-Brownsville Local School Board or any other representatives from the local communities of New York City having a stake in quality education through decentralized community control;
(3) taking any action to compel the plaintiffs to retain within the School *963 District teachers whom the Governing Board has determined should be transferred out of the District;
(4) stationing police in and around the Ocean Hill-Brownsville schools to enforce the terms of the aforementioned agreement pursuant to a settlement of a strike declared illegal by the New York State Supreme Court;
(5) encouraging, aiding and giving sanction to the strike declared illegal by the New York Supreme Court by:
a) paying those teachers who struck the Ocean Hill-Brownsville schools in the Spring of 1968;
b) rearranging the school year of 1968-69 in a fashion that permits the teachers who struck the schools in the Fall of 1968 to be paid for most of the days schools were closed as a result of the strike declared illegal;
(6) continuing to enforce the suspension and/or removal of principals of the Ocean Hill-Brownsville schools and the Unit Administrator, Rhody McCoy, selected by the community and/or community representatives;
(7) otherwise threatening, intimidating, and/or harassing plaintiffs by actions designed to deny and/or have the effect of denying to plaintiffs the system of quality education in effect at the Ocean Hill-Brownsville School District prior to defendants' intervention therein.
An understanding of the legal status of the Ocean Hill Board is essential to an appraisal of the legal sufficiency of plaintiffs' attempts to state a cause of action predicated upon a denial of equal protection.
Until the Marchi Act (Laws 1968, Ch. 568, effective June 5, 1968) was enacted, there was nothing in the Education Law or any other statute authorizing (a) the establishment of any such local board as a body having official powers or (b) the exercise of any educational or other powers by such a local board or (c) the delegation of any of the powers of the Board of Education to such a local board.
During the entire period involved, therefore, and in the Spring of 1968 when the Ocean Hill Board first purported to "dismiss" and then "transfer" 19 teachers and supervisors, it had no legal or governmental powers and no status other than as an unofficial body of citizen advisors. The Ocean Hill demonstration project, as then existing, consisted of the operation of a special group of schools by and under the control of Board of Education personnel, with the Ocean Hill Board acting in an advisory capacity.
The Marchi Act authorizes the Board of Education, with the approval of the Regents, to delegate functions, powers and duties of that Board to local boards until June 30, 1969 and the Board of Education on September 4, 1968, adopted a resolution providing for delegation of certain of its functions, powers and duties to local boards (Exhibit C attached to Donovan affidavit). The Regents approved this delegation on October 17, 1968, effective October 18, 1968.
The Unit Administrator of the district, Mr. McCoy is a temporary appointee employed by the Board of Education (Donovan affidavit, par. 10). As such an employee, he is required to perform his duties under the direction and supervision of the Superintendent of Schools (Education Law, § 2566, McKinney's Consol.Laws, c. 16, Subd. 6) and subject to the directions of the Board of Education (Education Law, § 2552, § 2554, Subd. 15, par. a).
It is well established in this State that it is unlawful for any public official or body, without statutory authorization, to attempt to delegate its governmental powers. Matter of Behringer v. Parisi, 5 N.Y.2d 147, 151, 182 N.Y.S.2d 365, 156 N.E.2d 71 (1959); Matter of Blount v. Forbes, 250 App. Div. 15, 293 N.Y.S. 319 (1st Dept., 1937). Dealings between the Board of Education and the Ocean Hill Board could not result in any such delegation, since no statute permitted such a conferral. Moreover, the Board of Education *964 never adopted any resolution delegating any powers to the Ocean Hill Board, except for the September 4, 1968 resolution which was approved by the Regents. Accordingly, the Ocean Hill Board has only such powers as were delegated by the September 4, 1968 resolution, plus the power to appoint a local superintendent of schools, as conferred by the Marchi Act.
The witnesses of the plaintiff testified in substance that the Ocean Hill-Brownsville area is a poor section of the City, having a large majority of Black and Puerto Rican inhabitants; that most of the children in the 8 schools in the district are Black and Puerto Rican; that some of the schools selected for inclusion in the district were among the worst in the area; that prior to the time the demonstration project began functioning in the Fall of 1967, there were high rates of pupil and teacher absenteeism, there were high rates of student dropouts, serious disciplinary problems existed, and the students' performance was frequently below grade level; that, in addition, the schools were over-crowded, run-down, and understaffed; that during the course of this past year, however, most of these problems have been relieved or have disappeared altogether; that new I.S. 55 was opened in the district in February 1968; that a pupil-teacher ratio of about 19 to 1 has been achieved; that parents have taken a much greater interest in the operation of the schools; new programs and new methods of teaching have been devised to improve student performance; special classes have been introduced for the more gifted pupils; absenteeism, disciplinary problems and the drop-out rate have shown marked improvement. In general, the witnesses from the district testified that remarkable progress had been made during the past year in the schools in that area.
Mr. John Doar, President of the Board of Education, was called for the purpose of discussing proposals that have been considered by the Central Board and the Mayor to close I.S. 271 on a temporary basis. Mr. Doar testified that the Board had not approved the closing of I.S. 271 for educational reasons but it did recognize that the Mayor had the authority to close I.S. 271, if necessary, for reasons of public safety.
Mr. Doar testified that it was his understanding that in the event the Mayor should close I.S. 271 it would be re-opened as soon as safety factors would permit.
The facts as they unfold are substantially as set forth in the affidavit of Dr. Bernard E. Donovan, Superintendent of Schools, dated October 15, 1968. One must first read his affidavit to get a view of the broad picture and then the papers and testimony as adduced to find out whether there is a valid complaint upon which this Court can assume jurisdiction.
It appears from the papers before this Court that in May, 1968, the Ocean Hill Board notified 13 teachers and 6 supervisors of the district that they were "dismissed". This action was taken without charges or a hearing on the basis of a claim by the Ocean Hill Board that these employees were unfit for service. Subsequently the Ocean Hill Board changed this action to a request for a transfer of these employees on the ground of claimed unfitness.
In accordance with the usual procedure of the Board of Education in cases where allegations of dereliction are made against teachers and supervisors, the Superintendent of Schools refused to transfer these employees without an investigation of the allegations and an opportunity for the employees to respond to the accusations.
The Ocean Hill Board filed charges of unfitness against 10 of the accused 19 employees, the other 9 employees having been eliminated from the attempted ouster by voluntary transfer or otherwise. The teachers were acquitted of these charges after a trial before Mr. Justice Rivers, acting as a Trial Examiner for the Board of Education. *965 Judge Rivers recommended to the Board of Education that the demand of the Ocean Hill Board for the transfer of the teachers be rejected. (The report and recommendations of Judge Francis E. Rivers, dated August 26, 1968, is attached to the affidavit of Abraham Wilner, Assistant Superintendent of Schools, in charge of personnel, dated October 21, 1968.)
The Superintendent of Schools and the Board of Education accepted the recommendation of Judge Rivers.
Despite the acquittal, the Ocean Hill Board, prior to the opening of the Fall, 1968, term, declared that it would not permit the 10 teachers to return to their teaching positions and, in addition, that it would also oust approximately 100 teachers who absented themselves from their schools in the Spring of 1968 in protest against the attempted transfer.
The Ocean Hill Board did not have, at the time of these actions, and up to the time of the conclusion of this hearing did not possess, any legal power, jurisdiction or authority (a) to transfer teachers out of the schools of the Ocean Hill-Brownsville district or (b) to determine the fitness and competency of teachers, or (c) to refuse teaching assignments to any teacher duly assigned to the district or (d) to countermand orders of the Board of Education on any subject.
The Board of Education, after efforts to persuade the Ocean Hill Board and the Unit Administrator, Mr. McCoy, to allow these teachers to return to their rightful teaching positions, submitted the matter to the State Commissioner of Education. The Commissioner, after reviewing the facts and hearing the contentions of the Ocean Hill Board, the Board of Education and the United Federation of Teachers, issued a determination on September 14, 1968, ruling (a) that the efforts of the Ocean Hill Board to oust the teachers were illegal and contrary to sound educational principles, (b) that this Board should be suspended temporarily, and (c) that the 10 teachers be temporarily assigned outside the Ocean Hill District.
Under the broad jurisdiction to review educational matters conferred upon the Commissioner by the Education Law, including §§ 310 and 311 thereof (See Matter of Vetere v. Allen, 15 N.Y.2d 259, at pp. 265-266, 258 N.Y.S.2d 77, 206 N.E.2d 174 (1965)), he had full authority to review and determine all aspects of the legality and propriety of the attempted transfer of the teachers. The Commissioner may set aside a transfer of a teacher if he finds that it was arbitrarily made. (55 St.Dept. 581). In effect, therefore, the Commissioner sustained the refusal of the Board of Education and the Superintendent of Schools to permit the ouster.
Under New York Law, the determination of the Commissioner rejecting the claims and demands of the Ocean Hill Board as to the teachers is conclusive upon the Board and will not be set aside by the New York courts unless purely arbitrary. Matter of Chapin v. Board of Education, 291 N.Y. 241, 52 N.E.2d 113 (1943); Matter of Vetere v. Allen, supra.
On September 15, 1968, the Board of Education issued directives carrying out the determinations of the Commissioner of Education and notified the Ocean Hill Board members of this action.
On September 20, 1968, the Board of Education, with the approval of the Commissioner of Education, revoked the temporary suspension of the members of the Ocean Hill Board and directed that all 110 teachers sought to be excluded be reassigned to teaching duties in the Ocean Hill District.
Notwithstanding Board of Education orders issued on September 20, 1968 to the Ocean Hill Board and the Unit Administrator of the Ocean Hill District, Mr. McCoy, that the 10 acquitted teachers and the 100 other teachers be given teaching assignments in the schools of the area, the Ocean Hill Board and Mr. McCoy defied the Board of Education *966 and during the week preceding October 6th, 1968 purported to order that these teachers be refused teaching assignments. The Ocean Hill Board was suspended by the Board of Education for 30 days on October 6, 1968, following the attempt of the Ocean Hill Board to countermand these orders of the Board of Education.
While the above-described events were occurring, the full remedies available under the law were being invoked against the illegal strike being conducted by the United Federation of Teachers in protest against the unlawful attempts of the Ocean Hill Board to oust the 110 teachers.
The above-described actions and events, commencing with the move of the Ocean Hill Board to oust the 13 teachers and 6 supervisors in May, 1968, are matters of public record and common knowledge and are set forth at length in the affidavit of Superintendent Donovan sworn to on October 15, 1968 and in the Exhibits attached thereto. The allegations of the complaint, other than conclusions of law set forth by plaintiffs, are not in any significant way at variance with the above account of the actions of the Ocean Hill Board, the Board of Education and the Commissioner of Education.
This Court recognizes that there is a difference in the question of whether or not the Court has jurisdiction and whether or not the complaint sets forth a claim upon which relief can be granted. And yet unavoidably the substance of the complaint must be examined to answer the question of jurisdiction. The jurisdictional allegations of the pleader will not suffice. The nature of the inquiry to be made by the Court was described by Mr. Justice Cardozo in Gully v. First National Bank, 299 U.S. 109, at pp. 112-113, 57 S.Ct. 96, at pp. 97-98, 81 L.Ed. 70, as follows:
"How and when a case arises `under the Constitution or laws of the United States' has been much considered in the books. Some tests are well established. To bring a case within the statute, a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action. Starin v. City of New York, 115 U.S. 248, 257, 6 S.Ct. 28, 29 L.Ed. 388; First National Bank of Canton, Pa. v. Williams, 252 U.S. 504, 512, 40 S.Ct. 372, 64 L.Ed. 690. The right or immunity must be such that it will be supported if the Constitution or laws of the United States are given one construction or effect, and defeated if they receive another. Id.; King County, Wash. v. Seattle School District, 263 U.S. 361, 363, 364, 44 S.Ct. 127, 68 L.Ed. 339. A genuine and present controversy, not merely a possible or conjectural one, must exist with reference thereto (City of New Orleans v. Benjamin, 153 U.S. 411, 424, 14 S.Ct. 905, 38 L. Ed. 764; Defiance Water Co. v. City of Defiance, 191 U.S. 184, 191, 24 S. Ct. 63, 48 L.Ed. 140; Joy v. City of St. Louis, 201 U.S. 332, 26 S.Ct. 478, 50 L.Ed. 776; City and County of Denver v. New York Trust Co., 229 U.S. 123, 133, 33 S.Ct. 657, 57 L.Ed. 1101), and the controversy must be disclosed upon the face of the complaint, unaided by the answer or by the petition for removal. (Tennessee v. Union & Planters Bank, 152 U.S. 454, 14 S.Ct. 654, 38 L.Ed. 511; Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126; The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 57 L.Ed. 716; Taylor v. Anderson, 234 U.S. 74, 34 S.Ct. 724, 58 L.Ed. 1218.) Indeed, the complaint itself will not avail as a basis of jurisdiction in so far as it goes beyond a statement of the plaintiff's cause of action and anticipates or replies to a probable defense. Devine v. City of Los Angeles, 202 U.S. 313, 334, 26 S.Ct. 652, 50 L. Ed. 1046; The Fair v. Kohler Die & Specialty Co., supra."
Where a claim is properly made, as arising under the Constitution and laws of the United States, the Court *967 should of course take jurisdiction even if the claim would be subject to dismissal on motion. In Bell v. Hood, 327 U.S. 678, 681-683, 66 S.Ct. 773, 775-776, 90 L.Ed. 939 (1946) Mr. Justice Black described the procedure as follows:
"* * *. Before deciding that there is no jurisdiction, the District Court must look to the way the complaint is drawn to see if it is drawn so as to claim a right to recover under the Constitution and laws of the United States. For to that extent `the party who brings a suit is master to decide what law he will rely upon and * * does determine whether he will bring a `suit arising under' the * * * [Constitution or laws] of the United States by his declaration or bill.' The Fair v. Kohler Die Co., 228 U.S. 22, 25, 33 S.Ct. 410, 411, 57 L.Ed. 716. Though the mere failure to set out the federal or Constitutional claims as specifically as petitioners have done would not always be conclusive against the party bringing the suit, where the complaint, as here, is so drawn as to seek recovery directly under the Constitution or laws of the United States, the federal court, but for two possible exceptions later noted, must entertain the suit. Thus allegations far less specific than the ones in the complaint before us have been held adequate to show that the matter in controversy arose under the Constitution of the United States. Wiley v. Sinkler, 179 U.S. 58, 64-65, 21 S.Ct. 17, 45 L.Ed. 84; Swafford v. Templeton, 185 U.S. 487, 491-492, 22 S.Ct. 783, 785, 46 L.Ed. 1005. The reason for this is that the court must assume jurisdiction to decide whether the allegations state a cause of action on which the court can grant relief as well as to determine issues of fact arising in the controversy.
Jurisdiction, therefore, is not defeated as respondents seem to contend, by the possibility that the averments might fail to state a cause of action on which petitioners could actually recover. For it is well settled that the failure to state a proper cause of action calls for a judgment on the merits and not for a dismissal for want of jurisdiction. Whether the complaint states a cause of action on which relief could be granted is a question of law and just as issues of fact it must be decided after and not before the court has assumed jurisdiction over the controversy. If the court does later exercise its jurisdiction to determine that the allegations in the complaint do not state a ground for relief, then dismissal of the case would be on the merits, not for want of jurisdiction. Swafford v. Templeton, 185 U.S. 487, 493, 494, 22 S.Ct. 783, 46 L.Ed. 1005; Binderup v. Pathe Exchange, 263 U.S. 291, 305-308, 44 S.Ct. 96, 68 L.Ed. 308. The previously carved out exceptions are that a suit may sometimes be dismissed for want of jurisdiction where the alleged claim under the Constitution or federal statutes clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous. * *"
Where, however, it is obvious that the claim of federal jurisdiction is insubstantial and made only to acquire jurisdiction, the proper course is to dismiss the complaint as was done in Mainelli v. Providence Journal Company, 312 F.2d 3 (1st Cir. 1962) where the Court stated (312 F.2d 5-6):
"On the face of the complaint itself it is evident that the claim of federal jurisdiction is wholly insubstantial and frivolous and could have been made only for jurisdictional purposes. In this situation * * * the proper course is to dismiss for lack of jurisdiction without reaching the question whether the complaint states a claim upon which relief can be granted."
The constitutional issues involved go back to the Dred Scott decision (19 How. 393, 60 U.S. 393, 15 L.Ed. 691, 1856), in which it was held that the slaves were not entitled to the rights of citizens *968 and that not even Acts of Congress could change the situation; that only an Amendment to the Constitution could free slaves from the status of property and give them the rights of citizens.
The 13th and 14th Amendments were thereafter adopted:
AMENDMENT XIII.
Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.
Section 2. Congress shall have power to enforce this article by appropriate legislation.
The section of the 14th Amendment involved in this matter is Section 1. of said Amendment:
AMENDMENT XIV.
Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
Plaintiffs' contentions, admissions, proof and exhibits raise a serious question as to the relevance of these Amendments to the facts involved.
The plaintiffs admit that the State of New York was not made a party since there is no claim in this proceeding that any New York Law is unconstitutional or in any way violative of the Constitution of the United States.
The plaintiffs concede that decentralization of the New York City School system is not the only solution to the problems that exist. It is one suggestion that can be experimented with.
The plaintiffs reluctantly concede that centralization, as it has existed, is not inherently unconstitutional so that one could sue the state for decentralization assuming the Marchi Law had not been passed.
In the well-known segregation cases, the alternative was desegregation. We cannot assume that decentralization is the only constitutional alternative if we say centralization is unconstitutional.
It cannot be alleged that education is a right under the Constitution. However, when a state undertakes to provide public education it must provide it equally. (Brown v. Board of Education, 347 U.S. 483, 486, 74 S.Ct. 686, 98 L.Ed. 873), or it would be violative of the 14th Amendment.
The Plaintiffs seem to set out what is essentially a three-part theory.
(1) Their basic assertion is that the centralized school system existing before the decentralization experiment violated:
(a) The 13th Amendment in that "quality" education was not given the Black and Spanish-speaking children of New York and that this meant the imposition of "a badge or indicia" of slavery, contrary to the 13th Amendment mandate.
(b) The 14th Amendment in that "equality" of education was denied children because the present system of education did not respond to the particular educational needs of Black and Spanish-speaking children, resulting in high illiteracy rates;
(2) The Ocean Hill project was instituted to correct these constitutional deficiencies and is succeeding; and
(3) Any interference with the operating of the Ocean Hill project is unconstitutional, as it forces the children back to the unconstitutional system previously existing.
None of these allegations, considering all the papers, pleadings, exhibits and testimony adduced, give this Court jurisdiction.
*969 There has been no allegation made, or proven, that would tend to show any act, overt or subtle, that would violate the 13th Amendment.
While it might be a violation of the 13th Amendment for the stateor individuals to deny to Negroes the right to education, the complaint nowhere alleges that this is the case. Neither do we have the situation, as in Reitman v. Mulkey, 387 U.S. 369, 87 S.Ct. 1627, 18 L.Ed.2d 830 (1967), where the state is standing aside and permitting individuals to deny basic right to citizens. Nor is there indicated the extent to which the differences in education alleged are attributable to the centralized school system. Rather, we have the bald assertion that the New York school system violates the 13th Amendment because of the end product of the system.
There has been no allegation made, or proven, that could lead to the position that anyone either conspired or acted under color of state law to deny equal educational rights to anyone. There has been no allegation that less qualified teachers were forced, in a discriminatory manner, upon Negro schools, nor of any other arbitrary, discriminatory, or capricious action that could be deemed to violate the right of the inhabitants of the experimental district to equality of education. The mere showing that inequality exists, without more, does not make out a case of constitutional violations.
The plaintiffs cannot make out a case for the exercise of Federal jurisdiction under the various statutes cited in paragraph "12" of their complaint as the claimed basis of jurisdiction herein, unless they allege in their complaint facts establishing a violation of rights guaranteed by the Constitution or laws of the United States. When the complaint is analyzed in the light of matters of public record and the facts disclosed by the papers and the testimony before this Court, it is evident that the complaint fails to show any violation of plaintiffs' federal rights. A review of all the statutes cited by the plaintiffs fails to show how any of the acts alleged or proven come within the purview of such statutes. All said sections are dealt with thoroughly and at length by the briefs submitted by the parties, and this Court sees no reason to repeat each argument. However, the Court feels they are not applicable to the present case.
The plaintiffs allege that the complaint is clearly drawn in a manner that seeks relief under the Constitution of the United States. To bring a case within the statute, a right or immunity created by the Constitution must be an element, and an essential one, of the plaintiffs' cause of action. (Gully v. First National, supra.)
The plaintiffs cite the case of Baker v. Carr, 369 U.S. 186, 82 S.Ct. 691, 7 L. Ed.2d 663, which states:
Dismissal of the complaint upon the ground of lack of jurisdiction of the subject matter would, therefore, be justified only if that claim were `so attenuated and unsubstantial as to be absolutely devoid of merit'.
In the Baker case, however, the very nature of the controversy was federal and jurisdiction existed. The "one man one vote" principle was involved and it followed that all are entitled to the equal protection of the laws under the 14th Amendment.
The injunctive relief sought would require this Court to order the Board of Education of the City of New York to take actions which would be illegal under the Education Law of the State of New York. Education Law of the State of New York, §§ 2554(2), 2564, 2566(5) and 3012(1). For that reason, it cannot properly be found that the complaint sets forth a claim upon which relief could be granted. United States v. Rizzo, 119 F.Supp 736 (U.S. D.C., E.D.N.Y.1954).
In the one instance where relief is sought which does not involve the action and policies of the Board of Education of the City of New York, i. e., the removal of police from school locations in the Ocean Hill-Brownsville District, *970 the facts before the Court are such as to show that the basis for this demand is not merited. In such a situation a proceeding is properly dismissed. See Fay v. Douds, 172 F.2d 720 (C.A. 2) per Learned Hand 1949.
As the Court wrote in the case of Douds v. Local 294, IBT, 75 F.Supp. 414 at 417 (U.S.D.C., N.D.N.Y.):
"Arguments addressed to the fairness or efficiency of the statute are of no value here. Congress alone has the legislative power. The courts may only construe, apply and enforce the statute in accordance with the language and intent thereof. They are not concerned with whether or not the litigants consider the statute either good or bad."
It appears to this Court that even if it could be said that the claim herein is not unsubstantial nor frivolous it is made solely for the purpose of obtaining jurisdiction, especially since no act has been shown to be violative of the 13th and 14th Amendments, no Amendment bars specifically any of the acts alleged, and no federal statute is claimed to have been violated. Indeed, the complaint itself will not avail as a basis for jurisdiction in so far as it goes beyond a statement of the plaintiffs' cause of action and anticipates or replies to a probable defense.
The plaintiffs' claim that the nature of their Constitutional rights and the substantiality of their claims warrant that the Court assume jurisdiction. They rely on Jones v. Mayer Realty, 392 U.S. 409, 88 S.Ct. 2186, 20 L.Ed.2d 1189; Brown v. Board of Education, 347 U.S. 483, 486, 74 S.Ct. 686: United States v. Jefferson County Board of Education, 5 Cir., 372 F.2d 836; and Hobson v. Hansen, D.C., 269 F.Supp. 401.
This Court fails to see the similarity in any of these cases with the case at bar.
In the Brown case, supra, the Court declared school segregation to be against the equal protection of the laws guaranteed by the 14th Amendment, even if tangible factors are equal. The Court also stated:
"Today, education is perhaps the most important function of state and local governments." (347 U.S. p. 493, 74 S.Ct. p. 691) "It is the very foundation of good citizenship. * * * In these days, it is doubtful that any child may reasonably be expected to succeed in life if he is denied the opportunity of an education. Such an opportunity, where the state has undertaken to provide it, is a right which must be made available to all on equal terms." (Emphasis added.)
With relation to the present case, education, it seems, is not a constitutional right in and of itself, but must be equally provided if provided at all.
Segregation obviously connotes inferiority. But no finding or general feeling is present stating that centralized school systems are inherently inferior.
Plaintiffs do not point to a federal statute that defines and protects the rights they claim in the context presented here. Basically they rely on the 13th and 14th Amendments themselves. This claims too much. These Amendments are self-executing in fundamental but limited areas only. Contrast the situation before the Court in Jones v. Alfred H. Mayer Co., 392 U.S. 409, 88 S.Ct. 2186, 20 L.Ed.2d 1189 (1968) relied upon by plaintiffs, where Congress had passed a statute authorized by the 13th Amendment, 42 U.S.C. § 1982, to give all citizens equal rights in the purchase, lease or sale of real property. There the statute was intended to relieve former slaves of one of the disabilities of their prior status and give them equal opportunity with white persons.
Unaided by the statute it would appear impossible for the Court to have based relief on the 13th Amendment alone.
By the same token, in the present case there is no statute to give plaintiffs the rights they claim. When viewed in light *971 of the facts pleaded and presented at the trial neither the 13th nor 14th Amendment affords a basis for jurisdiction.
Time and again during the course of the arguments and the hearing, the Court offered the plaintiffs the opportunity to testify despite the Court's uncertainty as to whether the testimony was or would become relevant. T. 258 "I am permitting them an opportunity to at least give the Court some background in preparation for, I hope, will be a move on the plaintiffs' part here to show some violative acts;" T. 235 "* * on the question of jurisdiction, I have to give a little bit of latitude to the plaintiffs, an opportunity to them, to do what they feel is necessary in order to bring the issue to a zeroing-in point * * *", "* * * I think they should be entitled to bring in a little bit of background, * * * and then try to join it with any overt act which they claim then are violative of the 13th and 14th Amendments;" T. 521 "we have to have something more specific;" T. 523 (After testimony on October 21st, October 22d, a short hearing on October 23rd, October 24th, and many hours on October 28th, the Court still found it necessary to say "let us get to the matter before us").
At a later time the Court said: "Now, Mr. Stavis, I have given you a great deal of latitude. I have given everybody a great deal of latitude, but, I would like to, as I said before, start to zero-in on the relevant matters." T. 294.
"Let us start getting to the point where it becomes a little more relevant and not a little more ethereal." T. 295.
The testimony and the exhibits show that for a variety of reasons students in the Ocean Hill-Brownsville area have had many difficulties in prior years but that things are now improving. There have been overcrowded schools in the District and for that matter in the other districts in Brooklyn (defendants' Ex. B). The six elementary schools in the District are old but the Board of Education has approved new construction to replace each of them at a cost for construction estimated at three million dollars each (defendants' Exs. A and E, McCoy testimony pp. 125, 434-438).
Students in many schools of the City have performed below expectations on City-wide tests. The reasons for these results are explored in plaintiffs' exhibit 6 where it is stated (pp. 2-3 "Summary of Citywide Test Results for 1966-67"):
"When the results of the standardized reading achievement tests are considered in proper relationship to the other sources of information about the pupil, it is clear that the test results cannot be considered as an unqualified indication of the effectiveness of instruction. In the first place, the results refer to only a part of the pupil's general achievement. Secondly, in addition to the instructional effectiveness of the teacher there are other potent factors which strongly influence test results. Even a partial list of such factors will serve as a brief indication of the many factors other than the teaching during the period tested, which influence test results:
The child's pre-school experiences
The pupil's past educational history
The pupil's mobility from school to school
The quality and adequacy of instructional materials
The suitability of the physical plant
The pupil's language background, including Non-English speaking experiences
The pupil's attendance
The general out-of-school environment of the pupil.
*972 "Conversely, it is pertinent to observe that the factors of race or nationality, in themselves, are not causes of either high or low reading scores. If some ethnic groups of pupils are economically disadvantaged, the scores, on a group basis, often are below average. It is clear that this low achievement stems from the debilitating economic conditions, among other factors, and not from the fact of race."
Plaintiffs claim that decentralization legislation enacted by the Legislature was intended for the purpose of improving the quality of education for Black and Spanish-speaking children.
There is no evidence of thisit is an error. The Legislature was legislating for all children of our State, no matter what their color or national origin.
It is error for the plaintiffs to allege, as they do in paragraph "16" of the complaint as follows:
"16. The adoption of an educational system based upon decentralization and the involvement of the local community is an attempt to correct the denial of rights under the Thirteenth and Fourteenth Amendments to the United States Constitution hereinabove set forth."
There was no finding by the Legislature that there was a denial of the 13th and 14th Amendment rights. If one reads the Marchi Act and the Education Law, § 2553, the true meaning of the law is patent.
It must be recognized that the results of the Ocean Hill experiment have been greatly encouraging. The concept of community involvement is one that appears to have great possibilities. But even admitting all of this, the complaint, the papers and the testimony adduced do not allege any facts that can lead this Court to the conclusion that the present situation is one involving the danger of destruction of the Ocean Hill experiment. There has been no showing that the presence of the police in any way stifles the experiment. And while the competence of Mr. McCoy as an Educator is apparent, neither his removal nor that of the principals of the schools has been shown to be part of an attempt to destroy the experiment. The concept and its operation can certainly continue even if certain individuals are no longer part of the experiment. Mr. McCoy has no constitutional right to his job.
The Ocean Hill experiment is just that, an experiment. It is an attempt to see how the effectiveness of the educational structure may be improved. But the State should not be put into a constitutional straight-jacket, forbidding it from attempting other experiments. The alternative to segregation was some form of integrationthat was the clear alternative. There is no such obvious solution to the education problems of the large cities. The State should not be prevented from ending one experiment and trying others, if the action is taken in good faith, without discriminatory intent or result.
The acts complained of by plaintiffs are not sufficient to establish the jurisdiction of this Court.
The Suspension of the Governing Board.
The Governing Board was suspended only after it had refused to return a number of the disputed teachers to teaching assignments despite contrary instructions of the Central Board issued after the charges against the original 10 teachers had been dismissed for insufficient evidence. The validity of this suspension was attacked in State Court but the suspension was sustained. Ocean Hill-Brownsville Governing Board v. Board of Education, 30 A.D.2d 447, 294 N.Y.S.2d 134 (1968), Education Law § 2564, subd, 2.
The Reassignment of the Unit Administrator.
Here, too, the reassignment was required when Mr. McCoy stated he would obey the instructions of the Governing *973 Board rather than those of the Central Board on the assignment of the disputed teachers (see Defendants' Ex. C, McCoy testimony p. 449). Mr. McCoy has, since this hearing, been reinstated.
The Reassignment of the Principals.
The majority of principals have been returned to their schools in the District after a brief period.
The Closing of I.S. 271.
I.S. 271 was closed briefly because of disturbances in and around the school. It has been reopened. This issue is moot.
Stationing Police in the Ocean Hill-Brownsville District.
The question of assignment of police is a matter of public safety best left to the judgment of the Police Commissioner and the Mayor. Where public disorder is likely or actually taking place, it would be shortsighted to say the least not to provide police in sufficient numbers to protect life and property in the area. Police are in short supply and will be assigned to the area only while the need for their presence is manifest.
Financial Penalties for Striking Teachers.
Salary payments to striking teachers have been stopped. A Taylor Act proceeding is pending against the United Federation of Teachers in New York County. The school schedule will be extended so that some of the time lost may be made up by the teachers. However that may be, the lost time needs to be made up for the benefit of the children and to prevent the loss of State aid (Donovan affidavit).
Conducting Separate Negotiations with the United Federation of Teachers.
By now it is apparent that the parties have negotiated together and separately. Mayor Lindsay, the Board of Education and Dr. Donovan have met at great length with all parties to the dispute and with the Commissioner of Education. Negotiations where all parties were present were conducted in the presence of the Court. The Board of Education has a contract with the United Federation of Teachers. The contracting parties are not barred by any provision of law from conducting their negotiations in the absence of the plaintiffs.
The foregoing items are the more important "overt acts" disclosed by the record that might be claimed to support plaintiffs' allegations as to the jurisdiction of this Court and their claim for injunctive and declaratory relief.
Defendants, other than Albert Shanker, are public officials with duties imposed upon them by law. They cannot abdicate their responsibilities or delegate them to local groups, however well motivated, in the absence of statutory authority. Plaintiffs proceeded beyond their authority and when stopped claimed a violation of their constitutional rights. There has been no showing made before this Court to justify their claim even though the Court was most liberal in the latitude it gave plaintiffs for the production of testimony and exhibits.
The plaintiffs claim that in recognition of the constitutional obligation under the 13th Amendment, the New York State Legislature and the New York City Central Board authorized and established the Ocean Hill-Brownsville experimental district; that this was done pursuant to acceptance by the Legislature and said Board of the proposal that decentralization is an important method of eliminating for black children the badge of inferiority attendant to an inferior education; and that it is the obligation of this Court to protect the rights of plaintiffs by restraining the defendants from interference with or further disruption of the educational system now in progress in the Ocean Hill-Brownsville district.
This is not consistent with the facts and the laws of the State of New York.
The plaintiffs also allege a violation of the 14th Amendment and claim that *974 the New York Legislature passed the Marchi law, in which it was recognized, as a legislative finding, that decentralization of the New York City Schools was required as a method of insuring to minority group children the right to receive equal education; that the defendants are destroying decentralization or encouraging its destruction.
These facts are not consistent with the law cited or the proof adduced.
The plaintiffs rely upon Reitman v. Mulkey, 387 U.S. 369, 87 S.Ct. 1627, 18 L.Ed.2d 830. In that case, the Supreme Court of the United States reviewed a decision of the California Supreme Court which held that an article of the California Constitution violated the equal protection clause of the 14th Amendment. The Supreme Court held that the article in the California Constitution, prohibiting the state from denying the right of any person to sell, base or rent his real property to anyone he chooses, would involve the state in private racial discrimination to an unconstitutional degree.
It appears that by vote in 1964, the people of California placed in the state Constitution a provision forbidding the state from interfering with the right of persons to sell their real property to whomever they wished. The Supreme Court held that this provision gave the people the right to discriminate, free from state control, and that this meant that the state would be involved in "private racial discrimination to an unconstitutional degree." It is necessary "for a court to assess the potential impact of official action in determining whether the state has significantly involved itself with invidious discriminations."
If the education of the Negroes is so bad as to violate the 13th or 14th Amendment, the state cannot hide behind its laws, or let popular opinion, strikes, etc., make it refrain from correcting the wrongs, else by its very disassociation with events, it is countenancing, and a part of, the wrongs involved.
These facts are in no way similar to the issues in the case before this Court.
The plaintiffs also make much of their reliance upon the Cooper v. Aaron case, 358 U.S. 1, 78 S.Ct. 1401, 3 L.Ed.2d 5, 1958. This is the case arising out of the Little Rock crisis. After the Brown decision, the Little Rock School Board prepared a desegregation plan. The Governor surrounded the schools with troops and tensions became unmanageable. The School Board asked Negro students to stay away from school until the legal problems were settled. A suit was brought to enjoin the Governor and National Guard from attempting to prevent obedience to the court's order. After further problems, the President sent federal troops to Little Rock.
After all of this, the School Board and Superintendent of Schools filed a petition in the District Court seeking a postponement of the desegregation program because of extreme public hostility, which prevented a school program from being carried out. The District Court found that there was "chaos, bedlam and turmoil" in the schools, with violence against the Negro students and unrest among the teachers and administrators that affected the educational program. The delay was granted and the case taken to the Supreme Court.
The Court held that: from the point of view of the 14th Amendment, members of the School Board and Superintendent of Schools stand as agents of the state; their good faith would not constitute legal excuse for delay in implementing desegregation plans, where the vindication of constitutional rights was rendered difficult by other state officials; the constitutional rights of respondents are not to be sacrificed or yielded to the violence and disorder which followed upon the actions of the Governor and Legislature, especially when the problems could have been brought under control by state action; and no agency of the state could deny to any person the equal protection of the laws (14th Amendment).
*975 The Cooper case is different from the present case. The problems in Little Rock causing the School Board's request were "considered in light of the fact * * * that the conditions * * * are directly traceable to the actions of legislators and executive officials of the State of Arkansas, taken in their official capacities * * *." (358 U.S. 1, at 15, 78 S.Ct. 1401, at 1408.)
The request for a delay involved a defiance of a direct mandate of the Supreme Court end segregation in the schools. There is here no defiance of any such concrete constitutional mandate, if any at all. No one has yet made the finding that centralization of schools is as heinous as is segregation. It is yet to be established indeed, it's the very question we must first consider that a constitutional right has been denied to anybody.
On the other hand, New York State has led the way in trying to achieve quality education for all. The Marchi Act, a move towards school decentralization, is one such step. For the first time it gives the Board of Education a lawful basis for the delegation of some of its functions and duties to local school boards. The Central Board has adopted a decentralization program and the Regents approved it, effective October 18, 1968 (Loflin affidavit). So long as local school boards operate within the scope of the powers delegated to them and the relevant provisions of the Education Law, there will be no unlawful "interference" with their activities by these defendants. The Board of Education and the Mayor are dedicated to the support of school decentralization and the desire to bring quality education to all of the children of this City. Obviously there have been serious and unfortunate disputes between the parties but they did not arise under, or by virtue of any deprivation of rights protected by, the Constitution or laws of the United States.
This Court is very much aware of the legislative action in the field of education for the past many years.
For the school year 1958-59 the state budget allowed $585 million total aid to education for the state. Total aid to education for New York City for that period was $159 million.
For the school year 1964-65 the state budget allowed $1,062 million total aid to education for the state. Total aid to education for New York City for that period was $262 million.
The state-wide increase for that six-year period was 82 per centum.
The New York City increase for the same six-year period was 65 per centum.
During the succeeding four-year period the aid was greater and the percentage to New York City rose.
For the school year 1968-69 the state budget allowed $1,888 million total aid to education for the state. Total aid to education for New York City for that period was $509 million.
The state-wide increase for the four-year period was 78 per centum.
The New York City increase for the four-year period was 95 per centum.
There can be no argument that our state has not done much by way of financial aid to education in the light of its many other problems.
All of the financial aid set forth above is over and above the millions granted to New York City for the so-called "SEEK" program, which has proven to be most successful. This program is exactly what the title suggests seek out the less fortunate, those whose marks do not qualify them for higher education and give them a chance to make good. One only needs to make inquiry about this program to find that the word discrimination is a word of the past in New York City.
Likewise, particularly in the last ten years, all New York laws having something to do with education granted the same privileges to all, regardless of race or place of national origin.
*976 In fact, there is no claim in the matter before the Court that any law of New York discriminates or is violative of any United States Constitutional provision or United States Statute.
One can, therefore, ask, why did the Marchi Law (Ch. 568, L. of 1968) come about?
For many years legislators sought more financial aid for New York City for education. There were those who argued that New York City was receiving its proper share under the existing formulae. New York City was receiving its share on the basis of one entity. The rest of the state was receiving theirs on school district and/or county basis. The property values in New York County were so high as compared to the other four counties in New York City, that, when it was figured in with the other four counties, it reduced New York City's aid share. However, if the aid could be measured on a county basis, the poorer county would receive more and not be affected by the richer county. This move was successful and aid was granted to New York City on a five-county basis. As a result, New York City received $104 million more than it would have received under the then-existing formula. This happened during the 1966 Session of the Legislature. A section of the law stated that in order to continue receiving aid on a five-county basis, New York City was directed to propose to the 1967 Session of the Legislature a program to decentralize New York City into a meaningful five-part system and not continue to have one school district and receive aid based upon five school districts.
During the 1967 Session of the Legislature many proposals were offered. There were the so-called Regents Plan, the Bundy Plan, the New York City Plan and many others. No plan could be agreed upon and a bill was passed which in substance extended the problem for another year. (Chapter 484, Laws of 1967).
The 1968 Session of the Legislature wrestled with the problem again and as a compromise the Marchi Bill was passed, which in substance extends the problem for another year.
One should take note that the problem went from one of finance and how to get New York City more money based on a five-county aid program to one of decentralization within counties as we now see it in the light of existing circumstances.
Pressure is now put on the Legislature to do something about decentralizing the entire New York City for local school district purposes, and properly so, but losing sight of the original finance problem which must also be settled or New York City will lose the additional aid.
The Marchi Bill took this into consideration and, in fact, the New York City allotment on the five-county basis was only permitted in order to get support for the Marchi Bill.
The Court will not go into the questions raised by the defendants such as "the appropriate remedy at law must be found in the State Courts" or "that adequate remedies at law are through the State Courts." This Court could certainly decide those questions, if it would reach that point.
The only question before the Court at this point is does this Court have jurisdiction?
The motion this Court must now decide is the motion of the defendants to dismiss for want of jurisdiction, since it was made at the close of the plaintiffs' case on the question of jurisdiction.
Much of the relief sought by the plaintiffs is moot since the teachers' strike was settled.
On the basis of the foregoing, the motion of the defendants to dismiss for want of jurisdiction is granted and the proceeding dismissed.
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723 A.2d 804 (1998)
Jeffrey B. PINE et al.
v.
Peter KALIAN et al.
No. 98-146-Appeal.
Supreme Court of Rhode Island.
October 28, 1998.
Donald J. Nasif; Lloyd A. Rustigian, Johnston.
Terence J. Tierney, Providence, Gregory A. Mancini, Riverside.
ORDER
This case came before a panel of the Supreme Court on October 20, 1998, pursuant to an order directing the parties to appear and show cause why the issues raised in this appeal should not be summarily decided. The defendants, Peter Kalian and Robert Kalian, have appealed from the entry of an order granting a preliminary injunction requiring the defendants to abate all lead hazards from their premises at 11-13 Moore Street in Providence. The plaintiffs are the Attorney General of Rhode Island and the *805 Director of the Department of Health. After hearing the arguments of counsel and considering the memoranda submitted by the par ties, we are of the opinion that cause has not been shown. Therefore, the appeal will be decided at this time.
For at least 10 years, defendants have owned or controlled the subject premises that repeatedly were the subject of numerous housing code violations. In addition, significant amounts of lead on the premises have been found to constitute a hazard to the public and to children, in particular. In February, 1998, after trial in the Superior Court, a preliminary injunction was granted requiring defendants to engage a licensed lead abatement contractor for removal of the lead hazard and to place all rental revenues in an escrow account for the purpose of financing the cost of the abatement. This Court denied a motion to stay the order granting the injunction and pursuant to G.L.1956 (1997 Reenactment) § 9-24-7 placed this appeal on an expedited basis. The parties were directed to submit memoranda for consideration.
In deciding plaintiffs' motion for preliminary injunctive relief, the trial justice found that plaintiffs demonstrated a substantial likelihood of success on the merits, that the persistence of the continuing hazard of lead paint presents immediate and irreparable harm to the public so long as that hazard remains unabated, and that defendants will suffer no greater hardship than that of any other residential rental property owner who has removed lead paint.
It is our opinion that the trial justice carefully evaluated the essential factors in assessing the propriety of granting the injunction. He described defendants as "obstructive" and "noncompliant * * * to the point of out-right defiance," citing their numerous past violations and their knowing and deliberate refusal to comply with court orders. It is our conclusion that the arguments raised by defendants in their appeal of the decision of the Superior Court granting plaintiff's preliminary injunction are without merit.
This Court explained in Giacomini v. Bevilacqua, 118 R.I. 63, 372 A.2d 66, 67 (1977),
"`The granting of a preliminary injunction which merely preserves the status quo between the parties pending a hearing on the merits will not be disturbed on appeal absent a showing of an abuse of the trial court's discretion. * * * However, [w]hen an injunction mandatory in the nature is asked for, a stricter rule obtains. Owing to the extraordinary character of the remedy it should be granted on preliminary application only in cases of great urgency and when the right of the complainant is very clear.' Smart v. Boston Wire Stitcher Co., 50 R.I. 409, 415, 148 A. 803, 805 (1930)."
The findings of the trial justice clearly support the issuance of a mandatory injunction in this case. Therefore, we deny and dismiss the defendants' appeal and affirm the judgment of the Superior Court to which we remand the papers in the case for further proceedings.
Justices FLANDERS and GOLDBERG did not participate.
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United States Court of Appeals,
Fifth Circuit.
No. 96-50882.
UNITED STATES of America, Plaintiff-Appellee,
v.
Johnny Candido MANSOLO, Defendant-Appellant.
Nov. 18, 1997.
Appeal from the United States District Court for the Western
District of Texas.
Before WISDOM, SMITH and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
On April 19, 1996, Appellant Johnny Mansolo was involved in a
gun-shooting incident. The police subsequently discovered that the
gun used by Mansolo had been stolen and that its serial number had
been filed off. As a result, Mansolo was indicted on two counts:
possession of a stolen firearm in violation of 18 U.S.C. § 922(j),
and possession of a firearm with an obliterated serial number in
violation of 18 U.S.C. § 922(k). A jury convicted Mansolo on both
counts on August 20, 1996.
On November 7, 1996, Mansolo received 120 months imprisonment
under the § 922(j) count, and 30 months imprisonment under the §
922(k) count, the latter running consecutively to the former.
Mansolo was also ordered to serve a three-year term of supervised
release as to each count, to be served concurrently. Finally, he
was fined in the amount of $1,000 as to each count and subjected to
a mandatory assessment of $200.
Mansolo appeals claiming that his convictions and sentences
1
arising from one indictment alleging violations of two separate
subsections of § 922 violate the Double Jeopardy Clause of the
Constitution. Mansolo also claims that the imposition of
consecutively running sentences was in error.
I.
Mansolo argues that his separate convictions under § 922(j)
and § 922(k) violate principles of double jeopardy.1 He cites the
familiar Blockburger rule, noting 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 one, is whether each provision requires proof
of a fact which the other does not." United States v. York, 888
F.2d 1050, 1058 (5th Cir.1989) (citing Blockburger v. United
States, 284 U.S. 299, 304, 52 S.Ct. 180, 182, 76 L.Ed. 306 (1932)).
Relying on this Circuit's decision in United States v. Munoz-Romo,
989 F.2d 757 (5th Cir.1993), Mansolo asserts that "violating two
subsections of 18 U.S.C. § 922 is not, in the sense contemplated by
the Supreme Court in Blockburger, "a violation of two distinct
statutory provisions.' " He thus insists that consecutive
sentences for convictions under different subsections of § 922 for
possession of a single gun on a single occasion are multiplicious
and violate congressional intent.
However, this Court has previously held in United States v.
Nation, 832 F.2d 71 (5th Cir.1987), that separate sentences are
1
While Mansolo did not raise this objection at trial, the
parties are in agreement that this does not bar appellate review.
See United States v. Corona, 108 F.3d 565, 572 (5th Cir.1997).
2
permitted for separate violations of § 922(g)(1) (shipping and
transporting of a firearm by a convicted felon) and § 922(i)
(shipping and transporting a stolen firearm) because each violation
requires proof of different elements. As in the Nation case, the
separate sections of § 922 which Mansolo violated each require
proof of different elements.2
Our task therefore is to determine whether the holding in
Munoz-Romo or the holding in Nation controls our decision in this
case. We conclude that Munoz-Romo is not controlling. First,
because Munoz-Romo involved clearly different statutory provisions
(§ 922(g)(1) & (5)), that holding does not necessarily control the
result in this case. Furthermore, Munoz-Romo involved different
subparts of a single subsection of § 922, while this case involves
two separate subsections of § 922.
The Nation case is certainly closer to the circumstances
involved in this case than Munoz-Romo, and the two cases' holdings
are not inconsistent. The decision in Nation was based solely on
the Blockburger analysis. The subsequent Munoz-Romo case adds to
the analysis an additional inquiry as to whether Congress intended
separate sentences to be imposed for violations of the separate
crimes. The conclusion reached in Munoz-Romo depended on the
determination that the "language and structure of § 922(g) disclose
a clear Congressional intent not to impose cumulative punishments
2
A conviction under § 922(j) requires proof that the defendant
knew the firearm was stolen, while a conviction under § 922(k) does
not. A conviction under § 922(k) requires proof that the serial
number of the firearm was obliterated, while a conviction under §
922(j) does not.
3
when, because of the offender's status, possession of a single
weapon violates two subdivisions of subsection (g)." Munoz-Romo,
989 F.2d at 759. We read Munoz-Romo, and particularly the
references therein to the Eleventh Circuit's decision in United
States v. Winchester, 916 F.2d 601 (1990), as focusing its analysis
on whether Congress fixed a separate punishment for each of the
subsections of § 922 involved, and if so whether Congress fixed a
separate punishment for any subpart of each such subsection.
Clearly, Congress has fixed separate punishments for both § 922(j)
and § 922(k), see 18 U.S.C. § 924(a)(1)(B) & (a)(2), and there are
no subparts to either § 922(j) or (k). Therefore this case is
virtually indistinguishable from Nation, which involved § 922(g)(1)
and § 922(i). Thus, we hold that there was no error in permitting
Mansolo to be tried and convicted under both 18 U.S.C. § 922(j) and
18 U.S.C. § 922(k).
II.
The statutory maximum sentence for violations of 18 U.S.C. §
922(j) is 120 months of confinement. The statutory maximum
sentence for violations of 18 U.S.C. § 922(k) is 60 months of
confinement. Mansolo was convicted of violations of both of these
subsections of § 922, and was given consecutive sentences which
resulted in a total sentence of 150 months of confinement. The
district court sentenced Mansolo to the maximum sentence for the
violation of § 922(j), 120 months, and then an additional 30 months
of confinement for the violation of § 922(k). Mansolo contends
that because the combined sentences for the two convictions exceed
4
the greater of the two statutory maximums, the sentence was imposed
in error.
Plain error review applies on this point. No objection was
registered at trial. In order to redress errors to which there was
no objection at trial, the Court must ascertain that (1) there was
error, (2) the error was plain, (3) the error affects substantial
rights, and (4) if not corrected, the error would seriously affect
"the fairness, integrity or public reputation of judicial
proceedings." United States v. Olano, 507 U.S. 725, 731-32, 113
S.Ct. 1770, 1776, 123 L.Ed.2d 508 (1993).
Based upon Mansolo's total offense level of 26 and his
criminal history category of VI, the sentencing range imposed by
the Guidelines was 120 to 150 months. See U.S.S.G. ch. 5, pt. A
(1995) (sentencing table). The district court imposed a sentence
at the high end of the permitted range, and the Sentencing
Guidelines plainly provide:
If the sentence imposed on the count carrying the highest
statutory maximum is less than the total punishment, then the
sentence imposed on one or more of the other counts shall run
consecutively, but only to the extent necessary to produce a
combined sentence equal to the total punishment. In all other
respects sentences on all counts shall run concurrently,
except to the extent otherwise required by law.
U.S.S.G. § 5G1.2(d) (1995).
Rollins v. United States, 543 F.2d 574 (5th Cir.1976), cited
by Mansolo, is inapposite. Rollins involved the imposition of
cumulative sentences for the possession of an unregistered firearm
in violation of 26 U.S.C. § 5861(d) and possession of a firearm
with an unidentified serial number in violation of 28 U.S.C. §
5
5861(i). Unlike the situation presented by Mansolo's case, in
Rollins it was unnecessary to offer any additional proof to
establish the violation of one of the charged offenses if the other
had been proved. In other words, consecutive sentences for the two
offenses charged in Rollins would have violated the Double Jeopardy
Clause under Blockburger. Thus, the situation in Rollins is
distinguishable from the present case.
There does not appear to be any error below—certainly not any
error that would rise to the plain error standard.
III.
Accordingly, the judgment of the district court is AFFIRMED.
6
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290 F.3d 386
IN RE: BRUCE EDWARD BABBITT, (Babbitt Fee Application).
Division No. 98-1.
United States Court of Appeals, District of Columbia Circuit.
Filed May 21, 2002.
Division for the Purpose of Appointing Independent Counsels Ethics in Government Act of 1978, As Amended.
Before: SENTELLE, Presiding, FAY and CUDAHY, Senior Circuit Judges.
1
Opinion of the Special Court filed by Circuit Judge SENTELLE.
2
Opinion concurring in part and dissenting in part filed by Senior Circuit Judge CUDAHY.
PER CURIAM
ORDER
3
This matter coming to be heard and being heard before the Special Division of the Court upon the application of Bruce Edward Babbitt for reimbursement of attorneys' fees and costs pursuant to section 593(f) of the Ethics in Government Act of 1978, as amended, 28 U.S.C. § 591 et seq. (1994), and it appearing to the court that the application is allowable only to the extent reflected in the opinion issued contemporaneously herewith, it is hereby
4
ORDERED, ADJUDGED, and DECREED that the United States reimburse Bruce Edward Babbitt for attorneys' fees and expenses he incurred during the investigation by Independent Counsel Carol Bruce in the amount of $52,091.94 this 21st day of May, 2002.
ON APPLICATION FOR ATTORNEYS' FEES
SENTELLE, Circuit Judge:
5
Bruce Edward Babbitt petitions this court under Section 593(f) of the Ethics in Government Act of 1978, as amended, 28 U.S.C. § 591 et seq. (1994) (the "Act"), for reimbursement of attorneys' fees in the amount of $206,265.16 that he incurred during and as a result of the investigation conducted by Independent Counsel ("IC" or "OIC") Carol Elder Bruce. Because we conclude that with one relatively minor exception Babbitt has not carried his burden of showing that the fees would not have been incurred but for the requirements of the Act we deny the petition in large part while allowing recovery as to one element.
BACKGROUND
6
In 1993 a joint venture consisting of three Indian tribes and the owner of a dog track in Hudson, Wisconsin, applied to the U.S. Department of the Interior ("DOI") requesting permission to take the dog track into trust in order to establish a casino on the property, as permitted under certain conditions by federal law. See 25 U.S.C. § 2701 et. seq. The joint venture hired as a lobbyist Paul Eckstein, a friend and former law partner of the Secretary of the Interior, Bruce Edward Babbitt. On July 14, 1995, with denial of the application by the DOI imminent, Eckstein met alone with Babbitt in Babbitt's office seeking to delay the denial until Babbitt could meet with the leaders of the joint venture. The DOI nevertheless issued the denial later that same day. Eckstein subsequently testified in a civil suit challenging the Hudson application decision that when he requested the delay, Babbitt informed him that Harold Ickes, the White House Chief of Staff, had called and directed that Babbitt make a decision concerning the casino request that day.
7
Eckstein also alleged that during their meeting Babbitt informed him that certain Indian tribes opposed to the casino had contributed a substantial amount of money to the Democratic National Committee or other Democratic interests. About this same time there were allegations that the DOI's decision to deny the casino application was influenced by the donations made to the Democrats by the opposing tribes.
8
Eckstein's statements about his conversation with Babbitt were thereafter reported in the press. Two congressional committees, the Senate Governmental Affairs Committee and the House Committee on Government Reform and Oversight, then conducted investigations into the matter. Upon questioning of Babbitt by committee members of his conversation with Eckstein, Babbitt responded that he had never discussed the casino matter with Ickes and he disputed Eckstein's assertion that he told Eckstein that Ickes had instructed him to issue the decision that day. He further stated that he may have told Eckstein that Ickes wanted or expected the DOI to decide the matter promptly but that if he said this it was only an effort to terminate the meeting.
9
Thereafter, the Attorney General (hereinafter referred to as "AG" or "DOJ"), pursuant to section 592(a) of the Act, conducted a preliminary investigation to determine whether further investigation was warranted into whether Babbitt made false material statements in his responses to the congressional inquiries. On February 11, 1998, at the conclusion of the preliminary investigation, the AG, having determined that further investigation was warranted, submitted her application to us for the appointment of an independent counsel to look into the matter (hereinafter referred to as "Application"). The AG recommended that the independent counsel's prosecutorial jurisdiction include not only federal perjury and false statements violations by Babbitt but also, to the extent necessary to resolve these issues, the DOI's casino decision itself.
10
On March 19, 1998, we appointed Carol Elder Bruce as independent counsel to further investigate the allegations. After an investigation lasting 21 months that included numerous interviews, extensive document review, and substantial grand jury activity, IC Bruce concluded her investigation without bringing criminal charges against any person. Pursuant to the statute, the IC submitted a final report to this court on January 3, 2000. See 28 U.S.C. § 594(h)(1)(B). We ordered the report made public by order of August 22, 2000.
11
Babbitt, pursuant to section 593(f)(1) of the Act, has petitioned this court for reimbursement of the attorneys' fees he incurred during the IC's investigation. As directed by section 593(f)(2) of the Act, we forwarded copies of Babbitt's fee petition to the Attorney General and the IC and requested written evaluations of the petition. The court expresses its appreciation to the IC and the Attorney General for submitting these evaluations, which we have given due consideration in arriving at the decision announced herein.
ANALYSIS
The Independent Counsel statute provides:
12
Upon the request of an individual who is the subject of an investigation conducted by an independent counsel pursuant to this chapter, the division of the court may, if no indictment is brought against such individual pursuant to that investigation, award reimbursement for those reasonable attorneys' fees incurred by that individual during that investigation which would not have been incurred but for the requirements of this chapter.
13
28 U.S.C. § 593(f)(1). Accordingly, in order to obtain an attorneys' fees award under the statute, a petitioner must show that all of the following requirements are met:
14
1) the petitioner is a "subject" of the investigation;
15
2) the fees were incurred "during" the investigation;
16
3) the fees would not have been incurred "but for" the requirements of the Act; and
17
4) the fees are "reasonable."
18
See In re North (Dutton Fee Application), 11 F.3d 1075, 1077-82 (D.C.Cir., Spec. Div., 1993) (per curiam). Because we find that Babbitt fails to satisfy the third requirement, known as the "but for" test, we need not address the remaining requirements.
19
* * * * * * * * * *
20
We have previously established that "[a]ll requests for attorneys' fees under the Act must satisfy the `but for' requirement." In re Sealed Case, 890 F.2d 451, 452 (D.C.Cir., Spec. Div., 1989) (per curiam). And we have repeatedly held that "[t]he most difficult element for a fee applicant to establish under the Act is that the fees `would not have been incurred but for the requirements of [the Act].'" In re North (Bush Fee Application), 59 F.3d 184, 188 (D.C.Cir., Spec. Div., 1995) (per curiam) (quoting Dutton, 11 F.3d at 1079). In order to establish eligibility for an award, the fee applicant must show that the amounts claimed are only those fees and expenses above and beyond those he would have incurred as a result of an investigation by the DOJ. In re Sealed Case, 890 F.2d at 452-53. As we stated in In re Pierce (Olivas Fee Application), 178 F.3d 1350, 1355 (D.C.Cir., Spec. Div., 1999) (per curiam), "[i]f the investigative act generating the defensive costs would, in the absence of the Act, have been pursued by other authorities—`had the case been handled by the Department of Justice or other executive authorities rather than the Independent Counsel' — then Congress did not contemplate the award of counsel fees. In re North (Dutton Fee Application), 11 F.3d at 1080."
21
Babbitt argues that he satisfies the "but for" requirement under three distinct theories.
22
Subjected to a more rigorous application of the criminal law. First, Babbitt claims that the IC's investigation subjected him to a more rigorous application of the criminal law than he would have been subjected to in the absence of the Act because the IC's extensive investigation went far beyond the realm of any ordinary investigation of the same crimes. In support of this contention, Babbitt cites to section 592(a)(2)(B)(ii) of the Act which states that for the AG, after conducting a preliminary investigation, to determine that no further investigation is warranted because the person being investigated lacked the required state of mind for a violation, the evidence relied on to make this determination must be "clear and convincing." Babbitt argues that "[s]ince the potential crimes here under investigation, perjury and false statements, both require proof of criminal intent, section 592(a)(2)(B)(ii) — uniquely in this case — required prosecutive actions that demonstrably subjected Secretary Babbitt `to a more rigorous application of the criminal law.'" Absent the constraints of section 592(a)(2)(B)(ii), Babbitt contends that "the Attorney General may very well have exercised her normal prosecutorial discretion to terminate the investigation" at a much earlier stage.
23
Babbitt further claims that he was subjected to a more extensive and rigorous investigation than an ordinary citizen would endure under similar circumstances because "[t]he OIC investigation ... extended well beyond the bounds of a typical investigation of a private individual into perjury or false statements charges based on similar facts." These "similar facts," he states, "mostly concerned a slight discrepancy in two men's recollection of a brief, hurried one-on-one conversation that took place more than two years before either man testified about it." Therefore, according to Babbitt, the IC's investigation was more extensive and rigorous than would ordinarily have occurred because in addition to the conversation between Babbitt and Eckstein "— the sole basis of the Attorney General's application — the OIC also conducted an exhaustive investigation of the underlying decision-making process in the Hudson Casino, as reflected in the nearly 300 pages the OIC devoted to that issue in the Final Report."
24
While Babbitt acknowledges that this court gave the OIC jurisdiction to investigate the DOI's underlying decision in the Hudson case "[t]o the extent necessary to resolve the allegations that Secretary Babbitt made false statements concerning th[e] decision," Order Appointing Independent Counsel, March 19, 1998, he argues that "the OIC went well beyond what would have been undertaken by an ordinary prosecutor's office in a case involving an ordinary man." For authority, Babbitt relies on our decision in In re Sealed Case, where we found the "but for" requirement fulfilled as the fee applicant was subjected to a more rigorous application of the criminal law than is applied to other citizens because the IC was appointed to investigate the applicant's 1981, 1982, and/or 1984 tax returns but actually examined the applicant's tax returns for nine years, from 1976 to 1984. We noted that "the ordinary examination of a taxpayer for [the same] violation would have been substantially less probing." 890 F.2d at 453-54.
25
The issue here, however, is not what would have resulted if an "ordinary prosecutor's office" had investigated an "ordinary man." As the IC points out, Babbitt cannot compare himself to an "ordinary citizen" because this case has "the unique circumstances of perjury allegations concerning a cabinet officer's testimony before a Senate committee about matters involving the financing of national contests." In In re Nofziger, 925 F.2d 428, 443 (D.C.Cir., Spec. Div., 1991) (per curiam), we observed that in order "[t]o determine whether the subject of an independent counsel investigation has been subjected to a more rigorous application of the criminal law, the court must compare the investigation of the subject of the independent counsel investigation with an investigation into possible violations of the same statute conducted in the absence of the Independent Counsel Act." (emphasis in original). In this instance the investigation by the Independent Counsel must be compared with an investigation by the United States Department of Justice of Babbitt in his capacity not as an "ordinary man" but as Secretary of the Interior. Cf. id. ("[T]he comparison must be between the investigation of Nofziger, a former high-government official subject to the Act, for alleged violations of section 207(c) and the regular investigation of a similar, high-government official subject to section 207(c) who is not covered by the Independent Counsel Act."). We therefore agree with the IC that "in the face of allegations that a cabinet officer had committed perjury and made false statements to a U.S. Senate committee, the Justice Department would have conducted an investigation and Babbitt would have incurred substantially the attorney fees for which he now seeks reimbursement."
26
The IC makes the further argument that in this case "[t]he greater question was whether Babbitt and his staff were informed that Ickes and his staff sought a particular outcome or timing to the outcome of the Hudson Casino Application" and that, considering the AG's identification for investigation of the Hudson Casino application and issues relating to campaign finance contributions, Babbitt would have been subjected to an investigation of the same rigor and scope by the Department of Justice as he was by the Independent Counsel. We note that the circumstances surrounding the independent counsel investigation of Babbitt are similar to those in the independent counsel investigation of U.S. Department of Housing and Urban Development ("HUD") Secretary Samuel R. Pierce, Jr. in the early 1990's. In that case, allegations of abuses, favoritism, and mismanagement at HUD under the tenure of Pierce led to the appointment of an independent counsel to investigate whether Pierce and other HUD officials may have conspired to defraud the United States or committed other federal crimes related to their duties at HUD. That independent counsel investigation also took a considerable amount of time and delved deep into the decision-making process at HUD. In denying all requests except one for attorneys' fees in that matter for failure to meet the "but for" requirement, we held that "[t]he convoluted nature of the corruption involved and the high profile identity of the suspects and defendants would no doubt have resulted in a complex and lengthy investigation with or without the appointment of an independent counsel." In re Pierce (Kisner Fee Application), 178 F.3d 1356, 1361 (D.C.Cir., Spec. Div., 1999) (per curiam). So too here. The serious nature of the perjury and corruption allegations, the considerable number of witnesses involved in the casino application process, and the high profile identity of those involved would have resulted in an investigation of similar length and breadth if it had been undertaken by the Department of Justice in the absence of the Independent Counsel Act.
27
The Act restricted the AG's preliminary investigation. Babbitt next argues that the "but for" requirement is satisfied in this case because the Attorney General's preliminary investigation was hindered by the restrictive provisions of the Independent Counsel Act which prevented her from making conclusive credibility determinations and exercising her prosecutorial discretion to terminate the investigation. In support of this argument, Babbitt submits that in the AG's Application her "statements regarding the attenuated quality of the evidence on falsity, materiality, and criminal intent make clear that, absent (`but for') the requirements of the Independent Counsel Act restricting the Attorney General's ability to call witnesses, issue subpoenas, and make credibility determinations, she could and likely would have disposed of the case without seeking appointment of an independent counsel." In this regard, Babbitt compares his case to In re Donovan, 877 F.2d 982, 987-90 (D.C.Cir., Spec. Div., 1989), (per curiam) where we found the "but for" requirement satisfied because the alleged wrongdoing was based upon a single allegation by a single witness of extremely questionable credibility, and that if the AG had not been prohibited by the Act from convening grand juries, plea bargaining, and issuing subpoenas, then he would have been better able to evaluate the credibility of the witness and dispose of the case much sooner and at much lower cost. Likewise, Babbitt claims that he too "was subjected to an expensive and extensive investigation that, at its core, required a determination as to his credibility and state of mind that the Attorney General could have made had she been able to follow the Justice Department's usual process of calling witnesses and issuing subpoenas."
28
In response, the Independent Counsel argues that even if the AG was not limited by the Act in conducting her preliminary investigation, she would nevertheless have conducted an extensive investigation of this matter. Quoting from In re Sealed Case, 890 F.2d at 453, the IC notes that under the "but for" analysis, the question is whether any of the Act's restrictions "interfered with [the AG's] ability to conduct an adequate preliminary investigation" and, had the Attorney General not been so limited, whether the circumstances of this case are such that Babbitt "might have been subjected to a lesser investigation, or perhaps exonerated at this early stage." In arguing that Babbitt would have been subjected to a similar investigation by the DOJ, the IC cites to the AG's Application, which states in pertinent part:
29
[B]ecause of the close connection between the potential perjury and the underlying casino decision, I recommend that the Independent Counsel's prosecutorial jurisdiction specifically include any potential criminal violations in connection with the underlying casino decision that may emerge during the course of the investigation of the potential perjury and false statement allegations, insofar as exploration of those matters is deemed necessary to resolve these allegations.
30
Application at 8-9. Because the AG specifically mentions the possible investigation of the "underlying casino decision," the IC argues that if DOJ had been free to investigate this matter to conclusion on its own then, in order to resolve the perjury allegation, it would have explored the facts surrounding the underlying casino application and the campaign contributions that some parties claimed had influenced the process. We agree.
31
In Nofziger, the independent counsel was appointed to investigate whether the fee applicant had engaged in illegal lobbying communications within the prohibited one-year period after leaving his position at the White House. In denying the petitioner attorneys' fees because of his failure to satisfy the "but for" requirement, we noted that in the application to the court for appointment of independent counsel, the Acting Attorney General "did not complain that the limitations on his ability to investigate had `hampered' or restricted his preliminary investigation." 925 F.2d at 439 (emphasis in original). In the case before us, the AG in her Application also made no such complaint. As previously noted, Babbitt claims that the AG in her Application made "statements regarding the attenuated quality of the evidence on falsity, materiality, and criminal intent." But although the AG stated in her Application that there was "evidence suggesting that Secretary Babbitt lacked criminal intent," she nevertheless stated on the issue of "falsity" that "[t]he investigation has determined that there is specific and credible evidence indicating that Secretary Babbitt may have testified falsely" about his conversation with Eckstein, and concerning the issue of "materiality," the AG stated that "[e]vidence that the Secretary of the Interior, on the day the [Hudson Casino decision] issued, made a statement suggesting that the White House Deputy Chief of Staff was dictating the decision's timing would appear to be capable of influencing the nature and extent of the [Senate Governmental Affairs Committee's] inquiry and findings." We consequently find, paraphrasing Nofziger, that there is nothing in the record or in the circumstances of Babbitt's alleged offenses that indicates that the Attorney General, if freed of the restrictions of the Act, would have subjected Babbitt to a lesser investigation, or perhaps exonerated him at the preliminary investigation stage. Id.
32
Investigation duplication. Finally, Babbitt claims that he satisfies the "but for" requirement because the IC's investigation duplicated other previous examinations of the Hudson Casino issue, particularly the investigation of the Senate Governmental Affairs Committee, the investigation of the House Committee on Government Reform and Oversight, and the preliminary investigation of the Department of Justice. We have in the past awarded fees when the independent counsel's investigation constituted a substantial duplication of the preliminary investigation of the DOJ. See In re Olson, 884 F.2d 1415, 1420 (D.C.Cir., Spec. Div., 1989) (per curiam) (IC's investigation "necessarily duplicated ground that had been covered by the preliminary investigation of the Department of Justice"); In re Perry, 892 F.2d 1073, 1074 (D.C.Cir., Spec. Div., 1990) (per curiam) (fee applicant "was being subjected to expenses for a duplicative investigation that he would not have been subjected to in the absence of the Ethics in Government Act"). But we have specifically held that it is only duplication of the preliminary investigation by the DOJ that merits fee reimbursement, and so duplication by the IC of other investigations, such as those conducted by the Congress, is not relevant to this issue. See In re Pierce (Sanders Fee Application), 198 F.3d 899, 904 (D.C.Cir., Spec. Div., 1999) (per curiam), and In re Pierce (Seligman Fee Application), 201 F.3d 473, 476 (D.C.Cir., Spec. Div., 2000) (per curiam). Consequently, although Babbitt argues that the "OIC's endeavors substantially overlapped with the work of the two congressional Committees," it is only duplication of the DOJ's investigation that need concern us here.
33
In that regard, Babbitt claims that the OIC's work substantially duplicated the Justice Department's efforts of reviewing transcripts from the congressional hearings, interviewing witnesses, and gathering relevant information concerning the conflicting testimony. He further claims that the Justice Department also conducted an inquiry into the substance and process of the underlying casino decision, and that he was interrogated before the grand jury by the OIC about many of the same topics that he had been asked about in a Justice Department/FBI interview.
34
We note that the process of an independent counsel investigation set up by the Act will by its very nature necessarily replow some of the same ground already tilled by the DOJ. The issue to be addressed is whether the investigation by the IC merely duplicates that of the DOJ. Duplication by definition does not occur if the IC's investigation extends significantly beyond that of the DOJ's preliminary investigation. See In re Olson, 884 F.2d at 1420 ("but for" requirement satisfied where "[t]he greater portion of [the IC's] investigation" duplicated that of the DOJ.) (emphasis added). As we stated in Kisner, the fee applicant could not satisfy the "but for" requirement by claiming that the Independent Counsel's investigation duplicated that of the DOJ because "the Independent Counsel's investigation ranged far beyond the preliminary investigation not only in depth but breadth. The matters investigated as to Kisner are far beyond anything in the preliminary investigation." 178 F.3d at 1360. We find similar circumstances here. Under the Act the AG is limited to 90 days to complete her preliminary investigation and while conducting it she is not allowed, inter alia, to convene grand juries or issue subpoenas. 28 U.S.C. § 592(a). In her Application she stated that only "a limited inquiry" was conducted by the DOJ into the underlying casino decision. In contrast, the IC over a period of 21 months conducted an extensive investigation of Babbitt's statements and the underlying casino decision. Her office interviewed 460 people, reviewed over 630,000 documents, issued grand jury subpoenas to 167 people, and interrogated 58 of them before the grand jury. FINAL REPORT OF THE INDEPENDENT COUNSEL IN RE: BRUCE EDWARD BABBITT at 3-4. Therefore, the IC's investigation cannot in any relevant sense be considered duplicative of the DOJ's preliminary investigation.
35
* * * * * * * * * *
36
In sum, Babbitt has not satisfied the "but for" requirement under any of the aforementioned theories because "he was not subjected to an investigation that he would not have been subjected to in the absence of the Act." Nofziger, 925 F.2d at 446. The allegations concerning both the perjury and false statements by the Secretary of the Interior as well as the corruption of the underlying casino decision would in all probability have been extensively investigated by the Department of Justice in the absence of the independent counsel statute. See Kisner, 178 F.3d at 1360-61. We do however conclude that Babbitt's petition and the accompanying affidavits support recovery for one element. Babbitt incurred legal fees for the time spent by his counsel in reviewing and responding to the final report of the independent counsel. No such report would have been prepared, filed, reviewed, or responded to but for the Act. Specifically, 28 U.S.C. § 594(h)(1)(B) requires that the independent counsel "file a final report with the Division of the Court setting forth fully and completely a description of the work of the independent counsel...." Absent the Act, federal "prosecutors do not issue reports." In re: North, 16 F.3d 1234, 1238 (D.C.Cir., Spec. Div., 1994) (per curiam). Indeed, as we have observed before, "the filing of reports by independent counsels is `a complete departure from the authority of a United States Attorney' and is contrary to the practice in federal grand jury investigations." Id. quoting In re: Sealed Motion, 880 F.2d 1367, 1369-70 (D.C.Cir., Spec. Div., 1989) (per curiam). Therefore, we hold that Babbitt has established that he has incurred the fees occasioned by the report itself and would not have incurred those fees but for the Act. We therefore order filed simultaneously herewith an entered judgment in favor of Babbitt for $52,091.94 representing legal services expended in the processing of the final report and Babbitt's response thereto.
CONCLUSION
37
For the reasons set forth above, we allow in part the petition of Bruce Edward Babbitt to the extent of ordering reimbursement for attorney fees in the amount of $52,091.94. We deny the balance of the petition for failure to comply with the but for requirements, 28 U.S.C. § 593(f)(1).
38
RICHARD D. CUDAHY, Circuit Judge, concurring in part and dissenting in part:
39
The comparison of a real-life investigation to a hypothetical investigation — which is what the "but for" test is all about — is necessarily conjectural. We can really only guess what kind of an inquiry Secretary Babbitt would have been subjected to had there been no Independent Counsel Act.
40
The majority concedes that Secretary Babbitt is entitled to fees incurred in responding to the final report of the independent counsel. I agree with this unarguable concession as to an expense which could not possibly have been incurred but for the independent counsel's investigation. But I cannot agree that this relatively minor item exhausts the compensation to which the Secretary is legitimately entitled.
41
In exploring Secretary Babbitt's full entitlement to fees, I intend to make some general observations about our difficulties in attempting to compare an independent counsel's investigation with a hypothetical investigation of the same subject by someone else. Then I will demonstrate that the independent counsel's investigation of Secretary Babbitt fits squarely within the statutory language and precedents that authorize this court to award attorneys' fees.
I.
42
The legislative history of the Independent Counsel Act contains language which has been cited in a number of our opinions to justify a parsimonious policy on the allowance of attorneys' fees.1 The Senate Report has language like "attorneys' fees would be warranted, if at all, in only rare instances" and "the court should award attorneys' fees sparingly, and ... reimbursement should not become a routine event." S.Rep. No. 97-496, at 19 (1982), reprinted in 1982 U.S.C.C.A.N. 3537, 3555. But the same report quotes attorney Lloyd Cutler with approval as follows:
43
So no matter what the outcome, it's clear to me, at least, that the appointment of an independent counsel increases the cost to the individual and that since that was done primarily for the benefit of the public, the public ought to bear that additional cost at least in the circumstance where no indictment is brought in the end.
44
Id. The report, therefore, seems to be saying, "Yes, independent counsel investigations cost the targets more than do others and the taxpayers ought to cover the increase, but don't approve too many reimbursements." This is clearly schizophrenic — perhaps a chronic failing of legislative history — and we have to make our way between the conflicting goals as best we can.2
45
The fact is that there is a lot of guesswork in comparing an actual with a hypothetical investigation. Cf. In re Nofziger, 925 F.2d 428, 433 (D.C.Cir., Spec. Div., 1991) ("To determine [for purposes of an attorneys' fee award] whether the subject of an independent counsel investigation has been subjected to a more rigorous application of the criminal law, the court must compare the investigation of the subject of the independent counsel investigation with an investigation into possible violations of the same statute conducted in the absence of the Independent Counsel Act." (emphasis in original)). Our court has tried to make the guesswork less perplexing by creating, in practical effect, a sort of implicit presumption that all investigations of a given subject — whoever conducts them — are fungible. Thus, with a few narrow exceptions,3 if an investigation is made under the very special — indeed unique — provisions of the independent counsel statute, it may be presumed that the very same investigation, placing the very same financial burden on the subject, would have been carried out, for example, by the Department of Justice in the absence of the statute. It would follow from the indulgence of this implicit presumption that a subject would incur no additional fees on account of the investigation by the Independent Counsel, and therefore the overwhelming majority of fee requests would be rejected in full. As this implicit presumption has progressed and become more controlling in the last several years, that is exactly what has taken place: very few requests for fees have been granted.4
46
Many observers might think that this more recent wholesale denial of fee petiwas clearly in the public interest and merely represented a sturdy defense of the public fisc. And, as noted, it is not difficult to find snippets of legislative history leaning the same way. I would remind those who might be of this opinion, however, that the only persons entitled to fees are those who were in fact targets of an investigation by an independent counsel and who were not indicted for a crime. In effect, these are people in the center of the prosecutor's bull's-eye, who were not indicted — who were exonerated. In providing such people with an opportunity to recover fees, Congress expressed the hope that, if they escaped punishment by the courts, they should not incur perhaps the worse punishment of crippling attorneys' fees. High as these fees were, however, in relation to the resources of the subjects — here Secretary Babbitt's fees are more that a year's salary — the requested fees are almost trivial in comparison with the formidable cost to the taxpayers of conducting the investigation. Thus, through September 30, 2001, the total expense reported by the Independent Counsel for investigating Secretary Babbitt amounted to $6,348,777, which is over thirty times the sum Babbitt has been forced to expend in his own defense. In truth, the only place where stringent standards of economy have been applied in the current investigation is in evaluating Secretary Babbitt's petition for fees.
47
But, if the majority has applied the "but for" test here with excessive zeal, what is a proper standard for estimating the scope of the investigation that would have looked into Secretary Babbitt's conduct in the absence of the Independent Counsel Act? As the discussion so far has suggested, this is not an easy question, and it has no easy answer. The majority seems to have taken a simple, if not simplistic, approach in indulging an implicit presumption that any alternative investigation of Mr. Babbitt would cover exactly the same ground to exactly the same depth as the independent counsel's inquiry (and, I suppose, reach the same conclusion).
48
I am certainly willing to accept an inquiry by the Department of Justice as a reasonable alternative under the statute for application of the "but for" test. It is not unreasonable to posit that the DOJ would have conducted an inquiry into the somewhat discrepant accounts, as recalled two years later, of a hurried conversation between Secretary Babbitt and Mr. Eckstein on July 14, 1995. But what kind of an investigation would it have conducted? Would it have taken 21 months and involved (as did the independent counsel's probe) the review of 630,000 documents, the conducting of 460 interviews, the issuance of 160 subpoenas, the calling of 58 witnesses before the grand jury and the preparation and issuance of a 484-page final report detailing every aspect of an incredibly thorough investigation?
49
I think an overwhelming inference may be drawn from all the circumstances involved that the DOJ would never have conducted such an inquiry. One of the better pieces of evidence for this conclusion is the very judgment that the DOJ reached in submitting its evaluation of Secretary Babbitt's fee petition. In this document, the DOJ clearly stated that the Secretary's request passed the "but for" test. Apparently, the Department did not see itself conducting an independent counsel-type inquiry in the case of Secretary Babbitt. And we have noted in an earlier case the kind of investigation (in the case of another cabinet officer) that is expected of an independent counsel: "[e]xtraordinary thoroughness of investigation is to be expected in some independent counsel investigations because of the institution of the independent counsel, and the extensive nature of the investigation and the report required by Congress." In re Meese, 907 F.2d 1192, 1201 n. 16 (D.C.Cir., Spec. Div., 1990) (awarding reimbursement of fees).
II.
A.
50
Turning now to the merits of Secretary Babbitt's fee petition, § 593(f)(1) of the Independent Counsel Act provides that an individual who has been subject to an investigation that did not result in an indictment is eligible for an "award of reasonable attorneys' fees incurred by that individual during that investigation that would not have incurred but for the requirements of this chapter." Secretary Babbitt argues that one of the requirements of the Act, 28 U.S.C. § 592(a)(2)(b)(ii), which deals with evidence of criminal intent, resulted in a more expansive investigation, and thus higher burdens on him to defend. The majority never squarely addresses this argument, instead making the conclusory assertion that "the high profile identity of those involved would have resulted in an investigation of similar length and breadth if it had been undertaken by the Department of Justice in the absence of the Independent Counsel Act." Ante at 392.
51
The thrust of Babbitt's argument can be summarized as follows: 28 U.S.C. § 592 prescribes the procedures that the Attorney General must follow when conducting the required 90-day preliminary investigation. In making her determination whether "reasonable grounds exist to warrant further investigation," the Independent Counsel Act generally requires that the Attorney General "comply with the written or other established policies of the Department of Justice with respect to the conduct of criminal investigations." § 592(c)(1). However, the subsection relied on by Secretary Babbitt provides an exception to this general rule; it substantially constrains the Attorney General's ability to focus on an accused person's state of mind in determining the need for further investigation:
52
The Attorney General shall not base a determination under this chapter that there are no reasonable grounds to believe that further investigation is warranted, upon a determination that such person lacked the state of mind required for the violation of the criminal law involved, unless there is clear and convincing evidence that the person lacked such a state of mind.
53
28 U.S.C. § 592(a)(2)(B)(ii).
54
Although this court has never before considered this provision in the context of the "but for" requirement for attorneys' fees,5 commentators have sharply criticized this § 592(a)(2)(B)(ii) as a dramatic departure from ordinary criminal procedure. For example, Professor Gormley has noted that the "clear and convincing" provision necessarily requires a referral to an independent counsel except in the unusual case where evidence of innocence is particularly strong:
55
[T]he key question normally assessed by a prosecutor in a criminal matter before exercising his or her discretion to prosecute — i.e. whether the conduct was inadvertent or negligent rather than knowing and intentional—cannot be considered by the Attorney General. This provision should be deleted entirely, since it further hamstrings the Attorney General and prevents her from conducting meaningful preliminary investigations to separate serious cases from minor, politically mischievous matters.
56
Ken Gormley, An Original Model of the Independent Counsel Statute, 97 Mich. L.Rev. 601, 649 (1998) (footnote omitted); see also Philip B. Heymann, Four Unresolved Questions About the Responsibilities of an Independent Counsel, 86 Geo. L. J. 2119, 2123 n. 13 (1998) (noting that in making recommendation for further investigation, "the Attorney General is precluded from finding that a person lacked the state of mind required to violate the criminal law, unless there is clear and convincing evidence of the absence of the requisite criminal intent — reversing the burden of proof applicable at trial "(emphasis added)). A review of the legislative history on this "clear and convincing" requirement, which was added to the Act in 1987, reveals that this provision was specifically designed to curtail the ability of the Attorney General to close a case based on lack of criminal intent. See S.Rep. No. 100-123, at 18 (1987), reprinted in 1987 U.S.C.C.A.N. 2150, 2167. Apparently, Congress had become dissatisfied with several investigations that had been terminated on this basis. See id. (discussing Attorney General Meese's decision to terminate the Schmults investigation on criminal intent grounds, and noting that the new provision "requires that, in such cases, the Attorney General must leave that issue to an independent counsel"). The effect of this provision is that most issues of criminal intent that might otherwise result in the termination of an investigation by the Attorney General must instead be resolved by the independent counsel.
57
In the case before us, the Attorney General specifically acknowledged the limitations that the Independent Counsel Act imposed on her discretionary authority:
58
The question of whether the potentially false statements at issue are material enough to warrant criminal prosecution is a prosecutive judgment that I am not permitted to make under the Independent Counsel Act. Nor am I permitted under the Act to decline to seek an appointment of an Independent Counsel based on the subject's lack of criminal intent unless I have clear and convincing evidence that he lacked the requisite state of mind. In this case, although there is evidence suggesting that Secretary Babbitt lacked criminal intent, I am unable to conclude at this juncture that such evidence is clear and convincing.
59
Appointment Application at 7. Moreover, the Attorney General also noted that "our preliminary investigation uncovered no evidence of criminal misconduct by Secretary Babbitt in the underlying matter [regarding the proposed Hudson casino]." Id. Both of these passages are quoted by the Department of Justice as the basis of its determination that Secretary Babbitt had indeed satisfied the elusive "but for" element of § 593(f)(1). Therefore, the issue before us is whether, but for the "clear and convincing" requirement of § 592(a)(2)(B)(ii), the investigation of Secretary Babbitt would likely have assumed the same scope, had the same duration and therefore demanded the same level of expenditures for a legal defense.
60
To my mind, a careful examination of the fees question in Babbitt's case necessarily gives rise to an overwhelming inference that but for the "clear and convincing" requirement of § 592(a)(2)(B)(ii), the investigation of Secretary Babbitt would have ended at a much earlier date. In cases where this court has awarded attorneys' fees based on a more rigorous application of the criminal law, the Attorney General's application for appointment of an independent counsel has frequently mentioned a shortcoming or disability in the preliminary investigation that is directly attributable to the requirements of the Act. See, e.g., In re Sealed Case, 890 F.2d at 453 (noting that Attorney General application cited "the Department's inability to use compulsory process" under § 592(a)(2)(A) as limiting the scope of its preliminary investigation); In re Donovan, 877 F.2d at 988 (noting that Attorney General's application stated that preliminary investigation was "hampered" by the limitations of § 592(a)(2)(A), which precluded the use of plea bargaining, immunity, grand juries, or subpoenas). In this case, Attorney General Reno specifically referred to the limitations placed on her prosecutorial discretion by the clear and convincing standard, notwithstanding the existence of "evidence suggesting that Secretary Babbitt lacked criminal intent." Appointment Application at 7. When such a case is allowed to proceed without any prosecutorial fruits (e.g., indictments and plea bargains in exchange for testimony) despite massive investment of resources by the independent counsel, the subject of the probe has surely been on the receiving end of "a `more rigorous application of the criminal law than is applied to other citizens.'" In re Meese, 907 F.2d at 1201 (quoting S.Rep. No. 97-496, 1982 U.S.C.C.A.N. at 3555).
61
As our earlier precedents suggest, the existence of prosecutorial fruits has sometimes helped to fortify the "but for" requirement of the attorneys' fees provision. For example, in In re Pierce (Pierce Fee Application), 213 F.3d 713 (D.C.Cir., Spec. Div., 2000), which also dealt with a long and expanding investigation, this court determined that:
62
the expansion occurred because the investigation itself revealed further evidence of fundamental corruption of a federal housing program and such crimes as perjury, bribery, and obstruction of justice. We are convinced that this matter would have been investigated for a significant period of time by any professional or politically appointed public prosecutor. Pierce was not, therefore, subjected to a more rigorous application of the criminal law than would have been applied to ordinary citizens.
63
Id. at 718 (emphasis added). The court then went on to conclude that Pierce failed the "but for" requirement and was therefore not entitled to his attorneys' fees. Id. at 719.
64
Because both the Babbitt investigation and Pierce involved alleged wrongdoing among high-profile officials, the majority relies on Pierce to assert here that the Department of Justice would have undoubtedly conducted "an investigation of... length and breadth [similar to Pierce]... in the absence of the Independent Counsel Act." Ante at 392. Although the majority is correct in asserting that both Pierce and the instant case involved allegations of various species of "corruption" on the part of prominent suspects, ante at 392, the intermediate and final outcomes of these two investigations could not stand in greater contrast to one another. The parallels drawn by the majority are therefore completely unjustified. In Pierce, there were dozens of indictments that ultimately resulted in the successful prosecutions of seventeen subjects. See 213 F.3d at 716. The apparently more plausible nature of the allegations resulting in those jury verdicts would certainly have motivated the DOJ to conduct from the start a much more thorough-going inquiry there than here, where no one was either indicted or convicted — an outcome that might have been foreseen by knowledgeable prosecutors. Even if we are not for some reason entitled to endow these hypothetical prosecutors with foresight as to how things would turn out, I see no reason why Secretary Babbitt is not entitled to the benefit of hindsight.
65
Although the majority has placed heavy reliance on In re Pierce, perhaps a better precedent to consider is In re Meese, which also involved an investigation of a cabinet official. In Meese, this court commented on the length and breadth of an investigation that included six additional matters beyond the initial referral and concluded, "It thus clearly appears that the basis upon which the referral was made and the extreme expansion of the resulting investigation subjected Meese to a `more rigorous application of the criminal law than is applied to other citizens.'" Id. at 1201 (quoting S.Rep. No. 97-496, 1982 U.S.C.C.A.N. at 3555) (emphasis added). Meese was subsequently awarded his attorneys' fees. In the case before us, Babbitt points out that the independent counsel investigation went well beyond the Babbitt-Eckstein conversation on July 14, 1995 and the underlying Hudson casino dispute, to include an examination of the decision-making process in eleven other matters involving Indian gaming, each of them concerning a different tribe located in another part of the country. The Independent Counsel ultimately found "insufficient evidence to warrant criminal prosecution of anyone for conduct related to the Hudson casino proposal, including Secretary Babbitt for his testimony about the Hudson matter before Congress." FINAL REPORT at 415 (emphasis added). Like Meese, the expansion of an independent counsel investigation far beyond its initial scope suggests that Babbitt has been subjected to a more rigorous application of criminal law.
66
As the forgoing discussion demonstrates, the Independent Counsel Act requires that when lack of evidence on criminal intent might otherwise result in the termination of the Attorney General's investigation, the investigation commenced by the Attorney General can only be completed through an inquiry by an independent counsel. See 28 U.S.C. § 592(a)(2)(B)(ii). In trying to establish the difference between the known independent counsel's investigation and a hypothetical probe by the DOJ — and thus the difference in defense costs incurred by their respective subjects — one must acknowledge key structural features that distinguish these two modes of criminal prosecution.
67
On several recent occasions, this court has announced a new insight that the Independent Counsel Act does not contemplate the payment of attorneys' fees for the inherently higher costs of defending against an independent counsel investigation. See,e.g., In re Nofziger (Bragg Fee Application), 956 F.2d 287, 294 (D.C.Cir., Spec. Div., 1992) (ruling that "these inherent costs are not reimbursable. Otherwise, fees would be paid in every case — but Congress indicated reimbursement of fees should only occur in `rare circumstances.'" (quoting S.Rep. No. 97-496)); In re Nofziger, 925 F.2d at 445 (same). Instead, according to recent decisions, the Act provides for reimbursement "only of those attorneys' fees that `would not have been incurred but for the requirements of [the Act].'" In re Nofziger, 925 F.2d at 445 (quoting 28 U.S.C. § 593(f)(1)) (emphasis in original). Essentially, this is a narrow interpretation of "requirements" to mean special demands imposed by the unique features of the Act rather than the general mandate laid down by the statute as a whole. Along these lines, the "requirement" most commonly found in these cases is the proscription of grand juries, subpoenas, immunity, and plea bargaining during a preliminary investigation, see note 7 (citing cases awarding attorneys' fees due to limitations imposed by § 592(a)(2)(A)), but the "clear and convincing" standard has, of course, the identical effect. The relevant point is that an unfruitful investigation conducted by the DOJ is likely to wrap up much faster than the same investigation conducted by an independent counsel; thus, a specific requirement of the Act subjected Secretary Babbitt to these higher "inherent costs."
68
As commentators have frequently noted, the differences in responsibilities and allocation of resources between regular prosecutors and the independent counsel could not stand in greater contrast. See, e.g., Cass R. Sunstein, Bad Incentives and Bad Institutions, 86 Geo. L. J. 2267, 2279 (1998) (commenting that the Independent Counsel Act "creates an incentive toward zealotry. An independent counsel who uncovers nothing is likely to look as if he has more or less wasted his time, or done nothing, whereas an independent counsel who brings a prosecution, or several prosecutions, is likely to look, in at least some circles, like another Archibald Cox, a kind of hero of democratic ideals."). Prosecutors in general have a variety of matters competing for their attention and must allocate the resources available to them to the situations most deserving — for various reasons — of their attention. The independent counsel, on the other hand, has a defined target to whom he must devote all his attention and dedicate all his resources—no matter what the attractions of that target may be in comparison with others.
69
Thus, a regular prosecutor with limited resources and a variety of places to employ them is likely to pursue the most easily convicted target; a cost-benefit analysis would certainly suggest that strong tendency. Judged by the outcome (which is the only test available to us), the Pierce inquiry, with its many convictions, in comparison with Babbitt would have attracted the most interest and attention from regular prosecutors. They might well have committed resources on the same scale as the independent counsel. On the other hand, the diminished prospects for success in Babbitt would almost inevitably have called forth from regular prosecutors a lesser effort than from the independent counsel. This may very well be one of the reasons that the DOJ concluded that Secretary Babbitt's request for fees passed the "but for" test.
70
But there is another, perhaps less obvious, reason that I cannot agree with the parallel drawn by the majority between Pierce and the instant case. Pierce might be characterized as a "garden-variety" corruption case. There were allegations of favoritism and mismanagement and of the use of the "revolving door" in dealings with the government. As a result, contractors with the government were allegedly in a position to line their pockets in exchange for benefits and favors conferred on government officials. This is exactly the sort of typical corruption case that a prosecutor in the Department of Justice would like to get his or her hands on. It did not raise larger political questions, like whether officials in the White House were dictating HUD policy outside regular decisional channels, nor whether operatives in a national party headquarters were seeking to manipulate HUD decisions in the interest of big contributors.
71
In the Babbitt investigation, on the other hand, there were no charges of pocket-lining graft as it is commonly understood. Instead, this inquiry gained its heft from the larger political issues of improper interventions by White House agents and possible dictation by national committee officers to executive department officials on behalf of big contributors. Alleged abuse of power was very much in the picture. The immediate spark giving rise to the call for an independent counsel was a small discrepancy in two men's recollection of a brief conversation that took place more than two years before either man testified about it. The charges of perjury and false statement arising from this exchange would not have called for a very far-reaching inquiry by the DOJ or anyone else. It was only the political ramifications of how the Hudson casino decision was made that gave ostensible weight to the situation. And this was a matter that could most comfortably be handled by an independent counsel. It is difficult to imagine its being handled effectively by anyone else.6 This is therefore a classic example of an investigation that would not have taken place in anything like the form that it actually assumed without the intrusion of the Independent Counsel Act. And in the end, to further chill the ardor of an ordinary prosecutor, no one was indicted or prosecuted. Here, the demands of the "but for" test were literally fulfilled — as the Department of Justice itself concluded.
72
It seems to me that the special provisions of the Independent Counsel Act on mens rea fit perfectly into the narrow category of subjection to a more rigorous application of the criminal law. Secretary Babbitt should therefore be awarded his full attorneys' fees. Hence, I respectfully DISSENT from the rejection of this major conclusion.7
Notes:
1
See, e.g, In re Nofziger, 938 F.2d 1397, 1401 (D.C.Cir., Spec. Div., 1991) (quoting S.Rep. No. 97-496 for the proposition that attorneys' fee should be awarded "only in rare instances," and ruling that inherently higher costs of defending against independent counsel investigation do not justify fees); In re Nofziger, 925 F.2d 428, 437 (D.C.Cir., Spec. Div., 1991) (quoting same passage from S.Rep. No. 97-496 and making same determination).
2
Interestingly enough, the same legislative history that has been used to deny attorneys' fees has also been used to award themCompare note 1 (cases relying on S.Rep. No. 97-496 to deny fees), with In re North (Dutton Fee Application), 11 F.3d 1075, 1080 (D.C.Cir., Spec. Div., 1993) (citing S.Rep. No. 97-496 for proposition that fee provision is meant to offset costs that would not have been incurred by a private citizen defending himself against a normal DOJ investigation, and thus awarding fees to petitioner), and In re Olson, 884 F.2d 1415, 1420 (D.C.Cir., Spec. Div., 1989) (quoting S.Rep. No. 97-496 for the proposition that attorneys' fee should be awarded "only in rare instances," such as when actions by the independent counsel duplicate actions by the Attorney General, but awarding fees for duplication, for an unsuccessful constitutional challenge and for expenses related to the final report).
3
InIn re Pierce (Kisner Application), 178 F.3d 1356, 1359 (D.C.Cir., Spec. Div., 1999), we set forth four categories in which the "but for" test is satisfied. However, we also noted that "these categories are not exhaustive, and probably could not be, given the `fact-specific nature of each independent counsel undertaking.'" Id. (quoting In re North (Dutton Fee Application), 11 F.3d at 1080). A review of our recent precedents, however, suggests a marked unwillingness to go beyond these four restrictive fact patterns.
4
A careful examination of the case law reveals an undeniable drift in our jurisprudence. For example, inIn re Donovan, 877 F.2d 982 (D.C.Cir., Spec. Div., 1989), this court granted attorneys' fees to former Secretary of Labor Donovan despite the fact that the evaluation of the fee petition by the Department of Justice found it "facially deficient in demonstrating that the fees would not have been incurred but for the Act." Id. at 986. In the case before us, on the other hand, the Department of Justice acknowledged the limitations imposed on the preliminary investigation by 28 U.S.C. § 592(a)(2)(B)(ii), the paucity of incriminating evidence and the subsequent breadth of the independent counsel investigation to conclude that the "but for" requirement had been satisfied. DOJ Evaluation at 11-12.
5
In contrast, this court has occasionally awarded fees when it has determined that the Attorney General could have disposed of the case at a earlier stage of investigationbut for other limitations on the investigatory process imposed by the Act. See, e.g., In re Sealed Case, 890 F.2d at 453 (granting attorneys' fees in case where strictures of § 592(a)(2)(A), which preclude the use of grand juries, subpoenas, etc., limited the ability of the Attorney General to conduct an adequate preliminary investigation); In re Donovan, 877 F.2d at 990 (granting attorneys' fee to former Secretary of Labor Donovan because, pursuant to § 592(a)(2)(A), the Deputy Attorney General was unable "to convene grand juries, plea bargain, grant immunity, or issue subpoenas," and thus "was deprived of his normal means of determining credibility and other relevant facts").
6
Some of our earlier precedents relied on the political dimensions of an independent counsel inquiry to determine that the "but for" requirement of § 593(f)(1) had been satisfiedSee, e.g, In re North (Reagan Fee Application), 94 F.3d 685, 690 (D.C.Cir., Spec. Div., 1996) (ruling that the "but for" requirement is satisfied because "a politically appointed Attorney General would not subject attempts to circumvent the Boland Amendments to criminal prosecution" and thus the Iran/Contra investigation would never have occurred); In re North (Regan Fee Application), 72 F.3d 891, 895 (D.C.Cir., Spec. Div., 1995) (same); In re North (Bush Fee Application), 59 F.3d 184, 188 (D.C.Cir., Spec. Div., 1995) (same); In re North (Dutton Fee Application), 11 F.3d 1075, 1080 (D.C.Cir., Spec. Div., 1993) (providing same rationale and noting that "Dutton's facts do not fit neatly into any box created by a prior opinion").
7
As I have earlier indicated, I certainly agree with the majority's determination that Secretary Babbitt is entitled to be made whole for fees incurred in reviewing and responding to the final report of the independent counsel—a phase of the investigation having no counterpart in alternative prosecutorial inquiries
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60 Ill. App.3d 320 (1978)
376 N.E.2d 774
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
WILLIAM McCLAIN, Defendant-Appellant.
No. 14627.
Illinois Appellate Court Fourth District.
Opinion filed May 26, 1978.
*321 Richard J. Wilson and Donald T. McDougall, both of State Appellate Defender's Office, of Springfield, for appellant.
Patrick M. Walsh, State's Attorney, of Decatur, for the People.
Judgment affirmed.
Mr. JUSTICE REARDON delivered the opinion of the court:
The defendant, William McClain, was sentenced to concurrent terms of 7 to 14 and 8 to 16 years' imprisonment after a Macon County jury found *322 him guilty of aggravated kidnaping and rape, violations of sections 10-2 and 11-1 of the Criminal Code of 1961 (Ill. Rev. Stat. 1975, ch. 38, pars. 10-2, 11-1). The jury also found defendant guilty of kidnaping, unlawful restraint, and battery, violations of sections 10-1, 10-3, and 12-1 of the Code (Ill. Rev. Stat. 1975, ch. 38, pars. 10-1, 10-3, 12-1), but the court vacated the judgments entered on those verdicts after it imposed sentence for the rape and aggravated kidnaping offenses.
During the early morning hours of February 20, 1977, the defendant and Douglas Miller followed a young woman's automobile as she drove home from work. The men pulled their green Chevrolet in front of the victim's automobile, forcing her to stop at the side of the road. Miller then approached the woman and requested a tire tool to use in repairing his wobbly wheel. Miller pulled a knife, forced his way into the woman's automobile, told her to place a blindfold over her eyes and he started driving. Thereafter, Miller stopped and told the woman to enter the men's automobile which was, by that time, parked nearby. The woman was ordered to remove her clothing and to lie down on the back seat where, while still blindfolded, the two men raped her. Each man raped the woman while the other drove the vehicle around the essentially rural countryside.
On appeal, the defendant contends: (1) that the jury should have been instructed on the question of whether the evidence established beyond a reasonable doubt that the offense occurred in Macon County; (2) that he was prejudiced by the presentation of Susan Kee's irrelevant testimony to the jury; (3) that the court abused its discretion in excluding a police officer's testimony concerning Miller's pretrial statement that the victim consented to intercourse; (4) that the State failed to prove beyond a reasonable doubt that the defendant and victim were not married to each other; and (5) that the court abused its discretion by imposing excessive sentences.
1-3 An averment that a crime was committed in a particular county is a material element in the State's case and must be proved beyond a reasonable doubt. (People v. White (1975), 26 Ill. App.3d 659, 661, 325 N.E.2d 313.) If venue is a controverted issue in the case, then the question of venue must be submitted to the jury for resolution. (People v. Anderson (1934), 355 Ill. 289, 303, 189 N.E. 338; People v. Trejo (1976), 40 Ill. App.3d 503, 510, 352 N.E.2d 68.) An allegation that the State has failed to prove the location of the offense does not also attack the sufficiency of the indictment, because the indictment need only allege the situs of the crime with sufficient particularity to notify the defendant of the offense with which he is charged. (People v. Blanchett (1965), 33 Ill.2d 527, 532-35, 212 N.E.2d 97; People v. Ondrey (1976), 65 Ill.2d 360, 363, 357 N.E.2d 1160.) An allegation that the State has failed to prove the location of the *323 offense must also be distinguished from an objection to improper place of trial which can be waived unless objected to before trial. See section 1-6 of the Code (Ill. Rev. Stat. 1975, ch. 38, par. 1-6).
In the instant case, the court refused to give Defendant's Instruction No. 2, a non-I.P.I. instruction, which stated: "The Court instructs the jury that the State must prove beyond a reasonable doubt that each and every element of an offense occurred in Macon County, Illinois. If you find reasonable doubt that any element occurred outside Macon County, Illinois, you should find the Defendant not guilty of that offense." As Anderson and Trejo clearly hold, this instruction or one similar to it should be given to the jury only when the evidence raises a question as to the propriety of venue.
In the instant case, the victim's testimony clearly reflects that she was abducted in Macon County and that she was raped shortly after her abductor's automobile reached the dead end of a curving road. Because she was blindfolded, the victim was unable to testify that she was raped in Macon County, although Deputy Sheriff Mark Cheviron testified that the defendant described the general location of the rapes to him in a pre-trial custodial interview. Without objection, Cheviron testified that the defendant told him that the rapes occurred close to Decatur, that the victim was not transported to any of the outlying towns around Decatur and that the victim was not transported more than 10 miles from Decatur. Cheviron testified that the area described by the defendant was almost entirely within Macon County and that the dead end roads described by the victim and defendant matched the description of dead end roads near Lake Decatur in Macon County.
We believe that the tendered instruction should have been given in the instant case (Anderson; Trejo); however, because the testimony presented at trial was sufficient to establish venue beyond a reasonable doubt, we find that the failure to instruct was harmless error in the context of this case. (People v. Barksdale (1974), 24 Ill. App.3d 489, 496, 321 N.E.2d 489.) We hold that Anderson and Trejo do not require the giving of a non-I.P.I. instruction on proof of venue where, as a question of law, there is only "some evidence" that the venue may be improper. Rather, the instruction required by Anderson and Trejo must be given only if the evidence raises a factual question as to whether venue had been proved beyond a reasonable doubt, i.e., where the evidence is only sufficient to avoid a directed verdict.
Prior to the testimony of Susan Kee, defendant filed a motion in limine to exclude Kee's testimony for the reason that it would be irrelevant and extremely prejudicial. Although the court denied the motion, after hearing Kee's testimony, the court struck it and instructed the jury to disregard it. Kee's testimony was that, on February 20, 1977, she was *324 followed by two men in a green automobile. She said that the automobile pulled in front of her, forced her to stop and that one of the men approached her to ask for assistance and "jumper" cables. When the man reached her car, she drove away. The witness was unable to directly link the defendant or Miller to her encounter on February 20, 1977, so the court struck the testimony.
4 When a motion in limine is made, the trial judge must exercise his discretion in granting the motion or in denying it, thereby leaving to the unsuccessful movant the procedure of specially objecting to the evidence when it is offered at trial. (Department of Public Works & Buildings v. Roehrig (1976), 45 Ill. App.3d 189, 195, 359 N.E.2d 752.) In the instant case, we cannot say that the trial judge abused his discretion in denying the motion when it was offered. Had the witness been able to more directly connect her encounter on February 20, 1977, to the defendant or Miller, her testimony would have been clearly relevant and properly admissible. (People v. Monroe (1977), 66 Ill.2d 317, 362 N.E.2d 295, 297.) Its relevance, however, could not be tested until after the witness testified, so we find no abuse of discretion in the denial of the motion in limine, the ultimate striking of the testimony or in the judge's instruction to the jury to disregard.
Defendant contends that the court abused its discretion in granting a motion in limine which prevented him from calling Deputy Sheriff Cheviron to testify that Miller told Cheviron that on February 20, 1977, the victim consented to the acts of intercourse. Defendant specifically contends that the statement was a declaration against penal interest which tended to exculpate the defendant and which should have been admitted as an exception to the hearsay rule in accordance with Chambers v. Mississippi (1973), 410 U.S. 284, 35 L.Ed.2d 297, 93 S.Ct. 1038, People v. Craven (1973), 54 Ill.2d 419, 299 N.E.2d 1, and People v. Ireland (1976), 38 Ill. App.3d 616, 348 N.E.2d 277.
5 McCormick states that "Hearsay evidence is testimony in court, or written evidence, of a statement made out of court, the statement being offered as an assertion to show the truth of matters asserted therein, and thus resting for its value upon the credibility of the out-of-court asserter." (Emphasis omitted.) (McCormick, Evidence § 246, at 584 (2d ed. 1972).) Unless an exception to the hearsay rule applies, the hearsay testimony should be excluded because the asserter or declarant is not under oath, not personally present before the fact-finder, and not available for cross-examination. (McCormick, Evidence § 245, at 581-84 (2d ed. 1972).) In the instant case, Miller's statement to Cheviron is not admissible as a declaration against penal interest, a hearsay exception, because the statement is self-serving in nature and because Miller had a clear motive to falsify the statement, i.e., to absolve himself of criminal responsibility. *325 (Chambers; Ireland.) We, therefore, hold that the trial court did not abuse its discretion in excluding the hearsay testimony.
6 Defendant contends that the State failed to establish beyond a reasonable doubt that the victim and defendant were not married to each other at the time of the rape. While there is no direct testimony proving that the victim and defendant were not married, the victim did testify that she was not acquainted with defendant prior to the abduction and that she was properly referred to as a Miss, not a Mrs. In our opinion, this testimony was sufficient to establish beyond a reasonable doubt that the victim and defendant were not married to each other on February 20, 1977.
7 The sentences imposed in this case are within the statutory limits for Class 1 felonies and our careful review of the record fails to disclose an abuse of discretion by the court which imposed those sentences. Absent evidence of such an abuse in the record, we decline to tinker with the sentences imposed by the sentencing judge. People v. Perruquet (1977), 68 Ill.2d 149, 153, 368 N.E.2d 882, 883; People v. Honn (1977), 47 Ill. App.3d 378, 383, 362 N.E.2d 90, 94; People v. Hines (1976), 44 Ill. App.3d 204, 206, 357 N.E.2d 884, 885.
For the foregoing reasons, we affirm the convictions and sentences entered in this cause.
Affirmed.
GREEN, P.J., and CRAVEN, J., concur.
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54 So.3d 977 (2011)
McLEES
v.
STATE.
No. 1D10-6585.
District Court of Appeal of Florida, First District.
February 23, 2011.
DECISION WITHOUT PUBLISHED OPINION
Affirmed.
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298 F.2d 639
Feliks ZYGOWSKI, Appellant,v.ERIE MORNING TELEGRAM, INC. Doing Business as Journal Publishing Co.
No. 13616.
United States Court of Appeals Third Circuit.
Argued Oct. 20, 1961.Decided Jan. 12, 1962.
William W. Knox, Erie, Pa., for appellant.
Bernard F. Quinn, Erie, Pa. (Quinn, Leemhuis, Plate & Dwyer, Eaton & Nowotny, by Anthony M. Preston, Erie, Pa., on the brief), for appellee.
Before KALODNER, HASTIE and GANEY, Circuit Judges.
KALODNER, Circuit Judge.
1
Plaintiff, Feliks Zygowski, brought suit against defendant, Erie Morning Telegram, Inc., to recover minimum wages, overtime compensation, liquidated damages, and counsel fees under the Fair Labor Standards Act of 1938, as amended, 29 U.S.C.A. 201 et seq.1 The District Court, in a non-jury trial, held2 that plaintiff was not an employee within the meaning of the Act and therefore not entitled to recover. Plaintiff appeals from the judgment entered in favor of defendant and from the subsequent denial of plaintiff's 'Motion to Amend Findings of Fact and Conclusions of Law.'
2
The period for which recovery is sought extends from April 29, 1956, until plaintiff's discharge on April 11, 1958. The two-year statute of limitations, 29 U.S.C.A. 255, bars recovery for earlier employment, suit having been brought on April 29, 1958.
3
The facts, as found by the District Court and disclosed by the record, may be summarized as follows:
4
Defendant is engaged in the printing and publishing business in Erie, Pennsylvania.3 In January, 1953, when plaintiff commenced his employment with defendant, Isabelle Wojciechowski was its sole stockholder and president. Plaintiff married Isabelle in May, 1954, and at about that time she called a meeting of all the employees, some five in number, and advised them that plaintiff was the 'boss,' and would run the company. Thereafter, plaintiff was in complete charge of the business. His authority in the management and conduct of defendant was unrestricted. He hired and discharged employees, kept all the books, handled the office work, supervised all operations, and prepared and filed corporate tax returns.
5
Defendant's directors did not meet during the years 1953 to 1958 inclusive. Isabelle, in addition to being president of defendant, was also its vice-president and treasurer. One Charles Pickens was the elected secretary, but plaintiff, nevertheless, signed as secretary on defendant's checks and on City of Erie withholding statements which it filed.
6
The signatures of both plaintiff and Isabelle were required on defendant's checks. She would usually sign a number of blank checks and leave them with plaintiff to be completed and issued by him as needed.
7
The trial judge found that 'plaintiff made salary payments to himself in amounts determined by himself and in amounts which varied according to his testimony depending on the profits of the business.' During the period of approximately two years for which recovery is sought in this suit, these payments totalled $2,765.83 and were made at irregular intervals in sums varying in amount from one dollar to two thousand dollars.
8
After plaintiff's marriage to Isabelle in May, 1954, he used defendant's funds to pay doctor and hospital bills, household expenses, and other items for the support of his family. From March 24, 1956, until his discharge, these expenditures totalled approximately $6,600.4 None of this amount was recorded on defendant's books as wage payments to plaintiff.
9
Plaintiff denied Isabelle access to defendant's books from 1956 until his discharge. Just prior to that event Isabelle desired to pass a corporate resolution discontinuing his authority to sign checks. Plaintiff became incensed upon learning of this, and he refused to surrender the corporate seal, which Isabelle needed in order to pass the resolution. She found it necessary to call in the police to obtain the seal.
10
The District Court, in its opinion, 190 F.Supp. 210, made this graphic summation of the situation at pages 212-213:
11
'* * * The evidence certainly shows that (plaintiff) was permitted to and did assume all the rights, privileges and prerogatives of the owner of the business, that is to say, his wife. At first he acted for and on her behalf. Towards the end the evidence indicates that he acted as much for himself as for her. She had installed him as the managing director. He took to the position with alacrity. His wife very soon became voiceless in the management of the concern. She apparently accepted her status, as her only visits were weekly for the purpose of picking up the house money. * * * It is clear that from the marriage on, Isabelle Zygowski * * * put him in sole and full charge of the business. Trouble between the parties arose when in the exercise of tight fisted control over the business affairs, plaintiff commenced to exclude his wife from receiving any money from the business. She testified that he refused her even adequate house money. * * * From my observation of the two people, it is apparent that plaintiff was the dominating personality. On the marriage Isabelle abdicated all functions with regard to the corporation except signing checks. Plaintiff was her alter ego in all business affairs. She made no assignment of any stock to him but it is not believed that such an act was necessary. It seems to this court from the marriage on, it was a one man corporation as that term is commonly used, and that the man concerned was the plaintiff and not Isabelle Zygowski.'It was in the light of the foregoing that the District Court, as earlier stated, held that plaintiff was not an employee within the meaning of the Act. The record affords ample basis for the District Court's holding.
12
In order to recover, plaintiff must be an 'employee' within the meaning of the Act, and defendant must be an 'employer'. 29 U.S.C.A. 206, 207, 216; Goldberg v. Whitaker House Cooperative, Inc., 366 U.S. 28, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961). The Act defines 'employer' as including 'any person acting directly or indirectly in the interest of an employer in relation to an employee.' 'Employee' is defined as including 'any individual employed by an employer.' 'Employ' is defined as including 'to suffer or permit to work.' 29 U.S.C.A. 203. These are broad definitions that do not provide a ready-made answer in every case as to whether a particular type of relationship constitutes that of employer-employee.
13
In Rutherford Food Corp. v. McComb, 331 U.S. 722, 67 S.Ct. 1473, 91 L.Ed. 1772 (1947) the Supreme Court in pointing out that 'there is in the Fair Labor Standards Act no definition that solves problems as to the limits of the employer-employee relationship under the Act' (p. 728, 67 S.Ct. p. 1475), held that 'the determination of the relationship does not depend' on 'isolated factors but rather upon the circumstances of the whole activity' (p. 730, 67 S.Ct. p. 1477).
14
In Goldberg v. Whitaker House Cooperative, Inc., supra, 366 U.S. it was said (p. 33, 81 S.Ct. p.):
15
'In short, if the 'economic reality' rather than 'technical concepts' is to be the test of employment (United States v. Silk, 331 U.S. 704, 713 (67 S.Ct. 1463, 1468, 91 L.Ed. 1757); Rutherford Food Corp. v. McComb, 331 U.S. 722, 729 (67 S.Ct. 1473, 1476, 91 L.Ed. 1772)); these homeworkers are employees.'
16
In the instant case, the extraordinary and peculiar 'circumstances of the whole activity' of plaintiff, and the 'economic reality' of the prevailing situation support the District Court's holding that plaintiff was an 'employer' and not an 'employee' within the meaning of the Act.
17
For the reasons stated the judgment of the District Court will be affirmed.
1
Jurisdiction exists under 29 U.S.C.A. 216(b) and 28 U.S.C. 1337
2
The Opinion of the District Court is reported at 190 F.Supp. 210 (W.D.Pa.1960)
3
At trial defendant admitted that it is engaged in interstate commerce and the production of goods for interstate commerce
4
The District Court found that the $6600 sum covered the entire period from plaintiff's marriage until his discharge. The record, however, reveals that this sum was spent subsequent to March 24, 1956
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212 Kan. 11 (1973)
509 P.2d 1162
THE FLEMING COMPANY, a Corporation, et al., Appellees,
v.
JAMES T. McDONALD, Director of Revenue, Appellant.
No. 46,698
Supreme Court of Kansas.
Opinion filed May 12, 1973.
William P. Coates, Jr., Assistant Attorney General, argued the cause, and Vern Miller, Attorney General, Edward G. Collister, Jr., Assistant Attorney General, Matthew J. Dowd, Assistant Attorney General, William L. Harris, Jr., and Bruce J. Gammon, Attorneys, Department of Revenue, were with him on the brief for the appellant.
L.M. Cornish, Jr., of Glenn, Cornish and Leuenberger, of Topeka, argued the cause, and Edward B. Soule, of the same firm, was with him on the brief for the appellees.
The opinion of the court was delivered by
PRAGER, J.:
This is an action brought by the Fleming Company and two subsidiary corporations, plaintiffs-appellees, seeking a permanent injunction against the Director of Revenue, defendant-appellant, enjoining him from levying and collecting any additional tax upon cigarettes which Fleming had acquired, imprinted with tax indicia, and paid tax on prior to July 1, 1970. The facts in this case are not in dispute. Fleming and its subsidiaries are wholesale grocery companies supplying retail dealers within the state of Kansas. Fleming is a cigarette wholesale dealer licensed under the provisions of K.S.A. 79-3301, et seq., and supplies large quantities of cigarettes to Kansas retailers. K.S.A. 79-3311 provides that a cigarette wholesaler shall affix tax indicia to packages of cigarettes and may do so either by stamps or meter imprints. Fleming utilizes *12 meter machines which affix imprints upon each package of cigarettes. The Director of Revenue, or his representative, sets and adjusts the meter machine for the amount of tax indicia to be acquired by the wholesaler. Each wholesaler is then charged the tax therefor. The statute provides that the wholesaler must remit payment of this tax to the Director within 30 days from the date from which the machine is set and adjusted. The parties have agreed that all taxes due on the cigarettes which are the subject of this action were paid within the 30 day statutory period and prior to July 1, 1970. At that time the cigarette tax was 8¢ per package.
K.S.A. 79-3311 permits a wholesaler utilizing a meter machine to post a statutory bond which enables the wholesaler to acquire imprints up to a tax figure of 85% of this bond, provided the amount of the tax is paid to the Director within 30 days.
Fleming regularly purchased large quantities of cigarettes from cigarette manufacturers and large quantities of meter imprints from the Director. Meter imprints were acquired regularly about twice each month and Fleming would promptly stamp cigarettes with the meter imprints so received. All cigarettes concerned in this litigation were acquired by Fleming prior to July 1, 1970; the meter imprints machine was set and adjusted by the Director prior to July 1, 1970; the cigarettes were imprinted with tax indicia prior to July 1, 1970; and the tax had been remitted to and collected by the Director prior to July 1, 1970.
The problem arises in this case by reason of the enactment by the legislature of K.S.A. 1970 Supp. 79-3310 which increased the cigarette tax from 8¢ per package to 11¢ per package effective July 1, 1970. The Director sought to collect an additional tax of 3¢ per package on all cigarettes which Fleming had acquired and stamped in the normal course of business on which the cigarette tax had already been paid but which cigarettes were still in inventory and had not been distributed to retailers prior to July 1, 1970. Fleming took the position that it had already paid the tax on these cigarettes and should not be required to pay the tax again. Fleming brought this action for injunctive relief to enjoin the Director from levying and collecting the additional tax upon the cigarettes described. The trial court found in favor of Fleming and issued a permanent injunction enjoining the Director from levying and collecting the additional tax. The Director has brought a timely appeal to this court.
*13 A determination of the issues presented on this appeal requires us to construe certain provisions of the Kansas Cigarette Tax Law. We should consider the following statutory provisions:
"79-3302. Purpose of act. It is the purpose and intent of this act to levy a tax on cigarettes sold, distributed, conveyed or given away in this state, and to collect same from the wholesale or retail cigarette dealer, who first sells, distributes or conveys same in the state of Kansas. It is further the intent and purpose of this act that where a wholesale dealer or manufacturer's salesman gives away cigarettes for advertising or for any other purpose whatever, the same shall be taxed in the same manner as if they were sold in this state, and that said tax shall be paid in the manner prescribed by such rules and regulations as the director may require."
K.S.A. 1970 Supp. 79-3310 levies the tax and provides:
"79-3310. Tax on cigarettes. The following tax is hereby levied and assessed upon all cigarettes sold, distributed or given away within the state of Kansas: On each twenty (20) cigarettes or fractional part thereof, eleven cents (11¢ ) and such tax shall be collected and paid to the director as provided in this act. Said tax shall be paid only once and shall be paid by the wholesale dealer first receiving said cigarettes as herein provided.
"The taxes imposed by this act are hereby levied upon all sales of cigarettes made to any department, institution or agency of the state of Kansas, and to the political subdivisions thereof and their departments, institutions, and agencies."
It should be noted that the only change in 79-3310 made by the 1970 legislature was to increase the cigarette tax by changing the words "eight cents (8¢ )" to "eleven cents (11¢ )."
K.S.A. 1970 Supp. 79-3311 sets forth the procedure for the affixing of indicia of tax payment on each pack of cigarettes and for collection of the tax from the wholesaler. The specific provisions are as follows:
"79-3311. Stamps and meter imprints; sale; discount; corporate surety bond; tax meter, use and bond; cigarette tax refund fund established; transportation for out of state sale. The director shall design and designate indicia of tax payment to be affixed to each package of cigarettes as provided by this act. The director shall sell water applied stamps only to licensed wholesale dealers in the amounts of one thousand (1,000) or multiples thereof. Stamps applied by the heat process shall be sold only in amounts of thirty thousand (30,000) or multiples thereof. Meter imprints shall be sold only in amounts of ten thousand (10,000) or multiples thereof. Water applied stamps in amounts of ten thousand (10,000) or multiples thereof and stamps applied by the heat process and meter imprints shall be supplied to wholesale dealers at a discount of three and three-fourths percent (3 3/4%) from the face value thereof, and shall be deducted at the time of purchase or from the remittance therefor as hereinafter provided. Any wholesale cigarette dealer who shall file with the director a bond, of acceptable form, payable to the state of Kansas with *14 a corporate surety authorized to do business in Kansas, shall be permitted to purchase stamps, and remit therefor to the director within thirty (30) days after each such purchase, up to a maximum outstanding at any one time of eighty-five percent (85%) of the amount of the bond. Failure on the part of any wholesale dealer to remit as herein specified shall be cause for forfeiture of his bond. Remittances from the sale of such stamps or meter imprints shall be deposited with the state treasurer daily who shall issue a receipt therefor to the director and, except as hereinafter provided, shall be placed in the general fund of the state: Provided, That a revolving fund designated the cigarette tax refund fund not to exceed ten thousand dollars ($10,000) at any time shall be set apart and maintained by the director from revenue collected under this act and held by the state treasurer for prompt payment of all refunds authorized in this act and the act of which this act is amendatory. Said cigarette tax refund fund shall be in such amount as the director shall determine is necessary to meet current refunding requirements under this act and the act of which this act is amendatory.
"The wholesale cigarette dealer shall affix to each package of cigarettes stamps or tax meter imprints required by this act prior to said cigarettes being sold to any person, by him, his agent or agents, within the state of Kansas. The director is hereby empowered to authorize wholesale dealers to affix revenue tax meter imprints upon original packages of cigarettes and is charged with the duty of regulating the use of tax meters to secure payment of the proper taxes. No wholesale dealer shall affix revenue tax meter imprints to original packages of cigarettes without first having obtained permission from the director to employ this method of affixation. If the director approves the wholesale dealer's application for permission to affix revenue tax meter imprints to original packages of cigarettes he shall require such dealer to file a suitable bond payable to the state of Kansas executed by a corporate surety authorized to do business in Kansas. The director may, to assure the proper collection of taxes imposed by the act, revoke or suspend the privilege, theretofore granted, of imprinting tax meter imprints upon original packages of cigarettes. All meters shall be under the direct control of the director, and all transfer assignments or anything pertaining thereto must first be authorized by the director. All inks used in the stamping of cigarettes must be of a special type devised for use in connection with the machine employed and approved by the director. All repairs to the meter are strictly prohibited except by a duly authorized representative of the director. Requests for service shall be directed to the director. Meter machine ink imprints on all packages shall be clear and legible. If a wholesale dealer continuously issues illegible cigarette tax meter imprints, it shall be considered sufficient cause for revocation of his permit to use a cigarette tax meter.
"A licensed wholesale dealer may for the purpose of sale in another state transport cigarettes not bearing Kansas indicia of tax payment through the state of Kansas provided said cigarettes are contained in sealed and original cartons."
K.S.A. 1970 Supp. 79-3312 covers the redemption of stamps and meter imprints and provides as follows:
"79-3312. Redemption of stamps and meter imprints. The director shall redeem any unused stamps or meter imprints that any wholesale dealer presents *15 for redemption within six (6) months after the purchase thereof, at the face value less three and three-fourths percent (3 3/4%): Provided, That such stamps or meter imprints have been purchased from the director. The director shall prepare a voucher showing the net amount of such refund due, and the state controller shall draw his warrant on the state treasurer for the same. Wholesale dealers shall be entitled to a refund of the tax paid on cigarettes which have become unfit for sale upon proof thereof less three and three-fourths percent (3 3/4%)."
K.S.A. 79-3321 makes it unlawful for any person to possess more than 200 cigarettes without the required tax indicia being affixed as provided under the act.
In its essence the contention of the Director of Revenue on this appeal is that the district court erred in refusing to allow him to collect the additional tax on cigarettes in Fleming's possession on July 1, 1970, for which the taxable event, sale to a retailer, had not occurred, even though Fleming had previously purchased and/or affixed tax indicia predicated upon the earlier tax rate. The rationale of the Director's position is simply this: The tax is an excise tax upon the sale of cigarettes within Kansas. Until that event occurs no tax is due. Cigarettes held by the wholesaler for sale have not yet been sold; hence the change in the amount of tax is applicable to those cigarettes. The Director further argues that Fleming is not the taxpayer but only the statutory collector for the Director of Revenue. The taxing statutes simply require Fleming, as a wholesaler, to pay in advance the excise tax upon cigarettes until such time as the cigarettes are actually transferred to a retailer. Until that time the excise tax may be increased and passed on to the retailer who pays the tax to the wholesaler. The Director is concerned about the fact that Fleming could collect 11¢ tax on each pack of cigarettes sold after July 1, 1970, on which it had paid a tax of only 8¢ . The Director argues that this would constitute unjust enrichment and a windfall to Fleming at the rate of 3¢ per pack.
Fleming's position is that tax statutes are to be strictly construed in favor of the taxpayer; that the Director has no statutory authority to levy and collect an additional cigarette tax; that K.S.A. 1970 Supp. 79-3310 specifically provides that the cigarette tax shall be paid only once and shall be paid by the wholesale dealer first receiving the cigarettes. Fleming contends that under the statutory scheme the tax is really upon the inventory in Fleming's possession. Since the cigarette tax must be paid by the purchaser of stamps or meter imprints within 30 days after such purchase, the tax is not paid at any other time. There is nothing in the statute which requires *16 the cigarette wholesaler to collect the tax from the retailer or consumer or requires them to pay the tax. The only taxable event provided for in the statute is the purchase of the tax indicia by the wholesaler. Fleming further argues that in other recent taxing statutes increasing taxes on intoxicating liquors, motor fuels and special motor fuels, the legislature by specific provision has provided that the increase in tax should extend to existing inventory on which a lesser tax had already been paid. Such a provision was considered and intentionally rejected by the legislature in the statutes increasing the cigarette tax.
As pointed out above we are faced in this case with the problem of construing a tax statute. Under the Kansas cases we are required to construe a tax statute against the tax gatherer and in favor of the taxpayer. (Grauer v. Director of Revenue, 193 Kan. 605, 396 P.2d 260.) In Equitable Life Assurance Society v. Hobbs, 154 Kan. 1, 114 P.2d 871, the rule is stated as follows:
"Tax statutes will not be extended by implication beyond the clear import of language employed therein, and their operation will not be enlarged so as to include matters not specifically embraced. Where there is reasonable doubt as to the meaning of a taxing act, it will be construed most favorable to the taxpayer." (Syl ¶ 1.)
Another rule for construing statutes is that the legislative intent is to be determined by a general consideration of the whole act. Effect must be given, if possible, to the entire statute and every part thereof. To this end it is the duty of the court, so far as practicable, to reconcile the different provisions so as to make them consistent, harmonious and sensible. (Harris v. Shanahan, 192 Kan. 629, 390 P.2d 772.)
We have considered the various sections of the Kansas Cigarette Tax Law and have concluded that the district court was entirely correct in holding that Fleming and its subsidiaries were not required to pay an additional tax on cigarettes on which a tax had been previously paid by Fleming to the Director of Revenue. We further find that the district court properly granted injunctive relief to Fleming enjoining the Director from levying and collecting any additional tax upon cigarettes which the plaintiffs, prior to July 1, 1970, had imprinted with tax indicia and paid the tax at the previous tax rate of 8¢ per pack. In arriving at this conclusion we have given great weight to certain provisions of the Kansas Cigarette Law. When Fleming acquired the cigarettes in question prior to July 1, 1970, and while the cigarette tax was 8¢ per package:
*17 (1) The tax was to be paid to the Director by the wholesale dealer first receiving the cigarettes. (79-3310.)
(2) The tax was to be paid only once. (79-3310.)
(3) Meter imprints were to be acquired from the Director. (79-3311.)
(4) Following the purchase of meter imprints, the wholesale dealer was required to remit therefor to the Director within 30 days thereafter. (79-3311.)
(5) Payments made by the wholesale dealer to the Director were required to be deposited daily with the state treasurer and placed immediately in the state general fund. (79-3311.)
(6) Meter imprints were to be affixed to the cigarettes by the wholesaler. (79-3311.)
(7) The Director had direct control of the tax meters in order to secure payment of the proper tax imposed. (79-3311.)
(8) Any person who did not affix the imprints on the cigarette packages and had more than 200 cigarettes in his possession without the required tax indicia, was in violation of 79-3322 and guilty of a misdemeanor.
(9) Only wholesale dealers were entitled to claim a refund of the tax paid on cigarettes. There was no provision for a tax refund to retailers or consumers where cigarettes become unfit for sale. (79-3312.)
(10) There was no provision in the act which required the wholesaler to charge the cigarette tax to the retailer; nor is there any provision that the cigarette tax must be added to the cost of cigarettes and recovered by the wholesaler from the retailer or consumer as user.
(11) The statute did not require the wholesaler to keep records or make an accounting of taxes following his payment of the cigarette tax to the Director.
(12) Under the statute the only time specified for the tax to be paid was within the period of 30 days after stamps or imprints are purchased by the wholesaler.
When all of these provisions of the Kansas Cigarette Tax Law are considered together and in the absence of any specific provision in the statute for the payment of an additional tax after the tax has once been paid by the wholesale dealer, we believe that the trial court was correct in its finding that Fleming was not obligated to pay an additional tax at the new rate on cigarettes on which the tax had already been paid.
In arriving at this conclusion we have also considered other Kansas tax statutes where increases in taxes have been provided for. In some of these taxing statutes where the legislature so intended, it specifically provided that the increase in tax should apply to existing inventories and specifically spelled out the procedure for the Director to levy and collect the additional tax. In this regard we have noted in particular K.S.A. 41-501b which specifically provided that the increase in tax should apply to all alcoholic liquor in possession of any person for purposes of sale. Similar provisions may be found in K.S.A. 79-3408c pertaining to an increased tax on *18 motor vehicle fuels and in 79-3475a providing for an increased tax on special fuels and also in K.S.A. 1969 Supp. 79-3352 providing for a tax on inventories of tobacco products on hand when the tax went into effect. Had the legislature intended to levy an additional tax upon cigarettes in Fleming's inventory on which the tax had previously been paid, it could have easily done so by specifically so providing as it did provide in the other statutes discussed above.
The Director cites Patton v. Brady, Executrix, 184 U.S. 608, 46 L.Ed. 713, 22 S.Ct. 493. Patton held in substance that Congress had the power constitutionally to impose an additional tax on property in inventory still held for sale before it passed to the hands of the ultimate consumer. We have no quarrel with the holding in that case but find it not applicable here since the tax statute in Patton specifically provided for the payment of an additional tax. In the case at bar the legislature did not so provide. Fleming does not contend that the Kansas legislature could not have taxed the cigarettes in question but only contends that legislature did not do so. In our judgment Patton is distinguishable on that basis.
The Director cites two Texas cases as authority for his position McCarty v. James, 453 S.W.2d 220 and Daywood v. Calvert, 478 S.W.2d 152. Both of those cases involved the Texas Cigarette Tax Act which specifically made it mandatory that the cigarette tax levied be added to the price of the cigarettes and be paid by the ultimate buyer or consumer. The case at bar is distinguishable from the Texas cases in that the Kansas statute does not make it mandatory for the ultimate impact of the tax to fall on the ultimate consumer and is completely silent on the collection of any tax after the wholesaler has paid the tax.
We do not find persuasive the argument of the Director that Fleming may gain a windfall by reason of the decision of the trial court. Fleming paid all taxes which were legally due and owing at the time the cigarettes were purchased, in accordance with the statutory scheme created by the legislature. Since the legislature did not provide for the payment of an additional tax, Fleming was not obligated to pay it. Fleming sold cigarettes to retailers after July 1, 1970, in competition with other wholesale dealers. There is nothing in the record to show any improper actions or overreaching on the part of Fleming nor is there any showing that Fleming acted in any manner except in complete conformity with the law.
*19 For the reasons set forth above we find no error in the judgment of the district court. The judgment is affirmed.
FONTRON, J., dissenting.
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239 S.W.3d 156 (2007)
Kim M. HULSEY, Employee-Appellant,
v.
HAWTHORNE RESTAURANTS, INC., Employer-Respondent, and
Argonaut Great Central Insurance Company, Insurer-Respondent.
No. ED 89880.
Missouri Court of Appeals, Eastern District, Division One.
November 27, 2007.
Lawrence O. Willbrand, St. Louis, MO, for appellant.
Michael Margherio, St. Louis, MO, for respondents.
KENNETH M. ROMINES, Judge.
Introduction
This is a worker's compensation case. Here, we consider whether sufficient substantial and competent evidence exists to support the Labor and Industrial Relations Commission's ruling that Kim Hulsey's ("Hulsey") work-related fall on 1 December 2000 was not a substantial factor in causing the need for Hulsey's fusion surgery, which Hulsey received on 14 May 2004. We affirm the unspectacular proposition that the Commission is the finder of fact and may choose to believe one of two experts.
Factual and Procedural Background
Hulsey has worked as either a waitress or as a bartender since the age of sixteen. Prior to her work injury on 1 December 2000, she had been working for a year and *158 a half as a waitress at Hawthorne Restaurants. On the day of her work injury, Hulsey was standing on a chair at the restaurant putting up Christmas decorations with a staple gun. She attempted to step onto the arm of the chair for leverage and the chair flipped, causing her to fall to the floor. Hulsey recalls suffering from a bad burning sensation on her right side and right hip, but she continued to work for another hour before going home. Hulsey returned to work the following Tuesday despite still experiencing pain into her back and hip.
Hulsey claims that she had good days and bad days thereafter. She was still experiencing pain around Christmas of 2000, when she requested medical treatment from Kathy, one of the owners of the restaurant. Kathy denied this request.
A neighbor referred Hulsey to Dr. Tessier, who performed the first medical evaluation of Hulsey after her accident on 11 January 2001. Dr. Tessier concluded that Hulsey suffered from "mechanical low back pain with possible lower lumbar disc protrustion." In his notes of 11 January 2001, Dr. Tessier noted that straight leg raise exam was negative bilaterally, and that the tenderness complained of was "in the right sacroiliac region with some mid tenderness at the sciatic notch on the right side only." Dr. Tessier advised Hulsey to remain off of work from 1 January 2001 to 22 January 2001. When Hulsey informed her employer that she would not be able to come into work for a week, she was terminated.
According to the record, Hulsey's next treatment was not until 16 July 2001, when Hulsey returned to Dr. Tessier with ongoing complaints of an aching pain in the back of her pelvis, and a numb sensation down the right lower extremity into the feet. The medical records indicate that on 23 July 2001 Hulsey had both an MRI of the lumbar spine and of the pelvis. The MRI states, in part: "Degenerative disk disease predominates at the L5-S1 level. There is a focal disk protrusion or herniation centrally within the canal, which may lateralize slightly to the left of midline." The MRI of the pelvis was interpreted as showing no specific sacroiliac pathology. On 26 July 2001, upon reviewing the results of the MRI, Dr. Tessier suggested epidural steroid injection. Dr. Tessier then referred Hulsey to Dr. Sohn for further treatment.
On 8 January 2002, Hulsey met with Dr. Sohn, who diagnosed her with sacroiliitis and myofascial pain syndrome. He prescribed physical therapy, medication, and administered a trigger point injection.
Dr. Raymond F. Cohen met with Hulsey on 28 February 2002, took a history of injury and complaint, reviewed certain medical records, and performed a physical examination. Dr. Cohen concluded that Hulsey suffered from a lumbar disc protrusion at L5-S1, a right lumbosacral myofascial pain disorder and a right lumbar radiculitis, all of which he related to the injury at work on 1 December 2000. Dr. Cohen recommended that Hulsey have a lumbosacral and pelvic bone scan; a lumbar myelogram CT; and a lower extremity EMG NCD. In the event the testing was negative, he would further recommend treatment by epidural steroid injection, physical therapy, and medication. Dr. Cohen ruled out a surgical option in the absence of any definite radicular findings.
The next medical record in evidence was not until 22 June 2002, when Hulsey presented to the emergency room at St. Luke's Hospital with complaints of severe right sided low back and right hip pain. Hulsey was attempting to remove some feline feces from the carpet with a towel when her back "went out" and she was unable to straighten up. X-rays of the *159 lumbar spine showed no fracture or subluxation. Hulsey was treated and discharged that same day. Hulsey visited Dr. Tessier approximately two months later, during which Dr. Tessier discussed possible surgical intervention in the event epidural injections by Dr. Sohn did not work.
On 22 June 2003, Dr. David R. Lange, board certified in orthopedic surgery, performed an examination of Ms. Hulsey at the request of the employer's insurer. Dr. Lange solicited physical complaints from Hulsey, reviewed certain medical records, and performed a physical examination. Dr. Lange concluded that Hulsey suffered a right sacroiliac joint injury as a consequence of falling on one side of the pelvis. Dr. Lange concluded further that Hulsey had reached maximum medical improvement as of the date of his examination.
Two months after the evaluation with Dr. Lange on 22 June 2003, Hulsey met with Dr. David Raskas. Dr. Raskas took a history of complaint; reviewed certain medical records; had x-rays taken; performed a physical examination; diagnosed Hulsey as having discogenic pain at the L5-S1 level; and ordered a current MRI scan. An MRI of the lumbar spine was interpreted as showing "1. Multilevel degenerative disc and facet disease. Small focal central protrusion L5-S1. Mild protrusion lateralizes slightly to the right at L2-3. 2. Transitional first sacral segment."
On 9 April 2004, Dr. Raskas met with Hulsey to discuss various medical concerns, including as to the lumbar spine. Dr. Raskas notes that he reviewed the old lumbar MRI and states "She has some dehydration of her disks throughout the lumbar spine but the most collapsed significant one is what I would call the L5-S1 segment."
One week later, Hulsey had a myelogram and post myelogram CT of both the cervical and lumbar spines. The report as to the post myelogram CT of the spine speaks for itself. The only finding noted in the section entitled "Impression" is as to a "very mild stenosis at L3-4 and L4-5."
In his 23 April 2004 report, Dr. Raskas states that he reviewed the CT of the lower spine, and notes, "The L4-5 disk bulges quite a bit. The L5 and what I'll call transitional vertebra does its most collapse and is really degenerative." [sic]. Dr. Raskas recommended the fusion surgery that he performed with the assistance of Dr. Arenos on 14 May 2004.
The operative report indicates that Dr. Raskas performed a complete discectomy and anterior lumbar interbody fusion of L5-S1 and L4-5. Subsequent to that operation, Hulsey suffered groin pain and swelling in her left lower extremity. Doppler ultrasounds indicated a deep venous thrombosis in the proximal, femoral, and iliac vessels.
Studies suggested that Hulsey had developed blood clots in her left iliac vein and in the left common femoral artery. Hulsey was put on anticoagulants. Hulsey was further treated for her venous condition by placement of a filter, and a stent in the left common iliac vein.
Hulsey testified that she continued to treat with Dr. Greco, who actively monitored her use of blood thinning medication.
Dr. Cohen had the opportunity to meet with Hulsey again on 5 October 2004, approximately 5 months after her fusion surgery. Dr. Cohen became aware of the development of a deep vein thrombosis in the left leg post the surgery, and of ongoing care provided by Dr. Greco. Dr. Cohen concluded that the work trauma suffered on 1 December 2000 caused the need for the fusion surgery and was also the cause of the deep vein thrombosis, inasmuch *160 as the DVT was a result of the fusion surgery.
Dr. Cohen acknowledged that one of the findings contained in the operative notes of Dr. Raskas suggests the presence of severe degenerative disc disease at L5-S1 and L4-5. When asked as to the significance of such a finding, he notes:
That compared to her initial MRI scan done in July of '01 and the operation several years ago and going along with her history of progression of the severe back pain, that the disc space had progressively lost its space. In other words, it had gone lower or collapsed and would have been consistent with her ongoing complaints of pain, that once that process had started and the disc protruded, it no longer could support that disc space between L5 and S1.
Dr. Cohen acknowledges that it is extremely unlikely for a patient the age of Hulsey to have as much disc space narrowing in the absence of trauma. He further states, "So if a patient has a history of significant back trauma and has an MRI and as time goes by and the back pain gets worse and then shows collapse of that disc space, then more likely than not the trauma is what caused the need for the surgery."
In November of 2004, Dr. Lange was provided with records relating to Hulsey's spinal fusion surgery. Dr. Lange also had the opportunity to see Hulsey on 23 June 2005. Dr. Lange notes that Hulsey completed a pain drawing that indicated that she still had right low back symptoms, right leg complaints, and similar pain levels to what she had indicated after completing the same form while seeing Dr. Lange in 2003. Dr. Lange acknowledged that his diagnosis of sacroiliac joint injury could be proved to be incorrect in the event that the fusion surgery performed on Hulsey had the effect of resolving her pain complaints.
Regarding the finding of disc herniation at L5-S1, Dr. Lange notes that Hulsey had a small disc herniation centrally located and extending to the left, asymptomatic side. He notes that such disc herniation was not treated by the fusion surgery had by Hulsey, inasmuch as the herniation is posterior into the canal, and would require a posterior approach. Dr. Lange, when advised that the surgery involved an anterior retroperitoneal approach, noted that the surgery had by Ms. Hulsey was to remove the inside disc to effect fusion, and was not to treat the herniation, which would not have been seen by this anterior approach.
On 2 November 2006, the Administrative Law Judge held that the work injury suffered on 1 December 2000 was not a substantial factor in causing the need for Hulsey's fusion surgery at L5-S1 and L4-L5 of the low back.
On 7 June 2007, with one member dissenting,[1] the Labor and Industrial Relations Commission affirmed the administrative law judge's ruling, asserting that the award was supported by competent and substantial evidence. Hulsey appeals the ruling of the Labor and Industrial Relations Commission to this Court.
Discussion
It appears from Hulsey's ill-drafted brief[2] that the sole issue on appeal is *161 whether substantial and competent evidence exists to support the Commission's ruling that Hulsey's 1 December 2000 work-related fall was not a substantial factor in causing the need for Hulsey's fusion surgery.
On appeal from a decision in a worker's compensation case, we may modify, reverse, remand for rehearing, or set aside the award upon any of the following grounds and no other:
(1) That the commission acted without or in excess of its powers;
(2) That the award was procured by fraud;
(3) That the facts founds by the commission do not support the award;
(4) That there was not sufficient competent evidence in the record to warrant the making of the award. Section 287.495.1 RSMo 2000.
We must examine the record as a whole to determine if sufficient substantial and competent evidence exists to support the award, or whether the award is contrary to the overwhelming weight of the evidence. Hampton v. Big Boy Steel Erection, 121 S.W.3d 220, 222-23 (Mo. banc 2003).
The employee has the burden of proving, to a reasonable probability, that her injury resulted from the accident to which she attributes it. Silman v. William Montgomery Associates, 891 S.W.2d 173, 175 (Mo.App. E.D.1995) (overruled on other grounds). Proper opinion testimony as to causal connection is competent and can constitute substantial evidence. Id. at 176. We are not to review the weight the administrative law judge gave to expert opinions if each was based on competent and substantial evidence. Smith v. Climate Engineering, 939 S.W.2d 429, 431 (Mo.App. E.D.1996) (overruled on other grounds); see also Johnson v. Denton Construction Co., 911 S.W.2d 286, 288 (Mo.1995) (holding the decision to accept one of two conflicting medical opinions is an issue of fact for determination by the Commission). Our task is a single determination whether, considering the whole record, there is sufficient competent and substantial evidence to support the award. This standard would not be met in the rare case when the award is contrary to the overwhelming weight of the evidence. Hampton, 121 S.W.3d at 223. If there is substantial and competent evidence in the record, albeit in conflict with other evidence, this Court is required to affirm the final award of the Commission. Mueller v. Bay, 670 S.W.2d 129, 131 (Mo.App.E.D. 1984).
Here the Commission had the opinions of two experts on which to base its decision, Dr. Cohen and Dr. Lange. It chose to rely on Dr. Lange. Hulsey argues that the Commission's decision to believe Dr. Lange was not based on sufficient competent evidence in the record and was contrary to the overwhelming weight of the evidence in that the only evidence of Dr. Lange's finding was premised on Dr. Lange's deposition testimony that the "mechanism of injury" was consistent with *162 a sacroiliac joint injury, and that Dr. Lange did not opine that Husley did not need the surgery on her spine. We disagree.
We first dispense with Hulsey's argument that Dr. Lange's opinion does not constitute sufficient competent evidence. Proper opinion testimony as to causal connection is competent and can constitute substantial evidence. Silman, 891 S.W.2d at 176. Dr. Lange is a spine surgeon by training and experience. He examined Hulsey on 22 June 2003, and concluded that Hulsey suffered a right sacroiliac joint injury as a consequence of falling on one side of the pelvis. Dr. Lange further concluded that Hulsey had reached maximum medical improvement as of the date of his examination. Dr. Lange acknowledged that his diagnosis of sacroiliac joint injury could be proved to be incorrect in the event that the fusion surgery performed on Hulsey had the effect of resolving her pain complaints.
Hulsey had the fusion surgery performed in May 2004 and thereafter presented to Dr. Lange in November 2004 and again in June 2005. During her visits with Dr. Lange, Hulsey continued to complain of low back and leg pain. She additionally drew a pain diagram in which she indicated that she still had right low back symptoms and right leg complaints, and similar pain levels to what she had indicated after completing the same pain diagram with Dr. Lange in 2003. Under Silman, Dr. Lange's opinion is competent and substantial evidence.
We also disagree with Hulsey's claim that Dr. Lange's opinion is against the overwhelming weight of the evidence. While there was substantial evidence to support Dr. Cohen's conclusion that Hulsey's fall necessitated the fusion surgery, the evidence is not so overwhelming as to require a reversal. Dr. Lange and Dr. Cohen are both experts in their field who gave differing opinions. Both opinions were based on substantial and competent evidence in that they were based on an evaluation of the patient's history and symptoms.
The Commission is free to believe whatever expert it chooses as long as each opinion is based on substantial and competent evidence, and we should not disrupt that, even if the competing expert is worthy of belief. Smith v. Climate Engineering at 431; Mueller v. Bay at 131. The Commission chose to believe Dr. Lange's opinion that the work-related injury was to the right hip, and that Hulsey was at maximum medical improvement before the surgery. Dr. Berkin, who had the opportunity to evaluate Hulsey a little over two years after the fall, also opined that Hulsey was not a surgical candidate. Dr. Lange's opinion was not against the overwhelming weight of the evidence.
Conclusion
Upon review of the entire record, it is clear to this Court that sufficient substantial and competent evidence exists to support the Commission's award and the award is not contrary to the overwhelming weight of the evidence. We therefore affirm the ruling of the Labor and Industrial Relations Committee.
AFFIRMED.
KATHIANNE KNAUP CRANE, P.J., and ROBERT G. DOWD, JR., J., concur.
NOTES
[1] Chairman William F. Ringer and Member Alice A. Bartlett affirmed while Member John J. Hickey dissented.
[2] Hulsey's Brief has an "Introduction" section preceding the Statement of Facts which contains facts and argument which do not have specific page references to the legal file or the transcript in violation of Rule 84.04(i). Further, Hulsey's "Introduction" and Statement of Facts are argumentative in that they contain numerous underlined words and phrases, thus violating Rule 84.04(c). Compliance with the briefing requirements under Rule 84.04 is mandatory. Bishop v. Metro Restoration Services, Inc., 209 S.W.3d 43, 45 (Mo.App. S.D.2006). Perfection is not required, but an appellant must reasonably comply with the rules. Hicks, 41 S.W.3d at 640. The failure to substantially comply with Rule 84.04 preserves nothing for appellate review and warrants dismissal of the appeal. Id.; Brown, 211 S.W.3d at 147; Bishop, 209 S.W.3d at 48; Thornton, 161 S.W.3d at 920. While we chose not to dismiss this case, that fact should not diminish the importance of Rule 84.04.
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216 F.2d 256
C & H AIR CONDITIONING FAN COMPANY, Inc., Appellant,v.D. L. HAFFNER, Appellee.
No. 14881.
United States Court of Appeals Fifth Circuit.
October 22, 1954.
J. E. B. Stewart, Atlanta, Ga., for appellant.
A. DeJongh Franklin, Atlanta, Ga., for appellee.
Before HUTCHESON, Chief Judge, and RIVES and TUTTLE, Circuit Judges.
TUTTLE, Circuit Judge.
1
D. L. Haffner sued C & H Air Conditioning Company, Inc. for conversion of electric motors which C & H admitted receiving under certain Trust Receipts. These Trust Receipts provided that the purchaser would hold them as the property of Haffner, but permitted the disposition of the motors upon certain conditions not material here.
2
The defendant, C & H, claimed against Haffner that it had suffered damages by specified breaches of contracts of purchase under which it claimed to have acquired the motors. The sum claimed as a counterclaim exceeded the amount sued for.
3
Defendant denied that there was any conversion; claimed that the action, if any, was based on the relation of debtor and creditor, and asserted that a balancing of the conflicting claims would leave the plaintiff indebted to defendant. It sought judgment for this net amount.
4
The case was tried by the parties on these conflicting contentions. Evidence was introduced which would authorize a finding by the jury that there was an unpaid balance due the plaintiff, Haffner, unless C & H successfully carried the burden of proving damages resulting from the alleged breach of contract by Haffner.
5
The jury found for the plaintiff in the full amount sued for.
6
Appellant, C & H Air Conditioning Fan Company, Inc., here complains that the trial court erred in its disposition of the following contested issues: 1. That the action of trover was not proper and that the cause of action, if any, was on contract; 2. That if the court should find a trover action proper, there was no evidence to support the full amount of the verdict; 3. That the court should have sustained defendant's motion for a new trial; and 4. The jury "improperly failed to find in favor of appellant, as an off-set, the amount shown to have been spent by appellant for repairing defective motors and to allow credit for 99 defective motors which appellee, in open court, agreed to take back."
7
1. While an action in trover for the conversion of personal property may well have been a technical proceeding, both under the common law and under the Georgia statutes, 107 Ga.Ann.Code 101; Atlantic Coast Line Railroad Co. v. McRee, 12 Ga.App. 137, 76 S.E. 1057; Southern Express Co. v. Sinclair, 130 Ga. 372, 60 S.E. 849, it is not necessary in the Federal Courts for the plaintiff to recover strictly on the theory outlined in his complaint or fail completely. Rule 2 F.R.C.P., 28 U.S.C.A. and Rule 15 F.R. C.P., 28 U.S.C.A.
8
2. Here there was a conflict as to the proper form of action; the plaintiff denominated it an action for conversion; the defendant contended the relationship was one of debtor and creditor. Evidence was admitted without objection tending to support both contentions. Although the defendant moved for a directed verdict on the ground that conversion was not the proper remedy, the court charged the jury as to the two conflicting theories and this charge was not excepted to. If, as the defendant contends here, plaintiff failed to prove facts necessary to establish the tort of conversion, the defendant gains nothing if the jury accepted the defendant's own theory that if indebted at all it was as debtor to creditor and not as a "converter." See C. I. T. Corp. v. Hawley, 34 Cal.App.2d 66, 70, 93 P.2d 216, 218.
9
3. There was ample evidence to support a jury finding that there was an unpaid debt of as much as $17,179.25 that arose out of the transactions between the parties regardless of the nature of the transactions. This was sufficient unless the defendant's counterclaim was proven under such circumstances as to certainty or legal effect as would require the trial court to withdraw that issue from the jury and instruct the jury to find its validity and amount in favor of the defendant. This was not the case. The cross-claim for damages was sharply contested, and the court did not err in submitting that issue, as a part of the balancing of accounts, to the jury for its determination. This sufficiently answers appellant's contentions with respect to its contested issues except for the reference to an agreement claimed to have been made by the plaintiff during the trial that he would "take back" some motors and would allow credit for them. At most, this was an effort to make a new agreement, which the trial court properly stated was not involved in this law suit.
10
No error having been committed by the trial court, the judgment is affirmed.
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Order filed April 16, 2020
In The
Fourteenth Court of Appeals
____________
NO. 14-20-00193-CV
____________
DARRELL GARETH ARCHER, Appellant
V.
HARRY HARTLEY II, ICT ENGINES INC., AND IMPACO INC., Appellees
On Appeal from County Civil Court at Law No. 4
Harris County, Texas
Trial Court Cause No. 1145555
ORDER
The notice of appeal in this case was filed March 9, 2020. To date, the filing
fee of $205.00 has not been paid. No evidence that appellant is excused by statute
or the Texas Rules of Appellate Procedure from paying costs has been filed. See
Tex. R. App. P. 5. Therefore, the court issues the following order.
Appellant is ordered to pay the filing fee in the amount of $205.00 to the
clerk of this court on or before April 27, 2020. See Tex. R. App. P. 5. If appellant
fails to timely pay the filing fee in accordance with this order, the appeal will be
dismissed.
PER CURIAM
Panel consists of Chief Justice Frost and Justices Jewell and Spain.
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981 A.2d 405 (2009)
HARRISBURG GARDENS, INC., Appellant
v.
SUSQUEHANNA TOWNSHIP ZONING HEARING BOARD.
No. 636 C.D. 2008.
Commonwealth Court of Pennsylvania.
Argued March 31, 2009.
Decided September 23, 2009.
*407 Leslie D. Jacobson, Harrisburg, for appellant.
Kathryn Simpson, Harrisburg, for appellees.
BEFORE: LEADBETTER, President Judge, PELLEGRINI, Judge, and KELLEY, Senior Judge.
OPINION BY Senior Judge KELLEY.
Appellant Harrisburg Gardens, Inc. (Harrisburg Gardens) appeals from an order of the Court of Common Pleas of Dauphin County (Trial Court) that overruled Harrisburg Gardens' appeal of, and affirmed, a Decision of the Susquehanna Township Zoning Hearing Board (Board). The Board's Decision, inter alia, concluded that Harrisburg Gardens' present use and operation of its property and business was not a valid nonconforming use, and further was not a natural expansion of a pre-existing valid nonconforming use enjoyed by Harrisburg Gardens' predecessor. We affirm.
Harrisburg Gardens is the owner of approximately 7 acres of real property (hereinafter, the Property) on which it operates a nursery and garden center, selling plants, landscape boulders, pavers, stone, mulch, topsoil and related products. Harrisburg Gardens is also involved in landscaping, excavating, shrub and grass care and services, and the installation of patios, retaining walls, and ponds. The Property is located in a residential neighborhood containing approximately thirty-one residences, of which at least ten abut the Property.
Harrisburg Gardens purchased the Property in 2000 from a party named Montgomery, who in turn had previously purchased the Property from Walter-Nissley-Walter (WNW). During the period of Montgomery and WNW operations, the business was primarily a nursery, earning its profits from the sales and service of plants, trees and shrubs, with a small percentage of sales generated by the sale of stone and mulch. During those periods, the business maintained two or three storage bins for mulch, topsoil, and/or stone or related products. The business, at that time, maintained no inventory of large landscape boulders.
Since its purchase of the Property, Harrisburg Gardens' business operations have evolved toward the selling of more retaining wall and landscape materials, although it does still grow and sell plants and related products, some of which are brought in from off site. However, the business currently derives more than half of its sales volume from stone and related products, as opposed to plant-related products. During the current ownership of the business, Harrisburg Gardens has expanded spatially on its lot without the erection of *408 new buildings, and now employs more workers. Harrisburg Gardens' current operation involves the use of large trucks for the purpose of handling its on-site inventory of large landscaping boulders. The current business uses more and larger trucks, and causes significantly more noise and dust, in comparison to its predecessor. Until recently, Harrisburg Gardens had also been manufacturing topsoil and crushing rock on the Property, which was then trucked off site. The Property's number of mulch/topsoil/stone storage bins had also increased significantly.
At an unspecified time prior to the proceedings at issue, Susquehanna Township Zoning Officer Michael Rohrer responded to complaints filed by Harrisburg Gardens' neighbors concerning its current uses of the Property. Rohrer performed a site inspection of the business, and then forwarded a letter to neighbors Tim and Pam Alvey (the Alveys) indicating that Harrisburg Gardens was operating a legal, nonconforming entity that was not in violation of any ordinance.
Thereafter, however, on August 9, 2006, Rohrer forwarded a letter to Harrisburg Gardens' owner indicating that a subsequent site inspection confirmed that the business had expanded its prior nursery business to include the manufacturing of topsoil and stone. Rohrer further stated, therein, that the prior nonconforming use had not included such manufacturing activities and that manufacturing was not listed as a permitted use under the Susquehanna Township Zoning Ordinance (Ordinance)[1] for the R-2 Zoning District in which the business was located. Rohrer also noted that any nonconforming use extension must be approved by the Board via special exception. Rohrer further notified Harrisburg Gardens that certain large landscaping boulders were being stored in violation of the visibility requirements in Section 2108.2 of the Ordinance, and requested that the boulders be relocated.
On September 6, 2006, Rohrer again wrote to the Alveys, stating that Harrisburg Gardens had removed the large boulders as requested, that Harrisburg Gardens had removed a soil/rock processing machine, and that the business was no longer manufacturing products on the Property. Rohrer concluded that Harrisburg Gardens was therefore no longer in violation of the Ordinance.
On October 9, 2006, the Alveys filed a Notice of Appeal with the Board, claiming, in relevant part, that Harrisburg Gardens was still in violation of the Ordinance in relation to its continuing nonconforming uses, and that its activities represented an unhealthy, harmful trespass upon the properties of the neighbors of the business. The Alveys requested that the Board either reassess Harrisburg Gardens' uses of the Property, or formally require the business to submit an application for an extension of nonconforming use. The Board thereafter held hearings on November 1, 2006, and January 17, 2007.
By Decision filed on March 2, 2007, the Board sustained the Alveys' appeal, concluding that Harrisburg Gardens' present use and operation was neither a valid nonconforming use, nor a valid continuation of any prior nonconforming use of its predecessor. The Board noted, in its Decision, the doctrine of natural expansion, under which our Courts have held that the owner of a nonconforming use may expand that use in the pursuit of expanding its business.[2]*409 However, the Board concluded that the evidence presented in this case demonstrated that Harrisburg Gardens' current operation was not a mere expansion or enlargement of a similar business activity, but something new and dissimilar to the existing nonconforming use. The Board particularly noted that Harrisburg Gardens' current operation included a change in the intensity and concentration in certain business activities, including significant increases in noise, dust, dirt, vibration, and large truck traffic, as well as the use of a greater number of trucks, employees, and large material storage bins. Accordingly, the Board sustained the Alveys' appeal, expressly concluding that Harrisburg Gardens' present use and operation of its business was not a valid nonconforming use, and was not a valid continuation of the nonconforming use enjoyed by Harrisburg Gardens' predecessors.
On March 30, 2007, Harrisburg Gardens filed in the Trial Court a Land Use Appeal from the Board's Decision, and additionally filed a Motion for the Presentation of Additional Evidence (the Motion). By order dated April 4, 2007, the Trial Court remanded the matter to the Board for consideration of Harrisburg Gardens' Motion. Thereafter the Board held a hearing on June 6, 2007, to receive the requested additional evidence. At the Board hearing, Harrisburg Gardens' requested a continuance due to the unavailability of its witnesses, which continuance was denied. The Board, however, did receive additional testimony from three witnesses that had previously testified before the Board in the matter. On July 18, 2007, the Board sent to the Trial Court the additional evidence received, without issuing a new decision in the matter.
On November 30, 2007, Harrisburg Gardens filed a Motion to Strike the Testimony, Exhibits and Record Created by the Board (hereinafter, Motion to Strike), seeking to exclude the testimony presented to the Board in its second hearing by those witnesses that had previously testified in the matter. Harrisburg Gardens, therein, noted that testimony from witnesses who had previously testified should have only been allowed as rebuttal, and not direct, testimony. By order dated December 21, 2007, the Trial Court denied Harrisburg Gardens' Motion to Strike.
The Trial Court thereafter considered Harrisburg Gardens' Land Use Appeal based upon the parties' briefs.[3] By order dated March 17, 2008, the Trial Court adopted the Board's findings of fact, and ruled that the Board did not abuse its discretion or commit an error of law in regards to its March 2, 2007 Decision. Citing to the Board's findings, the Trial Court further concluded that Harrisburg Gardens' current operation was a new and dissimilar business entity from that of its predecessors. As such, the Trial Court overruled Harrisburg Gardens' appeal, and affirmed the Board's Decision.
Harrisburg Gardens now appeals from the Trial Court's March 17, 2008 order to this Court. By order dated April 15, 2008, the Trial Court ordered Harrisburg Gardens to file a statement of the errors complained of and intended to be argued on appeal, pursuant to Pa.R.A.P.1925. Harrisburg *410 Gardens complied therewith on April 30, 2008, and subsequently the Trial Court issued a Memorandum Opinion in support of its March 17, 2008 order (hereinafter, the Trial Court Opinion).
Where the trial court receives no additional evidence on appeal from a zoning hearing board's decision, an appellate court's standard of review is to determine whether the board committed an abuse of discretion or an error of law. Narberth JKST Tennis Club, Inc. v. Zoning Hearing Board of Borough of Narberth, 938 A.2d 1144 (Pa.Cmwlth.2007).
Pennsylvania's Supreme Court has established that to qualify as a continuation of an existing nonconforming use, a proposed use must be sufficiently similar to the nonconforming use to a sufficient degree so as to not constitute a new or different use. Limley v. Zoning Hearing Board of Port Vue Borough, 533 Pa. 340, 625 A.2d 54 (1993). While a proposed use need not be identical to the existing use, a similarity between the uses is necessary. Id.
Further, citing to Limley, this Court has stated:
In determining whether a proposed use bears adequate similarity to an existing nonconforming use, courts must give effect to the doctrine of natural expansion, which permits a landowner to develop or expand a nonconforming business as a matter of right . . . The doctrine of natural expansion supports increased intensity in a property's utilization, e.g., an increase in the number of users or an increase in the frequency of a use.
Lench v. Zoning Board of Adjustment of City of Pittsburgh, 852 A.2d 442, 444 (Pa. Cmwlth.2004). A court cannot employ an overly technical assessment of a nonconforming use to stunt its natural development and growth. Id. However, we have also recognized that it is the policy of the law to closely restrict nonconforming uses. B & B Shoe Products Co. v. Zoning Hearing Board of Manheim Borough, 28 Pa. Cmwlth. 475, 368 A.2d 1332 (1977).
Harrisburg Gardens first argues that the Trial Court erred in affirming the Board's Decision, in that Harrisburg Gardens' current operation is an expansion or enlargement of the legal nonconforming use existing on the Property. Harrisburg Gardens cites primarily to Silver, and to Pappas v. Zoning Board of Adjustment of City of Philadelphia, 527 Pa. 149, 589 A.2d 675 (1991).
In Silver, our Supreme Court held that within certain limitations, the owner of a prior nonconforming use is entitled to expand its business in scope and volume provided that the expansion is natural, and is done for the accommodation of increased trade. The appellant therein owned a non-conforming apartment building, initially comprised of 33 units, which became a valid and legal non-conforming use when Philadelphia's first comprehensive zoning code was subsequently adopted. Silver sought to increase the number of units within the building by subdividing the existing units without changing the external dimensions of the pre-existing building. The Supreme Court held that the contemplated expansion must not be detrimental to public health, welfare and safety, and ultimately permitted the natural expansion of Silver's prior nonconforming use.
In Pappas, the Supreme Court again visited the natural expansion doctrine. Therein, the owner of a take-out sandwich shop, which constituted a nonconforming use, sought to expand to a full service pizza shop. However, the owner took three years to ultimately complete the renovations for the expansion, during which time no business was conducted on the site. While the dispositional crux of Pappas *411 was whether or not the prior nonconforming use had been abandoned, the Supreme Court also held that the expansion at issue could not be characterized as a change to a new and different use, but was an expansion of the prior nonconforming use, and that this Court's reliance on the overly technical distinction between a take-out and full service eatery ignored the doctrine of natural expansion in relation to the nonconforming use at issue.
Applying Silver and Pappas to the instant facts, Harrisburg Gardens argues that the Board specifically found that the business was conducting the same or similar activities on the Property as the prior owners, but is merely doing more volume that those prior owners. We disagree with that narrow, selective reading of the Board's Decision, which reads, in extended relevant part:
After reviewing the testimony in this case, the Board believes the most salient aspect instantly is the change in the intensity and concentration of particular activities, with the lesser salient aspect being the change in or addition of certain activities.[] Our Findings of Fact indicate that the operation under WNW was a simple nursery in which sales consisted of at least 90 plants, flowers and trees. With [Harrisburg] Gardens, the mix has become over 50 in stone. Along with this change in the mix of product came a large, concomitant increase in noise, dust, dirt, vibration and large truck traffic, and a greater number of trucks and employees and activity in general. While the WNW operation had trucks and employees, and a very few storage bins, [Harrisburg] Gardens' operation involves larger and more trucks, more employees, and the dust, and noise that invariably accompanies greater business activities in general. For these reasons, we believe [Harrisburg] Gardens' operation is not a mere expansion or enlargement of a similar business activity, but something new and dissimilar from the WNW non-conforming use previously obtaining. [sic]
R.R. at 151a (footnote omitted). When read as a whole, the above-cited passage, directly relied upon by Harrisburg Gardens on this issue, cannot in any way be read to specifically conclude that Harrisburg Gardens is solely or even primarily conducting the same or similar activities on the Property as argued. Notwithstanding Harrisburg Garden's mischaracterization of the Board's specificity, the actual language of the Board's opinion concludes the precise opposite of Harrisburg Garden's argument on this point.
Additionally, and independently dispositive, the similarity of the prior and newly expanded uses is not determinative, notwithstanding Harrisburg Gardens' reliance upon testimony in the record that the current activity is not unrelated to the primary business. We have held that whether a use proposed as an extension or expansion of an existing nonconforming use is the same as the existing use, or is a use accessory to the existing use, the proposed use must be shown to be "needed to provide for . . . natural expansion and the accommodation of increased trade." IMS America, Ltd. v. Zoning Hearing Board of Borough of Ambler, 94 Pa.Cmwlth. 501, 503 A.2d 1061, 1064 (1986) (additional citation omitted; emphasis added). While Harrisburg Gardens' reliance on the similarity of the activities at issue can be seen to have some support within the record, there is no authority for such mere similarity, on its own, as a sufficient basis for the application of the natural expansion doctrine. "Expansions of nonconforming uses are also protected to the extent that they are necessary to provide for the natural expansion and accommodation of increased trade." Collis v. Zoning Hearing *412 Board of East Allen Township, 51 Pa. Cmwlth. 368, 415 A.2d 102, 104-105 (1980) (emphasis added). The record in the instant matter is bereft of any evidence found credible by the Board as to the necessity of the activity at issue as an element of the purported expansion of the original nonconforming use in this matter. Additionally, Harrisburg Gardens fails to cite to any such evidence within the record. As such, this argument is without merit.
Next, Harrisburg Gardens argues that the Board's finding[4] that Harrisburg Gardens' sales are more than 50 attributable to the sale of stone is without evidentiary support, and is in error. Harrisburg Gardens characterizes its owner's testimony as establishing that its sales consist of 50 plant materials, and 50 non-plant materials; however, the record flatly contradicts this characterization. Upon cross examination, and then when questioned by the Board's Chairman, Brent Miles, the owner of Harrisburg Gardens, testified:
Atty. Restak (on cross-examination): What percentage of your operation would you say is plant material as opposed to rock, landscape material, topsoil? Can you quantify that?
Mr. Miles: It would be a guess. Maybe 50/50.
* * *
Chairman: Did you say that about fifty percent of your business is selling trees, shrubs, flowers, whatever, and fifty percent stone?
Mr. Miles: If you did an overview of my property, there's probably fifty percent where there's plant material. There's a field that runs down the whole side that has mature trees that we sell occasionally too. So if you take that into consideration with the plant materials up front, you'd be looking at probably 50/50. If you're only looking at the plant material up front and then all the stone, then obviously the stone takes up more space.
Chairman: Well, not so much space as dollars. Is fifty percent of your business landscaping materials or
Mr. Miles: I'm sure I sell more stone. There's more money produced from the retail sales of stones than there is of the retail sales of plants.
R.R. at 117a, 121a-121b (emphasis added). Harrisburg Gardens concedes that Mr. Miles' testimony is the sole evidence of record establishing the proportions of the business's sales volume. As such, the unambiguous testimony of Harrisburg Gardens' owner contradicts, and defeats, the business's argument on this point.
Harrisburg Gardens next argues that no evidence of record supports the Board's Finding 6, which states:
During the period of the WNW and Montgomery operation, the business can best be described as a simple nursery, selling flowers, plants and trees, along with a small percentage of stone and mulch, and with at least 90 of sales of WNW being trees, shrubs and plants.
R.R. at 150a. Harrisburg Gardens asserts that there is no evidence of record as to the details of WNW's sales percentage of plant and non-plant materials, and that thusly the Board's finding is error, and the Board's conclusion that Harrisburg Gardens' operation is a new and different use from that of WNW is also error. Again, *413 the record belies Harrisburg Gardens' argument.
Carol Peters testified that she has lived on adjacent property since 1971, and also worked for Harrisburg Gardens for one summer several years ago. R.R. at 54a, 57a-58a. Peters testified that from its inception until its purchase by Harrisburg Gardens, the Property was operated as a traditional retail nursery that sold shrubs, plants, trees, flowers, and some mulch, and that 90 of the Property's use was dedicated to growing trees, shrubs and plants. R.R. at 128a-129a. Additionally, Jacquelyn Patton testified that she has lived in the area of the Property since 1954, and was both familiar with, and a customer of, the prior business operations on the Property. R.R. at 245a-247a. Patton corroborated Peters' characterization of the Property. Id. As such, Harrisburg Gardens' argument on this issue is without merit.[5]
Finally on this issue, Harrisburg Gardens argues that no evidence of any detriment to the health, welfare, and safety of the public has been presented. We disagree, based on the clear and repeated testimony in this matter of several witnesses of the significant increases in noise, dust, dirt, vibration, and large truck traffic, as well as the extension of this increased activity into later hours of the day and night. See R.R. at 17a, 26a-43a, 52a-54a, 58a-61a, 65a-68a, 101a, and 136a-137a. It is also well established that, once the objectors to Harrisburg Gardens' activities in this matter produced testimony as to the deleterious effects thereof upon their health, welfare, and/or safety, Harrisburg Gardens was then tasked with the burden to prove that its proposed expansion would not cause increased detrimental effects on surrounding properties. B & B Shoe. Harrisburg Gardens had failed to cite to any evidence within the record to satisfy that burden, and our examination of the record reveals no such evidence.
In its second issue, Harrisburg Gardens presents two arguments that the Trial Court erred in denying its Motion to Strike. Harrisburg Gardens first cites to Section 1005-A of the Municipalities Planning Code (hereinafter, the MPC).[6] Harrisburg *414 Gardens argues that its Motion for the Presentation of Additional Evidence[7] under Section 1005-A of the MPC, which was filed concurrently with Harrisburg Gardens' appeal from the Board's March 2, 2007 Decision, was improperly remanded to the Board for consideration. Harrisburg Gardens argues that the Trial Court was without authority to remand consideration of the Motion to Present Additional Evidence to the Board, and should have decided that Motion itself prior to any potential remand. Thusly, Harrisburg Gardens concludes that the Board was without authority to decide the Motion to Present Additional Evidence, and the remand was reversible error.
Our review of the record reveals that nowhere within its Statement of Matters Complained of on Appeal was this argument raised by Harrisburg Gardens. R.R. at 395a-396a. Thusly, it is waived. As expressly noted by the Trial Court within its order of April 15, 2008, a failure to state an error complained of and intended to be argued on appeal will be considered as a waiver thereof. Pa.R.A.P.1925(b); Solebury Township v. Solebury Township Zoning Hearing Board, 914 A.2d 972 (Pa. Cmwlth.2007).
Next, Harrisburg Gardens argues that the Trial Court erred in denying Harrisburg Garden's Motion to Strike the testimony and concomitant record thereof in the wake of the Board's receipt of the additional testimony. Harrisburg Gardens argues that its Motion to Present Additional Evidence requested additional testimony only by Harrisburg Gardens' witnesses.[8] However, at the June 6, 2007 remand hearing, Harrisburg Gardens' witnesses were unavailable, and a requested continuance was denied. Notwithstanding the fact that Harrisburg Gardens submitted no additional testimony, the Board took additional testimony and admitted additional exhibits to the record from Carol Peters, Jacqueline Patton, and Athanasios Gaitanis. R.R. at 219a-285a. Harrisburg Gardens emphasizes that all three of those witnesses had previously testified regarding the same or similar topics to which they had testified in the prior proceedings before the Board, and that thusly that testimony, and the related exhibits, should have been stricken from the record.
Harrisburg Gardens has also waived this argument. The record shows that Harrisburg Gardens presented its request for a *415 continuance to the Board on the very evening of the meeting at which the additional testimony and evidence had been previously scheduled to be received. R.R. at 206a. When the Board denied the continuance, and indicated that additional witnesses would be heard later in that same meeting, Harrisburg Gardens' counsel left the proceedings without making any objection on the record. R.R. at 216a-217a. As such, any objection to the testimony and evidence received after that point has been waived. A party cannot gain advantage by making a hasty retreat from the hearing room. See Seipstown Village, LLC v. Zoning Hearing Board of Weisenberg Township, 882 A.2d 32 (Pa.Cmwlth.2005). As noted above, a party who fails to raise an issue before a municipal zoning hearing board is precluded from doing so for the first time on appeal. Baker.
Accordingly, we affirm.
ORDER
AND NOW, this 23rd day of September, 2009, the order of the Court of Common Pleas of Dauphin County dated March 17, 2008, at No. 3162 CV 2007 LU, is affirmed.
NOTES
[1] Portions of the Ordinance can found in the Reproduced Record (R.R.) to this matter at 420a-435a.
[2] See generally, Silver v. Zoning Board of Adjustment, 435 Pa. 99, 255 A.2d 506 (1969) (With certain limitations, the owner of a prior nonconforming use is entitled to expand its business in scope and volume provided that the expansion is natural, and is done for the accommodation of increased trade).
[3] The Board and William and Carol Peters (the Peters), as Interveners, filed a joint brief before the Trial Court, and have filed a joint brief to this Court in the matter sub judice.
[4] The Board found:
12. [Harrisburg] Gardens now does more than half its business (in sales volume) in stone, as contrasted with plants.
R.R. at 161a.
[5] We note that while Peters testified as to her characterization of "90% of the Property's use" as dedicated to growing trees, shrubs, and plants, the Board attributed that 90% figure to the prior business's sales. R.R. at 128a-129a, 150a (emphasis added). However, we find that semantic difference to be harmless error on the Board's part. The testimony cited above, as well as the record as a whole herein, does establish a basis for the Board's conclusion that the current operation constitutes a new and dissimilar use from the prior non-conforming use.
We also emphasize, tangentially and independently dispositive from our foregoing analysis, that Harrisburg Gardens produced no credible evidence or testimony whatsoever in regards to the specific nature of the use prior to its assumption of ownership of the Property, in relation to either the use or sales breakdown thereof. Further, Harrisburg Gardens produced no evidence or testimony to prove the existence of a prior valid nonconforming use. Neither the Board, nor any party herein, addressed that foundational matter of fact. However, we have held that a property owner seeking to expand its nonconforming use bears the burden to prove the existence of a prior nonconforming use by showing an actual use that was created in good faith and that previously existed lawfully. McGeehan v. Zoning Hearing Board of Springfield Township, 45 Pa.Cmwlth. 403, 407 A.2d 56 (1979). Where the issue is a potential allowance for a permissible expansion of a non-conforming use, the determination of that issue must be based upon an evidentiary record clearly defining the present extent of that use, as well as its historical background. Upper Merion Township v. Urbano, 6 Pa.Cmwlth. 297, 294 A.2d 403, 409 (1972) (emphasis added).
[6] Act of July 31, 1968, P.L. 805, as amended, 53 P.S. 11005-A, added by the Act of December 21, 2008, P.L. 1329. Section 1005-A states:
Hearing and argument of land use appeal If, upon motion, it is shown that proper consideration of the land use appeal requires the presentation of additional evidence, a judge of the court may hold a hearing to receive additional evidence, may remand the case to the body, agency or officer whose decision or order has been brought up for review, or may refer the case to a referee to receive additional evidence, provided that appeals brought before the court pursuant to section 916.1 shall not be remanded for further hearings before any body, agency or officer of the municipality. If the record below includes findings of fact made by the governing body, board or agency whose decision or action is brought up for review and the court does not take additional evidence or appoint a referee to take additional evidence, the findings of the governing body, board or agency shall not be disturbed by the court if supported by substantial evidence. If the record does not include findings of fact or if additional evidence is taken by the court or by a referee, the court shall make its own findings of fact based on the record below as supplemented by the additional evidence, if any.
[7] See R.R. at 165a.
[8] We note that Harrisburg Gardens grossly mischaracterizes its own Motion to Present Additional Evidence. Nothing therein states expressly, or implies, that only witnesses on Harrisburg Gardens' behalf were requested, or would be allowed to testify. R.R. at 165a, 189a.
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759 P.2d 1108 (1988)
92 Or.App. 598
TREASURE VALLEY BANK, a Corporation, Respondent,
v.
Geraldine Crane LONG; Geraldine Crane Long, Personal Representative of the Estate of William R. Crane, Deceased; Ronald D. Clayton; Dean E. Crane; Viewpoint Properties, Inc.; McMenamin, Joseph, Babener & Carpenter; Werner S. Storch; Central Adjustment Bureau, Inc.; and G. Brock Hereford, Defendants, and
Malcolm D. MacGregor, Appellant.
85-10-20,566 E; CA A42660.
Court of Appeals of Oregon.
Argued and Submitted December 7, 1987.
Decided August 24, 1988.
Gordon R. Hanna, Salem, argued the cause for appellant. With him on the briefs was Churchill, Leonard, Brown & Donaldson, Salem.
William F. Nichols, Nyssa, argued the cause for respondent. With him on the *1109 brief was Stunz, Fonda, Pratt, Nichols, Kiyuna & Okai, Nyssa.
Before RICHARDSON, P.J., JOSEPH, C.J.,[*] and DEITS, J.
RICHARDSON, Presiding Judge.
Plaintiff, the seller under a land sale contract, brought this action for specific performance of the contract against the purchasers and their assignees. The court granted specific performance, ordered a sheriff's sale and awarded plaintiff a judgment against all of the purchasers and their assignees if there was a deficiency. Defendant MacGregor, an assignee of a purchaser's interest in the contract, is the only defendant who appeals. He contends that he did not assume his assignor's obligations under the contract and therefore cannot be held liable for a deficiency judgment.
The matter was tried to the court on stipulated facts. Ella Kohler contracted to sell the real property to William Crane, Ronald Clayton and Dean Crane. Kohler later assigned her seller's interest to plaintiff as security for a loan, and plaintiff eventually obtained all of the seller's interest by foreclosure. Viewpoint Properties, Inc., obtained the purchaser's rights and obligations under the contract after a series of transactions and assigned its interest in the contract to defendant.
Defendant's affidavit, which was received by stipulation, explained the assignment:
"4. At the time of the assignment Viewpoint Properties was insolvent. The assignment was designed to allow me to salvage some of the money I was losing as a result of the Viewpoint Properties insolvency. I calculated that if I could gain some advantage, so be it. If I could not gain an advantage, I could not hurt Viewpoint Properties if I defaulted.
"5. Viewpoint Properties did not demand that I assume the contract obligation, and, if they had, I would not have taken the assignment. Viewpoint Properties did not demand indemnity from the contract and I was unwilling to supply it. My only interest in the property was to try to salvage something from my loss. I never agreed to be personally liable on the debt. In fact, it was agreed between Viewpoint Properties and I that I would not become personally liable upon the contract assigned."
The president of Viewpoint Properties submitted an affidavit which was to the same effect.
After the assignment, defendant paid a total of $38,152 to plaintiff on the contract. He also leased some of the farm land, a dog kennel and a residence and sold an option for mineral exploration. He received about $9,200 for the leases and the option. Because defendant was the only person making payments on the contract, the contract was declared in default when he ceased doing so, the balance due was accelerated and this action was commenced.
In his first assignment, defendant contends that the court erred by denying his motion to strike the "claim of personal liability against him for the land sale contract balance." The complaint alleged only that defendant was an assignee of a purchaser's interest. His principal argument is that a bare assignment of that type is not sufficient to impose liability on the assignee and, therefore, the allegation was insufficient. The parties tried the case fully, and it is here on de novo review; consequently, even if the allegation is insufficient, there is no reason to reverse on that assignment of error. We need not address the merits of the first assignment.
The other three assignments relate to the court's conclusions regarding defendant's liability, and all three raise the same issue: whether, under the stipulated facts, defendant assumed the purchasers' obligations on the land sale contract. We address them together.
Either party to a land sale contract may normally have specific performance. Wittick v. Miles, 274 Or. 1, 545 P.2d 121 (1976). A seller's rights against the *1110 purchaser's assignee arise from the seller's status as a third party beneficiary of the assignment contract. Kunzman v. Thorsen, 303 Or. 600, 740 P.2d 754 (1987). The scope of the assignment defines the relief available to the seller. As the court said in Kunzman:
"In essence, the vendor's action is one for specific performance of the assignee's agreement to assume the vendee's duties." 303 Or. at 603, 740 P.2d 754.
Thus, the dispute here is about the interpretation of the assignment between Viewpoint Properties and defendant. The assignment contains nothing to the effect that defendant agreed to assume or not assume Viewpoint Properties' obligations under the contract.
The assignee of a contract for the purchase of land assumes no liability by reason of the assignment alone. Hodges et ux. v. Servine et ux., 211 Or. 428, 437, 316 P.2d 312 (1957). Where the assignee claims "the benefits of the contract," however, an inference arises that he intended to assume the contract's obligations as well.
In Kunzman v. Thorsen, supra, the court described the process of interpreting a contract of assignment when it is silent as to the assignee's obligations:
"From this mash of precedent we distill the following principle: An asignee `claims the benefits' of a land sale contract when he or she exercises the rights in the contract's subject matter conferred upon the vendee by the contract. Where a party accepts a broadly worded assignment of a land sale contract, `steps into the shoes' of the assignor and asserts the interests the contract conveys, the presumption arises that the assignee intended also to assume the duties the contract imposes.
"* * *
"Accepting the benefits of a contract does not impose liability on an assignee. The Hodges rule is a rule of construction only. It considers the probable intent of the parties at the time the assignment was made for the purpose of determining whether expansive words of the assignment imply an assumption of duties by the assignee. Where the parties clearly intend otherwise (as evinced either by the terms of the assignment or by the surrounding circumstances, e.g., an assignment for security), the implication that the assignee assumed the vendor's [sic] contractual duties is dispelled." 303 Or. at 610, 740 P.2d 754. (Emphasis in original.)
Defendant concedes that paying the contract payments for a period of time, leasing parts of the property and selling a mineral exploration option were sufficient economic exploitations to constitute a claim of the benefits of the contract. The question is whether the facts surrounding the assignment dispell the implication that defendant assumed the obligations. On de novo review, we conclude that they do.
The affidavits of defendant and the president of Viewpoint Properties were received by stipulation. There is no contradictory evidence. The essence of the affidavits is that defendant accepted the assignment in order to recoup some of the money owed to him by Viewpoint Properties and that it was expressly agreed that defendant would not have any obligations to make payments on the land sale contract. We conclude that defendant did not intend to assume the obligations of the purchasers under the contract and, therefore, he cannot be held liable for any payment due to plaintiff under the contract or any deficiency after distribution of the proceeds of the sheriff's sale.
Reversed as to defendant MacGregor.
NOTES
[*] Joseph, C.J., vice Newman, J.
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700 F.2d 699
UNITED STATES of America, Plaintiff-Appellee,v.Jeanne P. JOHNSON, Clarence A. Johnson, Defendants-Appellants.
No. 82-8210.
United States Court of Appeals,Eleventh Circuit.
March 17, 1983.
Frank P. Samford, Decatur, Ga., for defendants-appellants.
Gale McKenzie, Sp. Asst. U.S. Atty., U.S. Dept. of Justice, Atlanta, Ga., for plaintiff-appellee.
Appeals from the United States District Court for the Northern District of Georgia.
Before GODBOLD, Chief Judge, RONEY, Circuit Judge, and PITTMAN*, District Judge.
PER CURIAM:
1
Clarence and Jeanne Johnson were convicted of multiple counts of mail fraud and making false statements to the government in connection with obtaining private and government funding for the operation of Allied Community Services, Inc., a private nonprofit contract agency formed to engage in public charity to combat poverty. 18 U.S.C.A. Secs. 1341, 1001. Defendants diverted much of the money to their personal use. Clarence Johnson appeals his conviction on one count, asserting insufficiency of evidence. The primary challenge on appeal made by both Johnsons, however, is that the district court's requirement that each defendant make restitution in the amount of $150,000 to Allied's successor organization, as a condition for a suspended sentence and probation, is unsupported by the law and the evidence. Since the court's findings are insufficient to review this latter contention properly, we remand for further proceedings.
2
As to Clarence Johnson's challenge to his count 14 conviction, we affirm for two reasons: first, we need not decide the issue because the defendant received a concurrent, identical five-year sentence for other unchallenged counts. The conviction for count 14 resulted in a two-year sentence, which the court suspended, placing Johnson on probation for five years. Similarly, Johnson's convictions on counts 26 and 27 produced two two-year sentences to run concurrently with the count 14 sentence. Like the count 14 sentence, both two-year sentences on counts 26 and 27 were suspended with Johnson placed on probation for five years. At oral argument, counsel for Clarence Johnson acknowledged that reversal of the count 14 conviction could not lessen the time of incarceration or probation. Appellate courts generally have refused to review a conviction when the sentence is concurrent with that for another unchallenged or upheld conviction. United States v. Buchanan, 544 F.2d 1322, 1325 (5th Cir.), cert. denied, 432 U.S. 907, 97 S.Ct. 2953, 53 L.Ed.2d 1080 (1977); United States v. Easterly, 444 F.2d 1236, 1240 (5th Cir.1971).
3
Second, the evidence and the law tend to support the conviction. Count 14 charged various individuals with causing a letter to be sent to the Georgia Department of Human Services containing false information on receipts and expenditures in relation to the provision of child care services. The indictment alleged that the letter had been mailed as part of the general scheme to defraud the government and Allied. Johnson does not dispute this point. Nor does he argue with the accusation that the letter provided false data. He simply claims to have had nothing to do with the letter. When a defendant is proved to be a participant in a scheme to defraud and a document is mailed in furtherance of the scheme, however, he may be convicted of mail fraud, or at least of aiding or abetting the fraud, 18 U.S.C.A. Sec. 2, even if he did not personally mail the document. See United States v. Joyce, 499 F.2d 9, 16 (7th Cir.) (a member of a mail fraud scheme is responsible for any letter which any other member of the scheme causes to be mailed in execution of the scheme), cert. denied, 419 U.S. 1031, 95 S.Ct. 512, 42 L.Ed.2d 306 (1974); Sherwood v. United States, 300 F.2d 603, 605 (5th Cir.) (use of mails by fellow members of scheme may be attributed to defendant and render him guilty of mail fraud), cert. denied, 371 U.S. 838, 83 S.Ct. 65, 9 L.Ed.2d 74 (1962).
4
With respect to the required restitution, we are unable to discern whether the order is appropriate. Under 18 U.S.C.A. Sec. 3651, a court may condition probation upon the convicted defendant's making "restitution or reparation to aggrieved parties for actual damages or loss caused by the offense for which conviction was had." The amount of restitution cannot exceed the actual losses flowing from the offense for which the defendant has been convicted. See United States v. Tiler, 602 F.2d 30, 33 (2d Cir.1979); United States v. Boswell, 565 F.2d 1338, 1343 (5th Cir.), cert. denied, 439 U.S. 819, 99 S.Ct. 81, 58 L.Ed.2d 110 (1978). In a multiple count indictment, restitution is restricted to the counts that result in conviction. See Karrell v. United States, 181 F.2d 981, 987 (9th Cir.1950). The order can require restitution only to the damaged party. See Higdon v. United States, 627 F.2d 893, 899 n.14 (9th Cir.1980).
5
In this case, we cannot ascertain what the district court relied on in arriving at the figure of $150,000 for each defendant. We cannot easily determine whether Allied, whose successor organization is the beneficiary of the restitution order, lost $300,000 and, if so, whether the losses are attributable to the counts for which appellants were convicted, not those for which the Johnsons were acquitted or mistried. We therefore vacate this portion of the sentence and remand to the district court to reconsider the propriety and amount of the restitution order, and to specify the bases for its determination. If the defendants had approached this problem under Fed.R.Crim.P. 35, this information probably would be in the record. See United States v. Weiner, 418 F.2d 849, 851 (5th Cir.1969). It appears under the law, however, that the issue can be asserted on direct appeal and that we have jurisdiction to consider it. See United States v. Rosenbarger, 536 F.2d 715, 722 (6th Cir.1976) (issue regarding defect in sentence may be resolved on direct appeal without waiting for a Rule 35 motion to be filed), cert. denied, 431 U.S. 965, 97 S.Ct. 2920, 53 L.Ed.2d 1060 (1977); cf. United States v. Resnick, 483 F.2d 354, 358-59 (5th Cir.) ("declin[ing]" to consider challenge to constitutionality of sentence until district court ruled on the issue under Rule 35), cert. denied, 414 U.S. 1008, 94 S.Ct. 370, 38 L.Ed.2d 246 (1973). On remand, the district court may entertain such arguments as would be appropriate in a Rule 35 proceeding. See United States v. Horton, 646 F.2d 181, 189 (5th Cir.) (remanding to district court for Rule 35 proceeding), cert. denied, 454 U.S. 970, 102 S.Ct. 516, 70 L.Ed.2d 388 (1981), 455 U.S. 919, 102 S.Ct. 1274, 71 L.Ed.2d 459 (1982). The district court should reenter such sentences as it determines to be appropriate and certify its decision to this panel for further review of the contentions of the parties.
6
AFFIRMED IN PART; VACATED AND REMANDED IN PART.
*
Honorable Virgil Pittman, U.S. District Judge for the Southern District of Alabama, sitting by designation
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832 F.2d 1268
266 U.S.App.D.C. 30, 56 USLW 2283
In re SEALED CASE.
No. 87-5256.
United States Court of Appeals,District of Columbia Circuit.
Argued Sept. 3, 1987.Decided Nov. 6, 1987.
N. Richard Janis, with whom Lawrence H. Wechsler and Clement R. Gagne, III, Washington, D.C., was on the brief for appellant.
Paul L. Friedman, with whom Lawrence E. Walsh, Washington, D.C., Guy Miller Struve, New York City, William T. Hassler and Jeffrey Toobin, Washington, D.C., were on the brief for appellee.
Before HARRY T. EDWARDS, BUCKLEY and D.H. GINSBURG, Circuit Judges.
Opinion for the Court filed by Circuit Judge EDWARDS.
HARRY T. EDWARDS, Circuit Judge:
1
The appellant in this matter is a witness in a grand jury investigation presided over by Independent Counsel Lawrence Walsh. The District Court empaneled the grand jury to investigate possible violations of United States law by persons secretly selling arms to Iran and providing assistance to the Nicaraguan Contras. The appellant ("Witness") appeals a decision of the District Court holding him in contempt for failure to comply with a subpoena duces tecum issued by the grand jury.
2
The subpoena in question directed the Witness to produce, in his capacity as "custodian," various documents pertaining to the operations of eight foreign companies with which he was allegedly associated and whose records he allegedly controls. The Witness contends that, because the subpoena was addressed to him in a representative capacity, the District Court erred in holding that the Independent Counsel need only establish that the court had personal jurisdiction over the Witness. We agree. The Independent Counsel must show that the District Court has personal jurisdiction over each of the companies whose records it seeks in order to obtain an order directing the Witness to comply with the subpoena. Because the Independent Counsel has not yet made the requisite showing, we reverse the District Court's order and remand for further consideration of the court's jurisdiction over the eight companies.
3
We further hold that, pursuant to the Supreme Court's decisions in Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976), and United States v. Doe, 465 U.S. 605, 104 S.Ct. 1237, 79 L.Ed.2d 552 (1984), the Witness may properly invoke his Fifth Amendment privilege in refusing to produce the subpoenaed documents if he can show that the testimonial implications of his production of the documents--i.e., with respect to his alleged representative capacity, the existence or authenticity of the documents, or his possession or control of them--might tend to incriminate him. Once the Witness makes such a showing, the Independent Counsel is only entitled to an order requiring him to produce the subpoenaed documents if it can demonstrate that those possibly incriminatory facts to which the Witness would implicitly testify by producing the documents are a "foregone conclusion," or if the Independent Counsel grants the Witness use immunity with respect to the testimonial aspects of his production of the companies' records.
4
This case is under seal. In order to preserve the secrecy of the grand jury's investigation, we refrain from naming the Witness or the companies whose records have been subpoenaed.I. BACKGROUND
5
On January 28, 1987, the District Court empaneled a grand jury to investigate possible violations of United States law by Government officials and those who assisted them in surreptitiously selling arms to Iran and secretly funneling money and supplies to the Nicaraguan Contras. Two days later, the grand jury issued a subpoena to the Witness requiring the production of, inter alia, many of the documents whose disclosure is here at issue. The Independent Counsel was unable to serve the subpoena for several months due to the Witness' absence from the United States. After a mutually acceptable method of service was agreed upon, the grand jury issued a new subpoena duces tecum on April 30, 1987, and service was made the following day. The subpoena ordered the Witness, as "custodian" for eight foreign companies,1 to produce certain documents on May 6. The order read:
6
Bring with you any and all documents related to the business of the following corporations, including but not limited to corporate registration papers, incorporation papers, minutes of all meetings, financial records, bank account records, telephone records, personnel records, payroll records, and any record, note, memorandum or other document or thing associated with the business of [eight named foreign companies].
7
The Witness refused to comply with the subpoena. On May 6, 1987, the Independent Counsel filed a motion with the District Court to compel production of the requested documents. The Witness opposed the motion, contending that the subpoena suffered from five principal infirmities, any one of which would suffice to invalidate it. First, the Witness claimed that the District Court lacked personal jurisdiction over the eight companies, and that, because the Witness had been served in his representative capacity as "custodian" rather than in his individual capacity, personal jurisdiction over the companies was essential to render compliance mandatory. Second, the Witness argued that the Treaty on Mutual Assistance in Criminal Matters between the United States and Switzerland, May 25, 1973, United States-Switzerland, 27 U.S.T. 2019, T.I.A.S. No. 8302, furnished the sole avenue for obtaining at least some of the subpoenaed documents, and that more general notions of international comity precluded enforcement of a subpoena to obtain business records protected by the secrecy laws of other nations. Third, the Witness invoked the Fifth Amendment's privilege against compelled self-incrimination on the ground that the testimonial significance of his production of the documents--as opposed to the contents of the documents, with respect to which he asserted no privilege--might tend to incriminate him. Fourth, the Witness urged that the subpoena was impermissibly broad. Finally, the Witness challenged the legal authority of the Independent Counsel who had supervised the grand jury that had issued the subpoena.
8
The District Court granted the Independent Counsel's motion, rejecting all of the Witness' objections. See In re Grand Jury Subpoena, Misc. No. 87-0137 (D.D.C. July 10, 1987), reprinted in Joint Appendix ("J.A.") 76. The District Court first ruled that it had jurisdiction to enforce the subpoena simply because it had personal jurisdiction over the Witness; whether it had personal jurisdiction over the companies the court deemed irrelevant. The court then held that the Treaty on Mutual Assistance in Criminal Matters did not preclude the issuance of a subpoena in this case. It did not address the Witness' related argument that international comity required the court to stay its hand. The District Court also rejected the Witness' Fifth Amendment claim, finding it to be based on a misreading of Fisher and Doe. The court held that under the collective-entity exception to the Fifth Amendment privilege against compelled self-incrimination, reaffirmed most recently by the Supreme Court in Bellis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678 (1974), a custodian of a collective entity's documents could not assert a personal Fifth Amendment privilege to refuse to produce them in response to a subpoena. In the court's judgment, this rule survived Fisher and Doe. Because the Witness had been served as custodian for the companies whose records the Independent Counsel had demanded, the District Court decided that the Fifth Amendment did not excuse noncompliance. The court further adjudged the subpoena "clear in its demands and not unduly burdensome." J.A. 80. It upheld the authority of the Independent Counsel in another case decided that same day. See In re Sealed Case, 666 F.Supp. 231 (D.D.C.1987). The court therefore ordered the Witness to hand over the documents.
9
Pursuant to a stipulation of the parties entered into on July 17, 1987, and approved by the District Court on July 21, the return date for the subpoena was set for July 29, 1987. On July 28, the Witness informed the court that he would not comply with its order. Following a hearing on July 30, the District Court found the Witness in contempt pursuant to 28 U.S.C. Secs. 1826 and 1784 (1982) for failure to produce the records requested in the subpoena or to cause an alternative custodian to produce them. The court ordered the Witness confined for the life of the grand jury or until he complied with the District Court's order of July 10, 1987, unless the Witness sought an immediate appeal. The Witness filed a Notice of Appeal with this court on August 5, reiterating the five arguments he advanced in the trial court.
II. ANALYSIS
A. Personal Jurisdiction
10
The subpoena was issued to the Witness as a representative of the eight companies whose records the Independent Counsel wishes to obtain. As the District Court correctly noted in the Memorandum accompanying its Order of July 10, 1987, "[h]ad the corporations themselves been subpoenaed, clearly the Independent Counsel would have had to establish that the Court had in personam jurisdiction over them." J.A. 77. The Independent Counsel contends, however, that because the subpoena was addressed to the Witness as "custodian" for the companies, rather than to the companies themselves, and because the District Court unquestionably had personal jurisdiction over the Witness since he is a United States citizen, the Independent Counsel need not prove that the court had jurisdiction over the companies. The District Court agreed. Personal jurisdiction over a company's representative suffices, it held, to order compliance with a subpoena requesting production of the company's records, regardless of whether the company itself has any connection with the United States. J.A. 77.
11
The District Court's holding on this point is mistaken. By serving the Witness as "custodian" for the eight companies, the Independent Counsel has for jurisdictional purposes2 effectively attempted to serve the companies themselves. The Independent Counsel must therefore demonstrate that the District Court has personal jurisdiction over each of the companies in order to secure a valid order directing the production of the companies' records. The mere fact that the court has jurisdiction over an alleged representative of the companies is patently insufficient to establish jurisdiction over the companies or to entitle the Independent Counsel to view company documents. Just as service of a subpoena duces tecum on a corporate officer vacationing in the United States would not allow the Independent Counsel access to corporate records absent proof that a United States court had jurisdiction over the corporation itself, service of a subpoena on the Witness as "custodian" for the companies cannot confer on the Independent Counsel a right to inspect their records unless it can show that the District Court possesses personal jurisdiction over them. The Independent Counsel has adduced no authority to the contrary.3 The fact that the Witness is an American citizen, not just sojourning here, is also irrelevant to establishing jurisdiction over foreign companies. The Independent Counsel's repeated claim that the Witness has a "duty" to comply with the subpoena simply because he enjoys United States citizenship is utterly baseless as an assertion about our law.4
12
Under International Shoe and its progeny, a federal court has personal jurisdiction over a corporation or other business concern with respect to its activities or their effects within the United States only if that corporation has certain "minimum contacts" with the United States. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). In the case of foreign companies that do not regularly do business here, jurisdiction may be founded on conduct abroad that causes injury within the United States. As this court noted three years ago, "It has long been settled law that a country can regulate conduct occurring outside its territory which causes harmful results within its territory." Laker Airways v. Sabena, Belgian World Airlines, 731 F.2d 909, 922 (D.C.Cir.1984).
13
Although the District Court might therefore have personal jurisdiction over the companies, the Independent Counsel has not carried its burden of proving the effects necessary to establish such jurisdiction. At one point in its brief, the Independent Counsel alleges that "the Court here has jurisdiction over the companies in question, both by virtue of the impact the corporations' foreign actions have had on the United States, and by virtue of the companies' conduct within the United States." Brief for Appellee Independent Counsel at 34. The Independent Counsel, however, never specifies those actions by the companies that occurred within the United States or whose effects were felt here that it believes sufficient to establish jurisdiction. It merely suggests--erroneously--that the burden of proving that jurisdiction does not exist shifts to the Witness once the Independent Counsel has alleged that it does. See Brief for Appellee Independent Counsel at 34 n. 20. For his part, the Witness has persistently denied that "minimum contacts" obtain between the United States and the companies whose records have been subpoenaed. See, e.g., Brief of Appellant at 9, 13-14. Until the Independent Counsel has made the jurisdictional showing it claims it is prepared to make, it may not obtain a court order enforcing its subpoena.
14
Nothing precludes the Independent Counsel from proving that jurisdiction exists by means of ex parte submissions for in camera review if such submissions are necessary to preserve the secrecy of the grand jury's proceedings. See Marc Rich & Co. v. United States, 707 F.2d 663, 670 (2d Cir.), cert. denied, 463 U.S. 1215, 103 S.Ct. 3555, 77 L.Ed.2d 1400 (1983). Should the District Court decide, however, that the Independent Counsel has made an adequate showing based on ex parte submissions, then it should so inform the Witness and allow the Witness to challenge that showing by submitting opposing evidence.
15
In order to establish jurisdiction for purposes of enforcing a grand jury subpoena, the Independent Counsel need not prove what would be necessary to confer jurisdiction over the companies for purposes of trial. As the Third Circuit has noted, so stringent a requirement "might well invert the grand jury's function, requiring that body to furnish answers to its questions before it could ask them." In re Grand Jury Proceedings (Harrisburg Grand Jury 79-1), 658 F.2d 211, 214 (3d Cir.1981). A lower hurdle is appropriate. We join the Second Circuit in adopting the following test: "if the [Independent Counsel] shows that there is a reasonable probability that ultimately it will succeed in establishing the facts necessary for the exercise of jurisdiction, compliance with the grand jury's subpoena may be directed." Marc Rich, 707 F.2d at 670.
16
The record does not indicate whether the grand jury is investigating possible violations of United States law by the Witness, the companies, or both. Nor has the Independent Counsel disclosed the types of infractions it believes may have been committed. In the absence of this information, we are unable to describe with any precision the quantity or quality of evidence that the Independent Counsel must produce in order to prevail. We decline to speculate on a wide range of hypothetical cases. We merely note in passing that the evidence contained in the ex parte Affidavit of William Hassler ("Hassler Affidavit"), standing alone, falls far short of the quantum of evidence necessary to establish jurisdiction over any of the eight companies.
B. Fifth Amendment Privilege
17
An artificial legal entity, such as a corporation, possesses no Fifth Amendment privilege against compelled self-incrimination. See, e.g., Bellis v. United States, 417 U.S. 85, 90, 94 S.Ct. 2179, 2184, 40 L.Ed.2d 678 (1974); Hale v. Henkel, 201 U.S. 43, 74-75, 26 S.Ct. 370, 378-79, 50 L.Ed. 652 (1906). Because such an entity may not decline to testify by invoking the Fifth Amendment, "an individual cannot rely upon the privilege to avoid producing the records of a collective entity which are in his possession in a representative capacity, even if these records might incriminate him personally." Bellis, 417 U.S. at 88, 94 S.Ct. at 2183. The Supreme Court has found it "well settled that no privilege can be claimed by the custodian of corporate records, regardless of how small the corporation may be." Bellis, 417 U.S. at 100, 94 S.Ct. at 2189. Moreover, it is not the case that "examination of ... Supreme Court 'collective entity' cases discloses that in each instance the Court's decision that the records of the corporation were not privileged and had to be produced was based on the authority of the State effectively to regulate the corporation's exercise of State-granted privileges." Brief of Appellant at 13. In Bellis, the Supreme Court rejected this claim in no uncertain terms:
18
To some extent, [early twentieth century] decisions were based upon the particular incidents of the corporate form, the Court observing that a corporation has limited powers granted to it by the State in its charter, and is subject to the retained "visitorial power" of the State to investigate its activities.... But any thought that the principle formulated in these decisions was limited to corporate records was put to rest in United States v. White, [322 U.S. 694, 64 S.Ct. 1248, 88 L.Ed.2d 1542 (1944) ].... White announced the general rule that the privilege could not be employed by an individual to avoid production of the records of an organization, which he holds in a representative capacity as custodian on behalf of the group.
19
Bellis, 417 U.S. at 89, 94 S.Ct. at 2183.
20
Contrary to the Witness' claim, the fact that the companies whose records are sought have not been organized or licensed under the laws of any of the United States does not bar application of the collective-entity exception to them, any more than would the fact (if indeed it is one) that the companies are not corporations. The reason the Fifth Amendment may not be invoked by corporations or some more inclusive class of collective entities is not that they are creatures of the State; rather, collective entities, regardless of their location or state of incorporation, are artificial entities falling outside the privilege's "historic function of protecting only the natural individual from compulsory incrimination." Bellis, 417 U.S. at 89, 94 S.Ct. at 2184 (quoting United States v. White, 322 U.S. 694, 701, 64 S.Ct. 1248, 1252, 88 L.Ed. 1542 (1944)). Moreover, as the Court has noted, "[w]here the preparation of business records is voluntary, no compulsion is present." United States v. Doe, 465 U.S. 605, 610, 104 S.Ct. 1237, 1241, 79 L.Ed.2d 552 (1984). Therefore, neither a collective entity nor its representatives may refuse to comply with a subpoena duces tecum on the ground that the contents of any documents produced in response to it might tend to incriminate them.
21
A collective entity is also unable to use the Fifth Amendment to shield it from the possibly incriminating implications of its production of subpoenaed documents. The question this case presents is whether an alleged custodian of a collective entity's records may properly invoke his Fifth Amendment privilege to excuse his noncompliance with a subpoena requesting those records on the ground that the very act of producing them might tend to incriminate him.
22
In Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976), an IRS summons sought the production of records prepared for a taxpayer by his accountant. The Court held that, although the taxpayer could not himself have invoked his Fifth Amendment privilege to excuse noncompliance (had the summons been issued to him rather than to his attorney) because the records contained no testimonial declarations by the taxpayer, the Fifth Amendment might apply to his act of producing the records, whether he made them available personally or through his lawyer.
23
The act of producing evidence in response to a subpoena nevertheless has communicative aspects of its own, wholly aside from the contents of the papers produced. Compliance with the subpoena tacitly concedes the existence of the papers demanded and their possession or control by the taxpayer. It also would indicate the taxpayer's belief that the papers are those described in the subpoena. Curcio v. United States, 354 U.S. 118, 125 [77 S.Ct. 1145, 1150, 1 L.Ed.2d 1225] (1957). The elements of compulsion are clearly present, but the more difficult issues are whether the tacit averments of the taxpayer are both "testimonial" and "incriminating" for purposes of applying the Fifth Amendment. These questions perhaps do not lend themselves to categorical answers; their resolution may instead depend on the facts and circumstances of particular cases or classes thereof.
24
Fisher, 425 U.S. at 410, 96 S.Ct. at 1581.
25
The Court held in Fisher that the taxpayer's act of producing the records prepared by his accountant would not be either sufficiently testimonial or sufficiently self-incriminatory to qualify for Fifth Amendment protection. It found compliance with the summons to be inadequately testimonial because "[t]he existence and location of the papers are a foregone conclusion and the taxpayer adds little or nothing to the sum total of the Government's information by conceding that he in fact has the papers." Id. at 411, 96 S.Ct. at 1581.5 The Court further ruled that even if production of the records had "some minimal testimonial significance" in this regard, it would not pose "any realistic threat" of self-incrimination because it was not illegal to have accountants prepare one's tax records. Id. at 412, 96 S.Ct. at 1581. The Court also held that, because the taxpayer had not prepared the records himself, he could not authenticate them, and thus could not add to the case against him on this score by producing them. Id. at 413.
26
The Court elaborated Fisher 's "act-of-production" doctrine in Doe. In that case, a federal grand jury investigating corruption in the awarding of county and municipal contracts issued five subpoenas to the owner of several sole proprietorships, demanding production of certain business records of his companies. The Court held that the Government could only order him to produce the documents if it granted him use immunity with respect to the testimonial aspects of his act of producing the documents, because that act would involve testimonial self-incrimination. Without even mentioning its distinction in Fisher between the extent to which the act of producing records would be testimonial and the extent to which it might incriminate the person selecting and turning over the requested documents, the Court affirmed and applied Fisher 's "foregone conclusion" standard. After approving the Third Circuit's finding that "nothing in the record ... indicate[s] that the United States knows, as a certainty, that each of the myriad documents demanded by the five subpoenas in fact is in the appellee's possession or subject to his control," 465 U.S. at 613 n. 12, 104 S.Ct. at 1243 n. 12 (quoting In re Grand Jury Empanelled March 19, 1980, 680 F.2d 327, 335 (3d Cir.1982)), the Court went on to explain its holding:
27
Respondent did not concede in the District Court that the records listed in the subpoena actually existed or were in his possession. Respondent argued that by producing the records, he would tacitly admit their existence and his possession. Respondent also pointed out that if the Government obtained the documents from another source, it would have to authenticate them before they would be admissible at trial. See Fed.Rule Evid. 901. By producing the documents, respondent would relieve the Government of the need for authentication. These allegations were sufficient to establish a valid claim of the privilege against self-incrimination. This is not to say that the Government was foreclosed from rebutting respondent's claim by producing evidence that possession, existence, and authentication were a "foregone conclusion." Fisher, 425 U.S., at 411 [96 S.Ct. at 1581]. In this case, however, the Government failed to make such a showing.
28
Doe, 465 U.S. at 614 n. 13, 104 S.Ct. at 1243 n. 13.
29
The parallels between Doe and this case are striking. The Witness also refuses to concede that the documents sought by the Independent Counsel exist, let alone that he possesses them. He, too, insists on putting the Independent Counsel to the test of authenticating the documents and proving his familiarity with, and role in, the transactions they record. In addition, the Witness argues that the subpoena's demand for everything "associated with the business" of the eight companies would operate as an interrogatory, requiring him to use--and disclose--his personal knowledge of the companies' activities. Because many of those activities were allegedly covert and illegal, the Witness would, he claims, be required to incriminate himself by selecting and implicitly authenticating those documents that meet the terms of the subpoena. See Brief of Appellant at 44-45. More important still, the Witness contests the Independent Counsel's assertion that he is in fact a custodian of the companies' records--the essential precondition for commencing the analysis outlined in Fisher and Doe. The Witness therefore has a powerful prima facie claim to the Fifth Amendment's protection.
30
The question is whether such a claim can have merit in light of the long line of cases from Hale v. Henkel, 201 U.S. 43, 26 S.Ct. 370, 50 L.Ed. 652 (1906), to Bellis denying Fifth Amendment protection to collective entities and to their custodians when asked to produce documents belonging to those entities. We hold that it can. The fact that Fisher involved individual taxpayers and Doe involved a sole proprietorship does not preclude or even militate against application of the principles they announced to cases involving subpoenas issued to custodians of collective entities, particularly where the fact of custodianship is itself at issue. As the Third Circuit recently said,
31
[Fisher and Doe ] make the significant factor, for the privilege against self-incrimination, neither the nature of the entity which owns documents, nor the contents of documents, but rather the communicative or noncommunicative nature of the arguably incriminating disclosures sought to be compelled.
32
In re Grand Jury Matter (Brown), 768 F.2d 525, 528 (3d Cir.1985) (en banc) (footnotes omitted).
33
In Bellis, 417 U.S. at 100, 94 S.Ct. at 2189, the Court held that no collective entity, however small, enjoys a Fifth Amendment privilege. In Doe, the Court implicitly reaffirmed the vitality of Bellis, see 465 U.S. at 608, 104 S.Ct. at 1239, and held that, for purposes of the Fifth Amendment privilege, there is no difference between the voluntarily prepared business records of a corporation and those of an unincorporated proprietorship, 465 U.S. at 610-12, 104 S.Ct. at 1241-42. In Bellis, however, the Supreme Court, relying on White, 322 U.S. 694, 64 S.Ct. 1248, 88 L.Ed. 1542 (1944), also rejected the claim that the formal distinction between a corporation and other business entities, or the fact that the State retained "visitorial" powers with respect to corporations, was at all relevant to assertions of Fifth Amendment privilege. 417 U.S. at 89, 94 S.Ct. at 2183. So if neither the formal distinction between corporations and common-law modes of conducting business, nor the content of voluntarily prepared business records that either keeps, is of significance in the context of Fifth Amendment claims, then the Independent Counsel's argument here can find no reasonable foundation in the Court's current precedent. In other words, the "act-of-production" doctrine set forth in Fisher and Doe must be held to apply to attempts to compel custodians of collective entities to produce documents they officially control.
34
The principal reason for denying collective entities a Fifth Amendment privilege, and for forbidding representatives of those entities from invoking their personal privilege when an entity's documents are sought, is that the State's investigatory power "would be seriously embarrassed, if not wholly defeated in its effective exercise, if guilty officers could refuse inspection of records and papers of the corporation." Wilson v. United States, 221 U.S. 361, 384-85, 31 S.Ct. 538, 546, 55 L.Ed. 771 (1911). As the Court said in White, "evidence of wrongdoing by an organization or its representatives is usually to be found in the official records and documents of that organization. Were the cloak of the privilege to be thrown around these impersonal records and documents, effective enforcement of many federal and state laws would be impossible." White, 322 U.S. at 700, 64 S.Ct. at 1252. After Doe, however, an individual custodian could not impede investigation of possible criminal actions by a collective entity or its representatives by using his Fifth Amendment privilege to prevent the Government from introducing the contents of an entity's documents into evidence against them. And permitting a custodian to invoke the Fifth Amendment to decline to produce such documents himself would not keep them from the prosecutor's hands, because collective entities, having no privilege of their own, would have to comply with a subpoena addressed to them by finding someone to produce whatever records were sought. Thus, even when the "act-of-production" doctrine is extended to representatives of collective entities, the collective-entity exception to the Fifth Amendment privilege retains its vitality and accomplishes the purposes for which it was created. See Note, Fifth Amendment Privilege for Producing Corporate Documents, 84 MICH.L.REV. 1544, 1564-73 (1986).
35
We find it significant that in Doe the Supreme Court, while tacitly approving the Third Circuit's holding that "an individual may not assert the Fifth Amendment privilege on behalf of a corporation, partnership, or other collective entity under the holding of Bellis," 465 U.S. at 608, 104 S.Ct. at 1240 (emphasis added), did not expressly limit its statement of the "act-of-production" doctrine to individuals or sole proprietors, nor did it deny that custodians of collective entities could invoke the privilege on behalf of themselves. Instead, the Court restated the doctrine in the broadest possible terms, holding unqualifiedly that "[a] government subpoena compels the holder of the document to perform an act that may have testimonial aspects and an incriminating effect." 465 U.S. at 612, 104 S.Ct. at 1242. In the absence of any pragmatic reason or any explicit directive from the Supreme Court to limit the "act-of-production" doctrine to individuals acting in a nonrepresentative capacity, we decline to do so.
36
Prior Supreme Court decisions delimiting the collective-entity exception are not to the contrary. The Court has, to be sure, "time and again allowed subpoenas against the custodian of corporate documents or those belonging to other collective entities ... over claims that the documents will incriminate the custodian despite the fact that producing the documents tacitly admits their existence and their location in the hands of their possessor." Fisher, 425 U.S. at 411-12, 96 S.Ct. at 1581. But in only two of the cases cited by the majority in Fisher-Dreier v. United States, 221 U.S. 394, 31 S.Ct. 550, 55 L.Ed. 784 (1911), and Bellis--was the subpoena issued to a custodian in his representative capacity rather than to a collective entity,6 and in none of the cases cited was the custodianship of the person who refused to produce subpoenaed documents, let alone the existence of those documents or their possession or control by the custodian, even remotely in issue. In each of those cases, an admitted custodian attempted to invoke his personal Fifth Amendment privilege to prevent the Government from obtaining entity records whose contents might have proven incriminating; the possibly incriminatory effect of the custodian's act of producing the documents was never considered, apparently because the points to which the custodian would implicitly have testified were already well established. Indeed, the majority opinion in Fisher appears to construe the Court's earlier decisions in precisely this way; immediately after citing these cases, the opinion says: "The existence and possession or control of the subpoenaed documents being no more in issue here [in Fisher ] than in the above cases, the summons is equally enforceable." 425 U.S. at 412, 96 S.Ct. at 1581. The implication appears to be that when existence and possession or control are at issue, a custodian may invoke his Fifth Amendment privilege with respect to his act of producing them, just as an individual may invoke it if served with a subpoena in a nonrepresentative capacity.
37
We recognize that, in White, the Court once endorsed the notion that representatives of a collective group "assume the rights, duties, and privileges of the artificial entity or association of which they are agents or officers and they are bound by its obligations," so that "[i]n their official capacity ... they have no privilege against self-incrimination." 322 U.S. at 699, 64 S.Ct. at 1251. Thirteen years later, however, the Court retreated from this view, at least with respect to compelled oral testimony. A unanimous Court held that "[t]here is no hint in [earlier cases] that a custodian of corporate or association books waives his constitutional privilege as to oral testimony by assuming the duties of his office." Curcio v. United States, 354 U.S. 118, 124, 77 S.Ct. 1145, 1150, 1 L.Ed.2d 1225 (1957). Curcio did not itself extend this holding to include the testimonial implications of the act of production as well as speech, but by putting speech and production on a par for Fifth Amendment purposes, Fisher and Doe perforce accomplished that extension.
38
We therefore see no reason to withhold the privilege from representatives of collective entities.7 However, even if one accepted the abandoned thesis that an entity's custodian discards his Fifth Amendment rights upon assuming office, one could not rush to a decision in the case before us. For in this case the Witness steadfastly refuses to acknowledge that he is a custodian of the eight companies whose records the Independent Counsel has requested. The Independent Counsel would still have to establish that the Witness is indeed a custodian before it could compel him to furnish the subpoenaed documents.
39
The Doe Court appeared unanimous in requiring that the Government show, in order to block a claim of privilege, that it is a "foregone conclusion" that it would be able to prove at trial by independent evidence any possibly incriminatory facts to which an alleged custodian might implicitly testify by complying with a subpoena addressed to him or to the entity he supposedly represents. See Doe, 465 U.S. at 614 n. 13, 104 S.Ct. at 1243 n. 13; Fisher, 425 U.S. at 411, 96 S.Ct. at 1581. Unfortunately, Fisher and Doe shed little light on how this abstract test should be applied. In Fisher, the Supreme Court found the existence and location of the taxpayers' records a "foregone conclusion," but it could hardly have reached the opposite result inasmuch as the taxpayers had already admitted those points. See 425 U.S. at 430 n. 9, 96 S.Ct. at 1590 n. 9 (Brennan, J., concurring in the judgment). In Doe, the Court simply announced that the Government had failed to make the requisite showing, without saying what evidence the Government had adduced of possession, existence, or authenticity, and without specifying those additions that would have been necessary to establish each of these facts as a "foregone conclusion."
40
The Supreme Court has also provided conflicting guidance as to the extent to which incrimination must be likely in order to justify noncompliance with a subpoena on Fifth Amendment grounds. In Fisher, the Court said that so long as production poses no "realistic threat" of incrimination, compliance may be required. 425 U.S. at 412, 96 S.Ct. at 1581. In Doe, the Court held that in order to invoke the Fifth Amendment, one must be " 'confronted by substantial and "real," and not merely trifling or imaginary, hazards of incrimination.' " 465 U.S. at 614 n. 13, 104 S.Ct. at 1243 n. 13 (quoting Marchetti v. United States, 390 U.S. 39, 53, 88 S.Ct. 697, 705, 19 L.Ed.2d 889 (1968)). In other cases, however, the Court has apparently favored a less exacting requirement for appeals to the Fifth Amendment. For example, in Hoffman v. United States, 341 U.S. 479, 71 S.Ct. 814, 95 L.Ed. 1118 (1951), the Court held that an individual may justifiably claim the protection of the Fifth Amendment unless it is " 'perfectly clear, from a careful consideration of all the circumstances in the case, that ... the answer[s] cannot possibly have such tendency' to incriminate." Id. at 488, 71 S.Ct. at 819 (quoting Temple v. Commonwealth, 75 Va. 892, 898 (1881) (emphasis in original)); accord Malloy v. Hogan, 378 U.S. 1, 12, 84 S.Ct. 1489, 1495, 12 L.Ed.2d 653 (1964). The Supreme Court also has noted in passing that "[t]he burden of overcoming an assertion of the Fifth Amendment privilege ... is one which prosecutors would rarely be able to meet in the early stages of an investigation," Zurcher v. Stanford Daily, 436 U.S. 547, 562 n. 8, 98 S.Ct. 1970, 1979 n. 8, 56 L.Ed.2d 525 (1978), but general remarks of this sort are often of little use in concrete cases.
41
Whatever the precise contours of the "foregone conclusion" test (whether it encompasses or operates in coordination with the incrimination test), its application to the case now before us is comparatively simple. At a minimum, under even the most narrow reading of Fisher and Doe from the perspective of a collective entity's representative, the Independent Counsel must prove that it possesses admissible evidence sufficient to render it a "foregone conclusion" that the person served in a representative capacity is in fact a custodian of the collective entity whose record it seeks. The Independent Counsel has not yet offered such proof with respect to the Witness' alleged custodial relationship to the eight companies. The only evidence it has adduced of the Witness' alleged links to the companies is contained in the ex parte Hassler Affidavit, and that affidavit, if given credence, only ties the Witness to three of the eight companies by way of a single uncorroborated assertion by an unnamed source, while offering scant additional proof of his connections to three others. The statements in that affidavit do not claim, let alone purport to show, that the Witness is presently in control of the documents of any of the companies or that he maintained any contact with the companies after their formation and initial activities. Nor can the Independent Counsel rely on the Witness' testimony and alleged document production before Congressional committees investigating the Iran/Contra affair to carry its burden, because the Witness was granted use immunity with respect to his testimony and his production of documentary evidence. Finally, as the Witness points out, see Reply Brief of Appellant at 6-7, the public testimony on which the Independent Counsel relies not only fails to establish that the Witness currently controls the documents, but is tainted by virtue of its explicit references to and implicit reliance upon the Witness' immunized testimony. By any measure that might reasonably be extracted from Supreme Court precedents, the Independent Counsel's offer of proof is woefully inadequate. The Independent Counsel has no title to the order it seeks until it establishes, under the "foregone conclusion" standard, that the Witness is presently a custodian of each of the eight companies named in the subpoena.
42
The Independent Counsel may attempt to prove that the Witness is a custodian or, having established that fact, that his possession or control of the companies' records, or the genuineness or existence of those records, is either a "foregone conclusion" or not incriminatory by means of ex parte submissions for in camera review by the trial court if such submissions are necessary to preserve the secrecy of the grand jury's proceedings. See, e.g., Marc Rich, 707 F.2d at 670; In re John Doe Corp., 675 F.2d 482, 489-91 (2d Cir.1982). However, if the Independent Counsel adduces sufficient evidence to prove one or more of these facts, then the District Court should so inform the Witness and allow opposing submissions. It seems clear that any submissions that the Witness makes in challenging the Independent Counsel's evidence may not be used against him at trial, either as part of the Government's case-in-chief or for purposes of impeachment. The District Court's finding that some contested proposition is a "foregone conclusion" does not, of course, relieve the Government of its burden of establishing that proposition at trial.8
43
If the Independent Counsel fails to prove that the Witness' custodianship is a "foregone conclusion," or if it succeeds on this score but not with respect to some other testimonial aspect of production, then two courses lie open to it if it still wishes to compel production of the records it seeks. First, the Independent Counsel might grant the Witness use immunity limited to the testimonial significance of the act of production itself and request an order compelling him to comply with the subpoena. See Doe, 465 U.S. at 614-17, 104 S.Ct. at 1243-45. As the Court emphasized in Doe, a formal grant of use immunity alone suffices in these circumstances; an informal, judicially created "exclusionary rule" that would bar introduction at trial of testimonial evidence or inferences therefrom would not be satisfactory. The Court was unequivocal:
44
We are urged to adopt a doctrine of constructive use immunity. Under this doctrine, the courts would impose a requirement on the Government not to use the incriminatory aspects of the act of production against the person claiming the privilege even though the statutory procedures [for granting immunity] have not been followed.
45
We decline to extend the jurisdiction of courts to include prospective grants of use immunity in the absence of the formal request that the statute requires.
46
Doe, 465 U.S. at 616, 104 S.Ct. at 1244.
47
The Independent Counsel's second option would be to issue subpoenas to the eight companies rather than to the Witness qua custodian. As we have indicated, the jurisdictional requirements would be identical in these two cases. Because a collective entity possesses no Fifth Amendment privilege, the companies could not refuse to produce subpoenaed documents on the ground that those documents or the act of producing them would subject them or any natural person to criminal liability. See, e.g., Wilson, 221 U.S. at 376, 31 S.Ct. at 542; In re Two Grand Jury Subpoenae Duces Tecum, 769 F.2d 52, 57 (2d Cir.1985); United States v. G & G Advertising Co., 762 F.2d 632, 634-35 (8th Cir.1985).9
48
Compelling the Independent Counsel to resort to one of these two options in collective-entity cases would not, we repeat, markedly frustrate the Government's investigation of possible criminal offenses or its enforcement of criminal provisions.10 Rather, resort to these options merely ensures the Fifth Amendment its proper scope, in light of Supreme Court constructions of the privilege against compelled self-incrimination.
C. The Witness' Remaining Objections
49
In his brief, the Witness challenges the legal authority of the Independent Counsel, primarily by reference to arguments advanced by Lt. Col. Oliver North in a similar action. See Brief of Appellant at 45-48. Those arguments were laid to rest by this court's decision in In re: Sealed Case, 829 F.2d 50 (D.C.Cir.1987), which upheld the Independent Counsel's authority to conduct the present investigation pursuant to his appointment by the Attorney General.
50
The Witness' additional claim that "the Independent Counsel Provisions of the Ethics in Government Act are inapplicable on their face" to him, Brief of Appellant at 46, is beside the point, given the validity of the Attorney General's delegation of broad investigatory powers to the Independent Counsel. The Witness' second additional contention is that unless the Independent Counsel is removable at will by the Attorney General, this court must decide the constitutionality of the Independent Counsel's appointment under the Ethics in Government Act. Because this court has ruled that the Attorney General may remove the Independent Counsel at will by rescinding the regulation creating his office, so long as generally applicable procedural requirements are met, see In re: Sealed Case, 829 F.2d 56 & n. 33, 60-63, this court, by the Witness' own admission, need not reach the question whether the Independent Counsel's appointment under the Ethics in Government Act is constitutionally adequate.
51
The Witness also contends that the subpoena is overly broad, in violation of the Fourth Amendment. See Brief of Appellant at 43-45. We see no merit in this claim. The Supreme Court has held that the Fourth Amendment requires "specification of the documents to be produced adequate, but not excessive, for the purposes of the relevant inquiry. Necessarily, as has been said, this cannot be reduced to formula; for relevancy and adequacy or excess in the breadth of the subpoena are matters variable in relation to the nature, purposes and scope of the inquiry." Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186, 209, 66 S.Ct. 494, 506, 90 L.Ed. 614 (1946). In our view, the subpoena is not inordinately imprecise, notwithstanding its use of the phrases "related to" and "associated with," in view of the importance and comprehensiveness of the Independent Counsel's charge. It lists the documents to be produced with the reasonable particularity required by the Fourth Amendment.11
52
The Witness' final objection is that at least with respect to company records that were maintained or generated in Switzerland, the Swiss-American Treaty on Mutual Assistance in Criminal Matters provides the exclusive means for obtaining them because they were preserved or created in the expectation that Swiss secrecy laws would protect them. See Brief of Appellant at 14-16. We find this objection unconvincing. First, some of the documents sought may not be located in Switzerland. See Brief for Appellee Independent Counsel at 3 n. 1. This objection is therefore at best a partial attack on the subpoena. If the Witness has copies of the documents in his possession in the United States or in his control outside of Switzerland, then the objection apparently fails, unless the secrecy laws of another country would then be implicated.
53
Second, it is not clear from the Witness' brief that Swiss law forbids the companies or their custodians from complying with the subpoena even in regard to documents located in Switzerland. The Witness cites three statutory provisions, none of which, on its face, is plainly pertinent. See Brief of Appellant at 15 n. 11. Article 47(1) of the Swiss Federal Law (Relating to Banks and Savings Banks) refers to bank records; the subpoena requests company records. Article 271 of the Swiss Criminal Code applies to persons acting on behalf of a foreign state; it is not evident, and the Witness has not provided authority to suggest, that this provision would apply to a custodian responding to a grand jury subpoena. And Article 273 of the Swiss Criminal Code is directed at industrial spies, and thus seems irrelevant to the present action.
54
Third, even if the Witness might face possible prosecution in Switzerland if he complied with the subpoena, he would only run that risk if he traveled to Switzerland voluntarily. In In re: Sealed Case, 825 F.2d 494, 497 (D.C.Cir.1987), this court upheld a contempt order for failure to testify before a grand jury on similar facts, ruling that the Fifth Amendment "does not protect against dangers voluntarily assumed." We see no reason to depart from that precedent here.
55
Fourth, and most important, the Witness has offered no evidence that the United States Government, in signing the Treaty, understood it to supply the exclusive vehicle for obtaining documents in Switzerland whose production falls within the Treaty's ambit. The Swiss government, as amicus curiae, has indeed argued that any attempt to secure documents located in Switzerland and protected by Swiss secrecy laws would trammel Swiss sovereignty and offend common notions of international comity. See Marc Rich & Co. v. United States, 736 F.2d 864, 866 (2d Cir.1984). But the Witness has not cited any American decision adopting the Swiss government's view, and in fact almost all courts that have ruled on this issue or similar matters, such as the exclusivity of the discovery mechanisms contained in the Hague convention on evidence, have squarely rejected it.
56
The Second Circuit decided to order production of the corporate documents in Marc Rich, notwithstanding the Swiss government's plea. And although courts recognize comity as an important objective, there is little doubt that "[a] United States Court has the power to order any party within its jurisdiction to testify or produce documents regardless of a foreign sovereign's views to the contrary." In re Anschuetz & Co., 754 F.2d 602, 613 n. 28 (5th Cir.1985). In Societe Nationale Industrielle Aerospatiale v. United States District Court, --- U.S. ----, 107 S.Ct. 2542, 2551, 96 L.Ed.2d 461 (1987), for example, the Supreme Court refused to constrain the operation of United States discovery procedures, ruling that the Hague convention on evidence was "intended as a permissive supplement, not a preemptive replacement, for other means of obtaining evidence located abroad." And in In re Grand Jury Proceedings (Field), 532 F.2d 404 (5th Cir.), cert. denied, 429 U.S. 940, 97 S.Ct. 354, 50 L.Ed.2d 309 (1976), the Fifth Circuit upheld a contempt order issued to a Canadian citizen who managed a bank in the Cayman Islands for failure to testify on the ground that his testimony, though immunized from prosecution in the United States, would expose him to criminal sanctions in the Cayman Islands for violating bank secrecy laws.
57
Most courts, including this one, are reluctant to embrace doctrines that would allow those who break American laws to escape sanctions by setting up base abroad. As one court noted, "If one defendant could so easily evade discovery, every United States company would have a foreign affiliate for storing sensitive documents." Cooper Indus. v. British Aerospace, 102 F.R.D. 918, 920 (S.D.N.Y.1984). That danger is particularly acute in this instance, because the Treaty might not permit the Independent Counsel to obtain all of the documents it seeks that are located in Switzerland or, if it is able to obtain them in this way, to use them as it desires for prosecutorial purposes. See Brief for Appellee Independent Counsel at 3 n. 1. The Witness' claim that the companies and their officers expected protection when they chose to incorporate or operate in Switzerland or other countries is devoid of force, for in light of the importance this country attaches to its discovery procedures and to the prosecution of those who are believed to have flouted its laws, those expectations were both unreasonable and, on balance, of trivial importance. On the evidence before us, we do not believe that the Treaty on Mutual Assistance in Criminal Matters or considerations of comity could possibly block enforcement of the subpoena with respect to those documents, if any, whose only copies are protected by Swiss law.
III. CONCLUSION
58
When an alleged custodian of a collective entity is served with a subpoena duces tecum in his representative capacity, a court only has jurisdiction to issue an order compelling production of the subpoenaed documents if it has personal jurisdiction over the collective entity whose alleged custodian was served. Because the Independent Counsel has not demonstrated that the District Court possesses personal jurisdiction over the eight companies whose records it seeks, we reverse and remand to afford the Independent Counsel an opportunity to make the requisite showing. Under our reading of Fisher and Doe and their impact on Fifth Amendment jurisprudence, moreover, an alleged custodian of a collective entity is not foreclosed from invoking his privilege against compelled self-incrimination with regard to possibly incriminating testimonial admissions he might make in complying with a subpoena issued to him in his custodial capacity. If the Witness demonstrates that by producing the subpoenaed documents he might, through that very action, tend to incriminate himself, then the Independent Counsel must show that any possibly incriminating fact to which the Witness would implicitly testify is a "foregone conclusion."
59
Reversed and remanded.
1
Although the Independent Counsel invariably refers to the eight entities as "corporations," and although the names of seven of them contain corporate designations, such as "Inc.", "Corp.," "Ltd.," or "S.A.," the Witness has generally declined to acknowledge that any one of the entities is in fact a corporation. See Brief of Appellant at 10 ("[The Independent Counsel] has taken it upon itself to designate [the Witness] as the 'custodian' of the foreign companies' records, labeled all of the companies as corporations...."); Memorandum of Points and Authorities in Opposition to Motion to Compel Production of Documents 8 n. 3 (May 15, 1987), reprinted in Joint Appendix ("J.A.") 14, 21 n. 3 ("[The Witness] does not concede either the existence of the companies or that they are incorporated entities."). Notwithstanding stray references to the companies as "corporations," which might be construed as admissions, see, e.g., Reply Brief of Appellant at 10, 14, the Witness has steadfastly refused to concede that he has any knowledge of the companies, including their organizational form. Because the corporate status of the companies has not been established, this opinion will refer to the eight entities as "companies," although for purposes of this court's legal analysis the distinction is inconsequential
2
For Fifth Amendment purposes, the distinction between service on a company and service on an alleged custodian of the company is critical. See discussion in section II.B. & n. 9 infra
3
The Independent Counsel cites three cases for the proposition that personal jurisdiction over the individual served with a subpoena is enough to compel him to produce documents belonging to companies he represents. See Brief for Appellee Independent Counsel at 32-33. The Independent Counsel introduces those cases with the signal "Cf., e.g." Here, however, even that notoriously enigmatic signal has been taxed beyond its limits. We view with profound disfavor the Independent Counsel's disingenuous attempt to enlist prior holdings in the service of doctrines they in no wise support
In re Grand Jury Proceedings (Bank of Nova Scotia), 740 F.2d 817 (11th Cir.1984), cert. denied, 469 U.S. 1106, 105 S.Ct. 778, 83 L.Ed.2d 774 (1985), involved a Canadian bank that did considerable business in the United States and that therefore plainly had the "minimum contacts" with this country to establish jurisdiction under International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The subpoena had been served on the bank itself, not on an individual who allegedly controlled its records, and the principal issue was whether the bank had to produce records from its office in the Cayman Islands when producing those records might subject it to liability there. It is hard to imagine what parallel the Independent Counsel purports to find between the Eleventh Circuit case and the present action. An analogy would exist were the Independent Counsel able to show that the Witness has done business in the United States on behalf of the companies sufficient to give an American court jurisdiction over them, but the Independent Counsel has not attempted to do so. Instead, it has bluntly asserted that the citizenship of a corporate agent suffices to authorize production of the corporation's records.
In re Grand Jury Proceedings (Field), 532 F.2d 404 (5th Cir.), cert. denied, 429 U.S. 940, 97 S.Ct. 354, 50 L.Ed.2d 309 (1976), involved a nonresident alien (over whom the court unquestionably had personal jurisdiction) who was held in contempt for refusing to testify before a grand jury concerning transactions in the Cayman Islands that may have been part of a scheme to evade United States taxes, despite his having been granted immunity by the grand jury. The Fifth Circuit upheld the contempt order. The contemnor had not been subpoenaed as a representative of any business entity, whether domestic or foreign, the court's jurisdiction was not at issue, and the contemnor was not asked to produce any documents. Again, the analogy the Independent Counsel apparently sees is elusive.
The third case cited by the Independent Counsel--First Nat'l City Bank v. IRS, 271 F.2d 616 (2d Cir.1959), cert. denied, 361 U.S. 948, 80 S.Ct. 402, 4 L.Ed.2d 381 (1960)--is even further off point, for the IRS summons had there been served on an American bank, not one of its alleged agents, and the court found it unlikely that the bank would be subject to prosecution were it to produce records held at its Panamanian branch office.
4
The Independent Counsel relies on a single quotation plucked from Blackmer v. United States, 284 U.S. 421, 438, 52 S.Ct. 252, 255, 76 L.Ed. 375 (1932): "one of the duties which the citizen owes to his government is to support the administration of justice by attending its courts and giving his testimony whenever he is properly summoned." This citation provides no support for the Independent Counsel's position. Unlike Blackmer, which upheld fines imposed for refusal to obey a subpoena directing an American citizen to return from abroad to testify as a witness for the Government at a criminal trial, this case involves possibly self-incriminatory testimonial admissions, and the documents requested by the Independent Counsel have not, as our discussion of personal jurisdiction makes clear, been "properly summoned."
5
In his concurrence, Justice Brennan disagreed:
I know of no Fifth Amendment principle which makes the testimonial nature of evidence and, therefore, one's protection against incriminating himself, turn on the strength of the Government's case against him.
Fisher, 425 U.S. at 429, 96 S.Ct. at 1589-90 (Brennan, J., concurring in the judgment). Justice Brennan concluded, however, that notwithstanding the testimonial significance of taxpayers' production of their records, the implicit testimony they would furnish in these consolidated cases would not tend to incriminate them because they had already stipulated that the records existed and that those records matched the descriptions contained in the subpoenas. Id. at 430 n. 9, 96 S.Ct. at 1590 n. 9.
The difference between Justice Brennan's view and that of the majority seems largely semantic. Whether the strength of the Government's evidence determines the protection to be accorded the act of producing entity documents because it diminishes the act's testimonial value or because it lessens its self-incriminating character is of little moment, so long as the substantive threshold for protection remains the same. Justice Brennan, to be sure, seems to dispute this functional conflation of views, declaring, with respect to the possibly incriminating nature of the taxpayers' implicit authentication of the documents, that "the protection against self-incrimination cannot ... turn on the strength of the Government's case." Id. at 429, 96 S.Ct. at 1590. It is difficult, however, to square this isolated statement with Justice Brennan's result, since the taxpayers' prior admissions appear to have been decisive for him only because they sealed the Government's case with respect to those issues. The substantive equivalence of the two views is further evidenced by the fact that Justice Brennan did not take issue with the majority's reiteration of Fisher 's "foregone conclusion" test in Doe, 465 U.S. at 614 n. 13, 104 S.Ct. at 1243 n. 13, where the majority did not link the strength of the Government's case to the testimonial rather than the incriminatory character of the act of producing subpoenaed documents.
6
In Bellis, the custodian was served personally because the law firm in which he had been a partner had dissolved, and he had denied the other former partners access to the law firm's records. See 417 U.S. at 99, 94 S.Ct. at 2188
7
In addition to the Third Circuit, see Brown, 768 F.2d at 525, both the Second and the Fourth Circuits have adopted this view. See United States v. Lang, 792 F.2d 1235, 1240-41 (4th Cir.), cert. denied, --- U.S. ----, 107 S.Ct. 574, 93 L.Ed.2d 578 (1986); In re Two Grand Jury Subpoenae Duces Tecum, 769 F.2d 52, 57 (2d Cir.1985). The Sixth and Eighth Circuits have rejected it in name though not in substance, since both circuits automatically confer use immunity on a collective entity's custodian with respect to the testimonial implications of his act of producing entity documents. See In re Grand Jury Subpoena (85-W-71-5), 784 F.2d 857, 861 (9th Cir.1986), cert. dismissed, --- U.S. ----, 107 S.Ct. 918, 93 L.Ed.2d 18 (1987); In re Grand Jury Proceedings (Morganstern), 771 F.2d 143, 148 (6th Cir.) (en banc), cert. denied, 474 U.S. 1033, 106 S.Ct. 594, 88 L.Ed.2d 574 (1985)
8
If, moreover, the Government attempts to introduce at trial the Witness' production of the companies' records to prove the existence or authenticity of the documents or his possession or control of them, instead of introducing independent evidence to the same effect, then the Witness may presumably once again raise his Fifth Amendment privilege and contest whatever evidence the Government proffers to show that what the Witness implicitly acknowledged by producing the documents was either a "foregone conclusion" or not incriminatory
9
The Independent Counsel contends that, just as a collective entity would be obliged to find some representative to produce subpoenaed documents, so too the Witness must either find an alternative custodian to hand over the documents or do so himself, at whatever risk that would entail. See Brief of Appellee Independent Counsel at 10-11 & n. 7, 29. The Independent Counsel's assertion is misguided. A collective entity must find some means by which to comply because no Fifth Amendment defense is available to it. By contrast, a custodian does enjoy the Fifth Amendment's protection, and need only invoke it to absolve himself of any obligation to comply. It is up to the Independent Counsel to find an alternative custodian or to serve the companies directly, in part because a custodian's appointment of an alternative representative might itself bolster the evidence against him
10
See Note, Fifth Amendment Privilege for Producing Corporate Documents, 84 MICH.L.REV. 1544, 1564-73 (1986) (arguing that application of the "act-of-production" doctrine to collective-entity cases would rarely throttle Government investigations or prosecution); Note, Organizational Papers and the Privilege Against Self-Incrimination, 99 HARV.L.REV. 640, 648 (1986) (same)
11
The Witness also contends that his selection of documents conforming to the terms of the subpoena would have testimonial implications. This objection, however, goes not to the breadth of the subpoena but rather to the evidentiary significance of his compliance with it
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20 F.3d 469
U.S.v.Loper*
NO. 93-07292
United States Court of Appeals,Fifth Circuit.
Mar 31, 1994
1
Appeal From: S.D.Miss.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
| {
"pile_set_name": "FreeLaw"
} |
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